Multimodal operations draw seven bids as industry opens up

By Muluken Yewondwossen
Seven possible participants get drawn to the much awaited deregulation of multimodal operations, Capital’s sources reveal. According to sources there are surprise fresh faces in the bid mix.
As part of government’s effort to liberalize the logistics sector, in 2020, it scheduled to open up the sector through a multimodal scheme, where other players were invited to compete, alongside the Ethiopian Shipping Logistics, which had monopolized the sector for nearly 12 years.
At that time, two bids were put out by the Ethiopian Maritime Authority (EMA) to choose which businesses would be involved in the multimodal operation; however both bids were later canceled.
Seven organizations were drawn to the third bid, which was recently concluded, about two weeks back, to which sources cite that the number of documents had more than doubled, this time around.
As anonymous sources close to the issue tipped Capital, the most recent bidding process is said to conclude in the next few weeks, with the outcome being made public at the start of 2024.
According to sources, majority of the seven businesses that put in their proposal were either directly involved in the logistics industry or had partnered with people who had a lot of expertise in it.
Even though the sources were reluctant to give names of the other firms, it is claimed they are new players in the logistics space, with involvements in different investments.
Experts who requested anonymity stated that the bid document’s prerequisite were quite strict. According to a directive that was issued approximately two years ago, a company or enterprise must meet certain requirements in order to be selected as a multimodal operator.
These requirements include having a paid-up capital of 350 million birr in cash and other assets, of which at least 10 percent must be deposited in cash at a recognized bank.
The third requirement is that the business must own or rent a minimum of 5 hectares of adequately fenced and guarded property for a minimum of 4 years.
Within this, the order specified that, “A minimum of 3 hectares shall be well-developed terminals and a 3,000 square meter warehouse built with concrete and block.”
Along with up to 20 qualified personnel, the multimodal operators should have a variety of logistical equipment that may be used at a terminal.
A few carefully chosen logistics companies should possess thirty owned and forty rental trucks, respectively, and have branches abroad as well as reliable partners in the shipping and aviation industries.
Though sources said that just one international logistics business participated in the bid, the process was also available to overseas operators.
According to sources, foreign companies that were interested in participating in the multimodal operation in the previous bid included; Bolloré Transport & Logistics Ethiopia, a French-based company that is dominant in the African logistics business, which arrived in Ethiopia approximately three and a half years ago when the government partially opened the logistics sector on a joint venture basis. Nonetheless, the French firm did not take part in the latest bid.
Ethiopian Airlines, which had partnered with DHL, had purchased the bid document in the earlier rounds of bidding, but as sources stated, “This time around it’s not in the mix of the seven companies.”
Among the interested parties in the recently suspended bid are: Tikur Abay Transport Plc, a regional state enterprise; Gulf Ingot FZC Industries Plc, a UAE-based business with operations in Djibouti and Ethiopia; and Ethiopian Railways Corporation, which manages the Addis Ababa Light Rail Transit and other upcoming national lines. Capital learnt that the companies mentioned above are part of the latest bid.
Experts stated that it was surprising to see new businesses enter the market.
According to sources, the authority has promised that the most recent proposal would be the last one, unlike the previously annulled processes. They said that the outcome would be made public in the upcoming month.
Since the government launched the multimodal program in 2011, Ethiopian Shipping Lines, Ethiopian Maritime Transit Service, and Dry Port Service Enterprise, three long-standing and one recent public logistics enterprise, were combined to form Ethiopian Shipping Lines, the sole operator, in the same year. Subsequently, the land transportation company Comet Transport joined the massive logistics company.
Ultimately, the government and commercial logistics operators disagreed over the multimodal transport of goods proclamation no. 548/1007, which remains an ESL monopoly.
The government has repeatedly promised to allow competition in the industry. A concrete step toward this end was taken when the regulatory body issued a directive requiring licenses to be granted to individuals who meet the requirements outlined in the document and who are capable of participating in the program.
The CEO of Ethiopian Investment Holdings, Abdureham Eid Tahir, who oversees 26 large and strategic public enterprises, including ESL, stated around a week ago that the EMA will soon open the sector for competition, like the telecom industry.
According to him, the massive state-owned logistics company that also manages deepwater vessels has to be prepared for the next competition.