Djibouti: Tiny State, Massive Status

Djibouti: Tiny State, Massive Status

When Djibouti gained its independence in 1977, no one thought the tiny African state would last. 40 years later, Djibouti is a geopolitical powerhouse.

Alright, Djibouti isn’t quite a household name, we admit that, but its status is steadily growing. Djibouti, a country about the size of Wales, has a population of 900000 and is sandwiched between Eritrea, Ethiopia and Somalia. It looks out to Yemen, between them lies the 20 miles wide Bab-el-Mandeb Strait, a vital shipping lane that connects the Red Sea and the Gulf of Aden. It is this geography which has defined Djibouti.

In recent history, the former French colony has been exploited for military strategy. The United States has Camp Lemonnier, an overseas military base, in the country’s capital, Djibouti City. Originally a French air base, the camp is attached to the Djibouti-Ambouli International Airport. The US took control in 2002 to operate drone strikes for its post-September 11 counterterror efforts. The US was attracted to Djibouti because of its access to high terror areas like the Middle East.

There are similarities between modern Djibouti and 1940s Casablanca, due to foreign military activity. Lemonnier accommodates French and German troops and Japan has its only overseas base in Djibouti, established to combat piracy threats to commercial ships off the coast of Somalia. Nevertheless, the Americans have the biggest military presence in Djibouti.

Well, at least they did because China’s building a new naval base just a few miles from Lemonnier.

China wants to be a global superpower and is strengthening its military. Beijing is predicted to spend US$232 billion on its forces come 2020, that’s more than all western countries put together. This overseas base is a first for the People’s Republic and marks its international growth.

China has cited anti-piracy operations as motivation for the new base. The Gulf of Aden is a notable piracy hotspot but hijacking in the area has been relatively dormant for the last five years. So the new base has the US concerned.

For some time China and the US have been strategic rivals. Both have an arsenal of intercontinental nuclear missiles, both snoop on one another with satellites and, occasionally, both face off in contested waters. But the two have always kept a good distance, however, this is too close for comfort for the US, who believe China can take a good look at its counterterror operations.

But, China has genuine trade interests. The Port of Djibouti has significance in the ‘One Belt, One Road’ project. The project defines the Chinese economic offensive to control international trade using East/West shipping lanes, so Djibouti is of strategic importance. China’s connectivity scheme develops key infrastructure through Myanmar, Sri Lanka and Greece. The plans will use the ever-expanding and state funded Cosco Line to export Chinese made goods through Asia, Africa and Europe.

China’s new naval base can help manage the belt’s operations. The Horn of Africa is renowned for piracy and, even if the situation has quietened over the past years, China needs a strong protection force for the project to be a success.

This seems like the same old story for Djibouti. But, it’s not just a new base the People’s Republic is building.

There has been a remarkable investment into Djibouti’s logistical capabilities. Beijing has invested US$3.5 billion in a ‘Free Trade Zone’ in Djibouti City. Currently, the Port of Djibouti is used for transhipment and refuelling but the investment by the state backed China Merchant Holdings is set to realise Djibouti’s potential. A new container terminal and a multi-purpose terminal alongside new stacking yards will revitalise the port.

With the new electric railway connecting Djibouti City to the Ethiopian capital, Addis Ababa (again, built by Chinese state owned companies) the Port of Djibouti could become a gateway for Eastern Africa and extend the belt’s reach.

Furthermore, Chinese investment extends to new fuel pipes, new water pipes and 2 airport proposals with a new high tech hospital already financed and constructed.

China has additionally considered mediating the Dumeira border dispute between neighbours, Eritrea and Djibouti. Both claim the Dumeira Islands and tensions have recently escalated with heightened patrols at the border. Qatar originally had peacekeeping responsibilities but pulled out as it entered a diplomatic crisis of its own.

China’s interest in the dispute is for its own good. Historic instability has plagued many states along the belt and if tensions continue to fluctuate there will be damages to China’s trade initiative. These investments are supposed to cement diplomatic relations so Eurasian trade prospers.

So, why should America be concerned? Well, they’ve had a tough time in Djibouti. The US has never had good public relations in Djibouti. US troops are prohibited from leaving Lemonnier and many locals wonder why as there’s no pressing threat to American safety.

Drones have also caused a nuisance, some have crashed into local neighbourhoods and Djiboutian air traffic controllers have rejected them from taking off or landing out of resentment. In response, the US paid to retrain the controllers but many refused to attend lessons and American teachers were locked outside the control tower.

The US has tried to make up some public relations by providing free dental care for Djiboutians but this is nothing compared to what the Chinese promise. The US pays a whopping US$70 million a year for Lemonnier and that’s incentive for the Djiboutian government. Lemonnier is easy income but the Djiboutians may start to favour the Chinese considering the new crops of investment.

But the US shouldn’t be too concerned because Djibouti needs all it can get. With a mostly arid climate, there is very little Djibouti is able to accommodate yet its GDP has steadily risen since 2002 thanks to Lemonnier, and it should expect more of the same.

Djibouti will see its GDP grow thanks to Chinese investment and China will to see its trade prosper thanks, in part, to Djibouti. And the US? It will see all this happening from the front row.

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Destination to Watch: Myanmar

Destination to Watch: Myanmar

Myanmar (Burma) is a name increasingly appearing in our booking systems. After 50 years of isolation, the recent surge in interest has stirred our creative team to investigate the new ‘destination to watch’.


The country’s economy is mainly supported by the agricultural production of rice. Rice farms span over 60% of the country’s total land area. But this fast developing country is catching up on decades of underdevelopment. The business opportunities are becoming vast and the country is becoming a key centre for resources.

90% of the world’s Rubies originate in Myanmar, prized for their purity and hue, with neighbouring Thailand buying the majority of the countries gems. The mountainous Mogok area, boasts “the valley of rubies” and visitors are able to gaze on the rare pigeon’s blood rubies and blue sapphires.

Thailand is not the only country benefiting from Myanmar’s growth as China and India have both formed strong bonds. Leading businesses are already operating in Myanmar for various sectors, including oil and gas exploration, IT, hydro power and port/building construction.

The new Silk Road development is expected to open trade doors for countless countries and Myanmar too is set to feature. The city of Mandalay will become part of the route stretching from Kunming to Kolkata, running through China, Myanmar, Bangladesh and India.

With renewable energy and our planets future becoming more and more prominent in policy and politics, Myanmar faces some major energy challenges. It has one of the lowest electrification rates in the world – only a third of the population have access to affordable and reliable electricity. With the world turning to technology more and more, it’s expected that the demand/need for electricity is said to increase by 700% by 2030.

Currently, 70% of Myanmar’s domestic energy is generated by hydro-power, as amazing as this is, it can be problematic due to unpredictable weather. The government is planning on adding more diverse types of energy to the country but have said that they will keep renewable energy as their priority. Solar and wind energy are great potential sources of energy for the developing country. With large scale infrastructure naturally comes opportunities for transportation companies. Huge, specialised equipment needed in infrastructure projects will require transportation especially as much of the investment is external.

Some of the key benefits for UK business exporting to Burma include:

  • strong historical and trading links with the UK with a recognition of British brands
  • increasing demand for products, equipment and services resulting from incoming foreign investment and a growing middle class
  • strong economic growth to date and positive future forecasts
  • Potential strengths of the Burma market:
  • access to 40% of the world’s population living in bordering countries
  • abundant natural resources
  • commitment to political and economic reform with strong international donor backing
  • proven agricultural capacity

With all this to consider perhaps we can expect many more bookings to Myanmar over the coming years.

 

Need help with your global exports?

Contact our shipping agents for all LCL/ FCL and Project Cargo queries. We’ll be happy to help.

Port Salford Expansion

Port Salford Expansion

2017 may be the start of an exciting time for North West as the completion of the Salford Port expansion looks to restore the Manchester Ship Canal to its former glory.


In January 1894 the notorious Manchester ship canal opened; a river system expanding 36 miles, following the route of 7 different rivers. The canal originates at the Mersey estuary and travels to Salford Quays. In its time it was the largest river navigation canal in the world helping the Port of Manchester to become Britain’s third busiest port, despite the city being 40 miles inland.

 

7 Different Rivers

  • River Bollin
  • Glaze Brook
  • River Mersey
  • River Irwell
  • Bridgewater Canal
  • Shropshire Union Canal
  • Weaver Navigation
Over time however traffic passing through the canal declined as ships grew too large and the docks at Salford closed. But now it looks as though the historic river system has been given a new lease of life thanks to Peel Ports, who are in the midst of £138 million regeneration project.
The plans include huge redevelopment to the canal and surrounding area, with long term aims to boost capacity at the Port of Salford from 8,000 containers a year to 100,000 by 2030.

 

Peel Ports plan to expand the Port Salford creating an inland port facility on the Barton Strategic Site next to to the Manchester ship canal. Blue prints show a distribution facility with around 50,569 sq. ft. of warehouse space, 10,118 sq. ft. office space, including 81 car parking spaces and 16 trailer parking spaces.

The development sits within peel ports £50 billion ‘Atlantic gateway’ vision combing operations at the Port of Liverpool with the Manchester Ship canal to combat road congestion. The new Salford port expansion will be the UK’s first inland tin modal port facility and distribution park with terminal operations set to commence at the end of 2017.

 

Some more news you may be interested in…

Breaking Bad? The Story of Alang Ship Breaking Yards

Breaking Bad? The Story of Alang Ship Breaking Yards

As overcapacity plays havoc with the shipping industry, a record number of ships have been sent to scrap this year at ship breaking yards around the globe.

With many industry experts suggesting that ship recycling is a reluctant solution to industry woes, we take a closer look at ‘the world’s biggest ship graveyard’, Alang Ship breaking yard, India.


Where’d all the ships go?

On the search for economies of scale Maersk began building mega ships capable of handling greater capacity. With shipbuilding taking years and orders to honour from the glory days of growing global trade, the industry is now suffering large scale overcapacity, with the global idle fleet standing at 7.6% in October, an all-time high.

Subsequently freight rates have plummeted, hammering profits and even causing the collapse of the 7th biggest shipping line in the world. But even with Hanjin’s demise and idle box ship fleet at an all-time high the problem still remains. Shipping is in dire straits and the industry is hurting.

So how do you solve overcapacity? Re-balance the books. If there’s a slump in demand? Reduce the supply. Enter Alang, the world’s ship breaking capital.

Alang Shipbreaking Yard

The six mile stretch of land was once one of the poorest areas of India. Now at least 200 ships stand on the beach waiting to be dismantled by shipbreaking workers.

It takes anything from 2 weeks to a year to complete an entire ship, bringing in around a million dollars in steel alone. 2016 has seen a ship scrapping bonanza, with almost 147 vessels, around 507,000 TEU sent to ship breaking yards this year to date.

Working Conditions

Alang has been thrust into the spotlight recently after Maersk once again defended its controversial use of the regions shipbreaking yards.

It’s no secret that working conditions and safety measures on the beaches of Alang are some of the worst in the world, with over 50 people losing their lives since 2010, and some claiming that many deaths go unreported.

Alang Shipbreaking Yard

With high turnovers of largely migrant workers and uncooperative yard owners it has been difficult to establish any regulatory measures in the industry.

So considering Maersk’s stance on sustainability, it’s understandable why the news raised industry eyebrows. In May the company announced their commitment to more responsible recycling options with the delivery of the first two vessels to Shree Ram, a Hong Kong Convention approved facility in Alang.

But recent reports of a blast at Pakistan’s Gaddani shipyard, in which 20 workers lost their lives and over 100 workers suffered injuries, has once again posed the question how safe, responsible and ethical is the ship recycling industry?

Change to come?

This month the Indian Ministry of Shipping announced $1.5 million investment to support capacity building and safety training of the 20,000 workers based in Alang. But even with positive steps to improve working conditions the environmental impacts of ship breaking along the coast of Alang are undeniable.

Ship breaking releases harmful and dangerous pollutants into the coastal waters and surrounding sea bed, having a catastrophic effects on local marine life. In fact ship recycling is one of the most polluting industries in the world.

These hard facts make the sustainable initiatives celebrated by the world’s biggest carriers and their new super-efficient vessels all too ironic. When we build these new ships do we just brush Alang under the carpet? Dumping on those less armed to deal with our waste? Out of sight out of mind? Or is the ship breaking industry a much needed lifeline to developing regions that without it would starve?

It’s a question with a thousand responses. But the more the ship breaking industry faces such scrutiny, the harder it is to hide from the changes that have to come.


Find more industry viewpoints on our blog below…

Finance for Forwarders?

UK Export Finance has pledged support to exporters and supply chain SMEs by accessing finance through their banks.

Liverpool2 in Numbers

Liverpool2 in Numbers

The 4th November was a landmark day for the city of Liverpool as Peel Ports’ £400 million container terminal Liverpool2 was unveiled.


Key figures from the port along with local celebrities and media gathered at the docks to celebrate the opening of the new North East gateway for UK shippers.
The Port now boasts a state of the art deep water container terminal to sit alongside the existing Royal Seaforth terminal. The new 16.5 metre berthing pocket and five giant ‘megamax’ cranes, standing at 92m high, are designed to handle some of the world’s largest vessels.

The investment, which has become one of the largest private sector infrastructure projects in the UK, has been applauded by Secretary of State for International Trade Liam Fox,

“Exporting is vital to the economic health of our nation. This investment at Liverpool2 will boost crucial cargo capacity, create local jobs and is yet another sign that the UK is open for business with the world”

Fast Facts

The £400 million investment incorporated:

  • New 854m quay wall and land created from 5.5 million tonnes of sand and silt dredged from the Mersey.
  • 16.5m deep berthing pocket.
  • Construction of 5 Megamax Ship to Shore (STS) Cranes standing at 92m high designed to handle the world’s largest containerships.
  • The Port is already the country’s biggest transatlantic port (45% market share)
  • Each terminal has the capacity to handle around 1 million containers per annum.
  • Liverpool currently has around 8% of the container market in the UK. This figure would be expected to rise to between 15% and 20%.
Liverpool2 New Container Terminal

The Liverpool 2 development is an obvious response to the increasing size of vessels not only on the trans-Atlantic route but across global trade lanes. The quest for bigger ships has recently plagued the industry as global trade slows and demand for the additional capacity diminishes.

Peel Ports aim to keep pace with the ever changing industry environment and consequent needs of global shippers. By introducing the new deep water facility the Port allows some of the biggest vessels in the world to berth in the North West hub. For more information on the Liverpool2 launch and to view Peel Ports Liverpool2 videos click HERE.

If you have any import / export enquiries from the Port of Liverpool please call our team today on +44 (0) 161 868 6000 or use the form below to get in touch. 

 

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7 Insider Tips: Importing from China to UK

7 Insider Tips: Importing from China to UK

As Britain prepares to leave the EU the importance of our trading relationship with China is set to become ever more crucial. What better time for our team to divulge some insider knowledge on the 7 things every shipper should consider when importing from China to the UK.

In 2014, UK Imports from China were reportedly worth £38.3 billion, the 3rd largest source of imports behind Germany and the US. The number of UK companies sourcing products from the manufacturing powerhouse has increased significantly since the start of 2000. Only 1.8% of the UK’s total imports were sourced in China in 2000 and in 2014 the figure stands at 7%.

Table shows Growth in Imports from China 2000 to 2014.

 

UK Import Regulations: The Basics

When importing goods from China you will need to ask yourself the following questions

1. Have you declared your goods to customs?

This applies to all imports outside of the EU. This can be submitted to HMRC using Single Administration Document (SAD) via processing system called CHIEF (Customs handling of Import and Export Freight).

2. Have you paid the required VAT / duty?

The amount of duty payable is dependent on the types of goods and how they are classified under the UK Trade Tariff. The goods will not be released by customs until the duty and VAT has been paid.

3. Do you know your Commodity Codes?

It is important to find the right commodity code for your goods. This is a ten-digit number for imports from outside of the EU. Without declaring the commodity code on customs paperwork HMRC can impose fines and seize your goods when they arrive at customs, which may cause unnecessary delays in your supply chain.

4. Do your goods need an Import Licence?

Some goods may also require an import licence, typical licence goods include firearms, textile and food. For more information on import licences and to understand if your goods require one visit the gov.uk website.

5. Have you forecast for Seasonal Peaks?

Many of our customers exporting from China prepare months, if not years, in advance for Chinese New Year. Over 200 million people travel home for the celebrations, halting production and reduced manufacturing output is seen from the end of January through to the first half of March. In 2017 Chinese New Year falls on 28th January, put the date in your diary and plan your logistics accordingly!

Not only is it worth considering seasonal peaks, it is also important to keep an eye on manufacturing from major multinationals that have the power to dominate shipping capacity.

Tuscor Lloyds Air Freight team have recently experienced space restrictions from China as a result of the new iPhone 7 launch in September 2016. As the famous iPhone factory is located on the outskirts of Shanghai, Air freight space from China has clearly been dominated by the tech giant. Reports from previous product launches confirm that Apple intentionally buy up all available holiday air freight space out of China.

6. Have you chosen the best mode of Transport?

Deciding on the best mode of transport for your imports from China can be a tricky decision. The main considerations for any logistics manager is the bottom line, the speed in which you can receive the goods and the reliability of the service.

To transport heavier, bulkier goods air freight is far more expensive than sea freight. But the voyage time by sea from China to the UK can take anything up to 35 days. To air freight goods from China may take just 3 days. For more information on whether sea freight or air freight is best for your business take a look at our article here.

7. Do you understand your Incoterms?

One of the big decisions to make when importing from China is agreeing pricing structures as many Chinese manufacturers will include the shipping element.

Incoterms are internationally accepted commercial terms defining the respective roles of the buyer and seller in the arrangement of transportation and other responsibilities and clarify when the ownership of the merchandise takes place. They are used in conjunction with a sales agreement or other method of transacting the sale.

Whether you are an established international business or importing for the very first time, our China import specialists will provide the very best service to suit to your business needs. Contact our team on +44 (0) 161 868 6000 / shipping@tuscorlloyds.com and we will help to get your cargo moving.

Contact Our China Import Specialists

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