Rail demurrage suffocates exporters and importers | The journalist

EDR denounces freight delays that cost operations dearly

Exporters, importers and logistics companies are frustrated by the Ethio-Djibouti Railway’s (EDR) exorbitant demurrage charges for minor delays. As an alternative to rail transport, a significant number of companies are turning to trucking.

Currently, the railway company penalizes 32,000 birr per car if it is delayed for nine hours at the port of Djibouti or at Endode station, the departure point near Addis Ababa.

The penalty reaches up to 42,000 birr if a car is delayed for 12 hours. The billing rate also varies from customer to customer.

“After the wagon arrives in Djibouti or Endode, it takes a few hours before the cargo is unloaded. The penalty mounts very quickly. They want the containers to be unloaded immediately after the wagon arrives at its destination,” said an official from one of the major logistics companies in Ethiopia.

The manager says it is difficult to unload or load exactly when the car arrives. “There are also various issues that are delaying our operations.”

The penalty is double the cost of rail transport between Djibouti and Ethiopia. Shipping a 40ft container from Ethiopia to Djibouti costs 17,206 birr, while two 20ft containers cost 17,506 birr.

“The cost of rail transport between Ethiopia and Djibouti is cheaper than that of trucks. It’s also safer and faster. However, demurrage charges have become a big headache for us. We’ve been complaining to EDR for months,” said an exporter who spoke to The journalist on condition of anonymity. “But currently we have switched to using trucks.”

However, according to EDR officials, the source of the problem is mainly forwarding companies and freight owners.

“We have analyzed most of the causes of these complaints. But the source of complaints is usually the cargo owners themselves. There are tons of paperwork delaying our wagons in Ethiopia and Djibouti, including LCs, customs and other documentation processes,” a senior EDR official said.

The official says there are also challenges until the cargo arrives at the stations. “All of these challenges should not concern EDR. The central bank, customs commission, carriers, cargo owners and other stakeholders should perform their duties on time. The EDR cannot take responsibility for the ineffectiveness of other institutions.

A car must arrive according to the railway schedule. But exporters and importers usually don’t keep time. If a car is delayed even for an hour, it has a huge impact on the EDR, according to the official.

“The ships in Djibouti cannot wait for us. They always operate on a schedule. So when they miss our cargo, it’s a huge cost to EDR. That’s why we have to put pressure on shipowners to be precise. Otherwise, the whole system fails to interface with the sea shipping system. Our wagons take a maximum of 15 hours to reach Djibouti,” the official said.

As it is known when ships should pick up containers at the port of Djibouti, the official said, all customers are informed of the precise schedule in advance. “Land and sea schedules must be aligned. To avoid any delay, we must maintain a severe sanction for exporters and importers. »

On the other hand, cargo owners, central bank, customs and other stakeholders accuse each other. Of course, freight owners do not know or undertake the background of the import-export process since they outsource the task to freight forwarders.

Most Ethiopian import/export companies outsource almost all tasks to freight forwarders, who finalize everything from paperwork to delivering the cargo.

Just as Ethiopian exporters and importers are represented by Ethiopian forwarders, there are counter forwarders on the Djiboutian side. Ethiopian freight forwarders usually email or phone their Djiboutian counterparts to tell them that they have shipped goods from Ethiopia and vice versa.

However, Ethiopian freight forwarders have no control as it is difficult to find information regarding the process in Djibouti, which also contributes to delays.