Losing its coast has not stopped Ethiopia developing its shipping

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Losing its coast has not stopped Ethiopia developing its shipping


http://www.economist.com/node/21553050

(from the economist print edition)

ETHIOPIA became landlocked in 1992, when its Red Sea coast was lost to the new state of Eritrea. It lost access to its former ports soon afterwards. Since the outbreak of a vicious two-year war between the two countries in 1998, the Red Sea ports of Massawa and Assab have been off-limits to Ethiopian freight (see map). Instead, Ethiopia has to rely on Djibouti for imports and exports. That comes at a heavy price: it costs more to truck a container from Djibouti to Addis Ababa, Ethiopia’s capital, than to ship the same container from China to Djibouti.

But losing the coastline has not scuppered Ethiopia’s merchant fleet. The state-owned Ethiopian Shipping Lines (ESL) has eight ships afloat and nine under construction in China. That is modest compared with the armadas of the biggest shipping firms. But having any sort of ocean-going capability is good for national pride. At ESL’s Addis headquarters, complete with portholes and model ships, the outgoing boss, Ambachew Abraha, remembers proudly his days as an engineer aboard the freighter Queen of Sheba. “She was a real beauty,” he says. “With her I sailed to Rotterdam, Hull, Middlesborough.”

Mr Abraha was recently replaced as part of a shake-up of the company, which has seen a portfolio of state-owned transit and warehousing facilities added to it. The aim is to offset the high freight costs Ethiopian businesses pay by streamlining the entire transport process. A new railway is planned from Djibouti to Addis, and dry ports inside Ethiopia will allow goods to pass more quickly out of Djibouti, cutting the price of storage and customs.

Last year ESL made a profit of $40m. The new umbrella company looks likely to do even better. But a lot depends on Ethiopia getting more access to blue water. Its trade officials plan to do more business via the port of Berbera in Somaliland, a mostly unrecognised breakaway from Somalia, and with Port Sudan in Sudan. They are also cheered by a Kenyan plan to build a “super-port” at Lamu, a Swahili fishing-town near Kenya’s border with Somalia. A new road and railway would connect Lamu with Ethiopia and head on to South Sudan and possibly Uganda.

 


It might also reduce the risk of Ethiopian vessels being captured by Somali pirates. They have so far escaped that fate, perhaps because the pirates fear that the Ethiopians would launch a swift and bloody reprisal. But for all shippers, the threat of Somali piracy has nonetheless pushed up insurance costs and forced vessels to make expensive detours.

ESL handles 45% of Ethiopia’s shipping. Most of this is on the company’s own vessels, but some space is bought from other shipping lines. China is financing ESL’s new vessels, which will have improved cranes and holds for handling more complex cargoes, such as the colossal turbines needed to build Ethiopia’s new hydroelectric dams. Many of ESL’s ships leave Africa emptier than when they arrived, but that is changing. The shipping company hopes to increase its exports of coffee, grain, minerals, leather and textiles.

Ethiopia’s maritime ambitions are not limited to ESL. A school for sailors has been set up at a university in the lakeside town of Bahir Dar. It has ambitions to train 5,000 ship’s engineers and other officers for the world’s fleets within the next decade—providing low-cost competition for Sri Lankan and Filipino sailors. The government reckons these sailors could send home $250m a year in salaries. They would also return, as Mr Abraha has, with valuable skills and a hankering for the briny unusual in a landlocked country.

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