Revitalizing the Horn’s logistics

Société de Gestion du Terminal à conteneurs de Doraleh (SGTD), is the operator of East Africa’s most modern and advanced container Terminal, a leader in regional trade and supply chain management. Launched in 2009, it is one of the largest port infrastructure projects undertaken by the Djibouti Ports and Free Zones Authority (DPFZA).
Located in the Republic of Djibouti, at the entrance to the Red Sea and on the second busiest shipping lane in the world, the Doraleh Terminal is a regional hub thanks to its unique presence at the heart of global container traffic.
The Terminal’s unique geographical position at the crossroads of three continents offers access to ports and cities around the world (Africa, North America, Asia, Europe, Middle East), and allows an exceptional opening to the markets of East Africa, bringing together more than 250 million inhabitants.
As SGTD continues to revitalize the Horn’s logistics, Capital met with the firm’s CEO, Abdillahi Adaweh Sigad, during his recent visit to Ethiopia for candid insights on the progress realized thus far, the ripple benefits to its Ethiopian customers amongst other logistical operation queries. Excerpts;

 

Capital: How are the operations in the port ferrying on? Is there any development improvements set to bolster the operation in the near future?

Abdillahi Adaweh Sigad: As the operator of East Africa’s most modern and advanced container Terminal, and a leader in regional trade and supply chain management, I would say that our operations are growing from strength to strength.
An attribute to our strengths of course stem from multiple effective services including that of our marine service which includes international and Ethiopian service. Our operations are running smoothly since we are well equipped in terms of equipment like tugboats and others. Complementary to our success is also due to our well dedicated team that works for Djibouti Marine Service. As a result our performances have registered positive results over the years.
When we trickle down to infrastructure, the key at the port consumed the majority of investment at the facility and currently we are well on our way to berth any sized vessel in the world at our port. Our chain of machinery such as Sea to shore (STS) cranes are currently eight and are due to be enhanced by additional next generation four STS cranes which are coming in May and that will be fully operational in September 2023.
The other performance of expansion is registered at the yard. We have cranes for charging and discharged at the yard. Besides eight TST cranes, we have 30 RTG and 80 internal tracks in the yard for moving the containers.
Beyond that, we have leveraged the power of technology to run our operations as the highest level of efficiency possible. We have a strong IT and terminal operating system which simplifies our day to day job.

(Photo: Anteneh Aklilu)

As you know, a vessel can be analogized as a small town, since is carries about 10,000 to 14,000 or more containers. So all these data points are well registered in the system allowing us to know what is to be discharged from the vessels.
So for instance when a vessel comes in containing ten thousand containers, with an average like 1000 being ours, we are easily able to identify and discharge ours, and at the other end since our customers also have relevant documents they are able to stay updated and are liberty to easily pick their cargos.
As mentioned earlier, similarly, the internal trucks, RTG, and STS are all connected to the terminal operating system. So there is a central chain of command and we are able to seamlessly plan and organize our data and send the instruction to the system. As a result, people on the ground can follow through with their small devices and know or have a clear idea of where the shipment is and what and when to take it.
This terminal operating system is the reason why we can handle this number of containers. And we know exactly where your container is because in the yard we have a virtual addressing system.
Besides the mechanical logistic element, as I previously stated, we have skilled human resource that are in charge of this organization, 1300 staff to be exact. Of the total, about 800 are permanent and 500 are temporary staffs who aid in the smoothness f the activity. This number of course will grow with time as our operations continue to expand.
In the last 4.5 years, SGTD has been managed by Djibouti Ports and Free Zones Authority and as a result its performance has improved. In contrast to years prior, SGTD’s performance has rocketed by more than 30 percent.

Capital: What led to such positive improvements? Can you attribute these growths from progress in the transshipment wing?

Abdillahi Adaweh Sigad: Performance efficiencies are actually not based on the volume. Transshipment brings volume and not performance.
For instance, our transshipment was quite high in 2019 and 2020 then with the COVID crisis hit and we ended up losing some transshipment. We also had a major customer called PIL, which faced difficulty which then led to volume reduction.
But since last July, we are starting to see gains in volume. But the commercial efficiency is just efficiency of whatever you have big or small, it is pegged on the service delivery aspect.
The 30 percent increase in efficiency is attributed to our capacity growths. In particular to our Ethiopian customers we would like to convey that we are bringing in more capacity to serve them. We have increased the storage capacity by 20 percent at the new yard coupled with the commissioning of more key cranes will catalyze our efficiency. The combinations of the two assets will increase the capacity of the terminal overall.
So the measure transformation is the new 20 percent level of yard capacity and almost 50 percent crane capacity. So with this two capacities, storage capacity and key operation capacity by the yard will enable the terminal to double its capacity.

Capital: What are the pocket costs of the new four cranes and yard expansion?

Abdillahi Adaweh Sigad: It’s about 44 million dollars for the crane and an additional 30 million dollars for the yard expansion, which makes its 74 million dollars in total.
The four new incoming cranes are now on the assembling stage and we have so far paid 75 percent.

Capital: At what level of capacity is the operation running at the moment?

(Photo: Anteneh Aklilu)

Abdillahi Adaweh Sigad: Up to now we are limited to vessels of up to 15,000 TEU. But with the coming of STS cranes it can accommodate any vessel of up to 23,000 containers which is the maximum level of accommodation existent in the world today. As per the expansion, we then shall be able to accommodate a vessel like a size of Malaccamax.

Capital: How many vessels can you handle per month?

Abdillahi Adaweh Sigad: The Doraleh Container Terminal Management Company can handle from 35 to 40 vessels of any size per month and 60,000 containers.

Capital: What is the main purpose of your visit to Ethiopia?

Abdillahi Adaweh Sigad: We came to inform our Ethiopian customers on first hand basis that we have indeed increased and transformed the SGTD capacity and performance in both storage and yard capacity by 20 percent handling.
As you know, the performance of the port has been recognized by the World Bank with a high score rating. Of course there are no doubts on our performance whatsoever but since our operations are customer centric we came to inform our customers of the progress made and the opportunities thereof.
We have also been awarded the European Quality Award in December 2022 by the European Society Quality Research for our quality standards like management system, service and safety.
Now I want to disclose that in connection with the new expansion, Ethiopian customers will be able to contract any sized vessel for their incoming cargo.
Our berth is already enough to harbor any size vessel but our crane, the eight that we have are limited for vessels up to 15,000. This new coming cranes will allow us to overcome the challenges in terms of handling huge vessels with 23,000 containers.
So we are ready for any surge of course for transshipment but also to accommodate any transit volume which comes from Ethiopia and from the region.

Capital: What was the main reason behind the expansion of your capacity at this level?

Abdillahi Adaweh Sigad: We need to increase our market share on transshipment and transshipment is a huge business as you may well know. Expansion is also crucial since the priority in our region is growing and as a result we have to be ready for the growing demand.
Having the ability to accommodate these colossal vessels will actually make the freights cheaper since they are accommodated in one big vessel which is quite beneficial to any customer in the long run.
So it’s something that our customer especially Ethiopian shipping lines are encouraging us to bring in more transshipment because they shall negotiate better with carriers.
This investment on capacity increase was decided on 2018-2019 when Djibouti took over the control of the port. And we didn’t stop during the period of turbulence like COVID and regional crisis but it is a long terms vision.
Of course financially we have to struggle a little bit more with that situation but now we are quite happy and positive that we made it happen.

Capital: Numerous crises are decreasing shipment in the world including the pandemic and Ukraine-Russia War. How fast do you think you can recover your investment?

Abdillahi Adaweh Sigad: This type of investment will be recovered within let’s say 10 years usually or more. But accommodating enough activity to make that recovery run is integral to our operations. So we have hope in the local and regional situations and their improvements will also boost our recovery.
Similarly, we are putting in a lot of effort to convince transshipment companies to use Djibouti port.

(Photo: Anteneh Aklilu)

Previously, they argued that we don’t have the crane capacity. Nonetheless, they proceeded to agree to work with us based on our good performance. But they critiqued that they weren’t able to send some vessels because of our in capability to accommodate them.
So since last September, we started making what we call the road-show or commercial tour all over the world to attract them to our port of which whom most the top 10 shipping line due in fact call on our port for work.
So we have the contract. When the new cranes come in to surge our capacity handling capabilities it will be a great boost to our work. We are quite confident that we will see some volume improvement towards the end of 2023 but the main real impact will come in 2024. Because the equipment will be fully in service in September and shipping companies need about six months to adjust their line.
Cognizant of this, we approached them to be ready from November that is almost a year before and we see already that some transshipment in small modest volumes is coming. They also send some big vessel to test us which is quite conclusive. We need to think what is the regional opportunity? And I think we have to serve better and better. We have the capacity, thus we need to bring more regional and international volumes for a sustained benefit.

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