Multi-modal freight is becoming increasingly popular, seen as an efficient means to enhance trade with landlocked countries across continents. It has been found to increase efficiency and decrease costs when compared to traditional transport. It is optimal for countries such as Djibouti that offer vital trade links from seaports to landlocked countries through rail, road and air links.
Situated on the Horn of Africa at the entrance of the Red Sea on the Bab Al Mandab Strait, Djibouti is transforming into a major trade centre. With seven ports, it handles imports from Asia and Europe, and exports from East Africa and beyond. The development of new links from neighbouring Ethiopia supports Djibouti’s aim to enhance its multi-modal freight capabilities. The sector is being further improved through the development of new airports and freight flight routes, both by Air Djibouti and partner airlines.
A 2020 study by Research and Markets revealed that multi-modal transport can increase port efficiency by 30%, reduce damage to cargo by 10%, transport costs by 20% and motorway congestion by more than 50%. It can also help to lower emissions. The development of Djibouti’s sea-air freight industry is expected to boost investor interest in trade through Djibouti’s ports.
Multi-Modal Freight
Air Djibouti signed a memorandum of understanding with the International Djibouti Industrial Park Operation and Ethiopian Airlines in March 2022 to develop the region’s multi-modal transport, with a focus on sea air. Cargo will be transported from China to the Djibouti Free Zone by sea to be transferred to other African destinations via Djibouti-Ambouli International Airport using Ethiopian Airlines’ existing network.
Most Ethiopia-bound trade from Asia enters Africa through Djibouti’s seaport, with between 90% and 95% of Ethiopia’s total imports coming through Djibouti. Ethiopian Airlines has prior experience in sea-air freight through its operations in Dubai, experience that will be beneficial for the new partnership with Djibouti.
China and Africa have become major trade partners in recent years, bilaterally trading $254bn in 2021. Africa’s population of 1.4bn as of December 2022 provides China with an important export market. The development of sea-air freight in Djibouti compliments investment from China in the country’s road and rail networks as part of its Belt and Road initiative. Between 2008 and 2020 China invested at least $15bn in Djibouti, mainly in port, airport, rail and digital infrastructure.
The of sea-air connectivity has helped to deepen ties between the two East African countries, which have worked together to establish several major transport infrastructure projects. The Addis Ababa–Djibouti Railway and highway linking the two countries, part of the Ethiopia-Djibouti Transport Corridor Project, saw participation from both governments to boost trade.
Better Connectivity
The Ethiopian government has highlighted transport and logistics as a strategic sector for development. In its 10-year transport sector development strategy, the authorities have planned several road and rail projects. Ethiopia plans to invest $58bn in the sector over the next decade. In 2022 the Ethiopian Roads Authority announced plans to construct an additional 10,000 km of road for $80bn, to add to its existing 144,000-km network of roads. The development of Ethiopia’s roads and railways will enhance Djibouti’s connectivity to the rest of East Africa, including several landlocked countries.
The agreement between the two governments will lay the groundwork for developing more sea-air freight links in the future, supported by the construction of new airports in Djibouti and port expansion projects that are currently under way. As part of Djibouti Vision 2035, the government approved the construction of two new international airports in the country, at a combined cost of $599m. The $590m Doraleh Multipurpose Port, close to Djibouti City, will also help to further develop the country’s reputation as an international trade centre with multi-modal freight capabilities.
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