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Background: Ethiopia has been landlocked since Eritrea, a former province, gained independence. Its imports and exports by sea are now sent via neighbouring coastal states, mainly Djibouti, and it needs to ensure sustainable access to multiple transit corridors. Objective: This article aims to evaluate alternative transit corridors to Ethiopia in terms of basic port infrastructure, and logistics costs. The findings provide insights to inform policy on securing reliable maritime access to the country. Method: This study adopts a case study approach by using secondary data to evaluate alternative transit corridors. Following a critical review of theoretical and empirical literature, descriptive statistics are presented using tables, graphs and charts. Results: Low-cost, high-capacity and high-frequency global maritime freight trade is easier through Djibouti than through Mombasa in Kenya or Port Sudan, owing to its better liner shipping connectivity. Thus, Ethiopia should continue to import containerised cargo through the Port of Djibouti. However, direct access to the sea is also important for national defence and security. Conclusion: Ethiopia should therefore secure access through multiple ports to safeguard national security, regardless of economic feasibility. This can be realised by directing break-bulk, dry bulk and petroleum products through ports in Sudan and Kenya. In addition, particular emphasis should be given to seaports closest to the country’s economic centre, such as Berbera in Somaliland and Asseb and Massawa in Eritrea.
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Journal of Transport and Supply Chain Management
ISSN: (Online) 1995-5235, (Print) 2310-8789
Page 1 of 11 Original Research
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Authors:
Tesfaye B. Takele1
Tassew D. Tolcha2
Aliaons:
1Department of Logiscs and
Supply Chain Management,
College of Business and
Economics, Addis Ababa
University, Addis Ababa,
Ethiopia
2Faculty of Logiscs, Molde
University College, Molde,
Norway
Corresponding author:
Tesfaye Takele,
tesfayebelay76@gmail.com
Dates:
Received: 08 Dec. 2020
Accepted: 30 Apr. 2021
Published: 12 July 2021
How to cite this arcle:
Takele, T.B. & Tolcha, T.D.,
2021, ‘Opmal transit
corridors for Ethiopia’,
Journal of Transport and
Supply Chain Management
15(0), a567. hps://doi.
org/10.4102/jtscm.v15i0.567
Copyright:
© 2021. The Authors.
Licensee: AOSIS. This work
is licensed under the
Creave Commons
Aribuon License.
Introducon
No country is self-sufficient. All nations are involved in international trade to obtain inputs to
improve production and productivity (Rodrigue, Comtois & Slack 2006). International trade is
growing in terms of value and tonnage, and on average the value of world merchandise trade
increased by 7% between 1980 and 2011 (WTO 2013). Shipping carries 80% – 90% of global
trade by volume and 60% – 70% of global trade by value (Brooks & Faust 2018). Shipping
operations require access to the sea and adequate port facilities (Rodrigue et al. 2006). However,
about 20% of countries around the world are landlocked (Lahiri & Masjidi 2012), and 40% of
the population of Africa lives in landlocked countries (Jouanjean, Gachassin & Te Velde 2015).
Although the United Nations Convention on the Law of the Sea, Part X Article 125 gives
landlocked states the right to pass through the territories of transit states to access the sea,
exercising this right requires bilateral, subregional or regional agreements between landlocked
and transit states. Goods passing through transit corridors should not be subject to customs
duty, but landlocked countries must pay for facilities such as railways, roads and port facilities,
in line with negotiated agreements (United Nations 1982). Negotiations and agreements play a
pivotal role in optimising the benefits of landlocked states’ rights (Bayeh 2015). Reaching wise
and fair agreements requires identification and effective application of objective criteria (Fisher,
Ury & Patton 2011), which should be applied in selecting optimal transit corridors and
negotiating with transit neighbours.
Ethiopia became a landlocked country when its former province of Eritrea gained independence
in 1992 (The Economist 2012). Nevertheless, Eritrea’s port of Assab continued to handle more
than 75% of Ethiopia’s imports until the outbreak of war in 1998 (Snow et al. 2003), after which a
significant percentage of Ethiopian imports and exports shifted to Djibouti. The Ethio-Djibouti
transit corridor is now Ethiopia’s main maritime gateway, handling over 90% of its trade cargo
(Ursu & Van Den Berg 2018).
Background: Ethiopia has been landlocked since Eritrea, a former province, gained
independence. Its imports and exports by sea are now sent via neighbouring coastal states,
mainly Djibouti, and it needs to ensure sustainable access to multiple transit corridors.
Objective: This article aims to evaluate alternative transit corridors to Ethiopia in terms of
basic port infrastructure, and logistics costs. The findings provide insights to inform policy
on securing reliable maritime access to the country.
Method: This study adopts a case study approach by using secondary data to evaluate
alternative transit corridors. Following a critical review of theoretical and empirical
literature, descriptive statistics are presented using tables, graphs and charts.
Results: Low-cost, high-capacity and high-frequency global maritime freight trade is
easier through Djibouti than through Mombasa in Kenya or Port Sudan, owing to its better
liner shipping connectivity. Thus, Ethiopia should continue to import containerised cargo
through the Port of Djibouti. However, direct access to the sea is also important for national
defence and security.
Conclusion: Ethiopia should therefore secure access through multiple ports to safeguard
national security, regardless of economic feasibility. This can be realised by directing
break-bulk, dry bulk and petroleum products through ports in Sudan and Kenya. In
addition, particular emphasis should be given to seaports closest to the country’s economic
centre, such as Berbera in Somaliland and Asseb and Massawa in Eritrea.
Keywords: landlocked; transit corridor; infrastructure development; container shipping;
dry bulk shipping; logistics cost.
Opmal transit corridors for Ethiopia
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Lack of direct access to the sea may affect landlocked countries’
defence and security (Mishra & Singh 2008), so, setting aside
the economic benefits, Ethiopia’s dependence on a single
corridor may endanger its national security. Diversifying
import and export cargo through different transit corridors and
seaports is essential to preserve the country’s national interest
and increase its bargaining power in bilateral and multilateral
negotiations. The government of Ethiopia recognises this in its
national logistics strategy to be implemented from 2018 to 2028
(Ministry of Transport and EMAA 2019).
This study evaluates three alternative transit corridors
to Ethiopia, through Djibouti, Sudan and Kenya. The
findings reveal that the Port of Djibouti is optimal for
container shipping as a result of its greater maritime
connectivity, geographical proximity and infrastructural
development. Thus, Ethiopia should continue to utilise
Djibouti particularly for containerised cargo imports. To
increase its access to multiple corridors and seaports, break-
bulk cargo, petroleum products and dry bulk cargo might be
imported through other neighbouring transit corridors.
Overview of Ethiopia’s marime
access
Eritrea, a former province of Ethiopia, became an independent
state through a referendum in 1992. This made Ethiopia a
landlocked country because it lost its Red Sea ports of Assab
and Massawa to the new state (The Economist 2012). Assab port
continued to handle over 75% of Ethopia’s imports under a
bilateral agreement for transit movements signed in 1992 (Snow
et al. 2003). However, the outbreak of a border war between the
two countries ended Ethiopia’s access to these ports, marking
the beginning of its dependence on the Port of Djibouti
(Maritime & Transport Business Solutions [MTBS] 2014).
Since the outbreak of the Ethiopia–Eritrea war in 1998, a
significant percentage of Ethiopia’s imports and exports has
shifted to Djibouti. In 1993, Ethiopia signed a port utilisation
agreement with Djibouti, giving it the right of access to the
Port of Djibouti to import and export transit goods. The
agreement also gave Ethiopia a right to a duty-free plot of
land at the Port of Djibouti, harmonised transport and
communication operations to facilitate smooth flows of cargo
and information and harmonised formalities for the
movement of peoples, vehicles and aircraft (Giorgis 1995).
Following the increase in Ethiopian cargo passing through
the Port of Djibouti, the port authority invested US$15 million
in expanding the terminal (Snow et al. 2003). Further
agreements approved by the Ethiopian parliament have
been made between Ethiopia and Djibouti, relating to port
utilisation and cargo transit services (Federal Democratic
Republic of Ethiopia [FDRE] 2002) and multimodal transport
services (FDRE 2007). These will improve Ethiopia’s cross-
border logistics through the Port of Djibouti (MTBS 2014).
In August 2003, Somaliland and Ethiopia signed a
bilateral agreement, which took effect on 01 July 2005, to
improve truck road links and establish customs and ports
(UNPO 2005). This allowed Ethiopia to use the port of
Berbera, northwestern Somalia. An agreement was also
signed between Ethiopia and Sudan for cooperation
on transport and communication and to research the potential
to build roads to connect their border cities (Giorgis 1995).
Ethiopia has been using Port Sudan for exports and has made
efforts to use Sudanese ports for imports. For instance, 50 000
metric tons of fertiliser was imported through Port Sudan
in January 2015 (Abdu 2015).
Ethiopia is part of the Lamu Port–South Sudan–Ethiopia
Transport (LAPSSET) Corridor Project, an infrastructure
project dedicated to providing sea access to several east
African nations through Lamu. This port will consist of
32 deep-sea berths. The corridor comprises two elements:
an infrastructure corridor involving the development of
road, railway, pipelines and power transmission and a
50-km economic corridor on either side of the infrastructure
corridor where industrial investments will be situated
(Chome 2020; LAPSSET Corridor Development Authority
2016). Construction of three berths at Lamu Port was
completed in July 2020 (Ochieng 2020).
In addition to being landlocked, a unique characteristic of
Ethiopia’s import logistics is the semi-monopolistic Ethiopian
Shipping and Logistics Service Enterprise (ESLSE). In May
2000, the office of the prime minister of the Federal Democratic
Republic of Ethiopia issued a letter aimed at improving
foreign currency utilisation from sea imports into the country.
The letter, addressed to the National Bank of Ethiopia,
regional governments and ministerial offices, required
government and private importers to buy all import cargos
under free on board (FOB) arrangements and transport them
by using the Ethiopian Shipping Line (ESL) if purchased by
using the country’s foreign currency reserves or loans.
Importers would be allowed to use foreign vessels if ESL did
not or could not provide services in specific countries for
various reasons (FDRE, Office of the Prime Minister 2000).
Ethiopian Shipping Line would then issue a letter of
verification to the bank allowing foreign vessel utilisation.
Ethiopian Shipping Line’s rights and obligations were
transferred to the ESLSE under Council of Ministers
Regulation no. 255/2011. The Ethiopian government’s FOB
directive gave ESLSE an exclusive right to transport all of
Ethiopian’s sea imports (Ministry of Transport and EMAA
2019). This system aimed to save foreign currency but
blocked the market to foreign competition (MTBS 2014).
Ethiopian Shipping and Logistics Service Enterprise was
established in 2011 with a capital of 3760 million Ethiopia
Birr to provide multimodal transport, freight forwarding,
dry port, containerisation, warehousing and other related
services. It resulted from a decision by the Ethiopian
parliament to merge three government-owned companies
in the logistics sector: Ethiopian Shipping Lines Share
Company (SC), the Ethiopian Maritime and Transit Services
Enterprise and the Dry Ports Service Enterprise (FDRE 2011).
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A government-owned land transport company, Comet
Transport SC, was also incorporated into ESLSE in 2014
(Abdu 2014). Ethiopian Shipping and Logistics Service
Enterprise is responsible for supporting the country’s
economy by providing value-added services to its customers
(FDRE 2011; MTBS 2014).
Ethiopia’s logistics sector has recently been opened up to
international logistics service providers by allowing joint
ventures for freight forwarding and shipping agency
services between Ethiopian and foreign investors, where
the foreign investor owns a maximum of 49% (FDRE 2020;
Investment Commission 2018). Furthermore, as stipulated
in the country’s national logistics strategy and policy, the
government of Ethiopia has promised step-by-step
liberalisation of the maritime sector and multimodal
transport to admit international logistics operators (Ministry
of Transport and EMAA 2019, 2020).
Methodology
This study applies a case study approach by using
secondary data obtained from various sources, including
the Sea Ports Corporation of Sudan, Kenya Ports Authority,
the Port of Djibouti, Berbera Port Authority, the World Bank
database, ESLSE, Google Maps and articles from scientific
journals. Following a critical review of theoretical and
empirical literature, descriptive statistics are presented.
The cost and tariff analysis results are then discussed
by using tables, graphs and charts to guide decision-
making in selecting transit corridors and seaports.
Theorecal framework
Cost of being landlocked
Landlocked countries need to cross through transit states to
increase their participation in global trade. Several challenges
arise from their lack of direct access to the sea. Although being
landlocked does not necessarily cause countries to become
poor or have low economic growth, 38% of the world’s most
impoverished societies live in landlocked countries (Collier
2007). Landlocked countries’ economic and social development
is lower than that of coastal countries (Uprety 2006). They have
higher trading costs as a consequence of higher land transport
costs for imports and exports (Christ & Ferrantino 2011),
owing both to the distance to sea ports and the passage across
transit countries’ borders (Uprety 2006).
However, effective assessment of actual and potential transit
corridors may promote the efficiency of transit businesses and
improve regional and interregional connectivity (Vinokurov &
Tsukarev 2018). In addition, efficient ports promote trade
growth by empowering greater quantities of imports and
exports (Kalgora 2019). Kalgora, Abdoulkarim and Kossivi
(2019) recommended that efficient combinations of intermodal
transport systems should also be considered in assessing
optimal transit corridors for landlocked states. The quality of
the transport infrastructure and organisational restructuring
may determine the performance of cross-border corridors
(Hanaoka et al. 2019; Kawasaki, Kobayashi & Shibasaki 2021).
The challenges faced by landlocked countries include socio-
economic, political and infrastructural aspects.
Socio-economic and polical aspects
Landlocked countries’ neighbours may differ politically,
socially, economically and geographically (Lahiri & Masjidi
2012). Socio-political relationships between landlocked
and transit states will have a major impact on the use of
transportation infrastructure, and landlocked countries’
problems will be exacerbated if they are surrounded by
neighbours with socio-economic problems (Wilson 2008). For
example, Switzerland (Europe) has access to well-developed
transport infrastructure in Germany, Italy, Belgium, France
and the Netherlands, whereas Uganda’s neighbours – Kenya,
Somalia, Sudan, Tanzania and the Democratic Republic of
Congo (DRC) – suffer from social, economic and political
problems (Collier 2007). Uganda uses Mombasa Port in
Kenya for 90% of its exports and 78% of its imports. However,
the partnership between the two countries was interrupted
after Kenya’s 2007 elections, and the railway connecting
Uganda with Mombasa Port was torn up in protest against
Uganda’s president (Wilson 2008). In general, development
will be difficult in landlocked countries with scarce natural
resources and transit corridors through countries with
socio-economic problems (Collier 2007).
The United Nations (UN) categorises a significant
percentage of landlocked countries as low-income. As
shown in Figure 1, over 30 years the number of low-income
coastal countries reduced from 21 to 12, whereas the number
of low-income landlocked countries hardly changed
(12–11). This implies that landlocked countries are unable
to develop beyond the low-income category, whereas
coastal countries enjoy greater income improvements.
Regarding export structure, landlocked developing countries’
exports are highly concentrated in less diversified primary
commodities (United Nations [UN] 2014), and African
landlocked developing countries’ share of merchandise
exports declined between 2013 and 2017. These countries are
still struggling with challenges such as insufficient quantities
of and high prices for physical infrastructure, delays in cargo
flows as a result of poor customs facilitation and border
Source: Based on the data from World Bank, 2020, GNI per capita in US$ (Atlas methodology),
The World Bank, n.d., viewed 13 February 2021, from hps://data.worldbank.org/indicator/
NY.GNP.ATLS.CD?locaons=XT.
FIGURE 1: Low-income African countries.
Landlocked Coastal
0
5
10
15
20
25
30
1990 1995 2000 2005 2010 2015 2019
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procedures and declining proportions of GDP and
employment in manufacturing (United Nations Economic
Commission for Africa [UN ECA] 2019).
Some landlocked developing countries in Africa are
characterised by political instability. For instance, according
to the World Bank, between 2018 and 2020 six landlocked
countries were either politically unstable or faced social and
institutional fragility, and some transit neighbours were also
struggling with similar problems. In addition to internal
instability, some landlocked countries are involved in inter-
state border disputes with their coastal neighbours, as in the
case of Eritrea and Ethiopia, South Sudan and Sudan, Mali and
Mauritania, Malawi and Tanzania, Kenya and Uganda, Lesotho
and South Africa, Chad and Libya and Uganda and the DRC
(Sone 2017). Such disputes hinder long-term commitments to
cross-border infrastructure development and border trade.
Poor infrastructural development
Landlocked countries rely on their transit neighbours’
trade and transport infrastructure for their seaborne
trade. Inadequate infrastructure, inefficient transport and
cumbersome government regulations in both transit and
landlocked countries hamper freedom of transit. Furthermore,
transit countries’ ability to improve their infrastructure from
their own resources may be very limited because many are
themselves developing countries (Uprety 2006). Although
progress has been made in expanding and upgrading the
infrastructure of African landlocked developing countries,
insufficient physical infrastructure and high prices continue to
hinder development (UN ECA 2019). Thus, development
assistance to address hard and soft infrastructural gaps in
landlocked countries is essential.
Transacon cost theory
Transaction cost theory is based on the assumptions that
humans have limited capacity to understand and solve
complex problems, and that they engage in opportunistic
behaviour in their own self-interests (Williamson 1981).
Three critical dimensions for describing transactions are
uncertainty, frequency and transaction-specific investments.
Opportunism is particularly likely where investments in
human and physical capital are involved (Williamson 1979),
which implies that Ethiopia’s dependence on a single transit
corridor and investments in specific assets may result in
opportunistic behaviour by Djibouti.
Ethiopia and Djibouti have built a 751.7-km standard gauge,
electrified railway, amounting to a total investment of about
US$4 billion. The line starts in Addis Ababa, runs through
inland ports such as Modjo and ends in Djibouti (CREC
2018), and it was constructed through mutual investment.
The Ethiopian section of the line cost $3.4 billion, financed
70% by the Exim Bank of China and 30% by the Ethiopian
government and the Djibouti government contributed only
$878 million (Railway Technology 2017). Thus, transit
countries may engage in opportunistic behaviour to reduce
their economic burden.
Opportunism can be controlled through explicit contracts
that govern the relationship. Establishing strong and
enduring relational norms and trust will also reduce
opportunistic behaviour (Yaqub 2009). For example, in an
infinitely repeated game setting, a bilateral cooperation
model between a landlocked and coastal neighbour revealed
that, rather than issuing unilateral policies for individual
country gain, sustainable cooperation equilibrium will
result from designing domestic policies to maximise both
countries’ economic benefits (Lahiri & Masjidi 2012).
The challenges facing landlocked countries can be reduced
through integrated development strategies implemented
by both landlocked and transit countries. This includes
encouraging neighbours to develop better policies and achieve
economic growth, expanding air transportation through low-
cost airlines and increasing trade with sub-regional countries
(Collier 2007). Integrating different modes of transportation,
such as roads and railways, with port operations, and
establishing a modern information communication system for
customs clearing and cross-border information sharing are
also crucial to minimise the drawbacks of being landlocked
(Arvis, Raballand & Marteau 2010).
Ports’ compeveness
All alternative ports should be evaluated to establish sound
justifications and achieve good deals. Rebelo’s (1992) criteria
for evaluating transit corridors include infrastructure,
operations, traffic, trade facilitation, trade logistics and trade,
transit and transport institutions. According to Merk and Li
(2013), ports’ competitiveness can be evaluated in terms of
three main determinants: their connections with other ports,
strong hinterland connections with various modes of
transport and effective operations measured by the rough
utilisation rates and productivity of cranes, yards and berths.
These are summarised in Table 1.
Of the various criteria shown in Table 1, the most important
port selection attributes for the purposes of this study were
selected in consultation with high-level shipping and
logistics experts. These are presented in Table 2.
Results and discussion
Ethiopia is located in the East African region known as
the Horn of Africa, bordering Eritrea in the north, Kenya in
the south, Sudan in the northwest, South Sudan in the west
and southwest, Djibouti in the northeast and Somalia in the
east. It is the most populous landlocked country in the
world and the second most populous nation in Africa, with
about 115 million inhabitants in 2020 (World Population
Review 2021). Ethiopia may potentially secure maritime
access through corridors to the Port of Djibouti (Djibouti),
Berbera Port (Somaliland), Port Sudan (Sudan), Massawa
and Asseb ports (Eritrea), Mombasa Port (Kenya) and the
ports of Bosaso, Mogadishu and Kismayu (Somalia).
Although an agreement for peace, friendship and
comprehensive cooperation was concluded between
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Ethiopia and Eritrea in September 2018, a specific agreement
for port utilisation has not yet been signed to secure
Ethiopia’s access to ports in Eritrea. Widespread activities
by a terrorist group, Al-Shabaab, remain a potent threat to
peace and security in Somalia, with many attacks on
civilians and government institutions (United Nations
Security Council 2019). The prolonged conflict in Somalia
has become a major hinderance to considering the country
for transit services.
In March 2018, an investment agreement was signed
between Dubai Ports World, Ethiopia and Somaliland for
infrastructural development of Berbera Port and upgrading
of the Ethiopia–Somaliland transport corridor. However,
Somalia’s President Mohammed Abdullahi Farmajo
rejected the legitimacy of this contract (Kantack 2018), and
it has become a new source of intra- and inter-state tension
in the Horn (Musa & Horst 2019). This situation, along with
poor infrastructural development, will hinder effective
utilisation of Berbera Port for transit cargos.
In view of these facts, the Port of Djibouti, Port Sudan and
Mombasa Port can currently be considered as potential
transit corridors for Ethiopia’s cargo. Thus, critical analysis
was conducted on these ports to identify an optimal transit
corridor for the country.
Distances to potenal ports
Distances from hinterlands to seaports are a major factor in
selecting transit corridors for landlocked countries. Multimodal
cargo is transported via the Port of Djibouti to inland destinations
in Ethiopia, mainly to Modjo dry port (UNCTAD 2018). With
direct rail and road connections to the Port of Djibouti, Modjo
dry port is the largest port in the country, located 73 km from
the country’s capital, Addis Ababa. It handles more than 78% of
the country’s multimodally transported imports (Ethiopian
Shipping and Logistics Service Enterprise [ESLSE] 2020d).
Therefore, in this study Modjo was considered as the hinterland
destination for Ethiopia’s imports. Road distances from Modjo
to transit seaports are presented in Figure 2.
The Port of Djibouti is much closer to Ethiopia than Port
Sudan and Mombasa Port, which are more than double the
distance from Modjo. However, in addition to distance, road
quality, truck-handling capacity, levels of congestion,
availability of other modes of transport (mainly rail) and
lengths of roads must be taken into consideration when
comparing viable ports.
Port infrastructure and connecvity
Port infrastructure refers to physical facilities used in handling
day-to-day activities such as berths, suitable cranes, quays,
straddle carriers, forklifts and storage areas (Stopford 2009).
Alternative ports’ infrastructural development was evaluated
in terms of berthing capacity, number of cranes and
TABLE 1: Sea port selecon criteria.
Author Region Key drivers
Balla et al.
(2016)
West and Central Africa So infrastructure
Hard physical infrastructure
Song and Yeo
(2004)
China Cargo volumes
Port locaon
Port facilies
Service levels
Parola et al.
(2017)
Global Port costs
Hinterland connecvity
Port infrastructure
Port service quality
Naucal accessibility
Hinterland proximity
Port’s geographical locaon
Operaonal eciency
Marime connecvity
Port site
Chang, Lee and
Tongzon (2008)
Global Local cargo volumes
Berth availability
Transshipments
Terminal handling charges
Port locaon
Feeder network
Fanou and
Wang (2018)
Africa: Landlocked Number of navigaon lines
Port fees
Nature of the terrain
Transport infrastructure availability
Number of countries through which
shipments will pass
Port’s service levels
Distance between the seaport and
the landlocked country’s capital
Safety levels and relaons with
neighbouring countries
Source: Compiled from: Balla et al.(2016), Song and Yeo (2004), Parola et al. (2017), Chang,
Lee and Tongzon (2008), Fanou and Wang (2018).
Note: Please see the full reference list of the arcle, Takele, T.B. & Tolcha, T.D., 2021, ‘Opmal
transit corridors for Ethiopia’, Journal of Transport and Supply Chain Management 15(0),
a567. hps://doi.org/10.4102/jtscm.v15i0.567, for more informaon.
TABLE 2: Criteria for evaluang transit corridors.
Variable Category Performance indicators
Port hard
infrastructure
Berth availability Maximum berth dra
Total berth length
Superstructure Port-side gantry cranes
Cargo handling producvity
Port locaon and
connecvity
Marime connecvity
Distance between port and landlocked
country’s hinterland centre (Modjo)
Intermodal connecons
Cargo Volumes Annual container throughput
Handling Stevedoring
Terminal handling
Port dues
Wharfage
Source: Compiled from: Song and Yeo (2004), Parola et al. (2017), Chang et al. (2008) and Fanou
and Wang (2018).
Note: Please see the full reference list of the arcle, Takele, T.B. & Tolcha, T.D., 2021, ‘Opmal
transit corridors for Ethiopia’, Journal of Transport and Supply Chain Management 15(0),
a567. hps://doi.org/10.4102/jtscm.v15i0.567, for more informaon. FIGURE 2: Distance from Modjo to discharging seaports.
Inland
Outland
0 500 1000 1500 2000 2500
Djibou
Mombasa
Port Sudan
Distance (kilometres)
Sea ports
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productivity. As shown in Table 3, based on these criteria, the
Port of Djibouti is positioned more competitively than
Mombasa Port and Port Sudan, with the deepest draft, most
ship-to-shore gantry cranes and best quay productivity.
Capacity of ports’ container terminals
Container terminals generally have several berths with
one or more heavy-lift cranes and a collection area for
containers. Containers are stacked up to five blocks high
by using gantry cranes (Stopford 2009).
The competitiveness of transit corridors’ container terminals was
evaluated in terms of cargo-handling capacity and actual
throughput in 2019 (Figure 3). Although Mombasa Port has a
greater container-handling capacity, its utilisation rate is 86%,
so importing many more containers through Mombasa Port
may result in congestion. On the other hand, the Port of Djibouti
has the capacity to handle 1.4 million 20-foot equivalent units
(TEU) per year, with a 66% utilisation rate, as well as higher
productivity at 681 TEU per metre of quay per annum. Its
existing utilisation rate and crane productivity will enable it to
handle additional containers for transit and/or trans-shipment.
Comparison of port tari structures
The potential transit ports were compared for containers
and dry bulk cargo, that is fertiliser handling. As shown in
Figure 4, TEU container transit imports cost $602 at Port
Sudan, $254 at Mombasa Port and $450 at the Ports of
Djibouti for stevedoring, terminal handling charges (THCs)
and wharfage and/or port dues. Regarding dry bulk
imports, total port costs for stevedoring, shore handling
and other services up to the loading of bagged fertiliser or
grain onto truck or rail cost $13.01 at Port Sudan, $16.40 at
Lamu Port1 and $18.93 at the Port of Djibouti. Lower rates
are charged by Mombasa Port for containers and Port Sudan
for dry bulk. However, these two ports are located further
from Ethiopia, resulting in higher land transportation costs.
Corridors logiscs cost analysis
Container shipping
The total cost of importing a standard TEU from Shanghai
in China to Modjo dry port was computed by using different
transit ports. Freight quotes were collected in January 2021
from major liner shipping companies operating in East
Africa and from freight forwarders. The total cost consists
of sea freight, basic port charges and land transportation
costs. Terminal-handling charges and wharfage/port dues
were used to calculate port charges, but documentation fees
and other charges were excluded. Land transport costs were
$0.92 per TEU per kilometre from the Port of Djibouti to
Modjo dry port. These were computed based on the tariff
used by ESLSE, the major carrier in Ethiopia, since October
2020. The roads from Ethiopia to all transit corridors are
paved and have quite similar topography, so the same road
transport costs were applied to the other corridors to
Mombasa and Sudan.
The cost of sea freight (basic ocean freight and stevedoring)
from Shanghai to discharging seaports is about $2596 for the
Port of Djibouti, $3117 for Mombasa Port and $6060 for Port
Sudan. Sea freight costs are lower for imports into the Port of
Djibouti, whereas importing a TEU through Port Sudan costs
1.Mombasa Port Authority’s 2012 tari is applied to Lamu Port for the purposes of
this research.
Source: Authors, based on data extracted from Kenya Ports Authority (2020), Sudan Sea
Ports Corporaon (2017), Djibou Ports & Free Zone Authority (2018) and UNCTAD (2020).
Note: Please see the full reference list of the arcle, Takele, T.B. & Tolcha, T.D., 2021, ‘Opmal
transit corridors for Ethiopia’, Journal of Transport and Supply Chain Management 15(0),
a567. hps://doi.org/10.4102/jtscm.v15i0.567, for more informaon.
FIGURE 3: Container terminal capacity and container traffic (20-foot
equivalent units).
Capacity (TEU) Throughput (TEU, 2019)
0
200000
400000
600000
800000
1000000
1200000
1400000
1600000
1800000
Terminal capacity and
container traffic
1420000
932000
1425000
1650000
469526
1200000
Djibou Mombasa
Sea ports
Sudan
Source: Authors, based on data extracted from Kenya Ports Authority (2012), Sudan Sea
Ports Corporaon (2017) and Djibou Ports & Free Zone Authority (2018), freight forwarders
Note: Please see the full reference list of the arcle, Takele, T.B. & Tolcha, T.D., 2021, ‘Opmal
transit corridors for Ethiopia’, Journal of Transport and Supply Chain Management 15(0),
a567. hps://doi.org/10.4102/jtscm.v15i0.567, for more informaon.
FIGURE 4: (a) Port charges for containers/20-foot equivalent units and (b)
stevedoring and shore-handling charges for dry bulk per ton.
Sea ports
0
2
4
6
8
10
12
14
16
18
20
Cost
DjibouLamuSudan
Warfage/Port dues THC Stevedoring Djibou Lamu Sudan
0
100
200
300
400
500
600
700
Cost in US Dollar
SudanMombasa
Sea ports
Djibou
a b
TABLE 3: Ports’ infrastructure and connecvity.
Indicators Djibou Mombasa Sudan
Berth (metres)
Deepest berth 18 13.5 16
Total berth length 3774 4727.2 5698
Ship-to-shore gantry cranes (STS) 12 10 8
Quay producvity: TEU per metre of quay 681 469 n/a
Source: Compiled from Kenya Ports Authority (2020), Sudan Sea Ports Corporaon (2017),
Djibou Ports & Free Zone Authority (2018) and Humphreys (2019).
Note: Please see the full reference list of the arcle, Takele, T.B. & Tolcha, T.D., 2021,
‘Opmal transit corridors for Ethiopia’, Journal of Transport and Supply Chain Management
15(0), a567. hps://doi.org/10.4102/jtscm.v15i0.567, for more informaon.
n/a, not applicable; TEU, 20-foot equivalent units.
Page 7 of 11 Original Research
hp://www.jtscm.co.za Open Access
more than twice as much as through Djibouti. The reasons
for this big difference in maritime transport costs require
further analysis (see Figure 5).
Maritime transport costs, and particularly container
shipping, are determined by several factors. Liner shipping
connectivity (the number of carriers providing a direct
service, deployed containers, the number of services, vessel
sizes), ports’ levels of infrastructural development (berth
length, maximum draft, storage capacity) and transit times
impact on liner freight rates (Wilmsmeier & Hoffmann
2008). Sanchez et al. (2003) find that more efficient ports
(measured by hourly container-loading rates, average
containers loaded per vessel and waiting times) are
associated with lower freight rates. In this respect, the
identified ports differ considerably in terms of connectivity
and efficiency. Figure 6 shows transit ports’ liner shipping
connectivity and vessels’ carrying capacity.
UNCTAD’s liner shipping connectivity index (LSCI) was
used to capture countries’ container port connectivity. The
LSCI uses statistics on scheduled ship calls, deployed
containers, the number of shipping companies and liner
services, average vessel size and directly connected ports.
The higher the index, the easier it is to access high-
frequency and high-capacity global shipping (Rodrigue &
Notteboom 2020). Based on the performance statistics
presented in Figure 5, the Port of Djibouti has a higher
LSCI index. This implies that Ethiopia will have better
access to maritime containerised transport through the
Port of Djibouti than through Mombasa Port or Port
Sudan. Increased ship size is important to achieve
economies of scale, but bulk ships necessitate greater
investments in constructing terminals with deeper drafts
and higher cargo-handling equipment (Stopford 2009).
The Port of Djibouti also handles container vessels with
larger average and maximum carrying capacities. Lei and
Bachmann (2019) suggest that more vessel calls, higher
container throughput and larger numbers of containers
loaded/unloaded per vessel lead to lower freight rates.
The differences in sea freight costs between Djibouti,
Mombasa and Sudan are compatible with each port’s
maritime connectivity and vessel capacity.
Transporting a TEU from the Port of Djibouti to Modjo costs
about $750. However, the long out-land distances to Port
Sudan and Mombasa Port result in much higher logistics
costs of $1705 and $1760, respectively. The total logistics
costs of importing a TEU container from Shanghai seaport to
Modjo dry port through the discharging seaports are
summarised in Figure 7. In this regard, importing containers
through Djibouti costs $3663, which is less than half the cost
of Port Sudan. The Port of Djibouti’s relatively high liner
shipping connectivity and productivity, as well as
geographical proximity, contribute to lower logistics costs.
The above analysis proves that the Port of Djibouti’s well-
developed infrastructure, rail connections to Ethiopia (Modjo
and Addis Ababa), lower total container transport costs and
geographical proximity make it optimal for Ethiopia’s
container shipping. This implies that the Port of Djibouti
should continue to be the main transit corridor for Ethiopia,
0 1000 2000 3000 4000 5000 6000 7000 8000 9000
Sudan
Mombasa
Sea ports
Cost
Djibou $3663
$5032
$8235
Sea freight Port charges Land transport
Source: Authors, based on data extracted from Kenya Ports Authority (2012), Sudan Sea
Ports Corporaon (2017), Djibou Ports & Free Zone Authority (2018), ESLSE (2020c), and
Liner Shipping Companies (2021).
Note: Please see the full reference list of the arcle, Takele, T.B. & Tolcha, T.D., 2021, ‘Opmal
transit corridors for Ethiopia’, Journal of Transport and Supply Chain Management 15(0),
a567. hps://doi.org/10.4102/jtscm.v15i0.567, for more informaon.
FIGURE 5: Cost of imporng a 20-foot equivalent units container from Shanghai
to Modjo.
Source: Compiled from United Naons Conference on Trade and Development (UNCTAD), 2021, Marime transport indicators, UNCTADStat, n.d., viewed 17 February 2021, from hps://unctadstat.
unctad.org/wds/ReportFolders/reportFolders.aspx.
FIGURE 6: (a) Liner shipping connecvity index and (b) container-carrying capacity (20-foot equivalent units) per container ship.
Djibou Kenya Sudan
2018 2019 2020 S1
0
5
10
15
20
25
30
35
2018 2019
Year Sea ports
2020
Liner shipping connecvity index
0
2000
4000
6000
8000
10000
12000
14000
16000
Average Maximum Average Maximum Average Maximum
Djibou Kenya Sudan
Container-carrying capacity
a b
Page 8 of 11 Original Research
hp://www.jtscm.co.za Open Access
particularly for containerised cargo imports and exports.
However, considering the country’s vast geographical size
and population of more than 115 million, it is essential to
secure reliable access to multiple transit corridors, irrespective
of their economic feasibility. In this regard, dry bulk cargo
such as soil fertiliser might be imported through different
transit ports.
Dry bulk shipping
Fertiliser is the major dry bulk cargo imported and distributed
to all corners of Ethiopia. In 2019–2020, ESLSE transported
imports of 1 million metric tons of wheat and 0.87 million
metric tons of coal from loading ports to the Port of Djibouti
and 1.45 million metric tons of soil fertilisers from loading
ports to inland farmers’ receiving and dispatching posts
(ESLSE 2020a, 2020b).
Dry bulk freight rates are determined based on
interactions between demand and supply (Beenstock &
Vergottis 1989), as freight is a function of the balance
between the quantity demanded in ton miles and the supply
of ship services by fleet tonnage (Glen 2006). In addition,
length of laycan periods, vessel size (deadweight tonnage)
and shipping routes impact on dry bulk freight shipping
rates (Alizadeh & Talley 2011). As a result, there will be no
significant differences in dry bulk shipping rates for sea
freight from geographically proximal discharging ports
such as Djibouti and Berbera. This leads to an emphasis on
infrastructural quality and the costs of ports and land
transport in selecting transit corridors for dry bulk imports.
Dry bulk cargos can be imported into Ethiopia through
various neighbouring transit corridors.
Note: This is the authors’ elaboraon based on Google Maps.
FIGURE 7: Locaon of seaports and inland desnaons.
South Sudan
Page 9 of 11 Original Research
hp://www.jtscm.co.za Open Access
For Ethiopia’s 2020–2021 fertiliser imports, ESLSE has
agreed with the Ministry of Agriculture to transport 1.8
million metric tons of fertiliser from loading ports to inland
destinations. The carrier’s responsibility includes sea
transportation, port handling and inland transportation
(ESLSE 2020a). Per ton-kilometre (tkm) cost calculations for
fertiliser were based on ESLSE inland transport costs for
2020–2021. Fertiliser transportation costs about $0.068 per
tkm from the Port of Djibouti to inland destinations in
Ethiopia. Costs for the Ethio-Djibouti transit corridor were
applied to the other corridors for the purposes of this study,
although they may vary.
The logistics cost per ton was computed for each transit
corridor with different inland destinations: Wereta for the
northern part of the country (Port Sudan), Hawassa for the
southern part (Lamu Port) and Adama for the east and
central parts (Port of Djibouti). Figure 8 summarises the
logistics costs for each transit corridor.
Conclusion
Ethiopia became the most populous landlocked country
when its former province of Eritrea gained independence.
For over two decades, its imports and exports have been
dependent on the Port of Djibouti, which handles more than
90% of the country’s import and export trade by sea. With the
strategic significance of maritime access and the country’s
large geographical size and population, securing access to
the sea through multiple transit corridors is essential for
Ethiopia. As a result, this study evaluates alternative transit
corridors that might serve Ethiopia’s international trade.
Three ports are compared (Port of Djibouti, Mombasa Port
and Port Sudan) with Ethiopia’s containerised and dry
bulk cargo imports from the perspective of logistics costs.
The total logistics costs, including sea freight, port charges
and land transport, of importing a TEU from Shanghai to
Modjo dry port are around $3663 through Djibouti, $5032
through Mombasa Port and $8235 through Port Sudan.
With regard to container shipping, until now all container
imports (with the exception of waived imports) into
Ethiopia have been carried by ESLSE. Importing containers
through different transit discharging seaports would
distribute the consolidated freight, but might reduce the
benefits of consolidated shipments, such as reduced freight
rates. Compared with Port Sudan and Mombasa Port, the
Port of Djibouti scores higher for liner shipping
connectivity, which is associated with lower freight rates
(Sanchez et al. 2003; Wilmsmeier & Hoffmann 2008).
Accordingly, importing through the Port of Djibouti
results in lower sea freight rates. In addition, geographical
proximity and railway connections to Modjo make the
Port of Djibouti optimal for container shipping to Ethiopia.
The findings of this research clearly show that Ethiopia
should continue to utilise Djibouti port for its containerised
cargo imports and exports.
Direct access to the sea is important for national
security (Mishra & Singh 2008). Thus, selecting transit
ports for Ethiopia should go beyond economic feasibility,
as the country must secure access through multiple ports
to safeguard national security. Considering its large
geographical size, different transit corridors and seaports can
be utilised for different regions of the country, particularly
for handling dry bulk and liquid bulk cargos. For example,
soil fertiliser might be imported through Port Sudan to
Wereta for northern Ethiopia, through Lamu Port (Kenya) to
Hawassa for southern Ethiopia and through the Port of
Djibouti to Adama for east and central parts of the country.
In addition, further efforts should be made to ensure
sustainable access to the seaports of several neighbouring
countries, with particular emphasis on seaports within a
short geographical distance from the country’s economic
centre. These ports are Djibouti, Berbera in Somaliland and
Asseb and Massawa in Eritrea.
Acknowledgements
Compeng interests
T.B.T. and T.D.T. have declared that no competing interest
exists.
Authors’ contribuons
T.B.T. was responsible for the analysis and interpreted the
data. T.D.T. wrote the manuscript and edited the text.
Ethical consideraons
This article followed all ethical standards for research
without direct contact with human or animal subjects.
Funding informaon
This research received no specific grant from any funding
agency in the public, commercial or not-for-profit sectors.
Data availability
The data that support the findings of this study are available
from the corresponding author, T.B.T., upon reasonable
request.
Source: Authors, based on data extracted from Kenya Ports Authority (2012), Sudan Sea
Ports Corporaon (2017), Djibou Ports & Free Zone Authority (2018), freight forwarders
and ESLSE.
Note: Please see the full reference list of the arcle, Takele, T.B. & Tolcha, T.D., 2021, ‘Opmal
transit corridors for Ethiopia’, Journal of Transport and Supply Chain Management 15(0),
a567. hps://doi.org/10.4102/jtscm.v15i0.567, for more informaon.
FIGURE 8: Logiscs costs for dry bulk imports (per ton).
Stevedoring, shore handling and other charges Inland Outland
020 40 60
Dollar
80 10
01
20
Djibou – Adama
Lamu – Hawassa
Sudan – Wereta $97
$74
$114
Route
Page 10 of 11 Original Research
hp://www.jtscm.co.za Open Access
Disclaimer
The views and opinions expressed in this article are those
of the authors and do not necessarily reflect the official
position or policy of any affiliated agency of the authors.
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