Kenya’s ambition to promote Lamu Port as a key transit hub is facing significant challenges due to Ethiopia’s growing reliance on the Port of Djibouti and a recent agreement with Somaliland.
This development has complicated Kenya’s efforts to fully leverage the Lamu Port as part of the Sh1.2 trillion Lamu Port-South Sudan-Ethiopia-Transport (LAPSSET) Corridor initiative, involving collaboration among the three nations.
Ethiopia has secured complete access to Djibouti’s port, which is currently vital for approximately 95 percent of its international trade.
Additionally, Ethiopia has made strides in utilizing the port in the self-declared Republic of Somaliland, having acquired a 19 percent stake in the Berbera port through negotiations led by Dubai Ports World.
This investment grants Ethiopia advantageous access to the Red Sea and onward to the Suez Canal, a critical artery for global trade.
“Recognizing the essential need for sustainable maritime access to enhance economic performance is a positive step for Ethiopia,” remarked Senior Researcher Eden Tafesework.
These shifts pose a dilemma for Kenya, which has been actively encouraging Ethiopia to increase its usage of Lamu Port, Kenya’s second-largest port facility.
Since its launch in May 2021, Lamu Port has welcomed fewer than 70 vessels, with its initial three berths—constructed at a cost of Sh40 billion—operational yet underutilized.
In the previous year, the port managed to handle just 36 vessels and 37,576 tonnes of cargo, primarily consisting of transshipment cargo headed elsewhere.
The first Ethiopian cargo ship to dock at Lamu, the MV Abbay II, arrived in May 2023 with a load of 60,000 metric tonnes of fertilizer, marking a significant milestone three years after the port’s inauguration, despite Ethiopia being a major player in the LAPSSET initiative.
Ethiopian State Minister for Transport and Logistics, Dhenge Boru, emphasized the importance of the inaugural arrival of Abbay II, calling it a pivotal achievement for the region.
“Lamu Port is not merely a port; it is the lifeblood of the LAPSSET corridor, connecting Kenya, South Sudan, and Ethiopia through trade and connectivity,” he stated during the vessel’s arrival.
Nonetheless, Lamu Port’s role as a transshipment center remains limited compared to its regional counterparts, particularly Oman’s Port of Salalah, which dominates the transshipment market.
Kenya now faces a reassessment of its strategy to entice partners to increase cargo traffic through Lamu, which is being promoted as a strategic point for goods destined for southern Ethiopia and South Sudan, as well as transshipment to other ports.
Lamu’s geographical advantage allows it to handle cargo between various ports in Tanzania, South Africa, the Middle East, Europe, and Oman’s Salalah port, with projections estimating traffic could reach 23.9 million tonnes by 2030.Kenya Ports Authority (KPA) Managing Director William Ruto has assured that Lamu Port is ready to expand its capabilities to meet the rising demands of global trade.
KPA has invested significantly in new equipment and infrastructure development to enhance Lamu’s status as a regional trade and logistics hub.
The Kenyan government is actively pursuing investments for infrastructure enhancement and the establishment of a Special Economic Zone around Lamu Port, which is expected to feature at least 23 berths.
Lamu Port can accommodate vessels carrying up to 12,000 Twenty-foot Equivalent Units (TEUs), outperforming Mombasa’s capacity, which currently handles vessels with capacities between 8,000 and 10,000 TEUs.
It is equipped to welcome Post-Panamax ships, the largest class of vessels that cannot transit the Panama Canal.
The natural depth of Lamu and its closeness to the open sea position it favorably for transshipment activities, making it appealing for larger ships that cannot dock at Mombasa, according to the Shippers Council of Eastern Africa (SCEA).
To enhance efficiency, the Kenya Revenue Authority (KRA) has introduced the new Integrated Customs Management System (ICMS) at Lamu Port, aimed at expediting cargo clearance and improving turnaround times to secure a competitive edge in the shipping industry.
Despite slow progress, road infrastructure developments are underway.
The Economic Survey 2024 reports that the Lamu-Ijara-Garissa road, the longest segment of the LAPSSET project at 453 km, was 51 percent completed as of December 2023.
Long-distance truck drivers have voiced concerns about security along the corridor, particularly due to sporadic attacks by the Somali militant group Al-Shabaab.
The Long Distance Truck Drivers Association warns that if safety cannot be guaranteed, truckers will continue to favor transporting cargo from Mombasa through the Northern Corridor.“We cannot risk our drivers’ safety.
They need to be assured of security to fully engage with Lamu Port and the LAPSSET corridor,” stated the association’s leadership.
The LAPSSET Corridor Development Authority is focused on enhancing infrastructure to reduce operational costs and improve turnaround times, achieving a decrease from seven days to three days along the route.
Transportation costs for containers have also dropped, averaging $3,500 (Sh451,500), down from previous figures of $7,000 (Sh903,000) to $8,000 (Sh1 million).
“With the recent establishment of the Lamu Special Economic Zone and ongoing efforts to secure funding for the railway line, the LAPSSET Corridor is poised to lead development initiatives in Africa,” affirmed the authority.
