Following last week’s tense situation, the Ethio-Djibouti Railway (EDR) and the Djibouti Ports and Free Zones Authority (DPFZA) have resolved their dispute regarding EDR’s request for a forwarding license.
The railway company aimed to secure at least 60% of the freight transport stake in the corridor, which led to objections from Djiboutian transit operators.
In a letter dated June 3, the DPFZA emphasized that EDR must operate as a common carrier, ensuring non-discriminatory access to its services for all clients and their representatives. The authority contended that EDR’s service procurement process violated international standards.
DPFZA Chairman Aboubaker Omar Hadi stated that, in accordance with International Union of Railways (IUC) norms, EDR should concentrate on its core railway operations and leave logistics services to other providers.
The letter also referenced the World Trade Organization’s (WTO) General Agreement on Trade in Services (GATS) and the Trade Facilitation Agreement, which require transparent and non-discriminatory practices in trade and customs procedures.
Additionally, it cited the World Customs Organization’s Revised Kyoto Convention, which allows for third-party involvement in customs processes.
Earlier this year, in March, EDR was granted a license to operate as one of six new multimodal transport operators in Ethiopia, alongside Ethiopian Shipping & Logistics (ESL).
Since then, under CEO Takel Uma’s leadership, the railway company has ventured into new commercial activities, including the establishment of a subsidiary called Global Logistics.
This new entity manages customs clearance, freight forwarding, and transit services, which were previously handled by other firms.
However, EDR encountered difficulties in obtaining a transit license in Djibouti, prompting the company to invite bids from Djiboutian transit firms interested in collaboration.
While 18 freight forwarders participated, EDR ultimately selected three to provide services at competitive rates.
Many Djiboutian operators, including the Djibouti Transitaires Association (representing 90 members), argued that EDR’s approach favored specific companies, leading to unfair competition. Their concerns were echoed in DPFZA’s letter.
In response, EDR refuted DPFZA’s claims in a letter dated June 4 and signed by CEO Takel, asserting that its operations comply with international treaties and IUC regulations.
The company clarified that it had not yet received a Djiboutian forwarding license and was therefore not actively engaged in freight forwarding or customs clearance.
EDR defended its selection process for transit service providers, emphasizing its commitment to fairness, transparency, and non-discrimination.
This week, EDR’s leadership visited Djibouti to meet with DPFZA Chairman Hadi. Sources informed Capital that during these discussions, both parties addressed the procurement of transit services and other operational issues.
EDR asserted its legal right to operate in Djibouti, referencing the bilateral agreement between Ethiopia and Djibouti, which includes provisions for mutual recognition of business licenses.
Despite delays from Djibouti authorities in granting transit permissions, EDR executives maintained their right to operate in the country, according to sources.
An insider told Capital that EDR “emphasized its legal standing to operate as a freight forwarding service provider in both Ethiopia and Djibouti,” noting that “the agreement between the two states establishes a coordinated legal and regulatory framework for cross-border operations.”
EDR argued that under the principle of legal reciprocity outlined in the agreement, any business license issued in one member state should be recognized immediately in the other, given that the corporation is jointly owned by Ethiopia and Djibouti.
The management of EDR has made it clear that it aims to ensure similar operational conditions between the two nations based on competitive principles.
The Djibouti authorities were encouraged to resolve the situation and issue the necessary permits for EDR to operate as a freight forwarding service provider in Djibouti.
“Following the meeting, DPFZA agreed to ease tensions and grant EDR the necessary permits to function as a freight forwarding service provider in Djibouti, marking a significant step toward resolving the dispute,” sources told Capital.
Both countries jointly control EDR. Additionally, one-third of the employees at Global Logistics, the newly established commercial branch, are Djiboutian experts in freight forwarding and customs clearance.
