The new 700 kilometre electrified train line runs parallel to the now abandoned Ethiopia-Djibouti railway. It is the first part of a vast network of 5,000 kilometres of rail which Ethiopia hopes to build by 2020.
A fleet of shiny new trains will on Wednesday begin servicing a new route from the Ethiopian capital, Addis Ababa, to Djibouti's sea port.
Landlocked Ethiopia is one of the fastest growing economies in Africa. Ninety percent of its imports and exports are transported by road to and from Djibouti across the Red Sea.
The new 750 kilometre (460 mile) railway link will reduce the current excruciating multi-day trip along a congested, pot-holed road to a smooth 10 hour journey.
"We're so excited! It takes two or three days for a truck to come from Djibouti. The driver doesn't answer his phone. We don't know where he is and that can be a bit of a nightmare," said Ethiopian importer Tingrit Worku. "The train could make a huge difference."
Ethiopia is recovering from its worst drought in half a century, which is likely to see economic growth plummet by 4.5 percent this year.
The railway line, built by two Chinese companies, is expected to benefit both Ethiopia and Dijbouti. Ethiopia will now have easier access to the sea and Djibouti will have greater access to Ethiopia's emerging market of 95 million people.
"This train is a game changer. The connection to the ports [of Djibouti] will give a bounce and our economy will grow faster," said Mekonnen Getachew, a project manager for the Ethiopian Railways Corporation.
China has invested heavily in infrastructure in Ethiopia. Natural resources from Africa have helped fuel China's economic boom, and the country became the continent's largest trade partner in 2009. On Tuesday a high-level Chinese delegation signed further agreements worth $100 million for the construction of roads.
"It's the first standard gauge electrified railroad on the continent build with Chinese standard and technology, and certainly it will not be the last. Many stand to benefit from it," Chinese ambassador to Ethiopia La Yifan said in a statement.
Wednesday's inauguration will be followed by a three-month test period, with no paying passengers and carrying only cargo.
However, when the line is fully functional, uniformed Chinese controllers will welcome passengers to spotless platforms of newly built stations all along the route. Chinese technicians and stationmasters will keep operations running in the background.
"We don't yet have the management experience yet. We have a management contract with Chinese staff for five years, with an Ethiopian counterpart in training," said Getachew.
The railway is the first part of a vast network of 5,000 kilometres of rail which Ethiopia hopes to build by 2020.
"Our plan is to connect the train to Mekele [north], to Moyale [south], near Kenya, and to Gambella (west), near South Sudan. So we will be connected to Kenya, Sudan and South Sudan," said Getachew.