The Ethiopian Shipping and Logistics Services Enterprise (ESLSE) announced that it has completed the first phase of its restructuring
and has already launched its second phase restructuring that aims to import all containers without any delay from Djibouti Port, in a year time.
The enterprise indicated that the first restructuring phase focuses on the amalgamation of the three enterprises that are combined under one enterprise to modify the maritime business. Ahmed Tusa, CEO of ESLSE said that the first phase of the restructuring was carried out internally, “by our own force”.
“For the last one year we were undertaking the amalgamation and reconstruction of the three enterprises with our own capacity and before the implementation we have undertaken several studies to restructure under the new enterprise,” Ahmed explained.
He said this first phase restructuring will allow the new enterprise to undertake the maritime business in an orderly manner. In addition, according to the CEO, six policies and directives have been approved by the board for implementation with new operation procedure manuals aiming to modernize the shipping and logistics sectors.
“We restructured ESLSE into four sub divisions led by four deputy CEOs,” he said. According to the CEO the ‘shipping transport sector’ that handles the shipping service is the first division. ‘Freight forwarding’ is the other sector that transports goods from sea port to dry port. ‘Port and terminal services sector’ focuses on the dry port activities including customs clearance. ‘Supportive sector’, which support the other sectors activity, is the fourth division that come under the new restructure. More or less the first three sectors were already active when they were independent enterprise or since the formation of the new enterprise, except the supportive sector.
“On the new structure, employees’ misconception about the amalgamations of the new enterprise was one of the major challenges faced, due to lack of adequate information between employees and management,” the CEO explained.
He said that management training that focused on relevant issues commenced as of yesterday Saturday, December 29, to create awareness about the new restructuring.
He further said that the enterprise has been undertaking the logistics transport service seriously, however, delays remained a major problem since the implementation of the multimodal system.
Following the amalgamating of the three public enterprises in the past fiscal year, the government gave monopoly right for the enterprise to undertake the multimodal service in the country.
The enterprise introduced the system on all imports and exports in the country. However, disagreement occurred between clients and the enterprise due to the delay of the products.
Private freight forwarders have also been complaining that either the government has to allow the private sector to be involved on the multimodal scheme or to undertake the uni-modal activity.
Lately the government temporarily allowed the private sector to get involved in the uni-modal operation following the extreme congestion that occurred at the Port of Djibouti. Still it did not allow private companies to involve on the multimodal sector.
Ahmed Tusa acknowledged the problems related to the multimodal shipping system that created the congestion, especially since May 2012 at the port of Djibouti. The CEO said that the major problem was the delay of containers’ transportation from the port.
“The first reason is lack of sufficient preparation to undertake the multimodal scheme; in addition we were on the restructuring process of the three enterprises into one entity,” he said blaming his enterprise for the congestion. He said that the other reason for the problem was the inefficient implementation of clearance services process at the port.
The containers that were stuck at the port under the multimodal scheme were 8,000TEU in July, and in August the shipments in multimodal and uni-modal scheme pushed the stranded containers to reach 24,000 twenty feet unit (TEU).
When the multimodal scheme scaled up to other businesses (multimodal was applied for selected businesses at first and then to public enterprises and import/export business) confusion set in on the clearance process as the number of clients grew immediately.
“Difficulties occurred on the handling of clients’ clearance document. In addition, the number of freight forwarders involved was one at that time, but now it has grown to 30,” he explained. “These problems have also contributed for the congestion at the port,” he added.
“We have now solved the congestion at the port, but the problem we are facing is in the dry ports, mainly at Mojo Dry Port and Comet Terminal.”
In the past six months 57,000 containers both under the multimodal and uni-modal scheme were transported and now, 7,800 containers are in Mojo and Comet dry ports. On average the containers were stored for 33 days or over in the dry ports. “This situation is the reason for container congestion in the dry ports,” the CEO said.
Currently, containers in Djibouti bound to Ethiopia are 7,405; this number has decreased by half compared to the previous months. From the total containers at the port of Djibouti only 1,260 are containers that come via multimodal scheme. The CEO explained that the uni-modal container is now stored for 45 days on average, on the other hand the multimodal scheme containers are stored for 16 days on average, which used to be 40 days previously.
According to the CEO currently, the enterprise is transporting 250 to 300 containers per day. “According to our plan, within a month containers will be transported in less than ten days from the sea port to the country,” he added.
“We will also focus on the transportation of uni-modal containers from the port. We are processing to transport the uni-modal containers in collaboration with the relevant government offices,” he said.
“By now there is no multimodal congestion in the port of Djibouti,” he concluded.
The second phase
Today Mojo Dry Port and Comet terminal are congested. 86 percent of Mojo Dry Port and 68 percent of Comet Terminal are full. The enterprise transportation capacity to the dry ports and the number of clients that collect their product from the dry port is not equivalent. “On average we transport 200 containers daily while only 100 containers are collected by clients per day, which is another major factor for the congestion,” the CEO said.
“On the second phase of the restructure we are focused on making efficient our services, including our handling capacity,” he said.
One of the solutions to solve the congestion in the dry port is addressing clients including informing them about the arrival of their containers and communicating with them.
On the other hand we are also undertaking the expansion and construction of other dry ports and new terminals.
To transform fully into the multimodal scheme and to be able to cover the transportation of containers without any delay at Djibouti port, the enterprise is expanding the Mojo Dry port to double its capacity from the current 6,300 TEU. “For this expansion we have budgeted 650 million birr for the construction that will be operational by the end of this budget year and 150 million birr for the purchase of port equipments.
In addition we set up a new terminal in Adama town in the Bekelcha Transport compound with a capacity to hold 2,500 TEU. The Gelan container terminal which was constructed by the former Ethiopian Shipping Lines Enterprise will be operational in February 2013 and will have a 3,000 TEU handling capacity.
He said that the new mega warehouse construction in Mojo on a 5,400 square meter of land will be finalised within four months, and the construction of other similar warehouse will commence within one month time.
In addition to the stated projects the CEO confirmed that other new branches are giving service in Dire Dawa, Kombolcha and Mekele towns and these sites will also be expanded in the future.
“Due to all this we are safe enough to handle the import of containers,” he added.
“Our main aim is not profit; we want to focus on the satisfaction of our customers,” said the CEO while explaining the strategy that the enterprise is focusing on.
ESLSE’s head noted that to expand the system the enterprise will also hire new employees to meet customers’ satisfaction. “Based on this we can transport all containers including those imported under the uni-modal scheme without any delay at the port of Djibouti,” he confidently stated. This is our second phase that we target to meet until December 2013.
Consultancy and management outsourcing
Meanwhile, Ahmed Tussa indicated that the enterprise has a plan to hire a consultant in order to meet international standards. We have already selected a consultancy firm to undertake the study to boost the activities of the enterprise.
“Based on our plan the consultant firm will commence its study in mid January,” he said. The consultant can show the gaps that the enterprise needs to fill. According to the CEO the study will give direction for the enterprise to either outsource the management on a contractual basis for a foreign based firm or not.
Currently, International companies are showing their interest to handle the management of the enterprise and some of them have already expressed their interest to the government. For instance a group of giant companies that recently came from France expressed their interest to get involved in the management of the enterprise.
“That is why the enterprise assigned a consultant, to determine whether it can continue by itself or outsource part of the management to a foreign company.