CHANGING TRADE FLOWS
A fourth way of navigating checkpoints is by diverting the flow of trade to a different corridor altogether. Bula Hawa, Mandera and their respective Ethiopian and Kenyan hinterlands are supplied by three Somali sea ports: Berbera, Bosaso and Mogadishu. While truckers are more or less beholden to the routes they know, traders in hinterland destinations can use an alternative strategy to bypass checkpoints: They can source goods from ports other than Mogadishu, if the checkpoint taxes along the way are lower.
Before 2018, Mogadishu was the port of preference but since 2018, Bosaso and Berbera have gained in popularity because of the regime change in Ethiopia. In particular, the new leadership in the Somali regions of Ethiopia lifted trade restrictions, opening up a virtually checkpoint-free route through Ethiopia that drastically reduces transport costs. This has made it more cost-effective for traders in the dry ports of Bula Hawa, Dollow and even Baidoa to source from these faraway ports than to order goods in Mogadishu. This reduction in transport costs has been achieved despite the fact that at 1,600 km the route is more than three times as long than the shorter Baidoa corridor (500 km).
Table demonstrates the difference in the cost of transportation between the Berbera, Bosaso (through Ethiopia) and Mogadishu routes. The difference in cost of the same goods from different ports in Somalia upon arrival in Mandera or Bula Hawa is determined by two major factors: the differentiated tax regimes at the three ports (Bosaso, Berbera and Mogadishu); and the presence of different numbers of checkpoints along the route.
BROKERING TRADE ROUTES
A fourth way of navigating checkpoints is by diverting the flow of trade to a different corridor altogether. Bula Hawa, Mandera and their respective Ethiopian and Kenyan hinterlands are supplied by three Somali sea ports: Berbera, Bosaso and Mogadishu. While truckers are more or less beholden to the routes they know, traders in hinterland destinations can use an alternative strategy to bypass checkpoints: They can source goods from ports other than Mogadishu, if the checkpoint taxes along the way are lower.
Before 2018, Mogadishu was the port of preference but since 2018, Bosaso and Berbera have gained in popularity because of the regime change in Ethiopia. In particular, the new leadership in the Somali regions of Ethiopia lifted trade restrictions, opening up a virtually checkpoint-free route through Ethiopia that drastically reduces transport costs. This has made it more cost-effective for traders in the dry ports of Bula Hawa, Dollow and even Baidoa to source from these faraway ports than to order goods in Mogadishu. This reduction in transport costs has been achieved despite the fact that at 1,600 km the route is more than three times as long than the shorter Baidoa corridor (500 km).
Table demonstrates the difference in the cost of transportation between the Berbera, Bosaso (through Ethiopia) and Mogadishu routes. The difference in cost of the same goods from different ports in Somalia upon arrival in Mandera or Bula Hawa is determined by two major factors: the differentiated tax regimes at the three ports (Bosaso, Berbera and Mogadishu); and the presence of different numbers of checkpoints along the route.
BROKERING TRADE ROUTES
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