The Ethiopian Shipping and Logistics Services Enterprise (ESLSE) announced that it is working to manage the containerized consignment challenges under short and mid term plans. Half a billion birr worth of new containers have been procured.
It said that most of the staked containers at China will be eased by the third week of August.
It had stated that the world does not have enough containers in the right places to handle cargo demand which also imposes pressure on Ethiopian coming cargos.
The logistics giant that is in challenges on the global phenomenon of cargo boxes shortage stated that meanwhile the problem is still not easing on ESLSE, it has enabled to ship 150,000 containerized cargos in the 2020/21 budget year that ended on July 7. The plan was to handle 170,000 boxed cargos in the period.
In relation with the global pandemic, COVID 19, economic slowdown had engulfed the logistics sector. Moreover, containers being stranded in different destination globally fueled to the fire as it created shortage for operators including ESLSE. Similarly container freight rates price spiked by triple.
Spikes of consignment fleets from China to the US and northern Europe following the slowdown of the pandemic was stated as fueling the situation further more.
According to ESLSE, the season mainly July and August is the peak period for global trade that has also impacted the circumstance.
On its announcement the sole multimodal operators, ESLSE disclosed that in connection with the stated challenges boxes including Ethiopian clients have stayed at different Chinese ports for long that affects customers business.
It said at least 13,000 empty boxes should be required for transporting Ethiopian cargos that is stacked in China ports.
ESLSE has now designed a short and medium terms solution to move the cargos within the coming six weeks.
Roba Megersa, CEO of ESLSE, says that his enterprise has negotiated with CMA-CGM and MSC, French and an Italian-Swiss international shipping lines respectively, to clear container backlogs located in China, “the deal includes moving new bookings.”
He told Capital that ESLSE has also repositioned its four vessels to ports in China for fleeting at least 1,000 containers each on a single voyage. “We have made available containers on leasing and procurement arrangement to ease the delay consignment,” he added.
On the other hand, ESLSE is also working to lift the cargos located on South East Asia ports mainly in Thailand and Indonesia via leased spaces on other operators.
“Commodities like edible oil, handbook and other holiday goods will be transported on this arrangement before the end of August. On these strategies we would enable to move totally 15,000 containerized cargos in the stated period,” Roba explained.
New boxes
ESLSE is currently looking to buy more boxes to solve the challenge that is expected tom be prolonged for more years on the mid term strategy.
According to the CEO, chaos in global shortage of shipping container may continue in the coming two years, “Shipping companies will also continue on procuring new boxes since existed containers are not timely positioned.”
“Accessing empty containers from logistics market has become very strange,” he added by explaining that it makes the container freight rate to skyrocket.
He said that for instance the spot market for the fleeting of 40 feet container from China to Europe is now USD 20, 000. However the price of freight spikes and the demand for cargo has never shown reduction.
He justified that because of the continuing cargo demand that is not supported by making available the existed empty containers shipping line would need more boxes that will be filled by procured containers.
“On this spot market rate it could be difficult for the Red Sea to compete with others,” he added.
On the current spot market shipping companies are charging USD 11,000 per container for consignment to the Red Sea from China. “If we buy containers and at the same time transport cargos to our destination it would make us profitable. At the same time, we shall have additional containers,” Roba says, adding, “when it is also compared with the current rates of leasing space on other companies; transporting cargos with our new containers would make us profitable, due to that we are working to buy more containers.”
Under the revised strategy, ESLSE has targeted to own 10,000 containers, “if our boxes are increased we shall assign our vessels to lift cargos that would be congested in different ports.”
He revealed that at least ESLSE may have more voyages on ports to China when the number of owned containers increased like what it is doing now.
Weeks ago the logistics giant has procured 1,000 twenty foot equivalent units (TEUs) and 2,000 forty feet containers on swift approach following the failure of frequent attempt to buy the box for the past over a year on formal bidding processes.
The new procurement expands the number of ESLSE’s owned containers almost to double.
Before the latest, adding ESLSE had about 2,940 containers with two common sizes of TEU or forty feet; of which 2,398 TEUs, 184 forty feet high cube (HCs) and 358 forty feet general purpose (GPs) containers.
Wondimu Dembu, Deputy CEO for Corporate Service at ESLSE, said that as per the feasibility assessment the current swift procurement has been conducted to mitigate the chaos and accelerate the operation and profitability besides owning additional boxes.
“As per the feasibility assessment the procurement cost will be fully covered with a single containerized cargo shipment from the place where new boxes are available to Djibouti,” he told Capital.
“According to our evaluation, rather than using leased containers on the current rate buying and making operational owned containers shall make more profit. Due to that we have taken the fast decision,” the Deputy CEO for Corporate Service elaborated.
He said that from the short listed suppliers’ one of the top three containers manufacturers in the world CXIC Group Containers Co., Ltd of Changzhou based Chinese firm is selected to supply 3,000 containers within a month time. When the deal was sealed 72 TEUs have been already produced, while the company has a capacity to produce one boxes per 90 minutes. “Some of the boxes are getting in to the operation and others will follow the path,” Wondimu added.
China is popular on its container and vessel industry and most of the container manufacturers are located on major port areas like Shenzhen, which is one of the main ports that Ethiopian cargos are lifted.
Different reports indicated that Chinese companies currently top the list of the biggest shipping container manufacturers. They take up 85 percent of the world’s total production of shipping containers.
For the procurement of the stated amount of containers ESLSE has allocated almost half a billion birr.
Wondimu said that the enterprise has also floated a fresh tender to buy another 3,000 containers on the way to attain its previous plan.
“The latest bidding process is for the continuation of failed bid that was on the way for a year time,” he explained.
This time around ESLSE has targeted to buy additional 1,120 TEU and 1,880 forty feet containers.