Djibouti Disputes World Bank Port Ranking, Cites External Factors

Jun 22 , 2024. By MUNIR SHEMSU ( FORTUNE STAFF WRITER )

Djibouti officials have raised objections over what they describe as "inconsistencies" in the evaluation metrics used in the World Bank's recent port ranking. Out of 405 ports, Djibouti's ports dropped from 26th place last year to 379th this year. The officials expressed immediate discontent upon the report's release, prompting high-level discussions with the ranking team.

Nicolas Peltier-Thiberg, global director of transport of the World Bank, met with Ilyas M. Dawleh, minister of Economy & Finance, and Aboubaker Omar Hadi, president of the Djibouti Port & Free Zones Authority, last week. The delegation inspected container handling facilities at the ports, with plans for further technical exchanges scheduled for September.

Ilyas reiterated Djibouti's official disagreement with the recent rankings, particularly criticising the inclusion of the marine Automatic Identification System (AIS) as a relevant factor in evaluating port performance. He said that Djibouti's ports maintain high levels of productivity, effectiveness, and efficiency comparable to top global ports.

"We hope the CPPI index team will acknowledge scientifically proven errors and mistakes," he said.

The World Bank acknowledged the discussions with Djibouti officials, attributing the decline "largely to external factors independent of the port." These factors include security concerns in the Red Sea due to missile attacks at the Bab-el-Mandeb strait and increased authorization procedures since last year.

"This decline should be interpreted cautiously," the World Bank's statement noted.

The Container Port Performance Index (CPPI), jointly produced with S&P Global Market Intelligence, showed East and Southeast Asian ports dominating the top 20 positions, with Somaliland's Berbera Port ranked 103rd overall despite its smaller size.

Amid global disruptions to ocean freight supply chains, attributed to conflicts in the Red Sea, port congestion, and anticipatory import activities ahead of peak seasons, shipping analytics platforms like Oslo-based Xeneta forecasted spot rates nearing levels seen during the COVID-19 pandemic.

The World Bank underscored Djibouti's ports as crucial logistics hubs in Africa, pivotal for regional and economic development, especially for Ethiopia. Ethiopia heavily relies on these ports, which facilitated the transit of 95pc of its 7.6 million tons of goods in the first half of the year. Djibouti has served as the primary gateway for goods since its conflict with Eritrea began in 1998.

While Ethiopia aims to diversify its sea access, including through agreements with Somaliland to rent Berbera Port and exploring options like Kenya's Port Lamu, Djibouti remains the closest and most cost-effective choice. While there are attempts to invest in other ports, Ethiopia and Djibouti continue to negotiate updates to their longstanding protocol agreement to accommodate developments in the logistics sector.

PUBLISHED ON Jun 22,2024 [ VOL 25 , NO 1260]

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