Monday, June 17, 2024

Logistics industry expresses concerns over new directive permitting private sector participation in dry ports


By Muluken Yewondwossen

The Ministry of Transport and Logistics (MoTL) is in the process of drafting a directive to allow private sector involvement in the dry port scheme as part of efforts to liberalize the logistics industry. However, logistics actors have raised concerns, stating that the proposed directive fails to consider the practical realities on the ground.

During a meeting held on January 30 at the Ethiopian Maritime Authority’s premises, logistics actors reviewed the draft paper, which outlined expectations of private sector investment from both domestic and foreign businesses. The draft directive specified that private sector participation would be limited to a special terminal.

According to Article 7 of Part 3 of the draft directive, the special terminal would encompass an intermodal terminal, a vehicle terminal, a dry bulk cargo terminal, a container terminal, and a break bulk terminal. Additionally, logistics park and logistics hub services were included in the directive, although investors were required to invest specifically in the designated special terminals.

The directive outlined specific land and infrastructure requirements for each type of terminal. For example, the container terminal necessitated the construction of three warehouses on 2.5 hectares of land, with half of the area asphalted. The dry bulk freight terminal required two hectares of land, with 0.25 hectares asphalt concrete and three warehouses on a one-hectare plot. Similar specifications were provided for the break bulk freight terminal, vehicle terminal, and intermodal terminal.

Investment in a logistics park required a 33-hectare plot of land, with nine hectares developed, including three hectares of asphalted facilities. Similarly, an 80-hectare area was allocated for the logistics hub, with 34 hectares of asphalt concrete development to cater to various types of cargo.

The draft directive also outlined the equipment requirements for each terminal, including reach stackers, blowing machines, terminal tractors, forklifts, and gantries. It specified that half of the machines could be leased, except for rail-mounted and rubber-tiered gantries.

Despite the government’s intentions to liberalize the logistics industry, local logistics actors expressed dissatisfaction with the proposed directive during the conference. They argued that the directive did not consider the challenges faced by logistics businesses in Ethiopia, particularly in acquiring the specified land.

Logistics players highlighted the difficulty in accessing 5,000 to 10,000 square meters of land for warehouse construction, stating that the directive did not account for the capabilities of local logistics actors. They suggested that the directive might be more feasible for foreign investors rather than local businesses, unless through joint ventures.

Local logistics players expressed concerns that failure to address these issues could lead to the dominance of foreign investors in the industry. They emphasized the gradual development of capacity to meet the sector’s demands.

Currently, dry ports in Ethiopia are owned and operated by Ethiopian Shipping and Logistics, a state-owned logistics company with a monopoly on dry ports for multimodal transport services since 2009.

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