By our staff reporter
Due to the liberalization of multimodal logistics operations, Ethiopian commodities importers now have greater freedom in freight transportation. The logistics authority has recently granted operational licenses to a select group of entities to participate in the multimodal transport system.
For the past 13 years, the Ethiopian Shipping and Logistics (ESL), a state-owned logistics company, has held a monopoly on handling the majority of import goods, including containerized cargo.
When the government established the multimodal operation, it granted ESL and the former Ethiopian Shipping and Logistics Services Enterprise (ESLSE), which was formed 14 years ago through the merger of Ethiopian Shipping Lines, Dry Port Services Enterprise, and Maritime, Transit Services, and Comet Transport, exclusive rights to manage most import commodities.
The multimodal system entails transporting cargo from the loading port to the importer’s or buyer’s warehouse using various modes of transportation, including land, air, and sea.
The monopoly that took effect in 2012 sparked significant controversy between the government and the business community, particularly among private logistics firms.
However, one of the government’s recent actions, following its rise to power about six years ago, was to liberalize multimodal business and partially open the logistics industry to international companies.
According to a proposal introduced nearly five years ago, additional operators would be allowed to enter the industry alongside the existing state-owned vessel operating common carrier, ESL.
In 2021, the government issued a directive titled “Multimodal Transport Operators Commercial Licensing and Competency Certification Directive No. 802/2021,” aimed at incorporating more players into the multimodal framework.
The Ethiopian Maritime Authority (EMA), a regulatory body, took several years to identify competent multimodal operators based on established criteria. In March 2024, three additional participants were selected.
Following this selection, the Ministry of Transport and Logistics, EMA’s governing body, formally granted certificates to Panafric Global, Tikur Abay Transport, and Cosmos Multimodal Operation. These three companies were chosen from approximately eight competitors, allowing them to operate as non-vessel operating common carriers (NVOCCs) on behalf of their customers.
However, the process of obtaining an operation license, which was expected to be approved swiftly, faced unexpected delays due to issues on the Djiboutian side.
As per the agreement signed between the two nations in 2006, Djibouti, Ethiopia’s primary sea port for cargo, informed Ethiopia that it would not permit NVOCC multimodal operators to conduct business within its territory, just weeks after Ethiopia announced its decision to adopt a multimodal approach.
Consequently, it took months to resolve this issue. Fortunately, recent reports indicate that the two parties reached an amicable resolution that now allows multimodal operators to function in Djibouti.
The three operators can now commence their operations following the EMA’s awarding of a work permit and commercial license, as reported by Capital from reliable sources.
Cosmos CEO Dawit Woubeshet confirmed that his company has received an operating license from the EMA.
Per the regulatory body’s regulations, participants are required to begin operations within six months of obtaining their operating licenses.
According to sources, the selected companies are preparing to set up offices in countries that Ethiopian freight traverses, including neighboring nations, and are importing machinery to manage cargo.
The two largest new entrants into the market are Tikur Abay, a transport firm operated by the Amhara regional administration, and Cosmos, which was established by the well-known logistics provider Tradepath International, along with Geda Transport, a company from the Oromia region.
Belayneh Kinde, a prominent businessman, has partnered with Panafric Global Plc, one of the logistics companies involved in multimodal transport.
Cosmos CEO stated that the company is working to establish branch offices at ports and other locations globally where Ethiopian commodities primarily arrive.
“In addition to importing trucks and heavy machinery, we are also developing dry ports and hiring professionals,” he told Capital.
“We have issued an international bid for multimodal operating systems, which include support systems and services that operate within a company’s physical data center,” he continued.
To acquire equipment that requires foreign currency, the CEO expressed hope that the government will provide sufficient funding.
“We will implement various strategies, including leasing and purchasing, as well as long-term rentals, to import the expensive heavy-duty machinery,” he added.
According to the 2021 directive, a multimodal operator must meet minimum paid-up capital requirements, own or lease suitable real estate and infrastructure, possess logistical equipment, and employ trained personnel.
Selected companies are also required to maintain a fleet of trucks, both owned and rented, to operate branches abroad, and to establish partnerships in the shipping and aviation sectors.
At least 10% of the 350 million birr paid-up capital must be in cash from all available assets.
Industry observers note that this development marks a significant turning point for the logistics sector.
Since January 1, 2012, ESL has been the only multimodal operator used for importing products, handling 105,648 TEUs in the most recent fiscal year (2023/24), which accounted for 95% of all import containers for that year.
During that time, ESL managed 39.5% of the 1,775 imported vehicles under multimodal schemes.
