FROM MAGAZINE: Ethiopia influences the Horn of Africa

Ethiopia’s growing fame in the African continent cannot be ignored. With a visionary prime minister, aviation, shipping, and logistics partners are leaving no stones unturned in grabbing the opportunity.

“Over the past few months, Ethiopia has made historic investments in peace, the returns of which we will see in years to come. I believe that peace is an affair of the heart. It takes a few to make war, but it takes a village and a nation to build peace,” these words by the Ethiopian prime minister Abiy Ahmed Ali echoed Oslo City Hall on December 10, 2019, on receiving Nobel Peace Prize. He was honoured for his efforts to achieve peace and international cooperation and in particular for his decisive initiative to resolve the border conflict with neighbouring Eritrea.

One of the first moves by Ali upon taking office in April 2018 was to secure $3 billion in aid and investments from the United Arab Emirates (UAE).

In January 2020, the Nobel Laureate launched Electronic Single Window Project (eSW), which connects 16 regulatory agencies for enhancing efficiency in the trade logistics landscape by speeding the customs process for importers and exporters. The platform will reduce the 44 days hectic long paperwork process to 13 days and eventually to three days. The move follows after the government signed three agreements in November 2019 with Alibaba Group to join the Electronic World Trade Platform (eWTP), an Alibaba-led initiative that aims to lower barriers to global trade for small and medium-sized enterprises through e-commerce.

A report released on March 4, 2020, by The International Air Transport Association (IATA) on the importance of air transport and tourism to Ethiopia revealed that the sustained prioritisation of air transport, connectivity, and tourism as a strategic asset, would support an additional 900,000 jobs and at least $9.3 billion of gross domestic product (GDP) by 2037. If the current trend continues, the country’s air transport market will grow by 226 percent over the next 20 years.

On the other hand, Ethiopian Airlines, the country’s flag carrier plans to construct a new $5 billion airport in Bishoftu, which can handle 100 million passengers per annum. The move is due to the outgrowing capacity at its current base in Addis Ababa Bole International Airport. The carrier handled a cargo volume of 476382.711 tonnes in 2019.

Last year in May, DHL-Ethiopian Airlines Logistics Services, a joint venture company formed between DHL Global Forwarding (DGF) and Ethiopian Airlines came into existence. Since then, it scaled up its operations considerably by investing in establishing stations at Addis Ababa airport, and in the manufacturing hubs of Hawassa Industrial Park and Bole Lemi Industrial Park, which together contribute 80 percent of the industrial export products. Fitsum Abadi, managing director, Ethiopian Cargo & Logistics Services states, “Both Hawassa and Bole Lemi industrial parks are expanding further and new manufacturers are also joining, which will boost the export volume. We have offices in these two parks and will also open branches in Mekelle and Kombolcha. With the plan to introduce a warehouse facility in Modjo, we aim to introduce container station services targeting the export market. This will enable operational efficiency and cost reduction.”

Modjo dry port is the major inland port handling 70 percent of the total import of the country. The expansion of the dry port which will be operational by 2020 aims to reduce the congestion at Djibouti port and facilitate the import and export shipment movement.

Pramod Bagalwadi, CEO, DHL Global Forwarding, sub-Saharan Africa (SSA) cites, “Today, we are in the position of tapping into Ethiopian Airlines’ connectivity, to reach more of our customers and integrating them to the SSA and global network of DHL Global Forwarding. Although intra-trade on the continent is improving, we recognise that the movement of cargo continues to be faced with challenges due to the lack of direct flights to and from certain countries. However, by leveraging our network and Ethiopian Airlines’ connectivity, this challenge is minimised. Our joint venture has a presence in all industrial regions and serves major importers in the country like beverages, pharma distributors, NGOs, etc.”

In addition to air, ocean, and road freight services, as well as value-added services including customs brokerage, Ethiopia is also one of the key competence centres for DHL’s Industrial Projects, a unit of DHL Global Forwarding that manages complex logistics projects including deep-sea chartering activity and heavy-lift cargo.

Recently, Bolloré Transport & Logistics Ethiopia, a joint venture between Bolloré Transport & Logistics and the Ethiopian company CLS Logistics became operational. Bolloré, which has its presence in Ethiopia since 2008, has an air-freight operations site at Bole airport, 4,000 square metres of warehouses in Kaliti and agencies in the industrial parks of Hawassa, Bole Lemi, and Kombolcha.

Last month, Ethiopian Airlines joined forces with Sanad Aerotech to create a maintenance, repair, and overhaul (MRO) Center of Excellence in Africa. This will initially focus on MRO of auxiliary power units (APUs) in Addis Ababa and will start with APUs used on B737 and A320 aircraft. It will then pave the way for future collaboration in APUs MRO services to other African airlines. “IATA has cited safety developments and cost-competitiveness among the areas that need improvement in the region. An MRO Centre of Excellence will play a significant role in addressing these issues and fill the gap for an MRO solutions provider with advanced expertise across the region. This will encompass both the programme and facility, in partnership with Ethiopian Airlines,” says Mansoor Janahi, CEO of Sanad Aerotech.

Sanad continues to embrace the fourth industrial revolution (4IR) tools and technologies and investing in training programmes. Janahi observes, “Digitalisation initiatives and early adoption of 4IR technologies have helped in building our status as MRO solution provider in the world to employ several advanced technologies under a single roof. We aim to expand our capacity in Ethiopia to serve an increasingly competitive global market.”

In 2019, Ethiopian Airlines, Port and Logistics Administration Office of Chongqing Municipal Government and Chongqing Airport Group signed a cooperation agreement to launch scheduled freighter operations between Addis Ababa and Chongqing in China. The three new routes include Chongqing (CKG) -Addis Ababa, Chongqing-Dubai-Addis Ababa, and Chongqing-New Delhi-Addis Ababa. Abadi observes, “The major commodities via Delhi through Chongqing freighters are garment, medicine, auto parts, motorcycle parts, cell phone parts, and laptops. Since the operation of CKG freighter, we grabbed a stable share in the local market and attracted the cargo coming from the nearby city such as Chengdu and so on, also huge market share for Latin American (LATAM) business. We are even planning to increase our network in LATAM and South East Asia.” For the fiscal year 2018-2019, the airline earned an operating profit of $260 million.

Ethiopian Airlines was recently being criticised for its continued operations to and from China during the outbreak of COVID-19. Though the carrier did not cease the operation, it has cut down its weekly flights from Addis to Beijing, Chengdu, Guangzhou, and Shanghai by 33 percent. Even it changed aircraft on the Addis to Beijing, Guangzhou and Shanghai routes from B777 and A350 to B787-8 resulting in the change of capacity.

IATA’s report observed a few areas where the Ethiopian government can promote aviation growth to add more value to the country. It consists of the implementation of Single African Air Transport Market (SAATM); ensure future infrastructure investments maximise the economic and social benefits of connectivity; the government should find ways to make the blocked funds available, and improve air cargo facilitation.

Meanwhile on the road infrastructure front, in March 2019, the European Union (EU) commissioner for international cooperation and development Neven Mimica visited Eritrea and launched an initial $22.69 million project for road connections between the Ethiopian border and Eritrean ports.

This feature was originally published in March - April 2020 issue of Logistics Update Africa.