Study recommends outsourcing shipping operations

A new study conducted to boost the logistics and shipping activities of the country has made recommendations that the government has to consider partnering with the private sector.
The study that is expected to transform the current shipping and logistics system was delivered to the government earlier in the budget year and it raised several options of make do.
According to the country’s law of shipping and multimodal service scheme, these services are state monopolies of Ethiopian Shipping and Logistics Services Enterprise (ESLSE). Sources said that the new study mentioned that working in joint venture and letting in the private sector to the business should be the directions to modernize the system.
According to sources, the government is now considering a policy amendment on the national logistics strategy. “A new policy shall be developed after the evaluation of the study,” sources told Capital.
Currently, the study is being reviewed by relevant state stakeholders and the government is to come up with a viable strategy, according to sources.
Sources said that the government is considering outsourcing the shipping lines’ management for private companies like  it does in the power and telecom sector.
Recently the government outsourced the management of Ethio Telecom to a French company and the Ethiopian Power Utility to an Indian firm.
Outsourcing management of an organization is not a new administration plan, but it was not tried here. “Outsourcing the management has been stated as a recommendation in the latest study,” sources said.
According to experts knowledgeable of the sector, they do not expect the government to give a decision to invite the private sector to invest in joint ventures or fully privatize the sector.
“Possibly the government can invite companies to invest in the sector separately or give a management contract for the shipping sector only,” experts told Capital.
According to sources, international logistics companies have shown interest to invest in the sector. Some of them have already expressed their interest to establish dry ports or depot in the country, an operation fully controlled by the government.
Chief Alemu Ambaye, Deputy Chief Executive of Shipping Sector at ESLSE, said that he does not have any information on the issue.
Mekonnen Abera, Director-General of Ethiopian Maritime Authority also declined to comment on the situation.
According to sources, government is now considering to come up with a new policy.  Even though the import-export business had registered significant growth in the past years in relation with the economic growth and commencement of huge state projects, the logistics sector is not growing at a pace parallel to developments in other sectors, according to experts.
In the past few years, however, the government has made several changes including the amalgamation of three state-owned logistics and shipping enterprises under a single body to invigorate the sector.