Ethiopia has diversified its import channels by turning to the Lamu Port in the context of reducing its dependence on the Djibouti harbour, amidst heightened tensions along the Red Sea that have impacted on the cost of global trade.
Addis Ababa recently announced its decision to utilise the Port of Lamu for the shipment of goods, signaling a pivotal shift that is expected to boost activities at Kenya’s second-largest port and breathe new life into the ambitious Lamu Port South Sudan Ethiopia Transport (LAPSSET) project.
In a bid to decrease reliance on Djibouti, Ethiopia, a primary importer through that port, has specified that Lamu Port will handle shipments of fertiliser and livestock.
Transport Minister Alemu Sime conveyed to the local media in Addis Ababa that the initial consignment of fertiliser is anticipated to arrive in Lamu in two months. Additionally, Ethiopia aims to leverage the same facility for livestock exports to the global market.
Minister Alemu stressed that this re-routing is a response to address both logistical and security concerns that have plagued the primary trade route through Djibouti, which relies on Red Sea waters.
Reports from Addis Fortune indicate a prevailing sentiment within the country that the reliance on Djibouti ports has been characterised by frequent regulatory changes and security issues, prompting the Ethiopian government to seek more cost-effective and reliable alternatives for imports and exports.
As global trade faces potential disruptions due to tensions along the Red Sea, Ethiopia’s move to diversify its port usage is seen as a prudent measure to mitigate delays and minimise costs.
The reliance on the Suez Canal, responsible for facilitating 30 percent of global container trade, now poses a risk of prolonged disruption, impacting shipping routes and causing delays in the transportation of goods.
The Lamu Port, originally envisioned as Kenya’s transshipment hub for cargo destined for neighbouring countries and Indian Ocean island nations, gains renewed significance with Ethiopia’s decision.
However, the current underperformance at the Lamu Port poses challenges for the LAPSSET Corridor project, which hinges on the vibrancy of business activities at the harbour.
While the Port of Durban remains the largest in Sub-Saharan Africa, the success of the LAPSSET project is vital for Kenya’s ambitions to establish a major transit route for goods bound for South Sudan and Ethiopia.
gandae@businessdayafrica.org