Empty containers shortage halts Ethiopian exports

According to some journalistic sources, Ethiopian exporters are experiencing a serious problem of empty container availability, in counter-tendency with what it used to happen until few months ago, where the problem was the opposite, as empty containers were in excess and remained idle for long time at terminals in dry ports in Ethiopia. Unfortunately, this is happening in a period when some commodities that represent a large fraction of Ethiopian trade, such coffee, are in peak demand on international markets.

After shipped to Ethiopia, containers transporting transit goods from Djibouti are unstaffed at dry ports (mainly in Modjo, that handles between 75 and 80 % of the all the nation's imports), so that they can be staffed with Ethiopian products to be carried back to the Djibouti port for being shipped abroad. Container unstaffing and staffing operations must be carried out quicky in order to ensure a rapid re-use of the container.

However, currently, shipping companies in Ethiopia are not able to provide enough empty containers to such exporters, apparently because of a sharp reduction of Ethiopia’s imports. Less containers arrive in Ethiopia, so less containers can be reused for exports. This is reflected in container lease prices doubled in the last three months.

However, this seems to be in contrast with the findings of the Second Quarter 2021/22 Bulletin of the National Bank of Ethiopia, that based on data of the Ethiopian Customs Commission shows how during the second quarter of the fiscal year 2021/22 (ended in July 7, 2022), merchandise trade deficit reached USD 3.4 billion from the USD 2.6 billion of last year. This means that the growth in merchandise imports outweighed the growth of merchandise exports as shown in the figure below.

The reasons why the volume of imports in Ethiopia reportedly dropped, seem to be the foreign currency shortages and because most international shipping lines are allocating the scarcity of containers to other priority markets like China. With regard to the first factor, Ethiopian importers struggle to obtain foreign currency for paying their suppliers abroad as Ethiopia’s forex reserves have substantially reduced, but this is a chronic problem of which Ethiopia suffers. Another reason is indicated in an increment in freight prices from the Djibouti port to Ethiopia, which has reduced the demand of imported products. However, neither of such reasons look convincing and further analysis should be done to better understand the causes of such phenomenon.