It is strategically located at the crossroads of one of the busiest shipping routes in the world, linking Europe, the Far East, the Horn of Africa and the Persian Gulf.

The port serves as a key refueling and transshipment and also transport means center, and is the principal maritime outlet for imports to and exports from neighboring Ethiopia.

[3] The economy of Djibouti relies heavily on the strategic location of its port since about a third of all daily shipping in the world passes the north-east edge of Africa.

[12][4] The United States Navy is present at the port, having made Camp Lemonnier its only African base in an effort to fight the Global War on Terror.

[13] It uses the port to counter the terrorism threat posed by al-Shabaab, an al-Qaeda-linked Somali terrorist group, and to fight piracy in the region.

[18] A strategic meeting point between Northeast Africa and the Arabian Peninsula, the Red Sea was a place of contact and passage used by the Egyptians, the Phoenicians, the Ptolemaists, the Romans, the Greeks, the Byzantines, the Arabs, and then by the Europeans in search of the Spice route.

[20] The port evolved out of landlocked Ethiopia's search for a maritime outlet, and Djibouti's coastline provided both easy access and sheltered anchorage.

[21] Work on the Franco-Ethiopian Ethio-Djibouti Railways began in 1897 and completed in 1917, connecting the Ethiopian capital of Addis Ababa to the port of Djibouti.

On land, new warehouses and oil storage facilities were built, electricity and water supplies provided and railway lines laid.

[35] Chinese influence in Djibouti, particularly through its military base, has been criticized in recent years as being more beneficial to the stability of the current political regime than for the country itself.

Political commentators have stated that this dependence is not only worrying for the nation's finances, but also that China's growing military presence in the country is a threat to the stability of the geostrategic region.

[41][42][43] In 2020, the London Court of International Arbitration ruled in favor of DP World, stating that Djibouti's expropriation of the Doraleh Container Terminal was illegal and that the original concession rights are to be restored.