The Ministry of Transport (MoT) is now enforcing a new rule mandating that goods being
shipped through the Ethiopian Shipping and Logistics Enterprise (ESLE) use a multimodal (land, sea, or road) transportation service operated solely by state owned ESLE.
The multimodal arrangement is a scheme whereby the transportation of goods is under a single contract but performed with two or more different means of transportation. The transporter is accountable for the entire journey, including the shipment’s delivery at the final destination. The transportation can be carried out by rail, sea, and road.
According to the letter written on February 9, 2012 to the National Bank of Ethiopia (NBE), the new enforcement has been in effect since Monday February 13, 2012.
The letter signed by Diriba Kuma, Minister of Transport, says all import containers travelling through the Port of Djibouti that use ESLE have to transport their containers via a multimodal transport service.
Freight forwarders and shipping agents, said that the new additional directive will shut their businesses. “Because it forces all our customers to use the state monopoly service,” individuals involved in the sector told Capital.
The ministry office had already issued a Multimodal Transportation Implementation Directive starting from the beginning of this year to enforce all shipments that belong to the government to use multimodal transport through ESLE. In addition the directive also instructs all vehicles of three tonnes or less to be under the new scheme.
This directive that has been effective since January 1, 2012 instructs all shipments that use multimodal transport to deliver their cargoes to dry ports or warehouses that are authorised by Ethiopian Revenue and Customs Authority (ERCA). Also, all private importers, that open an LC from local banks, are ordered to bring their container shipments to dry ports and ERCA’s warehouses.
Freight forwarders said that the ministry does not have the right to amend these types of enforcements on state or private banks as private multimodal operators are allowed to be involved in the industry.
The new addendum for the Multimodal Transportation Implementation Directive has ordered all private or state containerised import items that use ESLE to transport their cargoes to dry ports or warehouses that are authorised by ERCA under the multimodal transport service agreement, which is exclusively operated by ESLE.
On the first directive, effective as of January, the private importers do not have the obligation to use the multimodal scheme even if they use ESLE’s service.
The circular which was written on Monday February 13 and signed by Yohanes Ayalew, NBE’s Chief Economist and Vice Governor of Monetary Stability, ordered not only state banks but also private banks to undertake their activity under the new directive right away.
The NBE letter also indicated that all banks have to report their customers’ logistical data within the first five days of the month for Maritime Affairs Authority and the Central Bank.
“The directive did not talk about any monopoly concerning the multimodal transport operation and because of that the ministry office should wait until private operators can be included in the sector before it amends enforcement regulations on banks,” freight forwarders argued.
Ahmed Tusa, Director of ESLE, told Capital that in the coming three months all import containers will operate under multimodal transport. Currently, about ten percent of the total containers are transported through multimodal systems.
Since the new multimodal directive was issued last month, the Ethiopian Freight Forwarders and Shipping Agents Association raised their concerns about the directive, saying it allowed only ESLE to be involved in the multimodal transport service.
At the Second Ethiopian Public private Sector Dialogue Forum held at the Sheraton Addis on Wednesday February 15, the new directive was one of the major issues of discussion. Despite government officials claim that the new directive will not spoil the private freight forwarders and shipping agents, members from the association have highly disputed the officials’ justification.
“The directive will collapse the 88 freight forwarders and shipping agents and other companies that worked in the sector, because the directive did not provide any space for the private sector,” participants said.
“The government has to see other options until the directive allows private companies to be involved in the multimodal transport scheme,” a freight forwarder commented.
Gizeshwork Tessema, general manager of Gize plc, who came from the association, said that the government must provide options for the private firms to compete in the sector. “For instance the government can amend a new law that allows us to get quotation from ESLE to continue the freight forwarding from the Port of Djibouti,” she told Capital.
“Or the government should modify the waiver right for freight forwarders and shipping agents to use other ships for cargo that transport from ports or countries that ESLE’s vessels do not deal with,” she added.
At the forum she strongly suggested that the government must respond to the issues raised by the association as much as possible. Recently the association has also written a letter for Diriba Kuma to give an immediate solution for members of the association to be involved in the new multimodal transport service.
“Despite the government officials saying the multimodal transport service will allow the private sector to participate, they did not give specific time when it will be allowed to do so,” freight forwarders told Capital.
Most of the freight forwarders who talked to Capital have concurred that the new system has a positive aspect for the country, but they argued that it has to include the private sector. “The government has to allow the private sector to be involved in the competitive market with the state owned ESLE,” they complained.
The multimodal service aim is to streamline shipments from Port of Djibouti to avoid warehouse fees in foreign currency.
ESLE was formed at the end of the past budget year with the merge of Ethiopian Shipping Lines (ESL), Dry Port Services Enterprise (DPSE), and Maritime and Transit Services (MTS) to undertake combined service for the sector.
Currently the country has two dry ports in Semera and Mojo 588 and 73Km east of Addis Ababa.