Ethiopia: DP World Eyes Ethiopia to Set Up Logistics Park

A Dubai-based port operator is conducting a feasibility study to build a multimodal logistics park, a freight aggregation and distribution hub, in Ethiopia.

DP World commissioned the feasibility study that is expected to be finalised in three months that looks at reducing the cost and time of importers and exporters in the country.

"It will make the exporters globally competitive," said Suhail Al Banna, CEO and managing director of DP World for the Middle East & Africa. "Importers and exporters won't have to come to Berbera to collect their stuff, as we gain the ability to move their cargo to the park at their convenience."

Logistics parks operate with both bonded and non-bonded warehouses, container yards for cargo consolidation and distribution hubs for import and export cargo.

DP World, which operates 78 marine and inland terminals across the world, has built the same facility in Kigali, Rwanda, a landlocked African country whose economy is predominantly based on imports mostly from Dubai, China and India.

Identifying how many logistics parks should be built and where to build the parks are the aims of the study, according to Banna.

"For sure, the parks will be located in areas with a large population and higher business and economic activities," said Banna.

Landlocked Ethiopia is criticised for having poor and costly logistics systems. Transporting a single container costs 1,000 dollars and 2,000 dollars more than the average price in Tanzania and Kenya, respectively, a study conducted by the World Bank Group indicated.

Ethiopia is shipping over 97pc of its cargo through the port of Djibouti, while the remaining two percent and one percent are shipped through Port Sudan and Berbera, respectively.

Aiming at handing a third of Ethiopia's commodities through, DP World, Ethiopia and the Republic of Somaliland entered a joint venture investment agreement last year to expand the Port of Berbera. Ethiopia holds a 19pc stake in the expansion project, while DP World and Somaliland hold 51pc and 30pc shares, respectively.

Last October, the first phase of the expansion was kicked off with a 101-million-dollar initial phase. The expansion consists of building a 400-metre quay and 250,000Sqm yard extension, as well as the development of a free zone to create a new regional trading hub. Shafa Al Nahda Contracting, a Dubai-based company, was awarded the project.

DP World, who has a 30-year concession on the Port of Berbera, has made the latest investment in the Port by procuring three Mobile Harbour Cranes for 12 million dollars. Last week the cranes were inaugurated at a ceremony attended by Muse Bihi Abdi, president of Somaliland, a self-declared state; Said Hassan, head of Somaliland Port Authority; and Banna of DP World, along with his DP World staff.

The new cranes will enable the Port to double its handling capacity to 28,000 twenty foot equivalent unit containers a month. The existing port facility has a 650-meter long wharf, encompassing more than 600Sqm designated as terminal space for containers, general cargo, office buildings and other facilities.

"We expect Ethiopia to ship 30pc of its cargo through the Port of Berbera," Said told Fortune. "Ethiopian officials signed an agreement last year to do so."

Ethiopia moves 13.5 million tonnes of imports and 1.8 million tonnes of export cargo annually through the port of Djibouti, representing nearly all trade shipments of the country. The Port of Berbera is currently shipping only one percent of the nation's trade activity, such as grain imports made by the World Food Programme.

"The only problem we currently have is the corridor," said Said, "which we expect to solve by 2020."

The construction of a road that will be connecting Ethiopia with the Port of Berbera was officially launched at the end of February. The inauguration ceremony was attended by Somaliland's president and Mustafa Mohammed Omer, deputy president of Ethiopia Somali Regional State.

The 250Km dual carriageway between the Somaliland port city of Berbera and the Ethiopian border is being funded by the UAE and the Abu Dhabi Fund for Development Construction Company. The roadway on the Ethiopian side has already been constructed by the Ethiopian Roads Authority.

DP World operates 78 marine and dry ports around the world. It is currently conducting a feasiblity study in Ethiopia.

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