In a bid to attract more business to its newly constructed Lamu port, the Kenya Ports Authority (KPA) plans to lower tariffs next month. This comes as Kenya aims to entice landlocked Ethiopia's substantial cargo volumes away from the Port of Djibouti, which currently serves as Ethiopia's primary trade gateway.Â
The move also comes as Kenya prepares for a landmark pilot shipment of Ethiopian fertilizer cargo through Lamu later this month.Â
The Port of Lamu has experienced significant growth in recent years, with cargo volumes increasing from 6,539 metric tons in 2022 to 37,576 metric tons last year - a rise of over 30,000 tons. Container traffic also rose notably, from 382 twenty-foot equivalent units (TEUs) in 2022 to 1,779 TEUs in 2023, representing an increase of nearly 1,400 TEUs.
However, Kenya sees an opportunity to further accelerate this momentum and stake a claim on Ethiopia's trade if it can offer a more competitive alternative through the Lamu Port-South Sudan-Ethiopia-Transport (LAPSSET) corridor project. In February 2024, a Kenya-Ethiopia joint committee convened to address bottlenecks holding back commercial use of the LAPSSET corridor.Â
A key recommendation was reviewing Lamu's port charges with the objective of incentivizing Ethiopian shippers. Planned incentives under consideration by KPA include fee waivers, extended free storage periods at Lamu, and an overall goal of lowering transit costs for Ethiopian importers and exporters.Â
Ethiopia has been keen to diversify its trade corridors in recent years. Strict requirements on letters of credit have at times led to lengthy delays in clearing cargo from Djibouti port. Additionally, Prime Minister Abiy Ahmed's vision of developing multi-modal transit networks has spurred efforts to explore alternative routes.