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ANALYSIS
Last week saw the rather relaxed version of Ahmed Tussa, the chief executive officer (CEO) of the national amalgamated shipping and logistic enterprise - the Ethiopian Shipping & Logistics Services Enterprise (ESLSE) - who was in Adama to announce the performance of the enterprise he oversees to its employees. Speaking of performance, Ahmed indicated that the Enterprise has done well even if there were challenges in the whole process.
For Ahmed, the challenges of the sectors could be summarised as poor customer service, paucity of experienced experts and management problems. TheEnterprise, Ahmed said, need to create a forward momentum in these aspects if the success of the past year is to be accelerated.
But, the realities of the past year seem to contradict with what Ahmed proclaimed. Nothing but chaos could describe the state of the shipping and logistic sector over the past year. The whole system went bust to an extent that the external trade of the nation eventually came to a standstill.
It took months to identify the problems. In the interim, businesspeople were left helpless. They were unable to know what happened to their cargo. No one within the ESLSE or higher-up was making decisions that could solve the problems.
Decision makers within the ESLSE, including Ahmed, were attributing the whole problem on procedural causes than fundamental structural factors. They were trying to distance themselves from the whole gamut of problems facing the sector, from monumental increment of backlogs at the port to poor integration of port and dry port services.
It took months for them to take responsibility for the chaos. Even if it was visible that the system was short of capable leadership, a lot of foot-dragging had to be taken to swallow that.
After months, a high-level team of official travelled toDjiboutito identify the root causes of the problems and submitted a road map of solutions. Even then, effective absorption by the ESLSE of the road map of solutions took a very long time.
Businesspeople were spending their valuable days on the doors of the ESLSE to have information about their cargo. As if this was not enough, the monopoly had to expose them for higher shipment costs. Increments made on container bonds were also another headache that faced businesspeople over the past year.
It is on top of these structural problems that poor customer handling practices and paucity of experienced staff were happening. They have a lot to do with the ongoing restructuring effort of theEnterprise, which, in itself, is criticised for being heavily politicised.
True, the ESLSE might have seen another year of magnificent profits. But it is certain that it comes at the expense of businesspeople.
Whatever good performance that Ahmed was talking about, it does show neither the progress nor the efficiency of theEnterprise. It instead shows the ever-expanding monopoly power of the amalgamation that remains to put the whole spectrum of services in shipping and logistics sectors under control.
If anything, the numbers could tell history in these terms. The number of containers that ESLSE has transported in 2012/13 has reached 90,000 20-ft equivalents. Yet, little improvement was witnessed in the rather bureaucratic procedures involved in importing and exporting.
The average number of documents required to import a given commodity, for instance, has increased to nine, in 2012/13. This entails a total time of 44 days and an importing cost per 20-ft container of 2,660 dollars.
No better is the case with exports. It will take seven procedures, 42 days and 2,160 dollars to export a commodity equivalent of 20-ft container.
At the heart of the higher cost and longer time that exports and imports fromEthiopiatake stands the monopolised service of the ESLSE. What seems to be lacking in the whole equation, therefore, is reliable alternative.
At the policy level, the whole calculation of the EPRDFites in keeping the sector under protection emanates from the desire to create a national champion, save hard currency and enhance governmental revenue. The competitiveness of the nation's external trade seems to be overlooked in the process.
Even if some of the changes, such as the switch from the long overdue uni-modal system of transportation to a multi-modal transport system, were introduced with good faith of improving the system, their eventual diffusion into the membranes of monopolisation swept the hope. They even added new breeds of burdens on the already dysfunctional operational structures of the ESLSE. As a result, the trade competitiveness of the nation could not witness any meaningful improvement even through such changes.
Even a year after the height of the chaos, poor service provision in theEnterprisecontinue to improperly consume the time and money of businesspeople. Amending shipping contracts, tracking cargo, effecting payments and releasing container bonds are just some of the edges wherein bureaucratic cumbersomeness remains significant.
However, the procedural problems directly relate with the monopoly power provided to the ESLSE. It is in the absolute control of the sector by the amalgamated beast that the fundamental problem lies.
If conventional economics is something to go by, competition is the driving force behind efficiency and reasonable pricing. Sectors that witness effective competition are highly likely to witnesses higher service provision efficiency and lower cost.
It could be no different with shipping and logistics. The very services provided by the ESLSE are offered the world over through competitive business enterprises. Since countries rightly understand the benefits of competition and the very costs of monopoly, they prefer to see as many shipping operators as possible operating at their ports.
It is through infusing competitive incentives that top trading nations of the world maintained their status in the global trade sphere. The fact remains similar from US toChina, fromBraziltoSouth Africa.
It ought to have been this similar trend that the EPRDFites ought to follow, than sticking to their protectionist policy. National trade competitiveness needs to be the priority agenda to focus on than dispense it for meagre revenue additions.
Indeed, in comparative terms, Ahmed has justifiable reason to be seen relaxed. The chaotic times might now have become history. But there is no guarantee that they will not return back.
The structural problem that sits at the bottom of the chaos - monopolisation - still exists. And it is only when an effective solution is put in place for the pain could the symptom be rightly avoided.
Local realities and experiences the world over show that opening the sector is key to solve the problem permanently. It is, therefore, on this lasting solution that the EPRDFites ought to expend their political commitment.
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