Thursday, March 30, 2023
BusinessPrivate operators poised to join multimodal logistics sector 

Private operators poised to join multimodal logistics sector 

Four new multimodal logistics companies set to join the sector will be announced in few weeks

The end of government monopoly in the logistics sector is imminent, as four logistics companies are in hot pursuit to be the first group of private multimodal logistics service providers under the terms of “Free on Board” (FoB).

After several companies expressed their interest to join the sector, a committee under the Ethiopian Maritime Authority is edging closer to announce the four companies set to join the sector. These companies will be sharing the market with the six-decade-old state-owned giant Ethiopian Shipping and Logistics Service Enterprise (ESLSE).

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According to the director general of the Authority, Yehualashet Jemere (Eng), the process in selecting the companies is undergoing at his office, and “the selected companies will soon be announced.”

The Authority had first issued an invitation for interested logistics companies to submit their expressions of interest within a month and a half beginning November 24, 2022. The call was later extended for a month beginning January 12, 2023, upon the “request of companies submitting their expression of interest,” as stated on the notice back in January.

Currently on the final stage, it is to be disclosed soon which companies meet the stringent requirements put in place by the directive issued to license and regulate multimodal transport operators.

Three months after the ratification of this directive back in June 2021, the National Logistics Council deliberated to “break the monopoly of the multimodal operator,” and ratified the FoB directive.

Interested companies applying for the license will have to present a paid-up capital of 350 million birr, open a head office in Ethiopia, and provide four lease or ownership documents for at least five hectares of land. Moreover, three hectares of the land should be a developed terminal with a minimum of 3,000 square meters of warehouse space, better known as a “bonded warehouse” in the industry.

Should the companies seek a temporary license until meeting the full requirements, they are required to fulfill a paid-up capital of 228 million birr and own or rent 3.5 hectares of land for at least four years, besides meeting several other requirements important for the works of logistics service.

Asked if his office would keep issuing multimodal transport service licenses, Yehualashet confirmed it would only be five companies this time as per the directive.

“It is a policy matter whether or not the sector will be open for more competitors,” he said. “It will have an effect on the country’s economy, so it is debatable and can be decided later.”

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