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Chinese car shipments touted as growth avenue for Djibouti port

Djibouti is a passing point for about a third of the world’s shipping traffic.

A Djibouti port part-owned by China Merchants Port plans to handle vehicle shipments from China and Europe as it chases other avenues of growth after meeting targets during its first year of operations.

The rapid growth of new business lines underlines why Chinese companies are scurrying to get a foot-in-the-door in the tiny northeast African nation, a passing point for about a third of the world’s shipping traffic. Businesses from the world’s second-biggest economy are involved in everything from rail to banking as part of China’s Belt and Road Initiative, which often uses debt to fund infrastructure and other projects.

The Doraleh Multi-Purpose Port also plans to extend its offering from mainly bulk importers, including fertilizer and wheat, with cargo destined for neighbouring Ethiopia to serve companies operating in the new Djibouti International Industrial Parks Operation, a sprawling manufacturing hub, said DMP’s commercial director, Habon Abdourahman Cher. It will seek to import raw materials and then handle exports from the interior, she said.

The port achieved 4.7 million deadweight tonnage, a measure of how much weight a ship can carry, in its first year, meeting its target for between 4 to 5 million tons, Director-General Wahib Daher Aden said. Richards Bay Coal Terminal in South Africa, the continent’s biggest shipper of the black fuel, has a design capacity of about 91 million tons a year.

“We think the second year of operations will achieve more than last year,” he said.

DMP’s container terminal, where four red cranes manufactured by Shanghai Zhenhua Heavy Industries hang overhead, is operating at almost 40% of capacity of 400 000 twenty-foot equivalent units annually, Habon said, referring to a standardized measurement for cargo containers. China Merchants owns 23.5% of Port de Djibouti SA, which operates DMP.

Even at the DIIPO manufacturing hub, the involvement of the Chinese is evident. The center is 30 percent owned by China Merchants Ports, 10% by China’s Port of Dalian Authority, and 60% by Great Horn Investment Holding, a wholly owned corporation of the Djibouti Ports and Free Zones Authority, Chairman Aboubaker Omar Hadi said.

The adjacent Doraleh Container Terminal — nationalised last year amid international arbitration in London with state-owned Dubai Ports World, which owned a third of the facility — also expects volumes to ramp up, said its director-general Abdillahi Adaweh Sigad. The government now fully owns DCT and it has since been renamed Société de Gestion du Terminal à conteneur de Doraleh.

The terminal expects to operate at 85% of capacity by the end of the year from 30% now by leveraging an international maritime slot- and vessel-sharing partnership with Ocean Alliance, Sigad said. The alliance includes China Ocean Shipping Co. and France’s CMA CGM.

© 2019 Bloomberg L.P
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