ESLSE to unlock shortages by purchasing new containers

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The Ethiopian Shipping and Logistics Services Enterprise (ESLSE), which has been facing hindrance of cargo boxes, is on the process of doubling its owned containers number to tackle the shortage. Meanwhile, public enterprises and government offices are alleged for the hoarding of its property.
The logistic giant and sole multimodal operators, ESLSE disclosed that it is on the process of buying new containers to expand its containerized cargo operation.
Roba Megersa, CEO of ESLSE, told Capital that there is a shortage of containers for different reasons including the current global challenge that is related with COVID 19 which has slow down the global economy.
He said that in order to recover from the challenge and boost its capacity, ESLSE is on the process to procure 3,000 twenty feet containers (TEUs). “As we all know, the Ethiopian procurement process and access to foreign currency has its own complication but we are trying our best to added new containers,” he remarked.
The Bid was floated on March, 2020 and 22 companies bought the bid document and in the end seven of them participated.
Wondimu Daba, Deputy CEO for Corporate Service at ESLSE, told Capital that the bidding process has passed three processes, namely; preliminary, technical and financial qualifications.
On the three evaluating steps, five companies had met the preliminary step and two of them passed the technical specification to compete on the financial evaluation.
“SMC, the company from China and coming via Ethiopian agent Tsemex Global Enterprise, has qualified on the financial offer that which we can’t disclose the amount since the processes is yet sealed,” the Deputy CEO said.
Wondimu said that the procurement process has been delayed following the bid winner compromising to deliver the product with the reason mentioned as the price increment on steel products, “we have been under discussion with the company to deliver the product as per the award, while it is unable to meet the commitment.”
He added that the enterprise had given ample time for the company to come up with the required result, “because of the delay the enterprise has possessed the ten percent performance bond that the company gives as a guarantee.”
Wondimu reminded that despite the award being given on August 20, 2020 some delays has occurred in relation to the approval of the letter of credit.
“Now we are on the process of developing another round bid document to call bidders for the second round due to the failure of first procurement process,” he said updating on the status regarding the procurement of 3,000 containers.
The new bid is expected to be floated in the first week of May.
Container shortage
In relation to the COVID 19 pandemic and lockdown, the global container shortage has become a challenge for the logistics sector, even though Ethiopia is not under lockdown because of the coronavirus the sector is affected by clients, who hoard containers.
The number of ESLSE containers or others that was managed on their behalf was controlled for years by clients like the infamous METEC.
Roba stated that there are very huge amount of containers hoard by public enterprises.
“We don’t know how to retrieve the property and some of them may not provide service. The only thing we shall do is cut the demurrage, but when we do that we have to settle the depreciated value (DV),” Roba said.
Most of the containers that are on the hand of METEC for years are leased and have the DV settlement. Partner shipping lines are expecting the DV from ESLSE, which we are also looking from METEC. “It has become strange since the settlement shall take huge amount of foreign currency,” he added.
Private clients are taking containers on deposit modality, while METEC took the hundreds of containers that are stored in different sites like Yayu Fertilizer project and other areas without similar guarantee that accrued the settlement amount.
According to the CEO, similarly there are still other public institutions and enterprises which are not returning containers on time.
He said that the container management in the country is very complicated. “For instance; meanwhile the dry port facility is owned by ESLSE, Customs Commission act like it owns and controls the containers. The Commission is using the containers as warehouse for staffed cargos and if it sold out the goods on auction it took the major share for itself, while ESLSE is supposed to settle the container demurrage,” he added.
Roba explained if ESLSE delayed to return the containers it may affect its relation with partners.
“With all this problems the movement of project cargos, COVID 19 related goods and basic commodities that included on the containerized cargo are maintained in good hand, while the containers shortage still affects,” he added.
“Meanwhile, currently, we have maintained a direct regular fleet to Chain that is weekly with MSC, and expanding lifting capacity at ports; the container constrain has become incident. Meanwhile, we have surpassed the previous containers cargo handling in terms of volume. The impact is not small and it forced us to meet 85 percent of the target,” he amplified.
Currently, ESLSE has about 2,940 containers with two common sizes of twenty or forty feet; of which 2,398 twenty feet containers (TEUs), 184 forty feet high cube (HCs) and 358 forty feet general purpose (GPs) containers.
Besides owning containers with different size, ESLSE is leasing containers as the business trend in the logistics sector. Based on that, it currently manages 49 TEUs and 500 HCs on lease arrangement.