Pandemic-induced container shortage pressures freight rates in Ethiopia

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The Ethiopian Shipping and Logistics Services Enterprise (ESLSE) has disclosed that the global shortage of shipping containers, primarily caused by the Covid-19 pandemic and that of the three million containers stranded in different destinations have led to 15% gap in global shipping lines business.

Roba Megersa, CEO of ESLSE told Ethio Trade and Investment Forum radio show that because of the stranded containers shipping and container prices were skyrocketed.

The shortage pushed price of containers to 400,000 Birr from the previous rate ranging from 100,000 to 150,000 Birr, Roba said.

“In a bid to reduce the impacts of container shortages, the Enterprise has increased its tariffs of containers for customers drastically,” he added.

Previously, the Enterprise has implemented a scheme to handle containerized cargos. “But that scheme is not effective and ESLSE is forced to implement a price increment,” Roba said.

“Ethiopia is paying $50 million penalty payment annually due to customers failure to return containers on time,” Roba said, adding, “Our price increment measurement is therefore implemented to cut such expenses.”

Customers have developed a habit of using containers as warehouses, according to Roba. “To solve the problem, construction of warehouses is underway at dry ports,” he said.

As collateral for containers, the Enterprise is requesting customers to pay 100,000 Birr for 20-foot containers and 200,000 Birr for 40-foot containers.

For perishable goods carrying refrigerated containers, clients are expected to pay 120,000 Birr for 20-foot, and 240,000 Birr for 40-foot containers.

Roba further explained that the Enterprise is providing transportation services at a competitive price, which has a 24% discount compared to the global rate.

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