Fortune News | May 15,2021
The federal government has assigned mandatory quotas to cross-border freight transport associations to ferry fertiliser and wheat from ports in Djibouti.
The decision comes following discussions held two weeks ago between the associations' leaders and federal transport officials. The meeting was co-chaired by Yehualashet Jemere, director-general of the Ethiopian Maritime Authority, and Abdulber Shamsu, deputy director of the Ethiopian Road Fund Service.
Yehualashet was a state minister for Transport before taking the helm at the Authority three months ago, replacing Mekonnen Abera, who had served as director-general since 2008.
The quotas, which were introduced last week, will stay enforced until July 7, 2022. Operating under the Ministry of Transport & Logistics, a committee comprising representatives from various federal agencies supervises the implementation of the quotas based on trucks' service life and loading capacity. Close to 68 trucking associations are expected to assign between 24 and 664
trucks each to transport 1.3 million tonnes of fertiliser and wheat.
The rules apply to cargo trucks that can load more than 40tn and have been in service for less than 30 years. Trucks on the road for less than 15 years are designated "Level 1", while those older are labelled a "Level 2". Tariffs range from 257 Br to 520 Br a quintal, depending on the distance from ports in Djibouti to the destinations inland.
Officials say the mandatory quota is prompted by the need to transport fertiliser that has been sitting in Djibouti since January this year. The stock is part of the 770,000tn agricultural input bought from the Morocco-based OCP Group last November through the Ethiopian Agricultural Businesses Corporation. A little over half a million tonnes of NPS, one of three types of chemical fertilisers in use in Ethiopia, is waiting for pick up.
Wheat destined for emergency humanitarian assistance for people in drought-affected areas in the southern and eastern parts of the country was docked in Djibouti last month.
Alpha Cross-Border Freight Transport Owners' Association is among the associations called up for duty, which has 126 trucks under its fleet. Authorities expect it to commit up to eight trucks a week for the task. Mohammed Kibret, its general manager, raises concerns about potential delays in the loading and unloading process. Many in the industry complain about the "clunky" loading and unloading process.
“Officials have promised eased loading procedures,” he said. “But we haven’t seen any improvements.”
Industry players say it can take a truck up to three weeks on average to complete a single trip, inflating operational costs.
“Some of the destinations are also difficult to drive to,” said Mohammed. “This is why some of the tariffs are set higher.”
The tariff for destinations like Molale, a town in the Amhara Regional State 254Km northeast of Addis Abeba, is set at 445 Br a quintal. Many truck drivers do not prefer the area for its rocky roads and mountainous topography.
Dereje Legesse, the general manager of Segon Cross Border Freight Transport Owners' Association, says the tariffs are no different from market prices. Transporting cargo for the state-owned Ethiopian Shipping & Logistics Services Enterprise (ESLSE) pays an average of 226 Br a quintal.
“Although the tariff seems higher in some cases, it's similar when calculated for a kilometre,” said Dereje.
Segon, incorporated in 2017 and runs a fleet of over 200 trucks, is required to allocate 40 trucks per week.
It is not the first time federal authorities instituted mandatory quotas for the trucking industry. Last year, they assigned quotas to transport cement from factories to Guba, the Grand Ethiopian Renaissance Dam (GERD) site in the Benishangul-Gumuz Regional State. Truck owners were paid 292 Br a quintal.
Officials say the activities of the trucks will be monitored at four checkpoints.
"Failure to comply with the rules will have serious consequences,” warns Bareo Hassen, a state minister for Transport & Logistics.
Experts caution federal authorities to explore other alternatives instead of playing it tough with truck owners. They can use the Ethio-Djibouti Railway efficiently, according to Matiwos Ensermu (PhD), associate professor of logistics and supply chain management at the Addis Abeba University School of Commerce.
The 765Km railway, Africa's first fully-electrified transboundary line between Ethiopia and Djibouti, transported over 77,300 shipping containers last year. The company transported around a quarter of Ethiopia's export and import freight.
Officials are expecting two other vessels carrying wheat and fertiliser to call ports in Djibouti in the coming weeks, Bareo disclosed.
The Agricultural Businesses Corporation is awaiting the arrival of half a million tonnes of urea fertiliser supplied by FertiGlobe, an Abu Dhabi-based firm. The Corporation secured a deal with FertiGlobe last month following four months of negotiations. The federal government had budgeted 1.6 billion dollars to procure 780,000tn of NPS and half a million tons of urea this year, though rising international prices likely mean the procurements will overshoot the budget.
PUBLISHED ON May 07,2022 [ VOL 23 , NO 1149]
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