Minister "Encourages" Private Importers to Go Multimodal
By Zekarias Haddush addisfortune.com
The Minister of Communications and Transportation (MoCT), Driba Kuma, has encouraged the private sector to use the multimodal transportation system, which is to be fully operational beginning July 7, 2010.
Copied to the Prime Minister's Office and in a letter he issued on June 4, 2010, the minister advised state agencies (30 of them) to use this transportation system, while he "encouraged" the private sector to "take advantage of the oppoprtunity," which he said was created with a door-to-door delivery system for cargo.
The multimodal transportation arrangement is a system whereby the transportation of goods is under a single contract but is performed with two different means of transportation. The carrier is liable for the entire journey, even though it is performed with several different means of transportation (i.e. rail, sea and road). The carrier, however, does not have to be in possession of all of the means of transportation and in practice usually is not.
The UN Multimodal Convention defines multimodal transportation as, "the carriage of goods by at least two different modes of transportation on the basis of a multimodal transportation contract from a place in one country at which the goods are taken charge of by the multimodal transportation operator to a place designated for delivery situated in a different country."
The state owned Ethiopian Shipping Lines (ESL) is responsible for the transportation of much of Ethiopia's import cargo. In 2008, for instance, the ESL brought 20,000 containers, and all of them were delivered at the Port of Djibouti. With the launching of the dry port facility at Modjo, Oromia Regional State, 76km from Addis Abeba, this has now changed. As of last year, government owned Cargo has begun to be delivered to this site. The ESL thence became the sole multimodal transportation operator (MTO).
Importers are to enter into a contractual agreement with the ESL for the latter to bring their containers or vehicles to Djibouti Port, process all clearance requirements at the port, and deliver the containers to the designated dry ports of Modjo and Semera, Afar Regional State. An importer is to avoid entering into different contracts with agents, transitors, and forwarders for the delivery of imported goods.
So far, it has been an experimental effort by the authorities, trying to determine whether or not their initiative will become functional. Their desire is to see as much Cargo as possible lifted as fast as possible from the Port of Djibouti, thus avoiding paying warehouse fees in foreign currency and facing the threat of confiscation and subsequent auction by the port after six months of waiting.
The authorities in the maritime industry are satisfied with the experiment, Minister Driba's letter, two weeks, ago signals.
The letter compels state agencies not to use any system but the multimodal arrangement beginning in the first week of July, 2010, barring any unforeseen circumstances. But with private companies, his wording has created confusion within the industry as to whether it implicitly makes the transportation regimen mandatory.
It is not mandatory, said Mekonen Abera, director general of the Ethiopian Maritime Affairs Authority.
"This is not some sort of order made to the private sector," Mekonnen told Fortune. "It, rather, provides the option for importers to take advantage of this service for all containerised cargo and vehicles."
"I urge the private sector to take advantage of this opportunity," says Driba in his letter. This is not an appropriate way of writing the letter, according to a middle level government official in the maritime industry.
"He should have written the letter in a manner that does not make the operator in the private sector insecure," this official told Fortune.
It is a guarded use of words with the intent to force the private sector to inevitably comply, according to a manager of a forwarding company. The private sector is already insecure; they are wary of such expressions, he said.
"They are deliberately using this word, inching toward making the multimodal transportation system mandatory for all," he told Fortune, demanding anonymity, because the industry's association is yet to form a common position.
But the offer by the minister does not have any direct impact on freight forwarders or agents, nor will it force private importers should they choose to receive their Cargo at the Port of Djibouti, believes the industry's leader, Daniel Zemichael, also the managing director of Freighters International Plc.
Daniel has been under fire from his members for allegedly neglecting their interests due to a conflict of interest. Some are even putting pressure on him to resign from his position at the Ethiopian Freight Forwarders and Shipping Agency Association (EFFSAA). Daniel denies the existence of such pressure on him, or the demand put to the association's office.
His company is, however, a local representative of Steger Group, a Dutch company in charge of managing Modjo Dry Port's facilities, a job it received without competitive bidding. Steger is also an agent of the ESL in the Netherlands.
Operators in the private sector are uncomfortable with the minister's letter. The Ethiopian Maritime Affairs Authority is writing a draft directive governing the procedures that the private sector will be required to follow in order to use the multimodal transportation services and be permitted to be inspected and taxed by the Ethiopian Revenues and Customs Authority (ERCA). The new system may lead to a complte monopoly along the corridor, they are concerned.
Minister Driba was not available for comment, for he was in a series of meetings last week. However, representatives of the private forwarding companies will meet him in the following few days, hoping to table their concerns, Fortune learnt.
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