The landscape of containerization operations which the country is keen on expanding for export commodities reels in great performance in the first half of the budget year.
The role of the logistics giant, Ethiopian Shipping and Logistics Services Enterprise (ESLSE) has been noted as crucial in supporting the scheme since it has contributed to positioning its empty containers for exporters.
ESLSE disclosed that despite the logistics sector globally being in challenging circumstances including the aftermath of COVID 19 and conflict between Russia and Ukraine, the logistics enterprise still managed to attain massive success in the first six months of the 2022/23 budget year.
Roba Megersa, CEO of ESLSE, while providing insights on the matter said that the COVID 19 impact is still affecting the logistics sector, “Food commodities prices are very high, port congestions is still there, containers congestions is eight folds compared with pre COVID period. Similarly, the container operation rate has shown reduction mid-2022 but picked up again significantly at the end of the year with petroleum price and commodities also increasing.”
“Vessel operation cost has also continued at exaggerated price, and similarly the Ukraine Russia conflict has impacted the sea voyage and logistic operation,” the CEO said.
These situations affect Ethiopia’s logistic operation besides the shortage of hard currency.
In the first six months of the budget year, the country containerized consignment declined by 12.8 percent, “compared with the preceding similar periods the import of containerized cargo has reduced significantly. In contrary the import of vehicles has increased in the stated period.”
In general, the import of dry cargo that includes containerized cargo was 3.5 million metric tons while the export cargo was 450,000 metric tons.
Of the stated volume, one million ton and 102,000 metric tons was handled by ESLSE for import and export activities respectively.
“Our vessels have also been involved on cross trade business that contributes to generate foreign currency and additional profit. This operation has made our vessels to be profitable,” Roba explained.
ESLSE’s vessels operation registered the first profit in the past budget year since the enterprise settled the credit arrears that was taken to buy nine vessels about 12 years ago to embark on cross trade service.
In the stated period, the operation that ESLSE provided surpassed the set projections.
For the stated period, ESLSE targeted to provide different logistics services for 2.2 million metric tons of cargos, while actually it managed 2.4 million metric tons of consignment which was 104 percent of the target.
According to Roba, shipping service for vehicle cargos has registered highest contribution. In the six months it had projected to transport 3,645 units of vehicles, while the actual performance achieved 4,226 vehicles.
Similarly, the public enterprise has transported 312,000 metric tons bulk cargo that was more than double when compared with the projection of 150,000 metric tons.
Containerized cargo export has been boosted in the reported period.
“In the period, 4,500 containerized cargos were shipped through Djibouti corridor, of that, 3,079 containers or 70 percent of the total were staffed locally and the rest in Djibouti. It is a very big move,” the CEO amplified the success.
“We have played a key role by providing empty containers for exporters for free,” he further explained.
For the last about three years ESLSE has aggressively expanded the number of container it owns.
In the six months, 19.5 billion birr revenue and 2.2 billion birr gross profit has been secured.
Regarding cross trade, ESLSE vessels have provided services for import cargos to Berbera, Somaliland and Mombasa, Kenya and the export of Eritrean cargos.
At the Indian subcontinent and Far East, Ethiopian carrier vessels have provided services through time and voyage charter schemes.
“Through cross trade we have managed to transport 850,000 metric tons of cargo in six months that has increased by three folds. We are using our own containers and providing services for destination besides Ethiopian cargos,” Roba said while citing the positive strides made on cross trade.
“We assigned leased vessels for the transport of our huge cargos that allows us to assign our vessels for cross trade, which contributes to eliminate idle time and demurrage for our vessels,” he said, adding, “the cross trade expands regional integration and generate additional foreign currency and profit.”
He said that every time the performance on cross trade is increase, it heighted the surpassing of the projection for the six months set for the budget year.
Foreign currency shortage, francovaluta and the direction that the NBE imposed on some commodities which were suspended from securing letter of credit has been noted to have affected the performance of the ESLSE.
“Providing waiver is also affecting our activity that should be corrected to keep the country and the identity of the flag carrier,” Roba underlined.
According to Roba, the road in Djibouti is also one of the major challenges that relevant government bodies from the two countries have to address.
“By any standard, ports in Djibouti are high quality in terms of service and quality, while the road conditions have resulted in spikes in price for truck service,” he complained.
“On our side, we have discussed the issue with Aboubaker Omar Hadi, Chairman of Djibouti Ports and Free Zones Authority, and he told me they are seriously looking into the solution. However we are using the Dawale route, the Galafi line is the main road that needs swift renovation,” he added.
He added that bad road conditions in some part of the country for instance on the way to Woreta to which ESLSE has a dry port is affecting the logistics activity, in an area where the demand and market is very high and lucrative for the logistics operator.
Access to foreign currency from local banks was also stated as another challenge for the period.
“We have USD 220 million in foreign currency in local banks but in some cases we could not access our money on time when we want it particularly from private banks but the cross trade service has contributed to fill our demand in terms of hard currency,” he explained.