The Djibouti Ports and Free Zones Authority (DPFZA) has issued a statement clarifying its stance on Multimodal Transport Operators (MTOs). This follows assertions from sector experts that the DPFZA lacks a legal basis or clear definition for MTOs within maritime industry standards.
Ethiopian experts argue that the privileges granted to Djibouti are aimed at ensuring reciprocity in MTO services and strengthening the strong bilateral relationship between the two countries.
In its recent announcement, the DPFZA differentiated between Non-Vessel Operating Common Carriers (NVOCCs) and MTOs, describing both as shipping intermediaries but with distinct scopes of activity.
According to the DPFZA, an NVOCC focuses on ocean freight, acting as a carrier by booking bulk space on vessels, reselling it, and issuing its own Bills of Lading for the sea leg.
The DPFZA noted that under liner terms, NVOCCs bear the costs of ocean freight, while the shipping carrier manages and pays for loading and origin port charges.
In contrast, the DPFZA defined an MTO as an entity that coordinates door-to-door services across multiple transport modes—sea, air, and land—under a single contract and Multimodal Transport Document.
The MTO is responsible for the entire journey, often utilizing owned assets or subcontractors. The DPFZA emphasized that an NVOCC cannot legally or operationally function as an MTO, adding that port operators require a deposit from NVOCCs to cover terminal handling charges.
The statement concluded by highlighting the importance of adhering to international trade and transport regulations to protect business interests, the economy, and supply chain efficiency.
However, industry experts perceive the DPFZA’s statement as a reaction to Ethiopia’s initiative to increase the number of MTO players as part of its broader logistics transformation strategy.
Worku Lemma, Head of the National Logistics Transformation Office, expressed confusion over Djibouti’s opposition.
He noted that while the issue is being addressed at high government levels, the DPFZA’s public position seems misaligned with Ethiopia’s aspirations.
Worku told Capital that the definitions provided by the DPFZA do not reference international standards, best practices, or legal frameworks. He argued that Ethiopia’s inclusion of six additional MTOs is intended to enhance multimodal coverage and implement its national logistics strategy more effectively and reliably.
He further clarified that Ethiopia has established its own legal framework for MTOs, including a proclamation and directives from the Ministry of Transport and Logistics, stressing that Ethiopia is responsible for safeguarding its importers’ interests.
Worku referenced the United Nations Convention on International Multimodal Transport of Goods (1980), which defines an MTO as an entity responsible for transporting goods on behalf of a third party without necessarily owning transport assets.
He maintained that, according to this convention, NVOCCs can lease vessel slots and operate within multimodal transport.
Yared Shiferaw, a maritime law expert and former head of the Legal Department at Ethiopian Shipping and Logistics (ESL), echoed this perspective.
He acknowledged the distinction between NVOCCs and MTOs but asserted that MTOs should be allowed to charter vessels, as is common practice globally, including by ESL.
Some observers note that Djibouti’s private freight forwarders might see reduced revenue if cargo is moved more efficiently through MTOs. However, experts like Yared argue that Djiboutian logistics practitioners should leverage the preferential market access granted by Ethiopia instead of resisting operational improvements.
Yared suggested that Djibouti’s concerns may arise from the potential impact on its private freight forwarders, who currently benefit from the unimodal transport of Ethiopian cargo.
He noted that under the 2006 bilateral agreement, Djiboutian nationals are treated as Ethiopians in Ethiopia and are allowed to invest in most sectors, including logistics. This provision creates opportunities for Djiboutian operators to engage in the evolving market.
The issue gained significant attention when an Ethiopian delegation, led by Adem Farah, Deputy Head of the Prosperity Party, met with Djibouti’s President Ismail Omar Guelleh on December 18. President Guelleh instructed that the challenges in the sector be addressed promptly.
In November, the Djibouti Port and Free Zones Authority (DPFZA) reiterated its stance in a letter to the Ethiopian Diplomatic Mission in Djibouti, stating that Bills of Lading issued by Non-Vessel Operating Common Carriers (NVOCCs) are not recognized within Djibouti’s ports and corridors. Only those issued by vessel-operating shipping lines acting as Multimodal Transport Operators (MTOs) are legally valid for cargo movement.
As the Ethiopian Maritime Authority has set an October 2025 deadline for newly licensed MTOs to begin operations, the dispute has become urgent for logistics stakeholders in Addis Ababa.
The six companies licensed in March 2025—Gulf Ingot, Panafric Global, Tikur Abay Transport, Cosmos MTO, Ethio-Djibouti Railway Share Company (EDR), and Ethiopian Railway Corporation—are now urging the Ethiopian government to facilitate a resolution so they can start operations as planned.
