The opening of the logistics sector to multimodal operations has come with tight restrictions, reserving key strategic commodities and trade routes exclusively for the state-owned giant, the Ethiopian Shipping & Logistics  (ESL).

Federal government officials expect the partial liberalisation to boost efficiency in a logistics sector that has been long criticised for poor performance and high costs. A recent World Bank report ranked Ethiopia poorly, with a logistics performance score of 2.94 out of five.

Djibouti has served as Ethiopia’s main gateway for two decades, handling 95.1pc of its imports during the first half of this year. Djibouti relies heavily on the Suez Canal, which accounts for about 30.6pc of global container traffic, facilitating the movement of over one trillion dollars worth of goods annually. According to the UN COMTRADE, Ethiopia’s imports from China reached 5.57 billion dollars in 2023, while imports from the UAE totalled 578 million dollars.

Multimodal logistics involves handling cargo through various transportation methods, vessels, railways, and trucks. ESL, a state-owned enterprise managing roughly 90pc of cargo traffic bound for Ethiopia, monopolised this sector entirely. ESL controls critical routes and commodities, particularly bulk shipments like fertilisers and capital goods, essential to the national economy. Six companies were allowed to enter the market in an unprecedented policy shift to increase competition and efficiency.

However, two of Ethiopia's largest import markets — China and the United Arab Emirates (UAE) — are reserved exclusively for ESL, sharply limiting opportunities for incoming competitors. Bulk cargo shipments, too, remain off-limits to these companies.

According to Yalew Tesfaye, a senior official at the logistics administration of the Ethiopian Maritime Authority (EMA), multimodal operators could generally handle imported cargo, yet bulk cargo remains strictly under ESL’s control.

“The state-owned enterprise has to be protected,” said Yalew.

While the logistics corridor was slowly opening for competition from the private sector, safeguarding ESL appears to be a priority for policymakers. Under the new policy, multimodal operators should establish their own expansive terminals or lease from eight dry ports owned by ESL, or other companies.

ESLSE operates eight dry ports nationwide, notably the Modjo terminal in the Oromia Regional State, built in 2009. It covers 150hct and handles approximately 78pc of the country’s imports.

Berisso Amalo, CEO of ESL, cautioned against renting the company's dry port spaces to competitors, anticipating detailed studies to determine the advantages.

"We can't just say yes," Berisso told Fortune. "It's a competition after all."

He also recognised the new entrants as an opportunity for ESL rather than a threat, seeing competition as a driving force to improve his company's operational capabilities.

"We're already improving our infrastructure and technology in preparation for competition," Berisso said.

Cosmos Multimodal Plc,, Tikur Abay Transport Plc, Panafric Global, Ethio-Djibouti Railway S.C., Ethio-Rail Logistics Plc, and Gulf Ingot FZC Multimodal Operator have received authorisation to operate. Authorities have set rigorous conditions for their market entry, including appointments of boards of directors with at least five years of relevant industry experience, developing or leasing terminals covering at least five hectares, operating a minimum fleet of 30 trucks, and maintaining warehouse facilities of at least 30,000Sqm, built from concrete.

"They've gone through strict requirements and have proved their capability," said Yalew.

He anticipates more operators might join if authorities deem additional entrants feasible. Officials from his Authority are coordinating closely with the National Bank of Ethiopia (NBE) and the Ethiopian Customs Commission to facilitate customs clearances and banking procedures for the new operators.

“Companies have received all approvals to start operation,” Yalew told Fortune.

Yet industry veterans have expressed scepticism about the reform's limited scope. Daniel Zemichael, former president of the Ethiopian Freight Forwarders & Shipping Agents Association (EFFSAA) and general manager of Freighters International, pointed out the limitations new entrants face. With about 70pc of imports sourced from China and the UAE, the newcomers will only have access to about 20pc of the market.

ESL’s dominant position, managing over 80pc of Ethiopia's trade, presents tough competition for incoming companies seeking substantial market share.

"This shows that multimodal operation is still monopolised," said Daniel.