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Ethiopian, DHL to sign JV agreement

Ethiopian, DHL to sign JV agreement

The Ethiopian Airlines Group and DHL, the leading global logistics and forwarding company, are going to sign an agreement to jointly incorporate a logistics service company in Ethiopia.  

One of the eight profit centers of Ethiopian Airlines Aviation Group, Ethiopian Airlines Cargo and Logistics, has partnered with DHL to render logistics services in Ethiopia.

Ethiopian Airlines Group CEO Tewolde Gebremariam told The Reporter that Ethiopian and DHL would sign the agreement in two weeks’ time. According to Tewolde, Ethiopian will have a 51 percent share while DHL will own 49 percent stake in the joint venture logistics company.

Tewolde said the leading global forwarding company is a good customer of Ethiopian Cargo. “We transport DHL’s parcels from Europe to China, from China to Africa, from Europe to Africa. We transport a large volume of goods from Europe to Nigeria and South Africa because we have an extensive and efficient cargo flight network. We annually secure 50 million USD business from DHL.”

Tewolde said the JV company would deliver efficient logistics services for Ethiopian manufacturing sector. The joint venture company will have offices in Addis Ababa and regional towns. “The company would focus on serving manufactures in the newly established industrial parks and other major export centers.”

According to Tewolde, Ethiopia has an in efficient and expensive logistics sector. “Today it takes a long time and a lot of money for manufacturers to transport their goods to Djibouti. It is also time taking and expensive to ship the products to American and European markets. Ethiopia is on the right track to industrialization but the logistics sector is lagging behind,” he said.     

The Ethiopian government is developing industrial parks in various parts of the country. Three industrial parks have been built in Hawassa, Mekelle, and Kombolcha towns and five more are under development. Many believe that the development of the industrial parks will transform the economy significantly.   

Tewolde told The Reporter that he firmly believes the development of the industrial parks is going to be a game changer in the Ethiopian economy in terms of industrialization. However, Tewolde said, industrialization without equivalent global standards and logistics service will be a failure. “We learnt this from China, Europe and the US. In China most of the development is around the coastal areas.”

“If we see the Hawassa, Mekelle and Kombolacha industrial parks (Dire Dawa and Adama to be inaugurated soon), they produce significant amounts of products for export. The manufacturers should get a global standard logistics services. If it is a high value and time sensitive material, they may use air transport. If it is low value and long-time deliver service, then they can use sea transport. We believe that the logistics sector is the dragging force. It is under developed. I know there are a number of initiatives to develop the sector. And we also want to contribute our share. That is why we are going to enter the logistics service in Ethiopia,” Tewolde added.

One of the eight profit generating units of Ethiopian Airlines Group— Ethiopian Cargo and Logistics Services is scaling up its business operation by making huge investments on its infrastructure and fleet.

With eight dedicated cargo aircraft, six B777-200F and two B757-200F and a daily up lift capacity of 8,672 tons, Ethiopian Cargo and Logistics Services is the largest cargo operator in Africa. 

At the Paris Airshow 2017, Ethiopian placed firm orders for two B777F valued at USD 615.4 million. In June 2017, Ethiopian inaugurated a state of the art cargo terminal built at its main hub in Addis Ababa which can handle 600,000 tons of cargo. Coupled with the previous terminal; Ethiopian Cargo now has the capacity to handle close to one million tons of cargo. 

Ethiopian Cargo and Logistics Services is dealing with global electronic giants like General Electric (GE), Samsung and Techno Mobile to set up their regional storage and distribution centers in Addis Ababa where Ethiopian cargo can provide to them with efficient and reliable transport services throughout Africa.

Ethiopian Cargo is now transporting 343,000 tons of cargo every year generating 10 billion birr revenue. According to Ethiopian 15-year growth road map dubbed Vision 2025, Ethiopian Cargo will have 19 dedicated freighter aircraft (11 B777, four B767-300 and four B737-800) which can transport 820,000 tons of cargo generating USD two billion of revenue flying to 57 destinations. It now serves 39 international cargo destinations.