Saturday 13 April 2024
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Ethiopia: longer waiting times for coffee exports due to attacks in the Red Sea

The conundrum is the result of decisions from global shipping giants to route their vessels around the Cape of Good Hope rather than through the shorter but more dangerous Suez Canal. Danish Maersk, the French CMA CGM, and German Hapag-Lloyd are among those who have opted for the longer but safer route since December 2023

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Coffee exporters from Ethiopia are forced to endure months-long waiting times to ship their products abroad as Houthi strikes continue to choke the Red Sea. The logistical hurdles are accompanied by chaos in the domestic coffee supply chain as the result of a recently introduced ‘vertical integration’ scheme and the central bank’s cap on bank credit growth. Below, the article published in the Reporter.

The dilemma of Ethiopian exporters

The exporters are considering a shift to Kenya’s Mombasa port as a solution, but the negative effects of the logistical problems have already entrenched themselves in the industry.

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“Before, at least one vessel used to arrive in Djibouti daily,” Tameru Tadesse, the owner and general manager of a coffee export firm, told The Reporter. “Since the start of the insecurity on the Red Sea, it has been one vessel a month. We try not to miss this single vessel and our coffee is stranded in Djibouti.”

The conundrum is the result of decisions from global shipping giants to route their vessels around the Cape of Good Hope rather than through the shorter but more dangerous Suez Canal. Danish Maersk, the French CMA CGM, and German Hapag-Lloyd are among those who have opted for the longer but safer route since December 2023.

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“We are trying to ship the coffee via Mombasa, but it is far and there are also issues with vehicles on the Mombasa route,” said Tameru, whose company’s biggest clients are in China, Japan, and other Asian markets.

Alternative ports such as Mogadishu are also off the table due to tensions between Ethiopia and Somalia, say exporters.

The logistical hurdles are accompanied by chaos in the domestic coffee supply chain as the result of a recently introduced ‘vertical integration’ scheme and the central bank’s cap on bank credit growth.

“Exporters and suppliers take coffee from growers on credit. These growers and suppliers have delivered coffee to exporters on credit, but aren’t being paid. Countless growers and suppliers are stranded without their money or their coffee,” Hussein Ambo (PhD), president of the Ethiopian Coffee Association, told The Reporter.

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