Ethiopia’s critical trade lifeline through Djibouti is under immediate threat, as a fierce regulatory standoff has paralyzed the country’s newly licensed multimodal transport operators (MTOs), with experts warning that only top‑level intervention between the two countries’ leaders can resolve the crisis.
The Djibouti Ports and Free Zones Authority (DPFZA) has firmly barred the operators from its territory, contradicting Ethiopia’s logistics liberalization drive and setting the stage for a high‑stakes diplomatic clash that observers say cannot be settled at a technical level alone.
This follows a recent DPFZA directive reaffirming a ban on licensed Ethiopian MTOs operating at the border—a move that has sparked considerable concern within the industry and derailed operators’ plans to begin services by the deadline set by Ethiopian regulators. In a letter issued one month ago, the authority restated a position first communicated nearly twenty months earlier, casting renewed uncertainty over the prospects of the newly licensed firms.
Sources close to the matter told Capital that the dispute has been under review within relevant Ethiopian government offices since Djibouti’s latest communication. Both private- and public‑sector representatives have voiced concern that the continued exclusion of Ethiopian MTOs from Djibouti would disrupt logistics chains that have relied almost entirely on Djibouti’s ports for the past three decades.
They stress that the deadlock can only be broken through top‑tier engagement. “It is expected that senior leadership from both countries will discuss the matter, as dialogue has stalled at lower administrative tiers,” one source said, noting that Ethiopia’s Ministry of Transport and Logistics has decided Prime Minister Abiy Ahmed should raise the issue with Djiboutian President Ismail Omar Guelleh.
Sources in Djibouti add that operators there, united under their association ATD, are keen to acquire shares in Ethiopia’s recently liberalized MTO sector. Experts point out that Ethiopia has opened its logistics industry to foreign participation in multiple forms, including joint ventures with local companies, arguing that Djiboutian firms could invest through Ethiopian entities rather than blocking the new licenses altogether.
Djiboutian authorities have also raised technical objections, including that the newly approved Ethiopian MTOs lack guarantees from recognized international insurers—a prerequisite for operating in Djibouti under its current rules. Sector players say they have been told the broader dispute could ultimately be resolved under a revision of a bilateral agreement signed by the two nations at the start of the millennium.
“The revision covers around fifteen points and could be time‑consuming. Therefore, the multimodal transport clause should be annexed separately to allow the new operators to begin work sooner,” one source told Capital. Another observer added, “It is my understanding that Djibouti’s primary aim is to protect its interests, not to completely halt MTO activity.”
The conflict dates back to March 2024, when the Ethiopian Maritime Authority (EMA) granted MTO licenses to six new operators, ending the long‑standing monopoly of the state‑owned Ethiopian Shipping and Logistics (ESL). The reform was intended to introduce competition into a sector that includes operations in Djibouti—Ethiopia’s essential maritime gateway as the world’s most populous landlocked country.
The DPFZA responded swiftly. In a March 17, 2024 notice signed by Chairman Aboubaker Omar Hadi, the authority declared that Non‑Vessel Operating Common Carriers (NVOCCs) are not authorized to act as MTOs within Djibouti. It stated that Bills of Lading issued by NVOCCs are not recognized in Djibouti’s ports and trade corridors due to concerns over their legal status, citing risks related to payment security, cargo tracking and financial accountability. Sector experts have criticized the stance, arguing that it conflicts with prevailing international maritime and trade practices.
In the wake of the initial fallout, senior Ethiopian officials visited Djibouti, and in May last year both nations agreed to form a joint committee to settle the dispute amicably. The committee was tasked with reviewing longstanding bilateral instruments, including the 2002 Ethio‑Djibouti Utilization of the Port of Djibouti and Services to Cargo in Transit Agreement. Experts note that the original multimodal framework from 2006 was negotiated at a time when ESL was the sole operator—a fundamentally different landscape from today’s liberalized market with six new MTO licensees.
Despite these diplomatic efforts, the DPFZA’s most recent letter, dated November 10 and addressed to the Ethiopian diplomatic mission in Djibouti, firmly restates its original position. The letter, which became public a week ago, asks the Ethiopian Embassy to convey the authority’s clarification to relevant institutions in Addis Ababa.
It explicitly declares that an NVOCC does not own or operate sea‑going vessels and that, accordingly, a Bill of Lading issued by an NVOCC “is not recognized within the Djibouti Ports and Corridors” due to its legal status. The authority maintains that only Bills of Lading issued by vessel‑operating shipping lines acting as MTOs are legally valid for cargo movements within its jurisdiction.
This latest turn has become a critical priority for logistics players in Addis Ababa. Sources report that the newly licensed MTOs are now urging the Ethiopian government to broker a resolution—a pressing need given that the EMA has set an October 2025 deadline for them to begin operations.
The six companies awarded MTO licenses in March 2025 are Gulf Ingot, Panafric Global, Tikur Abay Transport, Cosmos MTO, Ethio‑Djibouti Railway Standard Gauge Share Company (EDR) and Ethiopian Railway Corporation. Notably, EDR—a bilateral joint venture—has been allowed to operate, leading other licensees to assume they too would be permitted to commence business. Some had already begun preparatory work for clients before Djibouti’s latest letter surfaced.
Attempts by Capital to obtain additional comments from Transport and Logistics Minister Alemu Sime and EMA Deputy Director General Fraol Tafa were unsuccessful at the time of writing.
