Ethiopian Shipping and Logistics (ESL) is broadening its scope by making a strategic entry into the railway sector, expanding beyond maritime transport.
By venturing into rail transport, ESL aims to create a seamless, multi-modal network that enhances efficiency, lowers costs, and strengthens supply chain resilience for the nation.
The well-established shipping company, which currently operates in vessel operations, inland transport, and freight forwarding, is exploring the addition of a new division focused on rail transport.
Despite the government’s licensing of approximately six new multimodal operators, ESL remains a dominant player in the industry and is eager to invest in railway infrastructure.
Beriso Amelo, CEO of ESL, expressed to Capital, “If we have a policy greenlight to use the railway infrastructure, why don’t we have our own transport system? We are in the logistics business and have significant capacity, so why don’t we buy our own train?”
This potential initiative comes amid challenges faced by the existing Ethio-Djibouti Railway (EDR), a 752 km line linking central Ethiopia to Djibouti’s ports, which is dealing with substantial debt exceeding USD 4 billion.
While EDR is pursuing new ventures to enhance its operations, it is not expected to oppose ESL’s plans.
Sources at EDR indicated that ESL’s proposed entry would have minimal impact, as Ethiopia plans to develop additional railway lines that will be independently operated by the government.
“Ethiopia has a significant demand in the logistics sector, so if more operators engage in railway transport, they can contribute to the country’s development,” the sources noted.
ESL plans to operate on the railway line connecting Ethiopia and Djibouti.
Reiterating this perspective, ESL’s CEO remarked, “Ethiopia is a vast nation that requires an additional railway operator free from debt.” He added, “We are exploring several business opportunities, including investments in the railway sector.”
The initiative will involve a bidding process to procure a train system for ESL to operate, significantly enhancing the company’s inland transport capabilities, which currently rely on its own fleet and leased trucks.
In a recent effort to expand its capacity, ESL invested 750 million birr to acquire 100 Sinotruk trucks. This investment is part of a broader plan to grow its truck fleet to 1,000 vehicles within two years, solidifying its position as Ethiopia’s primary cross-border freight carrier along the critical Djibouti trade corridor.
ESL’s strengthened financial position has facilitated these ambitious plans. The company’s board, chaired by Finance Minister Ahmed Shide, recently approved a capital increase to 200 billion birr—a tenfold rise—pending final approval from the sovereign wealth fund, Ethiopian Investment Holdings, which oversees major strategic public enterprises like Ethiopian Airlines and Ethio Telecom.
In the concluded fiscal year, ESL distributed 17 billion birr in dividends to the government after generating total revenue of 109 billion birr.
This revenue represents a 184% growth over the past two years and a 91% increase from the previous year. Furthermore, the company, with a presence and partnerships in over 350 ports worldwide, earned USD 500 million in foreign currency from its international activities.
Currently, ESL is free of significant debt, particularly to international creditors.
Beriso informed Capital that ESL has revised its vessel acquisition plan, stating, “We aim to purchase a total of nine vessels, including six currently in the bidding process.” ESL is implementing a robust fleet expansion strategy to meet rising demand and enhance its global competitiveness.
The company has recently opened bids for new Ultramax vessels and is working with shipbrokers to acquire four second-hand mid-sized vessels for various operational needs.
ESL’s current fleet of ten vessels will soon be supplemented by two new heavy-lift Ultramax multipurpose (MPP) bulk carriers and two second-hand Ultramax bulk carriers, each with a deadweight tonnage (DWT) of 60,000–65,000 and no more than eight years old.
In a notable strategic shift, ESL is re-entering the container shipping market nearly three decades after exiting. The company plans to acquire two second-hand container vessels, each with capacities between 3,000 and 5,000 TEU and under ten years of age. These acquisitions are aimed at enhancing operational capacity and addressing Ethiopia’s increasing logistics needs.
The purchase of five new vessels will be financed through partnerships with three local banks: the Commercial Bank of Ethiopia, Awash Bank, and Dashen Bank. ESL will cover 30% of the total cost, while the banks will provide the remaining 70%. An additional vessel will be fully financed by ESL.
The procurement process for new vessels will utilize a two-stage bidding system, starting with proposals from shipbuilders and culminating in the selection of the most suitable bidder. For second-hand vessels, shipbrokers will identify appropriate options.
Delivery of the four second-hand vessels is anticipated shortly, while the construction of the two new MPP vessels will take at least two years following the completion of the bidding process. Payments for new ships will be made in installments tied to construction milestones, while purchases of second-hand vessels will be finalized upon deal closure.
To support this ambitious growth, ESL is focusing on generating foreign currency through expanded operations. “We aim to acquire high-standard trucks, specialized service vehicles, and additional vessels to meet Ethiopia’s growing demand,” said Beriso. “This requires generating more foreign currency through diversified operations.”
The logistics giant, which underscores its vital role in supporting the government both within and beyond its core business—including through social contributions—also reported various corporate social responsibility initiatives during the past fiscal year to assist communities in need.
