Ethiopia: Modjo Dry Port Cuts Tariffs On Exports By 70%

Modjo Dry Port is one of Ethiopia's seven operational inland dry ports along with Qality, Semera, Meqelle, Dire Dawa, Gelan and Kombolcha.

The state monopoly shipping giant, Ethiopian Shipping & Logistics Services Enterprise, will implement tariff cuts of between 50pc and 70pc within a month on products exported through Modjo Dry Port.

The tariff reduction will apply to all the services the port provides including cleaning the containers, containerising the goods, transportation and loading and unloading costs. The 50pc to 70pc discount for exports are in relation to what the Enterprise normally charges for imports.

It also offers up to a 73pc lower freight rate than the global shipping spot market rate for exports to be carried by its shipping vessels. As part of the new changes, the Enterprise has also granted access to private logistics operators to use the port to serve their customers.

"We made the discounts to support export containerisation," Roba Megersa, CEO of the Enterprise told Fortune.

As part of the cost reduction effort, the Enterprise has started rail shipment of containers from Modjo Dry Port. It will also start offering containers for free along with stuffing and stripping of containers; loading and unloading for transportation; and pooling services whereby goods from different exporters are aggregated andstuffed into containers at ports to maximise space and reduce costs.

Land transport takes more time, and the payment for the loading and unloading service requires exporters to pay in foreign currency at the Port of Djibouti, according to Dereje Mideksa, director of Modjo Dry Port.

"These two factors were making the logistics expensive," Dereje said.

The service will make exporting through Modjo Dry Port cheaper and more efficient, according to Ashebir Nota, communications director at the Enterprise.

The dry port in Modjo is located approximately 70Km from the capital and has a railway system with a capacity to move 3,500tn of cargo on a single trip. The train can make two trips a day to Djibouti, while truck transport takes more than four days for a two-way trip. As the largest port in the country, Modjo Dry Port handles more than 70pc of the nation's imports and has the capacity to hold 14,500 containers at a time.

Before the train shipment began, the only other options for exporters were Qality Dry Port and the Port of Djibouti.

The Enterprise started the loading and unloading service at Qality Dry Port last year. The project has not been successful thus far, as only five companies are using the service and only 231 containers were exported in the previous six months.

Qality Dry Port can only be accessed by truck transport, accounting for the very limited number of clients, according to Dereje of Modjo Dry Port.

"Other private logistics companies provide the service by trucking the goods to Djibouti and performing the loading and unloading services there," Dereje said.

Exporting by train from Modjo began eight months ago by extending the service to companies that operate at the industrial parks who perform their own containerising at their facilities. Apart from companies in the industrial parks, businesses will also be able to ship their products through Modjo by train when the service is launched soon.

"The whole process is completed, except for fulfilling our human resource needs and facilitating storage areas for the goods," said Asheber.

Ethiopia is known for having a poor and costly logistics systems. The cost to transport a single container in Ethiopia is between 1,000 and 2,000 dollars higher than the average price in Tanzania and Kenya, respectively, a study conducted by the World Bank indicated.

Gizeshwork Tessema, CEO of Gize Plc, a logistics and shipping company, shares the Authority's assertion of the benefits of expanding and improving services in support of the export sector.

Yet she feels there is more the Enterprise can do to make logistics more efficient.

"Even though private logistics companies are working in the sector, there is no legal and governmental representative of the state that represents the private enterprises in Djibouti," she said. "Even though the Enterprise has a branch office in Djibouti port, it is only for its own logistics services."

Modjo Dry Port works with two systems known as unimodal transport and multimodal transport, and it is the only multimodal service provider in the country. As it is the principal port in the country, the government and development partners are working to expand the facility. The World Bank has pledged a 150-million-dollar loan to expand Modjo Dry Port.

Modjo Dry Port is one of Ethiopia's seven operational inland dry ports along with Qality, Semera, Meqelle, Dire Dawa, Gelan and Kombolcha. These ports have an installed handling capacity of 22,000 containers. The eighth dry port in Woreta is expected to be operational next year.

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