In 2021, the Ethiopian Ministry of Transport issued the much contested Multimodal Transport Operators Commercial Licensing and Competency Certification Directive no. 802/2021 (MTO Directive) to open up the multimodal business sector, currently reserved to the state-owned Ethiopian Shipping and Logistics Service Enterprise (ESLSE). The directive allows the provision of multimodal transport services (i.e. the offer of combined maritime-road-air-rail transport services under a single contract), only to those operators that are granted with a license issued by the Ethiopian Maritime Authority (EMA).
In order to obtain such a license, applicants have however to fulfil a series of very stringent financial, capacity and organizational criteria. Among these, there is a requirement to have a minimum paid-up capital of at least 350 million Birr (about 6.35 million US$); a competency certification to manage multimodal transport operations; at least 5 years of experience as a carrier, shipping agent, shipping company, multimodal transport operator, etc.; at least 15 trained employees holding first degree or certificate of competency with 8 or more years of experience in the same areas, and dispose of at least 5 hectares of leased or owned land. The Directive also allows foreign companies to obtain a MTO license for operating in Ethiopia, but exclusively in joint venture with an Ethiopian partner, insofar they fulfil all the requirements stated by the Directive.
Licensing of multimodal operators is a practice recommended by UNCTAD (see this document at pag. 13, para 25), particularly in developing countries, where these operators must offer specific technical and financial guarantees to accomplish the responsibilities related to the conduction of mutimodal operations. Based on this recommendation, the UN concluded in 1980 a Convention on the International Multimodal Transport of Goods. that at art. 4 para 2 recognizes the right for States to maintain measures for controlling at the national level multimodal transport operations and multimodal transport operators, including the right to subject their activity to a license. However, the Convention never entered into force because it did not achieve so far the minimum number of ratifications (30 States).
In Ethiopia, most of observers had argued that the requirements introduced by the Ethiopian government for licensing of MTOs were unrealistic and expressly designed to create a regulatory barrier for ESLSE competitors to enter into the multimodal business. It seems that their opinion was not totally unjustified, as Ethiopian medias are circulating the news that all the seven logistics companies that have applied for a multimodal operating license have been disqualified by the EMA. Applicants included a giant of logistics, such as Bollore Transport & Logistics, and two public enterprises, the Ethiopian Railways Corporation (ERC) and the Ethio-Djibouti Railways S.C., the latter participated by Public Bodies and State Enterprises of Ethiopia and Djibouti.
Initially, EMA had selected an Ethiopian logistics company as eligible for the grant of the license, but in the end the decision was overturned and also this one has been finally disqualified.
In 2018, the United Nations Development Programme (UNDP) National Logistics Strategy for Ethiopia indicated that unimodal transport (which is the only form of transport currently used by private logistics companies in the country), is around 18 percent more expensive than multimodal transport, recommending a higher use of the latter mode of transport to reduce logistics costs in the country. In a nation that has among the highest transportation costs in the Horn of Africa and the East Africa region, simplification of the MTO Directive requirements, rather than a possibility, should be a necessity.
Desiderio Consultants Ltd., 46, Rhapta Road, Westlands
KENY