Ethiopian Shipping and Logistics (ESL), a giant state-owned logistics company, has a goal to increase its income by around a quarter.

The corporation has achieved remarkable success in the closed budget year, surpassing nearly its entire objective. During the Friday, July 26 news conference, Berisso Amallo, the CEO of ESL, said that the business aims to increase its income by over 23 percent in the 2024/25 budget year.

The CEO predicted that the current budget year will bring in 70.6 billion birr in revenue and 9.2 billion birr in gross profit.

In addition, the company wants to increase the number of containers it owns from the existing 13,635 TEUs to 28,184 TEUs, a more than double increase.

In terms of operating services, the company anticipated handling about eight million tons, up from the 7.7 million tons reached in the budget year 2023/24, which ended on July 7.

Regarding marine freight services, the company predicted transporting 16.1 million tons, up from 13.3 million tons in the previous year.

According to the CEO, the company expects to handle 4.3 million tons of import maritime freight and 819,877 tons of cross-border freight.

2023/24 performance

Despite the high level of uncertainty around local and worldwide events that impact the marine industry, the company has demonstrated remarkable success in the 2023/24 budget year.

The thrilled CEO stated that one of the most important factors in achieving strong performance throughout the revenue and profit spectrum is cost-effective capital operating.

Although the corporation had aimed to cut costs by 500 million birr this year, real performance exceeded that by approximately 1.3 billion birr.

According to Berisso, his company’s operations in the ended budget year were far larger than both the previous year’s performance and the year’s goal.

“Our ships were never affected, despite the fact that business has been difficult for most large vessel operators in the Red Sea,” the CEO stated.

In the year that marks the CEO’s first full operational budget year after taking the job in April 2023, the business was able to increase its sales to 57 billion birr, or 13 percent of the objective.

In addition, it has improved by 34% over the performance of the year before. In terms of profit, the company was expected to secure 6.7 billion birr; however, actual performance was 132% of the objective, reaching over 8.8 billion birr, a 46% increase over the budget year 2022/23.

In the reported year, ESL’s vessel’s round voyage space utilization has achieved 89%, meeting 111% of the objective.

One of the main reasons for exceeding the round trip space utilization operating objective has been identified as the transportation of empty containers and excessive cross-trade activities.

The company’s foreign currency generation was one of its greatest achievements of the year. In the yearly report, the company achieved 118 percent of the target by securing about USD 421 million.

The best results in sea freight, Djibouti clearing services, and cross-trade have been identified as critical factors in surpassing the production of hard currency.

Despite difficulties with the Red Sea journey, Wondwossen Kassa (Cap), Deputy CEO for the Shipping Sector at ESL, said that his company effectively delivers goods to Ethiopia.

“Difficulties encountered by certain operators may present opportunities for others, as a result of which our vessels are advantageous given the increase in regional freight rates associated with security concerns,” Wondwossen clarified.

Within the cross-trade business, ESL’s time charter sector has grown by 177% of the objective for the budget year.

In terms of operating services, ESL was expected to handle more than 6.3 million tons of cargo in the year; however, actual performance was closer to 7.7 million tons, or 121% of the objective, and increased by 40% compared to the budget year performance of 2022/23.

ESL has moved about 4.6 million tons in its shipping business, using its own vessels, slot carriers, and charters, meeting 112% of the target and growing by 30% over the previous year. The other sector in which the corporation saw notable development was the freight forwarding services industry.

ESL has handled over 105,000 TEUs in the multimodal business that it solely provides in the nation, reaching 104% of the objective and improving by 14.7% from the 2022/23 performance.

The company’s unimodal operation saw almost 2.7 million tons of imported freight handled, increasing by 36.4 percent and 60%, respectively, compared to the projection and the performance of the previous year.

To achieve 381,000 tons, the export cargo operation has also increased by 35.6% over the previous year’s performance to meet the target.

Over 407,000 TEUs of containers have been processed through the port and terminal, exceeding both the goal by 7% and the previous year’s volume of 17%.

According to the annual report, nearly 3.7 million tons of dry bulk cargo were carried throughout the year, of which 38.6% was containerized goods.

In addition to difficulties on the Black Sea route, the CEO claims that the war between Russia and Ukraine has increased prices on the international market.

“The Middle East conflict has affected the marine business, resulting in a six percent increase in fuel prices on vessels and affecting the Suez Canal, one of the two major maritime choke points in the region, along with the Strait of Hormuz,” he continued.

According to reports, the Houthi Militants’ attack, which began in November 2023, disrupted vessel activity in the Red Sea. As a result, major ship operators, including Maersk, Hapag Lloyd, and CMA CGM, were forced to reroute their voyages to the Cape of Good Hope, which increased the cost of containerized cargo, in addition to causing cargo delays.