Djiboutian authorities have lashed out at the World Bank over its recent assessment of the country’s ports performance, which saw an unprecedented decline in global rankings. The fourth edition of the Container Port Performance Index (CPPI), produced jointly with S&P Global Market Intelligence, recorded a dramatic fall for Djibouti’s ports, which plummeted from 26th place last year to 379th out of 405 in the latest ranking.

Berbera Port, for instance, ranks 103rd overall, boasting superior operational efficiency and faster turnaround times for container ships. With an overall ranking of 208, Conakry Port showed moderate efficiency, outperforming Djibouti, though not reaching the highest regional standards.

The index's findings reveal what it describes as a "dramatic decline in performance" at Djibouti's ports. It cites systemic issues that could undermine the country's economic ambitions and its status as a strategic maritime hub. The report authors argue that Djibouti’s port infrastructure, though substantial, suffers from outdated equipment and insufficient maintenance. It blames frequent malfunctions of essential cranes, leading to extended delays, and the port labour force lacks specialised training for modern, large-scale maritime operations.

Djibouti’s lower ranking is primarily determined by various metrics, focusing on the total time vessels spend in port. The report blames a lack of advanced digitalisation and modern port management systems impeding operational efficiency.

Says the report: "The result is a bottleneck in cargo processing that ripples through global supply chains, affecting timelines and costs."

Economic analysts closely monitor Djibouti’s port performance due to its impact on the national economy. Port operations are a major revenue generator for Djibouti, and any decline in competitiveness could have far-reaching consequences. The government relies on revenues from port operations to support public services and infrastructure projects, making efficient port operations vital for the country’s economy.

However, Djibouti is displeased with the report, issuing a statement through the Djibouti Ports & Free Zones Authority (DPFZA), expressing “profound indignation.” Its officials sharply criticised the report for misrepresenting the port facilities and the quality of services provided. The statement asserted Djibouti's ambitious modernisation plan, pledging substantial investments to upgrade port facilities, enhance logistics capabilities, and train the workforce.

"These efforts are part of a broader strategy to transform Djibouti into a leading logistics and trade hub in Africa," said the statement.

The unusual drop in ranking has sparked a wave of ire from Djiboutian officials, who have taken to social media to voice their strongly worded objections.

Aboubaker O. Hadi, the Authority's chairperson, defended the ports' reputation, asserting their deep understanding of performance and the high level of service provided.

“We’re deeply knowledgeable about our performance and the outstanding services we provide to our customers, shipping and cargo owners,” Hadi said. “We’re proud to serve.”

A senior minister, Ilyas M. Dawaleh, echoes his indignation, slamming the report's finding as "irrational".

"What kind of science can justify a drop of 350+ points in the global ranking? What credibility to such an index fluctuating so widely in one year?" argued Dawaleh, a minister of Finance & Economy. "With our without biased index, Djibouti remains the largest and most efficient hub in sub-Saharan and eastern Africa."

Djibouti’s ports have been the primary entry point for goods destined for Ethiopia since the fallout with Eritrea in 1998. With 18 berths, the ports facilitated the transit of 95pc of the 7.6 million tons of goods into Ethiopia during the first half of this year.

Djibouti’s situation is further complicated by shifting global trade dynamics. The COVID-19 pandemic has accelerated supply chain diversification and near-shoring trends, where companies move production closer to home to avoid disruptions. The shift affects ports like Djibouti, which are required to improve their operational efficiencies and demonstrate adaptability to changing trade patterns. Xeneta, a shipping analytics platform based in Oslo, indicated a mix of uncertainty and disruption across global ocean freight supply chains. Spot rates are expected to reach COVID-19 levels this month, driven by ongoing conflict in the Red Sea, port congestion, and preemptive import activities ahead of the traditional peak season.

Gizat Worqu, general manager at the Ethiopian Coffee Exporters Association, pointed to frequent attacks on ships by Yemeni-based Houthi militia in the Red Sea as a factor impacting the ports' efficiency.

“It’s the most important development this year,” said Gizat, stating the disruption these attacks have caused to shipping schedules.

According to an experienced operator in Djibouti, the index does not reflect the reality on the ground but is influenced by large shipping companies' frustrations with wait time. He was surprised to see Djibouti ports are ranked far lower than those in Berbera and Mogadishu, which have no more than two berths each, compared to Djibouti's over 18. Not more than two international ships call these ports in a month, a sharp contrast to close to 20 vessels waiting to berth only last week.

"Admittedly, Djibouti is confronted with issues mainly due to the security crisis in the Red Sea," said the operator. "It's on the receiving end of the Houthi attack on vessels from big countries."

According to Demsew Benti, communications director for the state-owned Ethiopian Shipping & Logistics, it is a "regional problem.”

Demsew noted that the increased use of the Enterprise's fleets has allowed continuous service without major disruptions. ESL has increased its unimodal freight services from 1.69 million tons last year to 2.5 million tons in the past 10 months. Its shipping services moved 3.5 million tons in the same period, a 600,000tn increase from the previous year.

“Things could have been bad if we didn’t own ships,” Benti noted.

Industry veterans like Daniel Zemichael, former president of the Ethiopian Freight Forwarders & Shipping Agents Association (EFFSAA), attributed the reduced efficiency to crowding empty containers due to decreased vessel traffic. He also cited new inefficiencies at the Doraleh multipurpose port and overall congestion as contributing factors.

“Some of the bureaucracy during transit likely contributed as well,” said Daniel.

Shipping companies are voicing their frustrations over the delays at Djibouti’s ports.

“Djibouti’s port delays are becoming untenable,” said a representative from a leading global shipping line. “Every extra hour our vessels spend in port translates to increased costs and disrupted schedules. We need to see tangible improvements soon, or we’ll be forced to reconsider our routes.”

Local businesses dependent on timely imports and exports echo this sentiment.

“The inefficiencies at the port are affecting our supply chain significantly,” said a local importer. “Delays lead to increased costs, which we pass on to consumers. It’s a vicious cycle that needs to be broken.”

For Dawit Wubhset, president of the freighters association, shifting customs procedures, a foreign currency crunch, security crises engulfing the Red Sea, and inadequate road infrastructure are key factors impacting the logistics corridor. He advocated for streamlined operations and better communications when customs procedures change to reduce costs.

Hibret Lemma, CEO of the Hawassa Industrial Park Investors Association, echoed the criticism over the lack of clearly communicated standard operating procedures (SOP) at Djibouti ports as a primary issue. The Association, which represents 22 textile and apparel manufacturers, has its members faced problems due to new minimum invoice conditions and recent shifts in clearance administration by the Ethiopian Customs Commission.

“Everything is time-sensitive,” Hibret said. “Even a few days have major financial implications.”

Hibret believes upgrading from manual to automated processes could improve the ports' efficiency.

Logistical constraints and the reported decline in performance at Djibouti’s ports call for comprehensive strategies to enhance efficiency. However, experts caution that such transformations require time and sustained commitment, and the current pace of reforms may not be sufficient to meet global shipping demands.

Assefa Hadis, a senior advisor at the Ministry of Transport & Logistics, stated the importance of exploring alternative port options to boost logistics facilitation for Ethiopia. The government’s plans include increased use of Berbera Port in Somaliland, which ranks 105th in the CPPI, and Lamu Port in Kenya, which was not included in the report due to insufficient port calls.

Despite these hurdles, there are glimpses of hope. Industry operators credit the recent introduction of digital technologies to streamlining customs procedures and cargo tracking systems as a positive step. These innovations promise to reduce waiting times and enhance transparency in port operations.

PUBLISHED ON Jun 11,2024 [ VOL 25 , NO 1258]

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