Ethiopian vessels make a mark on cross trade services amplifying the performance of the Ethiopian Shipping and Logistics Services Enterprise (ESLSE), a sole flag carrier in Africa.
Despite some of the expected incoming cargos like rebar and coal showing reduction in the budget year as well as some of the import cargos sourced from Djibouti International Free Trade Zone, the state owned mammoth logistics service provider managed 7.2 million metric tons of import/export cargos in the 2021/22 budget year that closed on July 7.
In the budget year, the vessels that were operated by ESLSE were in good condition to carry out cabotage services for cargos in neighboring African ports.
Roba Megersa, CEO of ESLSE, said that through the cabotage operation package, the export cargos from Massawa, Eritrea, and containerized cargo from Djibouti itself have been transported by ESLSE vessels.
“Our vessels have regular service for bulk and containerized import cargos to Somaliland, at the same time we have started services at Mombasa to connect the Kenyan port to other destinations and similarly the service has expanded to other ports in Tanzania and South Africa and occasionally to western Africa,” the CEO explained.
He said that the cross trade operation at some point is a good strategy for ESLSE to widen its presence besides a significant hard currency generation for the enterprise.
In the budget year, the vessels that ESLSE operates have contributed to generate 1.8 billion birr, “they have become profitable for the first time.”
“One of the major reasons for the best performance of our vessels was the cross trade,” Roba explained.
He reminded that when the vessels were bought about a decade ago, the target was to transport project cargos; however the reduction of the number of projects made it less lucrative, “so we have shifted the vessels for strategic operations including introducing cross trade that made them profitable.”
“We bridged destinations that made our vessels to be in high demand and now we are full of activity. Furthermore, the procurement and increment of owned containers allowed us to make our vessels containerized, which is very profitable,” he added.
The settlement of the remaining arrears has also contributed for the vessels to become more profitable.
Currently, ESLSE operates 11 vessels and nine of them, which included two tankers, were built about 12 years ago and financially backed by the Chinese EXIM bank having consumed USD 234 million.
The nine multipurpose vessels, ‘Handysize’, including the two relatively oldest one that Ethiopia operates, now have a capacity of about 28,000 dwt.
Recently, ESLSE’s board has approved the procurement of two more ‘supramax bulk carrier’ that will have a capacity of 63,000 dwt.
The ‘supramax bulk carrier’ is currently highly preferred for bulk goods in the industry. Once the process is accomplished in the coming few weeks, the vessels will be built in two years time and will commence as a fleet thereafter.
ESLSE’s vessels have now transported 19 thousand import containers and 1.05 million metric tons of bulk cargos through cross trade business.
Roba said that because of COVID 19 and the conflict between Russia and Ukraine, the 2021/22 budget year made it one of the challenging years for the maritime business, “Nonetheless, our operation has been successful.”
In the budget year in total 7.2 million tons of cargos shipment have been managed through different operations including vessel, inland, freight forwarding and port and terminal services.
Regarding marine operation, it had targeted to transport 3.9 million tons, while the actual performance was 3.6 million tons or 93 percent of the target.
“The procurement of additional heavy duty trucks, 15 car carriers and 10,000 containers have accelerated the marine and inland transport,” Roba explained the success attained on the marine operation.
The containerized cargo fleet was 116,000, which is a share of 66 percent of the total containerized import to the country. In the year, for the first time the export cargo transferred through ports in Djibouti surpassed one million.
The enterprise has 25 percent market share on freight forwarding business segment, which is mainly operated by the private sector.
The enterprise that disclosed it made a history of zero demurrage for import of goods particularly fertilizer though Djibouti said that the transiting time for containerized cargos that operated through multimodal scheme was reduced to 5.5 days ahead of the grace period that is eight days.
Similarly, vessels berth time has been less than five days against the target of ten days.
The logistics giant has also disclosed that it is installing the state of the art IT solutions at its head office at the cost of 450 million birr.
The logistics enterprises that also operates its own vessels said that on the aim to be equipped with the latest IT system, it is developing Oracle’s tier III data center that would boost the IT management of ESLSE.
It will be the second after South Africa’s Oracle’s cloud computing system installed in Africa.
The Dire Dawa Dry Port that consumed USD 80 million covering 34 hectares is also expected to be operational in the near future.
Regarding the financial performance, in the budget year ESLSE has generated 51.4 billion birr in revenue and 5.64 billion birr profit before tax. The enterprise capital has also reached 64.85 billion birr.
In the budget year, USD 76 million has been secured.
As a challenge, ESLSE has stated that the public institutions are lagging behind in terms of settling the payment for the service that the logistics enterprise provides.
Similarly, the enterprise has faced a challenge from commercial banks in Ethiopia in terms of accessing its foreign currency savings, “the global price hike has also been a problem registered in the budget year.”
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