ETHIOPIAN CIVIL SERVICE UNIVERSTY

COLLEGE OF URBAN DEVELOPMENT AND ENGINEERING

DEPARTMENT OF URBAN INFRASTRUCTURE ANDTRANSPORT

Analysis on Perennial Problems of Managing Logistics in Ethiopia,

The Case of Import Grain and Fertilizer

By:

Temesgen Yihunie Alamineh

Thesis Project Code: TPM 7040

Adviser:

Asaminew Alemu (Dr.)

Assistant Professor

A Thesis Submitted to the Master’s Degree Program, Ethiopian Civil

Service University, in Partial Fulfillment of the Requirement for the
Award of Master’s Degree in
Transport Planning and Management

January, 2017
Addis Ababa, Ethiopia

I
 DECLARATION

I, Temesgen Yihunie Alamineh, ID number ECSU1400835, do hereby declare that the

Thesis entitled “Analysis on Perennial Problems of Managing Logistics in Ethiopia, the
Case of Import Grain and Fertilizer” is my original work and that it has not been
submitted partially; or in full, by any other person for an award of a degree in any other
university or institution.

Name of Participant: Temesgen Yihunie: Signature…………………….

Date…………….

This Thesis has been submitted for examination with my approval as a university
supervisor.

Name of Advisor: Dr.Asaminew Alemu: Signature…………………….

Date……………

II
 APPROVAL

The undersigned certify that we have read and hereby recommend to the Ethiopian Civil
Service university to accept the thesis submitted by Temesgen Yihunie, and entitled
“Analysis on Perennial Problems of Managing Logistics in Ethiopia, the Case of Import
Grain and Fertilizer” in partial fulfillment of the requirements for the award of a Masters
Degree in Transport Planning and Management.

Name of Supervisor ……………….…………………Signature………………….

Date………………………

Name of Internal Examiner ……………………..…Signature………….……..

Date……………………...

Name of External Examiner ……………………..Signature………….……..

Date……………………....

Name of Head of Department ……………….….. Signature………………….

Date……………. ………..

ABSTRACT

III
The main focus of this study is to analyze the permanent problems of logistics
management system of Ethiopia with special focus on import grain and fertilizer
logistics. In this study, both mix of qualitative and quantitative research approaches are
applied because the study is focused on statistical data of import grain and fertilizer and
opinions of the logistics sector professionals. The type of research is exploratory
research intended to examine and analysis the recurrent challenges of managing the
logistics sector of Ethiopia with the basis of case study strategy. Data gathering
instruments are interview of expertes by selecting purposive and simple randmon
sampling theqnics with field observations. The study found out that Logistics Demand of
the country is increasing from time to time parallel with the economic boost, while the
Supply of logistics infrastructure, skill, facility and working policies and procedures are
in infant stage. Most of the grain and fertilizer import is handled by government
institutions which results high inefficiency of procuring the product, transport contract
administration and using of all other international trade logistics services. The key
problem of actors in import grain and fertilizer logistics is the issue of planning. All
government importers are rival each other to use the same resource like sea port,
logistics service provider and port facilities without making interface in planning and
other coordination mechanism. The vessel discharge productivity at sea port is very
limited comparing with international practices, and the dispatch capacity of trucks also
not in line with the volume of the cargo at sea port. The volume of grain and fertilizer
import and the number warehouses and its capacity in the country doesn’t match.
Therefore, it is imperative to solve strategically this issue with giving special focus in
rearranging of grain and fertilizer import organizations, corridor utilization
management systems, availing logistics infrastructure and enhancing freight transport
capacities.

Key Words: - Logistics Management, Freight Transport, Grain and Fertilizer Importers, Logistics
Infrastructure, Discharge Productivity, Dispatched Capacity.

IV
 ACKNOWLEDGMENT

Thanks God for All!

I am so grateful for all that helped me in making this research project a success especially
to Dr. Asaminew Alemu, my advisor, for his guidance, excellent insights and for availing
all the time and resource necessary to support me in the research.

I am also thankful for my wife Tena Andualem, my children Kalkidan Temesgen and
Absera Temesgen for their continuous support during this work. I also extend my
gratitude to Ato Mekonnen Abera, Director General of Ethiopia Maritime Affairs
Authority (EMAA) and Dr. Eng. Mengist Hailemariam, Lead Expert in Supply chain and
Logistics Management at Logistics Transformation Office in EMAA for their
knowledgeable consultation until the end of this study.

Finally, I thanks for all higher officials and senior experts in grain and fertilizer import
organizations like NDRMC, WFP, EAWC, ETBC and logistics sectors like Federal
Road Transport Authority, ERCA, EMAA, ESLSE and NBE who have given me all the
necessary support during my data collection.
Thank you all again!

V
 TABLE OF CONTENTS
DECLARATION ......................................................................................................................................... II
APPROVAL ............................................................................................................................................... III
ABSTRACT................................................................................................................................................ III
ACKNOWLEDGMENT.............................................................................................................................. V
TABLE OF CONTENTS............................................................................................................................ VI
LIST OF TABLES ...................................................................................................................................... IX
LIST OF FIGURES ..................................................................................................................................... X
LIST OF APPENDICES .............................................................................................................................. X
ACRONYMS .............................................................................................................................................. XI
CHAPTER ONE ........................................................................................................................................... 1
INTRODUCTION ........................................................................................................................................ 1
1.1. Introduction .......................................................................................................................... 1
1.2. Background of the Study ...................................................................................................... 1
1.3. Problem Statement ............................................................................................................... 3
1.4. Objective of the Study .......................................................................................................... 4
1.4.1. Main Objective...................................................................................................................... 4
1.4.2. Specific Objectives ............................................................................................................... 4
1.4.3. Research Questions .............................................................................................................. 5
1.5. Significance of the Study...................................................................................................... 5
1.6. Scope of the Study ................................................................................................................ 6
1.7. Description of the Study Area .............................................................................................. 6
1.8. Organization of the Thesis.................................................................................................... 6
1.9. Limitation of the Study......................................................................................................... 6
1.10. Conclusion ............................................................................................................................ 7
CHAPTER TWO .......................................................................................................................................... 8
LITRATURE REVIEW ................................................................................................................................ 8
2.1. Introduction .......................................................................................................................... 8

VI
2.2. Theoretical Review of Logistics ........................................................................................................... 8
2.2.1. Logistics Management Definition ......................................................................................... 8
2.2.2. Evolution of Logistical Integration ....................................................................................... 9
2.3. Empirical Review of Grain and Fertilizer Logistics ........................................................... 11
2.3.1. Current Logistics Operating Environment of the Globe ..................................................... 11
2.3.2. Global Dry bulk Trade Volume and Logistics .................................................................... 11
2.3.3. Mapping of Current Import Grain and Fertilizer Logistics of Ethiopia .............................. 12
2.3.4. Policy and Institutional System of Ethiopian Transport and Logistics ............................... 13
2.3.5. Freight Transport Management Challenges ....................................................................... 19
2.3.6. Studies on Import Grain and Fertilizer Logistics Management in Ethiopia ....................... 20
2.3.7. Research Gaps ..................................................................................................................... 22
2.4. Conclusion .......................................................................................................................... 23
CHAPTER THREE .................................................................................................................................... 24
RESEARCH DESIGN ................................................................................................................................ 24
3.1. Introduction ........................................................................................................................ 24
3.2. Operational Definition of Variables ................................................................................... 24
3.3. Research Approach............................................................................................................. 26
3.4. Methods of Data Collection................................................................................................ 26
3.5. Sampling Design ................................................................................................................ 27
3.5.1. Population ........................................................................................................................... 27
3.5.2. Sample Frame ..................................................................................................................... 27
3.5.3. Sample Unit ........................................................................................................................ 28
3.5.4. Sampling Technique ........................................................................................................... 28
3.5.5. Sample Size ......................................................................................................................... 29
3.5.6. Sample................................................................................................................................. 31
3.6. Source of Data .................................................................................................................... 31
3.6.1. Primary Data Sources.......................................................................................................... 31
3.6.2. Secondary Data Sources...................................................................................................... 32
3.6.3. Data Analysis and Interpretation......................................................................................... 32
3.6.4. Data Presentations ............................................................................................................... 32

VII
 3.6.5. Limitations .......................................................................................................................... 33
3.6.6. Conclusion .......................................................................................................................... 33
CHAPTER FOUR....................................................................................................................................... 34
DATA PRESENTATION AND ANALYSIS ............................................................................................ 34
4.1. Introduction ........................................................................................................................ 34
4.2. Response Rate .................................................................................................................... 34
4.3. Demographic Data .............................................................................................................. 35
4.4. Findings .............................................................................................................................. 36
4.4.1. Presentation ......................................................................................................................... 36
4.4.1.1. Total import performance /2012 - 2016/ ............................................................................. 36
4.4.1.2. Import Performance by Corridor......................................................................................... 37
4.4.1.3. Government Bulkshipment Import Performance ................................................................ 38
4.4.2. Interpretation and Discussion.............................................................................................. 50
CHAPTER FIVE ........................................................................................................................................ 67
CONCLUSIONS AND RECOMMENDATIONS ..................................................................................... 67
5.1. Introduction ........................................................................................................................ 67
5.2. Conclusions ........................................................................................................................ 67
5.3. Recommendations .............................................................................................................. 70
5.4. Conclusion .......................................................................................................................... 72
References ................................................................................................................................................... 73
Appendices.................................................................................................................................................. 77

VIII
 LIST OF TABLES

Table: 4.1. Total Respondents--------------------------------------------------------------------34

Table: 4.2. Sex and age distribution of respondents -------------------------------------------35

Table: 4.3. Educational and Work experience of Respondents-------------------------------36

Table: 4.4. Total Import Volume in MT---------------------------------------------------------37

Table: 4.5. Annual imports Increment in MT---------------------------------------------------37

Table: 4.6. Grain and Fertilizer Import by Ports------------------------------------------------38

Table: 4.7. Grain and Fertilizer Import Volume by type of importers /2012 -2016/-------38

Table: 4.8.Daily Average Discharge Productivity----------------------------------------------39

Table: 4.9. Daily Average Dispatched and number of trucks --------------------------------40

Table: 4.10. Characteristics of Cross Border Freight Trucks---------------------------------40

Table: 4.11. Respondents answer on the presence of Full-fledged government policies-41

Table: 4.12. The existence of regulations and directives--------------------------------------41

Table: 4.13.Organizational Structure-------------------------------------------------------------42

Table: 4.14.Trained man power-------------------------------------------------------------------43

Table: 4.15. Logistics Coordination--------------------------------------------------------------43

Table: 4.16. IT utilization-------------------------------------------------------------------------43

Table: 4.17. Problems Matrix on the side of Suppliers---------------------------------------53

Table: 4.18. Carriers Problem Matrix------------------------------------------------------------54

Table: 4.19. Problem Matrix at Seaport Authorities and operators-------------------------54

Table: 4.20. Matrix Problems of at Customs----------------------------------------------------56

Table: 4.21. Matrix of Problems at Road Transport-------------------------------------------57

Table: 4.22. Matrix on problems on bank issues-----------------------------------------------58

IX
Table: 4.23. Problems on Freight Forwarding activities--------------------------------------59

Table: 4.24. Problems at Inland warehouses ---------------------------------------------------59

Table: 4.25. Problems on the side of Importers-------------------------------------------------61

Table 4.26: Problems on Regulatory Institutions-----------------------------------------------62

LIST OF FIGURES

Fig: 1. Evolution of logistics----------------------------------------------------------------------10

Fig: 2. Current import grain and fertilizer logistics process----------------------------------13

LIST OF APPENDICES

Interview Questionnaires------------------------------------------------------------------------75

X
 ACRONYMS

ADB -------- Asia Development Bank

AISE -------- Agricultural Input Supply Enterprise
ARRA -------Administration for Refuge and Returns Affairs
BPA --------- Berbera Port Authority
CFR ----------Cost and Freight
CRS ----------Catholic Relief Service
CSCMP-------Council of Supply Chain Management Professionals
DAP ---------- Diammonium Phosphate
DCT ----------Doraleh Container Terminal
DMP ----------Doraleh Multipurpose Ports
DPFZA ------- Djibouti Ports and Free Zone Authority
DRMFS-------Disaster Risk Management and Food Security
DWT ----------Dead Weight Ton
EGTE ---------Ethiopian Grain Trading Enterprise
EMAA --------Ethiopian Maritime Affairs Authority
ERA -----------Ethiopian Road Authority
ERCA ---------Ethiopian Revenue and Customs Authority
ESLSE --------Ethiopian Shipping and Logistics Service Enterprise
FDRE ---------Federal Democratic of Ethiopia
FOB -----------Free on Board
GDP-----------Gross Domestic Product
GoE-----------Government of Ethiopia
GTP-----------Growth and Transformation Plan
IFDC----------International Fertilizer Development Center
KPI ------------Key Performance Indicator
LOA ----------Length over All

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LPI ------------Logistics Performance Index
MDG ---------Millennium Development Goals
MoAANR ----------Ministry of Agriculture and Natural Resource
MoE ----------Ministry of Education
MOFEC -----Ministry of Finance and Economic Cooperation
MoFED --------Ministry of Finance and Economic Development
MoPE-----------Minister of Public Enterprise
MoTr -----------Ministry of Transport
MT --------------Metric Ton
MTSE ----------Maritime Transit Service Enterprise
MWITE -------Merchandise Wholesale Import & Trade Enterprise
NBE ------------National Bank of Ethiopia
NDRMC--------National Disaster and Risk Management Commission
PAID-------------Port Authority International Djibouti
RORO -----------Roll on Roll Off
RTA --------------Road Transport Authority
SDTV ------------Société Djiboutian de Gestion du Terminal Vraquier (French)
SPCS -------------Seaports Corporation of Sudan
TLSRP -----------Transport Logistics System Reform Program
UNCTAD -------United Nation Conference on Trade and Development
UNDP------------United Nation Development Program
URRAP ----------Universal Rural Road Access Program
WFP --------------World Food Program

XII
 CHAPTER ONE

INTRODUCTION

1.1. Introduction

This chapter comprises background of the study which clearly shows overview of the
research, statement of the problem that articulates the depth and coverage of the problem,
objective of the study, research questions to be answered by the study, and significance of
the study, scope of the study, description of the study area and organization of the paper.

1.2. Background of the Study

The rise of trade volume puts it marks on current world logistics challenges. In 1970, the
total trade volume of the world was around 2. 6 billion Mt, of which main bulk 0.448
billion Mt and other dry cargo 0.717 billion Mt. However, after 30 years the volume of
the trade has improved to 9. 842 billion Mt in 2014, of which main bulk 3.112 billion Mt
and other dry bulks around 3.903 billion Mt. (UNCTAD. 2015). Especially from the
above figure we can infer that dry bulk cargo is increased from 17% in 1970 to 32% of
the total trade volume in 2014. This phenomenon has opened new attentions to supply
chain management skill development and Logistics management knowledge in the world
and particular to Ethiopia.

Ethiopia is one of the Land Locked Developing Countries in sub Sahara Africa. Its
population size is estimated to be 96.96 million and its GDP at market price is $55.61
billion, with a total land area of 1.13 million km2.(World Bank,2014). The nearest sea
Port of Djibouti is 910Kms far from Addis Ababa. Even though, Ethiopia uses this port
for 95% of its import and export trade, it also uses the Port Sudan in the Sudan and
Berbera in Somaliland. The distance of Port Sudan and Berbera Port is 1900 km and 937
km, respectively (MoFED, 2013).

1
Ethiopian imports are growing at a much faster rate than exports, due to major
government investment projects, incentives to the private sector for construction and to
increased consumer spending power (Nathan, 2012). Import of merchandise increased
from US$1.86 billion in 2003 to US$11. 06 billion in 2012, while export of merchandise
increased from US$482.71 million in 2003 to US$5.7 billion in 2014 (World Bank, 2016)

The volume of Ethiopian import was 1,135,303 MT during 1993/94, from this volume
89% imported via the port of Assab, 11% via Port of Djibouti (Teshome, 1995). The
Ethiopian Maritime Affairs Authority (EMAA, 2015) annual report implies that in 2015,
Ethiopia’s import volume has escalated to 11.4 Million MT and from this volume of
import about 23% is dry bulk cargo like grain and fertilizers.

On the other hand, Ethiopian logistics infrastructure development, institutional setup and
legal grounds are not going parallel with import and export trade volume (Gebrerufael,
2015)
This situation puts Ethiopia under inefficient logistics management system labeled
countries in sub-Saharan Africa. Especially in trading across the border with the
parameters of time and cost, Ethiopia is ranked 166 out of 189 countries while Kenya
131, Rwanda 156, Uganda 128 (World Bank,2016)

To make international trade competitive and achieve the vision to be a middle income
country within 10 years, the Government of Ethiopia has done much on the expansion of
logistics and transport infrastructure, bilateral cooperation agreements with neighboring
countries, re-establishing of logistics operators and regulatory institutions (EMAA,
2014).

However, sources like World Bank has implied that the cost of logistics in Ethiopia is
amongst the highest in the world which seriously cripples business and renders the
Ethiopian foreign trade uncompetitive in its involvement in international trade (World
Bank, 2012)

2
Ethiopia is importing dry bulk products like grain, fertilizer, coal, sugar and bagged
cement for the last 20 years, nevertheless, logistics management and facility development
is not advanced (EMAA, 2014).

1.3. Problem Statement

Ethiopian logistics management system inefficiency has elucidated by different reports

like World Bank, UNDP, and UNCTAD for the last 10 years. Government institution
reports and plans show that the dry bulk logistics inefficiency leads the country to pay
enormous amount of foreign currencies.

To curve this inefficiency, alternative solutions and strategies were forwarded by

different consultants to the Government of Ethiopia (GoE). Efforts have been done in
soliciting of logistics system by improving infrastructure, institutional setup, internal
working process of regulatory offices and corridor management system. However, those
efforts didn’t bring the required achievement rather Ethiopia’s relative ranking in the
Logistics Performance Index (LPI) dropped from 123 in 2010 to 141 in 2012 (out of 155
countries surveyed (World Bank 2013) and 126 in 2016 out of 160 countries. One
indicator of this could be the transit time and cost of importing grain and fertilizer is
becoming high from time to time. As it is indicated in (EMAA, 2016) quarter report, the
maximum anchorage time of bulk vessel at Djibouti port before 2014 was around 48
days; however in 2016 the maximum anchorage time is more than 86 days. Similarly, the
berth dwell time of the vessels is increasing from year to year and this leads the vessel to
incur high cost for those days without any work (ibid).
The assessment of Ethiopian cargo at Djibouti implied that the total Sea Port logistics
cost of selected cargos in 2013 at Djibouti port was around 53,510,521.3 USD, from this
cost 48,056,499.3 USD or 89.8% was paid for storage and other similar operations. The
cost for dry bulk like grain, fertilizer, sugar and coal was around 38,522,598.11 USD,
which is 72% of the total cost at Djibouti port (FDRE Djibouti Embassy, 2013)

The major problems that lead to this high cost and time were related to transport and
other services. For example, in freight transport management system, transport
3
companies enter an agreement to uplift grain and fertilizer from seaports. However, in
practice they are not committed to abide by the agreements. The freight transport
regulation issued by Federal Road Transport Authority gives way to transporters to be
organized in associations; however those individual members of associations are not
abiding by the regulation of the association (MoTr, 2016)

Some freight transporters have a license to work at a cross border roads like Djibouti,
Port Sudan and Berbera, nonetheless they are working in inland roads due to high profit
of inland freight transport (MoTr, 2016)

On the other hand, importers of grain and fertilizer have no clear plan of procuring the
product, when and how it reaches to the port? How much trucks are needed? And which
transporter is efficient? In addition importers are not efficient in preparing documents and
sending to freight forwarders to offload the vessel at seaport (Jose Enrique Perez ALG,
February 24, 2015).

Therefore, those persistent problems need analysis to dig out the main causes behind
operational inefficiency of grain and fertilizer logistics system. Hence, the aim of this
thesis is to identify and analyze grain and fertilizer import logistics challenges with
possible recommendations.

1.4. Objective of the Study

1.4.1. Main Objective

The main objective of the study is to analyze persistent logistics management challenges
of import grain and fertilizer in Ethiopia and put forward possible approaches to address
the issues.

1.4.2. Specific Objectives

The specific objectives of this study include:

a) Assessing the major gaps in institutional set up of grain and fertilizer logistics
management.

4
 b) To identify clearly lasting tribulations of managing documentation, freight
transport and inland warehouses of import grain and fertilizer.
c) To analyze continual challenges of grain and fertilizer vessels discharge
productivity at sea port and dispatch capacity.
d) To propose possible solutions for the challenges of import grain and fertilizer
logistics.

1.4.3. Research Questions

Depending on the above objectives, the study tries to answer the following main research
questions. These are:

 What are the institutional gaps in logistics management of import grain and
fertilizer?
 What are persistent problems of banking system and documentation
requirements?
 What are the continual challenges that affect grain and fertilizer vessel discharge
productivity?
 What are freight transport management challenges in the transport of grain and
fertilizer?
 Are there any perennial logistics problems at sea ports, inland warehouses and
terminals in handling of grain and fertilizer?

1.5. Significance of the Study

By identifying the core persistent problems in managing logistics shows to the

Government of Ethiopia (GoE) the gaps in handling of import dry bulks especially grain
and fertilizer and its management system. Therefore, it enables the Government of
Ethiopia (GoE) to take action like reorganize logistics service provider and regulatory
institutions, formulate necessary legal frameworks, establish logistics centers, inaugurate
new transit corridors and infrastructure, upgrade existing transit infrastructures and
amend bilateral agreements with seaport owner countries. In addition the study helps as a
reference to other researchers in logistics and transport sector.

5
1.6. Scope of the Study

The conceptual boundary of the study is focused on challenges of import grain and
fertilizer logistics and its management. It also evaluates the contractual agreement of
suppliers and importers regarding transportation and delivery mechanisms of grain and
fertilizer. Handling system at seaport, road transport facilities, warehouse management
system in inland destinations, financial transaction system, custom and freight forwarding
documentations processes and standards in each node has been addressed. Hence, the
population of the research is individuals and organizations engaged in importing
activities and logistics management of grain and fertilizer.

1.7. Description of the Study Area

The geographical boundary of the study covers site observation of selected, warehouse in
different cities of the country like Adama, Mekele, Bahirdar, Hawasa, and Drie Dawa etc.
Seaports of Berbera, Djibouti and Port Sudan are the areas covered by the study. In
addition to sea ports and inland destinations, selected freight transport corridors and routs
Ethio – Djibouti and Ethio-Sudan boarders are visited.

1.8. Organization of the Thesis

The thesis has 5 chapters, chapter one Introduction, Chapter Two Review of Related
Literature, Chapter Three Research Methods and Methodology, Chapter Four Data
analysis and Interpretations, Chapter Five Conclusion and Recommendations. In addition
to the main chapters, the thesis has also pre and post main bodies. The pre-main bodies
are abstract, declarations, approvals and table of contents. The post-main bodies are
references, appendices like questionnaires, list of tables and figures are incorporated.

1.9. Limitation of the Study

During this work the researcher confronted different challenges especially concerning
seaport data collections both in terms of the availability of data at seaport and its realty.

6
To collect data from Berbera Port, it was difficult due to the transition stage of the Port
management and expert staffs. Hence, to avoid this problem the documents from
bilateral agreements available in FDRE Ministry of Foreign Affairs and Ethiopia
Maritime Affairs Authority, the statistical data from international none governmental
organizations like WFP has been collected and given a chance to confirm by the new
appointed deputy manager of Berbera port.

Moreover, in all seaports and inland warehouses there is daily basis data recording
system concerning the dry bulk logistics, and to analyze the 5 year data on daily basis it
was very difficult in terms of time and cost. To avoid this problem, the researcher used
the average monthly data compiled by the ports.

1.10. Conclusion

To wrapping up, in the background section of the study the overview of logistics
management system of Ethiopia especially focusing on import grain and fertilizer is
clearly stated. The justification of the problem and setting objective of the study are
concretized. The major research questions expected to be answered and scope of the
study, limitations of the study and organization of the thesis are also shaped. The next
chapter is about review of logistics management and dry bulk transport related literatures
in Global and Ethiopian level.

7
 CHAPTER TWO

LITRATURE REVIEW

2.1. Introduction

In this chapter, theoretical reviews of logistics, the definition of logistics and its
management, evolution of logistics integration, and recent logistics operating
environment of the world, dry bulk trade volume and its logistics trends are thoroughly
discussed. Policy and institutional system of Ethiopian transport and logistics like GTP
I&II, draft national transport policy, national transport master plan, draft national
logistics strategy, different regulations and directives to handle import grain and fertilizer
logistics are assessed sequentially. In the Empirical review of grain and fertilizer logistics
section different studies concerning dry bulk handling are analyzed and research gaps are
identified correspondingly.

2.2. Theoretical Review of Logistics

2.2.1. Logistics Management Definition

Logistics is the overall management of the way resources are obtained, stored and moved
to the locations where they are required (Swati Sharma, May 13, 2016). Therefore,
Logistics means having the right thing, at the right place, at the right time.

Logistics management entails identifying potential suppliers and distributors, evaluating

how accessible and effective they are and establishing relationships and signing contracts
with the companies who offer the best combination of price and service.

Logistics management is given different definition by different professionals associations

in the logistics sector. Among those professionals Council of supply Chain Management
Professionals have given the following definition about logistics management.

“Logistics management is the part of supply chain management that plans,

implements, and controls the efficient, effective forward and reverses flow and
8
 storage of goods, services, and related information between the point of origin
and the point of consumption in order to meet customers' requirements”
(CSCMP, 2005 )

Logistics management activities typically include inbound and outbound transportation

management, fleet management, warehousing, materials handling, order fulfillment,
logistics network design, inventory management, supply/demand planning and
management of third party logistics services providers. To varying degrees, the logistics
function also includes sourcing and procurement, production planning and scheduling,
packaging and assembly, and customer service. It is involved in all levels of planning and
execution - strategic, operational, and tactical. Logistics management is an integrating
function which coordinates and optimizes all logistics activities with other functions in
supply chain and logistics management, including marketing, sales, manufacturing,
finance, and information technology (Adam Robinson. July 31 2013)

2.2.2. Evolution of Logistical Integration

The evolution of logistics has been characterized by an increasing degree of integration, a

trend that was underlined in the 1960s as a key area for future productivity improvements
since the system was highly fragmented. (Jean -Paul Rodrigue,1998). This led to
consolidation into two distinct functions related to materials management and physical
distribution. This process moved further in the 1990s as globalization incited a functional
integration and the emergence of logistics in a true sense; all the elements of the supply
chain became part of a single management perspective.

However, only with the implementation of modern information and communication

technologies did a more complete integration became possible with the emergence of
supply chain management. It allows for the integrated management and control of
information, finance and goods flows and made possible a new range of production and
distribution systems (Silas Gachanja Kinyeki. 2012). Supply management has become a
complex sequence of activities aiming at value capture. Step by step, and according to
improvements in information and communication technologies, the two ends of the

9
assembly line became integrated into the logistics of the supply chain: the timely supply
of raw materials and components from outside, and the effective organization of
distribution and marketing. (Dawei Lu.2011)
High rack storages, which later became automatically driven or the internal movement of
packages by flat robots was early expressions of logistical engineering. Initially, logistics
was an activity divided around the supplying, warehousing, production and distribution
functions, most of them being fairly independent from the other. With the new
organization and management principles, firms were following a more integrated
approach, thus responding to the upcoming demand for flexibility without raising costs.
At the same time, many firms took advantage of new manufacturing opportunities in
developing countries (Alan Harrison and Remko van Hoek. 2008).

As production became increasingly fragmented, activities related to its management were

consolidated. Spatial fragmentation became a by-product of economies of scale in
distribution (Jean-Paul Rodrigue. 1998). The picture below shows the evolution of
logistics from 1960 to 2000 as (Jan Paula, 1998) pointed out.
Fig 1.1. Evolution of Logistics

Source:- Jean-Paul Rodrigue . 1998.

10
2.3. Empirical Review of Grain and Fertilizer Logistics

2.3.1. Current Logistics Operating Environment of the Globe

Logistics has drawn huge attention of researchers and practitioners since it was used
during the World War II. Early work has mainly focused on inbound logistics. Outbound
logistics became more and more important after the recognition of supply chain
management since 1990s. (Poirier, 1999) states that supply chain management has
emerged as one of the most powerful business improvement tools available to date.
Since the 1990s, the environment of logistics has changed greatly because of global
integration and the gradual shortening of lifecycles of products. The mode of production
in enterprises has changed from the traditional mass production mode led by products
into the mass customization production mode to facilitate increasing global market
competition. (Srinivasa , 2001) pointed out three main reasons for such a revolution:
Change of manufacturing strategy, Change of customer demand and Globalization.

The aforementioned issues revealed the complexity of logistics management in that the
traditional logistics operation which includes a large quantity of stock storage and
distribution cannot fulfill the real-time flexible logistics service demand among the
supply chain parties.

Based on the Transport Planning and Research Institute survey, the five greatest
challenges that logistics enterprises in the People’s Republic of China face are (i)
inadequate logistics infrastructure, (ii) unhealthy market conditions, (iii) unreasonable tax
policy, (iv)inappropriate transport regulations, and (v) lack of uniform standards. These
problems are difficult for logistics enterprises to resolve on their own, and require
government intervention. (ADB, 2012)

2.3.2. Global Dry bulk Trade Volume and Logistics

The increment of trade volume puts it footprint on current world logistics challenges. In
1970, the total trade volume of the world was around 2. 6 billion Mt, of which oil and gas
was 1. 44 billion Mt, main bulk 0.448 billion Mt and other dry cargo 0.717 billion Mt.
However, after 30 years the volume of the trade has increased to 9. 842 billion Mt in
11
2014, of which oil and gas is 2. 82 billion, main bulk 3.112 billion Mt and other dry bulks
around 3.903 billion Mt. (UNCTAD. 2015). This phenomenon has opened new
attentions to supply chain management skill development and Logistics management
knowledge. Especially from the above figure we can infer that dry bulk cargo is increased
from 17% in 1970 to 32% of the total trade volume in 2014. When we see this figure in
Ethiopian case, the total trade volume (Import and Export) in 1993/94, it was around
1,229,480 M, this volume has increased to 12,550,968 MT as of 2015 EMAA report.
Hence, to make the logistics system competitive, many researchers have tried to identify
the challenges and proposed their own solutions in Ethiopia.

2.3.3. Mapping of Current Import Grain and Fertilizer Logistics of Ethiopia

The import of grain and fertilizer starts from importers and continues to banks and other
procedures. As shown in figure 1.2 the mandatory actors and activities in international
trade are about 11, where as in the current grain and fertilizer import logistics of Ethiopia
Importers are different level of Government agencies which has different roles.

12
 Fig 1.2- Current Import Grain and Fertilizer Logistics Process

Source: Own Compilation

2.3.4. Policy and Institutional System of Ethiopian Transport and Logistics

2.3.4.1.Growth and Transformation Plan Phase 1&2(GTP 1 & 2) in the

Development policy context

The Growth and Transformation Plan (GTP1) was developed in 2010 by the Ministry of
Finance and Economic Development. It considers the 2010/11 - 2014/15 period) and
follows the pace set by earlier development plans: the Plan for Accelerated and Sustained
Development to end Poverty (PASDEP) for the 2005/6 - 2009/10 period and the SDPRP
(2002/03 - 2004/5).

13
All these programs aim at poverty eradication through accelerated economic growth and
follow the Millennium Development Goals (MDGs) for 2015. They are also aimed at
making Ethiopia a middle-income country by 2020-23.
The GTP1 gives special emphasis to transport, which represents a transversal sector
playing a major role in the effective achievement of targets for agricultural, rural,
industry, infrastructure and social development. Furthermore, the document sets specific
targets for each transport sub-sector.
Regarding the key-sectorial targets of the GTP, the total length of the road network is
expected to grow (in the Base Case scenario) from 48,800kms to 64,500kms at the end of
the GTP1 period. In addition, 71,523kms of new all-weather rural roads are planned to be
built under the URRAP program. Regarding the railway sub-sector, 2,395 kms of new
railway lines are planned to be completed by 2015.
The GTP1 does not include any infrastructure development indicators for the maritime
and air transport sectors. However, all sectors (road, rail, maritime and air) are addressed
from the transport services point of view: Regarding road transport services, the average
annual freight distance is estimated to grow from 80,000 km to 120,00km. As for the
maritime sub-sector, the current total reliance on Djibouti port is expected to become a
60/30/10 share between Djibouti, Berbera and Port Sudan respectively; in addition, the
oil transport capacity of Ethiopian ships is intended to reach 3.6 billion tones by the end
of the GTP1 period (GTP 1, 2011).
However, GTP 1 did not address specifically the logistical aspects of fertilizer import
process. In addition there is no clear logistics support program in the import aid and
commercial grains.
In GTP 2 there are three strategic programs in the logistics sector, these are transport
Logistics System Reform Program, Maritime Administration Reform Program and
Performance Capacity Reform.

The Strategic Objectives of Transport Logistics System Reform Program(TLSRP) are cut
general transit cost and time for import and export goods, increase the Logistics
Performance Index (LPI) from 2.59 to 3.07or improve the rank of the country from 104th

14
to 57th, increase containerzable Cargo of the country (Packing export goods in the
country and export them) from 7% to 100%, reduce demurrage at port from 40 days to 3
days, decrease the share of logistics cost in GDP from 30% to 22%, reduce the logistics
cost of import and export business by 20%, increase the general cargo coverage of the
country carried by multimodal transport from 51% to 90%, make zero demurrage for
unstaffed cargo, reduce the number of documents needed for transit of import and export
goods from 10 to 4, promote the currently prevailing low customer satisfaction of the
sector to 80%, increase the capacity of transporting import goods with own capacity from
391,000 Dead Weight Ton (DWT) to 881,000 DWT, transform the service of the sector
from the current manual procedure to 100% modern procedure. However, in this plan
regarding dry bulk logistics like grain and fertilizer, there is no as such clear objective to
change the current and perennial logistics challenges (EMAA, 2015)

There are also specific official strategies/documents from the Ministry of Transport
aiming at the development of specific sector policies.

2.3.4.2.National Transport Policy (2011)

This document, developed by the Ministry of Transport in 2011, intends to provide a

framework within which other transport institutions - government, statutory and private -
should tailor their individual policies and strategies. It actually represents quite an
extensive strategy, addressing many issues and setting guidelines for the transport sector
(and subsectors).

However, it does not clearly establish how these policies and strategies should be
implemented in the form of laws, programmes or prioritization of infrastructure
investment and maintenance.
The document was prepared in line with the government’s vision for Ethiopia, the GTP.
This National Transport Policy states that it is the first official document of its kind. Its
main objectives are: enhancement of quality transport, passenger rights, competitiveness
and facilitation for consumers with special needs and integration of information and
communication technologies in transport development and operations.

15
In the short run, the policy is expected to bring-about facilitative legal, institutional and
regulatory framework for the sector as well as to transport safety, security and efficiency.
In the long run, it is anticipated that expanded transport sector capacity will be laid out
through infrastructure development and service provision at all levels, through improved
connectivity, accessibility and multi-modals.
This document identifies the main problems of Ethiopia’s transportation sector,
considering infrastructure, services and institutional aspects summarized as follows: Lack
of coherent policy and guidance to all those institutions with competences on transport or
in connection with this sector. This leads to lack of coordination and even overlaps in the
scope and implementation of the different plans and programs; Sector management and
planning responsibilities which are divided between various ministries (responsible for
Transport, Works and Urban Development, Ministry of Trade and Industry, etc.);
Shortage of adequately trained and experienced personnel in the transport sector; and
Lack of competent regulatory regimes that are adequately equipped to enhance
competition, fair operational practices and complementarities of services in line with
national, regional and international standards.

On the basis of the initial diagnosis, the document lays down the policy principles or
goals and from that point sets specific objectives for a total of 17 transport domains: (i)
road network/infrastructure, (ii) financing for transport infrastructure development and
management, (iii) urban transport, (iv) inter-urban transport service, (v) rural transport,
(vi) non motorized and intermediate means of transport, (vii) road freight transport, (viii)
rail transport, (ix) air transport, (x) maritime transport, (xi) inland waterways transport,
(xii) gender and transport, (xiii) transport and the environment, (xiv) non-conventional
modes of transport (pipelines and cable-cars), (xv) institutional principles, (xvi) transport
research & development and (xvii) federal – regional relationships(MoTr. 2011)

16
 2.3.4.3. National Transport Master Plan Study (2008)

The Master Plan Study document, initiated by the Ministry of Transport and financed by
the European Union in 2008, is an extensive document consisting of three main volumes
and 13 appendix volumes.
This Master Plan was developed on the basis of a previous strategic document, the
National Transport Sector Strategy document (September 2007), which explained
Ethiopia’s situation at the time and proposed an overall development strategy. The
Master Plan aimed at the implementation of the said transport strategy over a 20-year
period (2008–2027).

While Volume 1 of the report is primarily concerned with the investment programme, the
second volume, which is more of a check list, contains the actions needed to ensure that
the strategy can be carried out and the objectives of the plan be achieved. Though not
officially adopted by the Ministry of Transport, there are indications that some of the
recommendations in the master plan have been implemented by the GoE fully or
partially. A national road safety council had been established. Efforts are underway to
upgrade some domestic airports to international level. The Ethiopian Railway
Corporation has started a 5 year plan as part of the GTP) to construct over 5,000kms of
railway lines (Jose E., 2015). However, this document didn’t show any clear strategies
regarding dry bulk freight logistics issues.
2.3.4.4.National Logistics Strategy

In order to support the Government of Ethiopia’s effort to enhance the country’s

competitiveness in the global market through improved national logistics system, UNDP
partnered with the Prime Minister’s Office to initiate a study on a national logistics
strategy. A major component of this comprehensive study was completed in 2013 by
Nathan Associate Inc. The scope of the strategy is to support the government in: (1)
reviewing the overall logistics system relevant for Ethiopia, (2) developing a blueprint for
a more efficient and effective system, (3) identifying the interventions required for a
logistics transformation, (4) designing the implementation approach and set-up, (5)

17
supporting the implementation process, including through progress assessment and
evaluation vis-à-vis pertinent measuring criteria, and 6) provide capacity building support
to Ethiopian Maritime Affairs Authority(Nathan, 2013). Even though this strategy study
was completed in the planned period, it lacks the identification of critical challenges in
bulk logistics like grain and fertilizer with practical solutions feet to the country.

2.3.4.5.Directives and Standards on Import Grain and Fertilizer Logistics

Ministry of Transport was issued a directive on March 2013 to coordinate import dry
bulk cargo at national level with core executive power is given to Ethiopia Maritime
Affairs Authority (MoTr, 2013) by which different regulatory institutions and importers
have given responsibilities to build coordination among them in all chains of dry bulk
import.

As indicated in the bulk shipment directive, EMAA requested all importers to submit
their annual shipment schedule for the year that indicates the amount and the time of
vessel arrivals and EMAA also compiles the schedule sent by the importers, rearrange
and prepares a final shipment schedule. The final schedule will be distributed to all
importers and other relevant stakeholders and instructs them to comply with the final
schedule. EMAA also follow up its implementation, solve problems during
implementation and act in accordance with the bulk shipment directives and standards.

However, challenges have been faced in meeting the schedule of vessel arrival to port
due to poor coordination and communication gap between suppliers, forwarders and
importers. Besides, the committee members are selected from lower level managements
and hence lack decision making power to execution of the planned schedule. More
importantly, since the committee is not a legal person and hence no accountability for the
failure in executing the decisions reached amongst committee members, including acting
in accordance with the planned schedule (EMAA, 2014).

18
 2.3.4.6.Institutional Framework

Ethiopia’s transport sector has a broad and complex structure, with an important number
of institutions and public companies regulating, governing and operating it (including
logistics and trade). These institutions are Ministries or Autonomous Agencies which are
directly responsible to Prime Minister, Planning and Regulating Institutions and
authorities, Operational Public Companies and Non- federal Government Institutions. All
institutions have great role in the logistics support of import grain and fertilizer (Jose E.,
2015).

2.3.5. Freight Transport Management Challenges

The majored challenges of freight transport in Ethiopia are trip delays, high operation
cost and load factor (RTA, 2012)

Most of the trip covered by Ethiopian trucks is around 60,000 KM and small number of
trucks covers 80,000 KM, however this trip in other civilized countries is about
180,000km (ibid). The main causes for the tripe delay are delay at Port due to poor
loading unloading system, long process of border checking by custom, long waiting to
check axel Load, delay at offloading warehouses, and more time to search cargo, driver
readiness and others.

The cost of truck operation is very high in Ethiopia which accounts 61% of the total cost
and of which 35% is for oil and fuel, 10% for tier and the reaming is for other
miscellaneous (ibid).

The other challenge is the load factor of the trucks; this could be 100% both in the round
trip. However in Ethiopian case the load factor is around 58% because of the imbalance
trade volume of the country which means import is very high and trucks can get cargo
while export is very low trucks can’t get cargo when back to seaports. Other countries
like France have 87% load factor (RTA, 2012).

19
Delay at warehouse to offload the cargo is very critical challenge; even though there is
demurrages law, its implementation is very weak due to poor recording system (RTA,
2016)

2.3.6. Studies on Import Grain and Fertilizer Logistics Management in

Ethiopia
Different international and national researchers have done much inquiry on logistics
challenges of Ethiopia. World Bank, UNCTAD, WFP and UNDP are the main
international institutions which have published different papers on Logistics management
system and Trade logistics facilitation in Ethiopia. Individual researchers in the academic
world also have tried to investigate different challenges of logistics in the landlocked
Ethiopia. However most of researchers and writers have focused on the operational issues
of logistics and the consequence of different problems in the sector. For example,
(Tilahun, 2014) and (Fekadu, 2013).argued that all the bottlenecks are due to lack of
infrastructure and financial matters.
Hence, logistics inefficiency of the country is characterized by the following different
factors.
 The distribution/collection of goods is generally inefficient due to poor road
infrastructure.
 Infrastructure maintenance and development is not adequately planned and
financed due to limited resources which hinder the efficient transit of goods.
 There is much delay caused by customs.
 Quality, time to market, is not emphasized in Ethiopia (Fekadu M. Debela. 2013).
On the other hand, “The high cost of doing business across borders in Ethiopia is said to
have become a major constraint to economic development. Ethiopia is one of the countries
with the highest set of challenges in cross border trade.” (Tilahun Esmail K., September
2014 pp, 146).
The World Bank study of trading across borders ranking puts the country at 166th in the
world. While, on average, sub-Saharan African customs delays are the longest in the world,
the average delay is 12 days in the region compared with 7 days in Latin America; the
20
longest delays in the region are in Ethiopia - where the average trader has to wait more than
30 days for customs to clear goods. Transportation delays along the Ethiopia-Djibouti
transport corridor are also widespread. Numerous stages in the process of clearing and
transporting commercial goods in transit from the port of Djibouti to Addis Ababa can take
more than 20 days. (ibid).
In addition (Johanes U.I. Agbahey et.al, 2015) revealed that the major constraint reported
by 87.5% of farmers is high fertilizer prices and by comparing the AISE’s prices at
Djibouti port and world market prices, that the increment is because of high cost of inland
transport.
Because of limited equipment at the berth and competition for berth space from vessels
carrying fertilizer, the throughput declines when the terminal is working more than one
vessel (The average handling rate for unloading wheat from bulk carriers is about 4,000
tons per day), which implies a turnaround time of 10 to 12 days, depending on the size of
the bulk carrier. As a result there is congestion during peak times for unloading bulk
materials (grains and fertilizer), and creates a significant demurrage cost, which is
incurred directly for FOB shipments, but indirectly for other shipments (Nathan
Associate Inc, 2014)

In recent years congestion at the SDTV terminal in Djibouti has been a serious problem.
This has three primary causes as (Nathan,2013) pointed out.
i. The arrival of grain vessels tends to overlap with the arrival of fertilizer vessels, and
both peak during about 6 months in the year. Attempts to spread out deliveries are
hampered by not only a lack of coordinated planning, but also by suppliers, which, in
the case of donors, base deliveries on availability of supply.
ii. The terminal has insufficient unloading capacity, which is aggravated by the practice
of bagging the wheat on the wharf for loading directly into trucks.
iii. The practice of direct delivery limits throughput to the availability of trucks since the
cycle time for trucks to deliver a load to the warehouses in Ethiopia and return to the
port is 8-10 days and a vessel unloads on average about 100 truckloads per day. As a
result, two large vessels unloading simultaneously will employ a total of 1600-2000
trucks. (Nathan Associate Inc, 2014)
21
The research conducted by International Fertilizer Development Center shows that the
supply chain of fertilizer importing to Ethiopia revealed that higher cost of transportation
and other logistics procedures comparing with international price. The average 2012
AISE contract cost and freight (CFR) Djibouti price for DAP was US $725.50 and the
prevailing DAP international price was US $640. The cost of DAP delivered at AISE
Nazret warehouse was US $787 compared with US $878 at cooperative warehouses.
These costs are estimated based on CFR Djibouti plus inland transportation cost from
port and unloading at the central warehouse, insurance, financing costs (bank interest
rates and LC bank commissions), and warehouse cost, overhead and
operational/administrative costs. (IFDC, 2012)

In addition (IFDC, 2012) identified that offloading capacity at the Djibouti Port is
limited, the number of trucks required to move the products inland is often not sufficient,
and costs can be high due to lack of backhaul cargos.
Even though the distance of Port Sudan from Ethiopia is significantly long, the uplifting
capacities of trucks of Sudan are very high and this gives an advantage to reduce the cost
of transport in the principle of economic of scale. However, the main problem in this
corridor is the limitation of road capacity both in Ethiopia and Sudan which limits the
trucks carrying capacity, especially in Ethiopia the landscape affects long trucks of
Sudanese (EMAA, 2016). Whereas the Berbera port has a capacity to handle grain
vessels about 25 DWT, however the international bulk market is going up in using of
high carrying capacity vessels about 100,000 DWT (MoTr, 2016).
2.3.7. Research Gaps

Most of researchers in fertilizer and grain import logistics didn’t touch the core and
perennial problems of Ethiopian Logistics Management. They only explained the
consequences of the problems and some operational challenges. In addition, there is no
sufficient assessment of institutional setup of Logistics Management especially
concerning grain and fertilizer supply. Hence, this research will address the recurrent
challenges of Logistics Management especially in the import operation of grain and
fertilizer and found out the causes for the challenges.
22
2.4. Conclusion

Generally, the theoretical analysis and empirical studies of dry bulk logistics management
in Ethiopia are discussed in detail. Especially the evolutions of logistics integration,
present global logistics trends focusing on dry bulk handling are assessed. Ethiopian
policy frameworks in logistics sector such as draft National Transport Policy, GTP 1&2,
National Transport Master Plan, Draft National Logistics Strategy and regulations and
directives to carry out import grain and fertilizer logistics are also scrutinize. The work of
other researchers concerning import grain and fertilizer challenges in Ethiopian case and
other international experiences have been thrash out.

23
 CHAPTER THREE

RESEARCH DESIGN

3.1. Introduction

This chapter includes operational definitions of variables, research approaches and

methods of data collection, sampling techniques, population and sampling frame,
sampling unites, sample size, sources of data and data presentation and interpretations
have been discussed in detail.

3.2. Operational Definition of Variables

The variables in the study are Concepts and terminologies which have the following
meanings and definitions.

Bulk Carrier: - is a merchant ship specially designed to transport unpackaged bulk

cargo, such as grains, coal, ore, and cement and fertilizer in its cargo
holds.

Dry Bulk Commodity: - A commodity which is shipped in large, unpackaged amounts.

There are many transport companies that specialize in dry bulk delivery.
These dry bulk commodities are coal, ore and grain, fertilizer, sugars,
cements etc.

General Cargo/Break-bulk/:- In shipping, break bulk cargo or general cargo are goods
that must be loaded separately, and not in intermodal container nor in
bulk as with oil or grain. Ships that carry this sort of cargo are often
called general cargo ships.

Import cargo Documentation: - is the process of identifying the relevant documents and
filling of the required information on the documents and submit to the
responsible body with the needed time. In effecting Imports
documentation plays a very important role. Especially in case of imports,
the availability of right documents, the correctness of the information

24
 available in the documents as well as the timeliness in submitting the
documents and filing the necessary applications for the Customs
Clearance determines the efficiency of the Customs Clearance process.

Inbound Logistics: - The activities of receiving, storing, and disseminating

incoming goods or materials for use.

Logistics Management: - is the part of supply chain management that plans,

implements, and controls the efficient, effective forward, and reverses
flow and storage of goods, services, and related information between the
point of origin and the point of consumption in order to meet customer's
requirements.

Outbound Logistics: - The movement of materials associated with storing, transporting,

and distributing goods to its customers..

Physical Distribution: - Handling, movement, and storage of goods from the point of
origin to the point of consumption or use, via various channels of
distribution.

Port Management: - is the management of ports. According to a syllabus at the United

Nations University: Large ports need to deal with a number of disparate
activities: the movement of ships, containers, and other cargo, the loading
and unloading of ships and containers, customs activities.

Supply Chain Management:- is Planning and controlling all of the business processes
– from end-customer to raw material suppliers – that link together
partners in a supply chain in order to serve the needs of the end-customer.

Stevedoring: - A firm or an individual engaged in the loading or unloading of a vessel,

Transport Operation Management:- is administering the overall planning and

optimizing of terrestrial transport rounds, inbound and outbound
transportation mode and transportation provider selection, management
25
 of motor carrier, rail, air and maritime transport, real time transportation
tracking, service quality control in the form of key performance indicator
(KPI), vehicle load and route optimization, transport costs and scheme
simulation, shipment batching of orders, cost control, reporting and
statistics and freight audit.
Warehouse Management: - is daily planning, organizing, staffing, directing, and
controlling the utilization of available resources, to move and store
materials into, within, and out of a warehouse.

3.3. Research Approach

The research approach is both mix of qualitative and quantitative research because the
study is focused on statistical data of import products and opinions of the managers and
experts in logistics management position. The type of research is exploratory or
descriptive study because it is intended to examine and know about the recurrent
challenges of managing the logistics sector of Ethiopia. Since the research is focused on
import grain and fertilizer logistics management system the research strategy is case
study. And the time dimension of the study is an approximation of longitudinal data using
cross-sectional design, because by taking 5 years or so import data and other costs by
cargo type it is intended to approximate for all other items and for the future time.

3.4. Methods of Data Collection

The methods of data collection were through structured interview questionnaire and
observation. The reason why this method implemented was to collect different level
logistics manager’s opinion about the management systems of Ethiopian logistics and
major recurrent challenges with possible remedial suggestions. In addition it was
important to see the statistical data of import and export volume and its logistics supply
side like port infrastructure, number of freight trucks, inland distribution centers or
warehouses and vessel daily productivity data. On the other hand there may be different
interventions by government institutions to tackle those challenges and it was important

26
to collect data using interview with relevant experts on the implementation and result of
interventions. To take a note on practical working procedures on the spot, observations of
warehouse, terminals and ports were conducted.

3.5. Sampling Design

3.5.1. Population

The population that the selected sample size consists of importers of dry bulk,
Government Regulatory Institutions of logistics sector and service providers, port and
terminal operators are the major areas. The reason for the decision of such population
was due to their higher involvement in the logistics sector. For example, importers have
the right to decide what type of product they import, the time that the product is needed,
the selection of the carrier and even the rout that they use to transport the product is
mostly done by importers. Regulatory institutions also have the main role in the
formulation and implementation of rules and regulations on logistics facilitation,
expansion of infrastructures and licensing of operators. Logistics service providers like
banking and insurance institutions have greater role in the sector. Operators like transport
association, shipping companies, port and terminal operators, freight forwarding
companies have indispensable role.

3.5.2. Sample Frame

The sampling frame of the research from which the sample selected was list of 5 dry
bulk importers from the Ethiopian Maritime Affairs Authority, the list of 23 cross border
freight transport companies from the Federal Road Transport Authority, List of 10 dry
bulk port operators from Djibouti Ports and Free Zone Authority, Berbera Port Authority
(BPA), Seaports Corporation of Sudan (SPCS), List of 64 dry bulk warehouses in the
country from importers, list of 7 import dry bulk logistics regulatory institutions from the
Ethiopian Maritime Affairs Authority and totally which accounts 109.

27
 3.5.3. Sample Unit
The sampling units for the research were importers of grain such as Ethiopian Grain
Trading Enterprise/EGTE/ Head Office and 16 destinations/warehouses/, World Food
Program/WFP/ Ethiopia/ Head Office and 3 destinations/, a National Disaster and Risk
Management Commission Head Office and 8 destinations , Food Security Coordination
Directorate under the Ministry of Agriculture and Natural Resource Head Office and 8
destinations, Catholic Relief Service Head Office and 3 destinations, and importers of
fertilizer such as Agricultural Input Supply Enterprise Head Office and Regional
Farmers Cooperatives Unions around 64 destinations. Regulatory institutions such as
Ministry of Transport, Ethiopia Maritime Affairs Authority, Federal Road Transport
Authority, Ethiopian Revenue and Custom Authority, National Bank of Ethiopia and
Ethiopian Road Authority. Logistics operators in related with the import of grain and
fertilizer is Ethiopian Shipping and Logistics Service Enterprise, Commercial Bank of
Ethiopia, 86 Transport associations and Government Procurement Agency.

Port and Terminal operators were divided in to two groups, the first one is Ethiopian
institutions in Djibouti, Port Sudan and Berbera such as branch office of Federal Road
Transport Authority, Ethiopia Maritime Affairs Authority, Maritime Transit Service
Enterprise /MTSE/, branch office of Ethiopian Revenue and Custom Authority, Ethiopian
Embassy and branch office of government transport enterprises. The second category
will be Djiboutian port operators such as Société Djiboutienne de Gestion du Terminal
Vraquier /SDTV/ which has a 35-year concession for handling bulk cargo at berths 14
and 15 in the Djibouti Multipurpose Terminal, Djibouti Ports and Free zone Authority
and Djibouti Custom, Sea Port Corporations of Sudan and Berebera Port Authority.

3.5.4. Sampling Technique

Both probability and none probability sampling technique has been employed to select
the appropriate sample size among populations. To select samples from the sample frame
of transport associations which have truck to transport grain and fertilizer, the
subcategory of probability sampling which is simple random sampling technique has
been applied. Because it is not possible to address all the associations and even though

28
they have similar characteristics of managing freight transport.After the transport
associations has been selected, operation managers and senior operation experts were
selected purposivly. For other sample frames, purposive sampling technique of none
probability sampling design has been implemented. Because, grain and fertilizer
importers are the only institutions in the country and they are limited in number.
Therefore, grain importers and fertilizer importers have been clustered in their nature.
Regulatory institutions and logistics service providers also have been handled differently.
In this regard in all regulatory and importer institutions, logistics experts and senior
managers were selected purposively for interview.

3.5.5. Sample Size

The participants in dry bulk cargo import process are mentioned earlier, so that all main
stockholders were included under sample size except transport associations and inland
destinations. The freight transports operators are around 86; among those 23 are grain and
fertilizer transporters for the last three years. Inland destinations are around 91 from
which 27 for grain and 64 for fertilizer, hence it is difficult to address all transporters and
inland destinations in terms of cost and time limitation. Therefore the researcher has
taken a sample from the list of grain and fertilizer transporters and inland destinations
using the following sample size determination formula. The reason in selecting this
formula was because it is used by different researchers to determine the sample size and
it is simple to calculate and understand the results easily.

3.5.5.1. The formula for infinite population

Sample Size SS

Z 2 * (p) * q

SS =
e2

29
Where:

Z = Z value (e.g. 1.96 for 95% confidence level)

p = percentage picking a choice, expressed as decimal
q = 1-p
e = confidence interval, expressed as decimal (Scott Smith, April 8, 2013)
Using this formula, the common ‘Z ‘value from the statistical table is 1.96 for 95%
confidence level. And ‘p ‘which is the level of heterogeneity is very low hence all
transporters in their operational activities and management system have almost the
similar characteristics and labeled as 0.01. While q = 1- 0.01 = 0.99. The designed level
of precision ‘e’ labeled as 5% or 0.05.
Therefore when we calculate using the above formula, SS = 4(0.01*0.099) = 15.84
(0.05)2
Since the population of transporters is finite, therefore it is important to use the finite
population correction factor.

3.5.5.2. The formula for Finite population

When the sample represents a significant (e.g. over 5%) proportion of the population, a
finite population correction factor can be applied. This will reduce the sample size
required. The formula for this is:

Where na = the adjusted sample size, nr = the original required sample size and N =
population size. (C.R Kothari. 2004)

Therefore, when we compute the required sample using the above formula, the sample
size will be :

30
na = 15.84
1 + (15.84 -1) = 10
23
Hence, the appropriate sample sizes were 10 grain and fertilizer transport associations out
of 23. Those associations were selected using lottery method.
For inland destinations of fertilizer:

15.84
na = 1 + (15.84 -1) = 12.87
64
Hence, the appropriate sample sizes were 13 inland destinations of fertilizer out of
64.Those destinations were selected using lottery method from the list.
For inland destinations of grain:

15.84
na = 1 + (15.84 -1) = 10.21
27
Hence, the appropriate sample sizes were 10 inland destinations of grain out of 27. Those
destinations were selected using lottery method from the list.

3.5.6. Sample
Therefore, the samples of the research are 10 inland warehouses of grain and fertilizer, 10
transport associations which are engaged in transporting of grain and fertilizer, all
regulatory institutions and government forwarding company.

3.6. Source of Data

3.6.1. Primary Data Sources

The primary data sources were heads and senior experts in regulatory institutions of
logistics sectors, relevant operational middle level workers at the site of operation and
related lower level workers using interview and questionnaire. Sea ports of Djibouti,

31
Berbera and Port Sudan and inland warehouse operations at Adama, Bahir Dar, Mekele,
Woreta and Kombolcha were observed.

3.6.2. Secondary Data Sources

The sources for secondary data were books of logistics and supply chain management
from ECSU libraries and internet sources, published journals of grain and fertilizer
logistics from internet sources, World Bank reports, Ethiopian Government policies,
proclamations and reports, Statistical data’s from Djibouti port, Port Sudan and Berbera
Ports. Statistical data and working procedures from Ethiopian Revenue and Custom
Authority, National Bank of Ethiopia, Importers like Ethiopian Grain Trading Enterprise
(EGTE), Agricultural Input Supply Enterprise (AISE), World Food Program (WFP) and
Catholic Relief Service (CRS). Operation procedures and manuals from logistics service
providers like Ethiopian Shipping and Logistics service Enterprise (ESLSE) and inland
warehouses were sources of secondary data. Government Medias, different letters, annual
bulletins, and company broachers also were used as data source.

3.6.3. Data Analysis and Interpretation

To make analysis of the data collected through different methods, it was important to
differentiate the data type initially whether it is quantitative or qualitative. The analysis of
qualitative data were involved uncovering and / or understanding the recurrent import
grain and fertilizer logistics challenges in Ethiopia - by using the data to describe the
phenomenon. Both qualitative and quantitative analysis was involved in entering to the
table by the form of problem matrix. The major analysis tool for the qualitative data is
content analysis of the responses which has been collected through: interviews and
observation.

3.6.4. Data Presentations

Responses from even an unstructured qualitative interview have been entered into a
computer in order to analyze. The qualitative data, however, has no system for pre-
coding, therefore the data has been presented in tables with the help of Excel, graphs and
problem matrix form.
32
 3.6.5. Limitations

The main constraint of the methodology of this study was the data presentation tools,
especially the opinions and number of problems of Ethiopian logistics system list out by
respondents were very challenging to analyze. Hence, the way out taken by the researcher
was categorizing the problems in the form of matrix and analyze accordingly.

3.6.6. Conclusion

Generally, the methodology of the research has been discussed and it is focused on
secondary data analysis and interview result interpretations to differentiate the recurrent
challenges of dry bulk logistics management in Ethiopia. Hence, the populations which
the selected sample size consists of institutions in the grain and fertilizer import logistics
system such as importers, transporters, logistics service providers and regulatory
organizations. Therefore, the collected data has been presented and analyzed in different
approaches.

33
 CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

4.1. Introduction

This chapter consists of the characteristics of the respondents in their age, sex,
educational background and work experience. Apart from that the core of this chapter is
the data which are collected both from primary and secondary sources to find out the
recurrent logistics challenges of Ethiopia concerning import grain and fertilizer are
presented, analyzed and interpreted here.

4.2. Response Rate

As per the plan to make an interview the total number of population was 109. From this
number, 50 of them have taken as a sample in different sampling techniques. To address
these 50 respondents interview questions has been prepared and mad an interview in their
office and different convenient places.

Table 4.1: Total Respondents

S.N Category of Respondents Total Sample Number of Respondents
Population Plan Respond %
1 Regulatory government 7 7 7 100
institutions
2 Importers 5 5 5 100
3 Logistics Service Providers - - - -
3.1. Transport Companies 23 10 9 90
3.2. Port and forwarding Operators 10 5 5 100
3.3. Warehouse Operators 64 23 21 82.6
109 50 47 94.52
Source: Own compilation 2016

As indicated in the above table 4.1, respondents are classified in to three categories
according to their function: these are regulatory organizations, importers and logistics

34
service providers. The regulatory organizations of import grain and fertilizer transport
and logistics process are 7 in number. The importers of grain and fertilizer in Ethiopia are
already known and 5 in number. Logistics service providers are classified as Transport
operators, Port and Forwarding service Operators and Warehouse Operators and 38 in
number. From all 50 organizations that has more relation with grain and fertilizer import
logistics, 47 experienced senior experts has been selected and mad an interview.
Therefore, the response rate was around 94.52% of the total respondents. Even though
the convenient time and location was pre determined in consultation with them, 3
respondents were unavailable for the interview.

4.3. Demographic Data

The background information of all the interviewed experts in each of the above
organizations is most of the expertise who are engaged in the transport and logistics
operation of grain and fertilizer. As clearly shown below in table 4.2, 78.72% of
respondents are male experts and 21.28% are female experts.
The age of respondents shows that 19.14% are between the ages 25 and 30, 25.53% of
the respondents are also between ages of 31 and 35. And 19.28% of the respondents are
between ages 36 – 40. In ages between 41 – 45 years there are about 17% of
respondents, 6.38% between 46 -50 years, and 12.77 % respondents are above 50 Years.
Table: 4.2 – Sex and age distribution of respondents

S.N Categories of Sex Age

Respondents Male Female 25-30 31-35 36-40 41-45 46-50 >50
1 Regulatory 10 0 0 0 0 4 0 3
2 Importers 4 1 0 2 1 2
3 Transport 9 0 1 2 3 1 0 2
Companies
4 Port operators 5 0 0 1 1 1 1 1
5 Warehouse 12 9 8 9 3 1 0 0
operators
Total 37 10 9 12 9 8 3 6
Percentage 78.72 21.28 19.14 25.53 19.28 17 6.38 12.77

Source: Own Compilation,2016

35
 As depicted in the table 4.3, the educational background of respondents are 57.45%
Diploma holders, 19.28% are first degree experts, 21.28% second degree professional
and 2.13% have third degree and they are researchers in logistics and supply chain.
Table: 4.3 – Education and work Experience
S.N Categories of Educational Background Work Experience
Respondents
Diploma B.A/Bs MSc/MA PHD <10 11 -20 21-30 >31
C Years
1 Regulatory 0 2 4 1 0 3 2 2

2 Importers 2 3 0 1 2 2 0

3 Transport Companies 8 1 0 0 5 2 2 0

4 Port operators 1 2 2 0 0 3 1 0

5 Warehouse operators 18 2 1 0 11 9 2 0

Total 27 9 11 0 17 19 8 2

Percentage 57.45 19.28 21.28 2.13 36.17 40.42 17 4.25

Source: Own Compilation,2016

The work experience of the respondents is 36.17 have less than 10 years experience,
40.42% have 11-20 years experience, 17% have 21 -30 Years experience and 4.25% have
greater than 30 years experience.

4.4. Findings

4.4.1. Presentation

4.4.1.1. Total import performance /2012 - 2016/

The total import of the country is significantly increasing from year to year as it is shown
below in table 4.4.
Table: 4.4. Total Import Volume in MT
Item 2012 2013 2014 2015 2016 TOTAL Share%
Wheat 1,114,094.31 1,319,984.89 1,910,324 1,910,464 2,611,305 8,866,172.20 15.43
Fertilizer 971301.765 573,565 858,696 691,036.60 828,318 3922917.365 6.82
Fuel 2,300,000 2,575,056 2,906,874 3,138,693 3,378,455.00 14,299,078 24.89
G/Cargo 4,903,000 5,552,770 5,595,525 6,592,363 8,460,750 31,104,408 54.14
Total 9,288,396.08 9,448,384.46 11,271,419 12,332,557 15,100,581 57,441,337.54

Source: ERCA and EMAA,2016

36
The above table 4.4, Shows that from the total import of Ethiopia, grain has a share of
15.43% and fertilizer has 6.82% and the sum of the two commodities is 22.25% of the
total import volume. The lion share of the total cargo is belongs to general cargo which
includes containerized cargos, RORO (Roll on Roll Off) and project cargos without
container i.e. 54.14%.

As table 4.5 below depicts, the annual increment of the import volume is variable
depending on the type of cargo, so that grain has been increasing averagely by
374,302.67MT which accounts 25% each year for the last 5 years. On the other hand
the increment of fertilizer was erratic and it has been decreasing averagely by
35,745.94MT which accounts -4.31% per year for the last 5 years. When we see the
quantity of import fuel, it has been regularly increasing by 269,613.75 MT which shows
10.11% per year, and General cargo increased by 889,437.50 MT shows 15.04%
increment per annum.

Table 4.5. Annual import Increment in MT

Item 2012 2013 2014 2015 sum Average Change
in %
Wheat 205,890.58 590,339.11 140 700,841 1,497,211 374,302.67 25
Fertilizer -397,736.77 285,131.00 -167,659 137281.40 -142,984 -35,745.94 -4.3

Fuel 275,056.00 331,818.00 231,819 239762 1,078,455 269,613.75 10.11

G/Cargo 649,770.00 42,755.00 996,838 1868387 3,557,750 889,437.50 15
Total 732,979.82 1,250,043.11 1,061,138 2,946,271 5,990,432 1,497,607.98

Source : Own compilation,2016

Therefore, the total import volume has been increasing by 1, 497,607.98Mt per year
and this can be 11.45% averagely, and the increment of grain which is 25 % is by far
greater than the average growth rate of the total import volume. Fertilizer is decreased by
4.3% and fuel increased by 10.11%, while general cargo increased by 15%.

4.4.1.2. Import Performance by Corridor

The table below shows the distribution of import grain and fertilizer by gateway ports.

37
 Table 4.6- Grain and Fertilizer Import by Ports
Year/Sea Ports Djibouti Berbera Port Sudan Total
2016 3,242,863 146,760 50,000 3,439,623

2015 2,574,633.20 26,868 100,000 2,701,501

2014 2,769,019.55 0 0 2,769,019.55

2013 1,893,548.22 0 0 1,893,548.22

2012 2,085,396 0 0 2,085,396

Total 12,565,460 173,628 150,000 12,889,088

Share in % 97.48 1.35 1.11 100

Source: ERCA and EMAA,2016
The data in the above table depicts that 97.48% of grain and fertilizer is coming via port
of Dijibouti, while 1.35% via Berbera,and 1.11% via Port Sudan.

4.4.1.3. Government Bulkshipment Import Performance

The share of government bulk shipment import comparing with other national and
intrnational organizations is indicated below in the table 4.7.
Table 4.7- Import Volume by Type of Importer /2012 -2016/
Share
Name of Type of
in %
S.N Cargo Type Importers Importer 2012 2013 2014 2015 2016 Total

1 Grain EGTE Gov't 579,566 675,539.22 646,133.90 745,051.60 260,000 2,906,291 22.72

NDRMC/DR
2 Grain MFS/ Gov't 0 153,484 464,138 221,251 926,084 1764957 13.80

3 Grain EIDIE Gov’t 0 0 0 300,000 0 300000 2.34

4 Grain FSCD Gov't 117,199 162,344 160,110.96 192,000 344,629 976,283 7.63

5 Grain FSRA Gov't 0 0 198,000 304,769 502769 3.93

6 Fertilizer AISE Gov't 971301.765 573,565 858,696 691,036.6 828,318 3922917.365 30.67

7 Grain WFP Non Gov't 370,656.60 279,476.000 224,726.64 207,540 313,266 1,395,665.24 10.91

8 Grain CRS Non Gov't 46,673 49,140 170,232.90 105,950 462,557 834,553 6.52
9 Grain Other Non Gov't 0 0 46,981.15 138,672 0 185653.15 1.45

Total 2,085,396 1,893,548.22 2,769,019.55 2,601,501.2 3,439,623 12,789,088.34 100

Gov't share 81.9%

Notice Non Gov't Share 18.1%

Source: ERCA and EMAA,2016

38
The total government importers are 6 in number and they have total share 81.9% import
grain and fertilizer and 18.1% is handled by None-Governmental Organizations as
indicated in table 4.7.

4.4.1.4. Discharge Productivity

As it is shown below table 4.8, the total vessels for the last 5 years are about 322. Those
vessels brought 12,789,088 MT Fertilizer and Grain destined to Ethiopia, and the 5 year
average discharge performance was 2972.54MT/day against the planned 7000MT/Day, The
number of days of vessels at port (dwelled time) at anchorage and Berth was 869 days with
comparing the planned 365.4 to discharge all vessels, and it was greater than by 504 days.
This shows that extra days were used o discharge in addition to the planned day. For this
extra day there is unplanned cost incurred by all vessels, as the shipping data’s shows on
average a 50,000DWT bulk vessel will cost $15,000 for fuel, crew accommodations and
other auxiliary services on the sea (column “I” in table 4.8). Therefore, if we take $15,000
in the last 5 years all vessels incur $37,800,900.77cost due to overstay at seaport. If the cost
includes the normal stay or all actual number of days, it will go up $65,206,164.76.

Table 4.8- Daily Average Discharge Productivity

Num Total Daily Average Discharge/MT Total Number of Days to Discharge Daily
ber of Volume/M Differen Differenc Average
vessel T Plann Actual ce (E=C- Planned Actual e Cos/Vessel Total Cost
Year s (A) (B) ed (C) (D) D) (F=B/C) (G=B/D) (H=F-G) (I) (J=H*I)

2012 69 2,085,396 7,000 3044 3,956 297.91 685 387.17 $15,000.00 $5,807,555.78

2013 53 1,893,548 7,000 3066 3,934 270.50 617.60 347.10 $15,000.00 $5,206,542.72

2014 56 2,769,019 7000 2901.8 4098.2 395.57 954.24 558.66 $15,000.00 $8,380,017.27

2015 60 2,601,501 7000 3103 3896.61 371.64 838.27 466.63 $15,000.00 $6,999,450

2016 84 3,439,623 7000 2747.6 4252.4 491.37 1251.86 760.48 $15,000.00 $11,407,335

322 12,789,088 1827 4347 2520 $37,800,900.77

Source: SDTV Djibouti Port,2016

39
 4.4.1.5. Daily Average Dispatched (DAD) Productivity
Daily Average Dispatched in MT to Ethiopia and number of trucks that are loaded
daily are presented below in a summery table 4.9.
Table 4.9. Daily Average Dispatched and Number of Trucks
Years 2012 2013 2014 2015 2016

Plan Actual % Plan Actual % Plan Actual % Plan Actual % Plan Actual %
DAD in 5760 1541 26.75 5520 1715 31 5720 1503 26.27 6040 1335 22 7440 1557 20.9
Mt
Number 144 44 30.55 138 49 35.5 143 43 30 151 38 25 186 45 24.19
of
Trucks

Source: Djibouti SDTV (2012- 2016)

4.4.1.6. Cross Boarder Freight Transport Capacity of Ethiopia

Ethiopia has 10,510 trucks which are operating to neibouring countries like Djibouti,
Sudan and Somaliland as indicated below in table 4.9.

Table 4.10. Characteristics of Cross Border Freight Trucks

Level Uplifting Age Associations Companies Private Total %age

Capacity Number Truck Number Truck Number Truck Trucks
in Mt number number number
Level 1 (ሀ ) 30 - 40 0-10 18 3,666 11 2,113 -- -- 5,779 54.98
Level1 (ለ ) 20 - 29.9 0-10 1 127 -- -- -- -- 127 1.20
Level 2 (ሀ ) 30 - 40 10.1-20 13 1421 -- -- -- -- 1,421 13.52
Level 2 (ለ ) 20 – 29.9 10.1-20 7 985 -- -- -- -- 985 9.37
Level 3 (ሀ ) 30 - 40 >20 9 450 -- -- -- -- 450 4.28
Level 3 (ለ ) 20 – 29.9 >> 17 1153 -- -- -- -- 1,153 10.90
Level 4 20 – 40 >> - - -- -- 15 595 595 5.66
Total 65 7,702 11 2,113 15 595 10,510

Source: Road Transport Authority, 2016

As shown in the above table 4.10, 54.98% of freight vehicles engaged in cross boarder
transport are in the age between 0 and 10 years. 45% of the vehicles are at age of above
10 years.

40
 4.4.1.7. The Presence of Full-Fledged Government Policies to Handle Import
Grain and Fertilizer

As indicated in the previous sections most of the bulk cargos in Ethiopia are imported by
government enterprise. Therefore, when we come across the policies and regulations
from the table 4.11, it is possible to infer that the enterprises of government of Ethiopia
that has no any regulation are about 93.62%. From the government institutions NDRMC
only has its own policy and strategy called National Policy and Strategy on Disaster Risk
Management, and from international organizations WFP and CRS has their own policies
to undertake their responsibilities all over the world.
Table: 4.11 – Respondents answer on the presence of Full-fledged
Government policies
No Answers Number of Respondents %age
1 Yes 3 6.38
2 No 44 93.62
Total 47 100
Source: Own compilation 2016

4.4.1.8. The presence of Regulations, Directives and standards in their

organization

As depicted below on table 4.12, regulations and directives in the logistics system of
grain and fertilizer in each regulatory institution and other actors are limited. From all
respondents, 68% responded that there is no regulation and directive to handle bulk
import and 32% responded that there are regulations and directives in their organization.
Table: 4.12 - The existence of regulations and directives
No Answers Number of Respondents %age
1 Yes 15 32
2 No 32 68
Total 47 100
Source: Own compilation 2016

41
 4.4.1.9.List of Regulations, Directives and Standards Issued by
Organizations
Among the regulations and directives issued by different actors of import grain and
fertilizer logistics are listed below as responded by experts in the sector. These are:

 Bulk shipment import transit directive issued by Ministry of Transport

 Import government dry cargo handling guideline issued by Ethiopia Maritime
Affairs Authority
 Incoming shipment manual issued by World Food Program
 Humanitarian cargo transit logistics manual issued by Catholic relief service

4.4.1.10. The presence of Standardized Structural organization to handle

import grain and Fertilizer
The presence of special division in the organization to handle grain and fertilizer import
was not as per the required as shown in Table 4.13 below that, 59.58% of respondents
replied that there is no effective organizational structure in their institutions. And 40.42%
of respondents replied that there is organizational structure in their institutions.
Table 4.13.Organizational Structure
No Answers Number of Respondents %age

1 Yes 19 40.42
2 No 28 59.58
Total 47 100
Source: Own compilation 2016

4.4.1.11. The presence of well trained expert to handle import grain and
fertilizer logistics
After organizational structure has been settled, the next job is allocating the right person
in the right place or position. In this regard from the respondents in table 4.14, 95.74 %
responded that there is no well trained man power in the area of grain and fertilizer
logistics. While 4.26% of the respondents replied that they have trained experts in the
area of logistics and these organizations are WFP and CRS.

42
 Table 4.14- Trained man power
No Answers Number of Respondents %age

1 Yes 2 4.26
2 No 45 95.74
Total 47 100
Source: Own compilation 2016

4.4.1.12. The presence of harmonized coordination among stakeholders to

handle import grain and fertilizer

As table 4.15 illustrates, 82.92% of respondents replied that the coordination of Ethiopian
bulk shipment logistics service actors and activities are not in line with the need of it.
And 17% of respondents replied that there is coordination to create smooth flow of
import bulk shipment among few organizations.
These organizations are: - EMAA with CRS, EGTE, MoA, AISE, WFP, ERCA, RTA,
ESLSE, FSCD and NBE.
The other coordination is between WFP and NDRMC, ARRA, MoE and MoAANR.
As per the respondents the area of coordination are the exchange of information from
seaports and inland warehouses.
Table 4.15 – Logistics Coordination
No Answers Number of Respondents %age

1 Yes 8 17.02
2 No 39 82.98
Total 47 100
Source: Own compilation 2016

4.4.1.13. Availability of well integrated IT utilization

As shown below in the table 4.16, 76.59% of respondents replied that there is no well
integrated ICT utilization in all organizations which are involved in bulk shipment (grain

43
and fertilizer) logistics in Ethiopia. Only 23.41 % responded that there is well designed
ICT infrastructure and its utilization in their organization.
Table 4.16. IT utilization
No Answers Number of Respondents %age

1 Yes 11 23.41
2 No 36 76.59
Total 47 100
Source: Own compilation 2016

4.4.1.14. List of Problems at Different Level Given by Respondents

Starting from suppliers to final consumers or importers there are different problems given by
respondents. These problems are listed below.

Suppliers
- The quality of grain is not as per the agreed terms and conditions
- Late delivery of Consignment
- Price variations (cost)
- Fail to send all the required documents
- Fail to send the right amount and type of grain at the right place and time
- Fail to provide the appropriate empty bags
- Lack of coordination with its similar suppliers
- Unwillingness in solving problems at different level
- Communication barriers between importer and supplier
- Sometimes they request additional price beyond the agreement
- High price of products considering logistics inefficiency at Djibouti port

Ship owners
- Schedule not met
- Fail to deliver the right quality and tonnage of grain
- Face port congestion
- Some of the vessels have no crane and other discharging facilities
- Availing old fleet

44
- Lack of proper communication with cargo receiver
- Poor handling of cargo onboard during sea passage

Sea ports
- Delay in process
- Poor facilities
- Low capacity
- Lack of berth
- Poor safeguard
- Monopoly nature of port operators
- Not giving priority for humanitarian cargo
- Have no adequate berth space( Draft and Length of berth)
- Long distance to get sea port (eg. Port Sudan)
- Security trait (eg. Berebera Port)
- Low capacity (Djibouti, Berbera)
- Bulk terminal bagging machine at Djibouti port fails frequently
- Shortage of enough warehouse and silo at Djibouti and Berbera ports
- Levying new tariffs without pre – notification of clients
- Poor Management system (Berbera Port)
- Shortage of skilled Dockers at all ports
- Pilferages
- Limited parking facilities
- Corruption
- Low operation efficiency in discharging
- Failure of bagging machines frequently
- Absence of different facilities for drivers
- Shortage of parking place for trucks
- Low level of integration among parties inside the port
- Limited number of berths (Berbera, Djibouti)
- Stevedoring activity is below standard

45
- Monopoly nature of Stevedoring companies (Djibouti)
- High cost of stevedoring companies

Customs
- Delay in checking at boarder
- Corruption
- High number of regulations affects operations
- Lengthy process for single shipment
- Many custom checkpoints
- Regulations revised frequently and affect operation
- Lack of structured system
- No perfect IT system
- Rigid customs procedure
- Unavailability of preferential treatment for humanitarian cargo
- There is no harmonized custom operation and procedure between Ethiopian
Custom and Djibouti custom
- Lack of knowledge about the nature of humanitarian cargo
- Long procedures in both countries (Djibouti and Ethiopia)
- Lack of modern inspection equipments (X-rays and scanning machine)
- Employs at custom are not committed to facilitate transit
- Harmonization problem
- Documentation redundancy
- Cause to delay of truck movement due to poor checking system and facilities
- Unsuitable working areas at the border (Galafe post)
- Cumbersome number of documents
- Poor coordination with Forwarding companies and cargo owners
- Not have any solution in case of document delay to proceed the clearing
- They have no care about trade facilitation

46
 Transport
- Low uplifting capacity of trucks
- Poor technology utilizations (GPS)
- Operational planning gap
- Poor Management system
- High transport cost per ton per km
- Low speed of tracks
- Unavailability of spare parts
- Low level of load capacity of trucks
- Roads are in - accessible during rain
- No alternative rout
- Not availing enough trucks
- Transporters are not abide by the agreement they entered with importer
- Fail to deliver the right quantity (always shortage record)
- Fail to respect custom procedures ( smuggling )
- Most of the trucks are not suitable to load different type of cargos
- Lack of ICT knowledge
- Unable to locate where the trucks are (no system)
- Most of transport agents at seaport are not qualified
- Axel load problems (the size of the road is limited and corruption is there)
- Lack of skilled labor
- Poor management system
- Old trucks
- Limited capacity of trucks
- Unsafe driving
- Technical failure of old trucks on the move
- Bad road conditions
- The road is too narrow from Djibouti to Galafe and Dewale to handle more
than 1000 Trucks per day
- Poor behavior of drivers

47
 - High traffic accident along Ethio –Djibouti corridor

Banks
- Shortage of foreign currency
- Absence of banks in rural areas
- Unable to get all services in all branches of banks
- Long time to get foreign currency
- High cost of transfer/transaction
- Slow response to the request fund
[[

Freight forwarders
- Delay in documentation
- Not have financial as well as human resource capacity
- Most of them are not qualified
- Not providing the right number of trucks
- Not providing the right type of trucks
- Lack of internal capacity and human resource
- Limited asset and facilities
- Unprofessional work
- Lack of commitment
- Fail to take responsibility for any delay
- No service level agreement with any partners
- No sense of urgency

Importers
- Shortage of trained man power
- Poor planning system
- Low level of salaries and incentives to attract senior experts
- Lack of information to meet logistics service providers
- Fail to order the right quality and type of grain
- Fail to provide all the necessary documents to freight forwarder

48
- Lack of coordination with similar importers
- Lack of comprehensive information about the cargo and logistics procedures
- Lack of collaboration
- Poor contract administration system ( with transporter, freight forwarder, ship
owner
- Poor monitoring and follow up system about their cargo status
- Lack of dedicated unit to handle all logistics operations from procurement to
delivery
- Unable to decide on finance matter (Government importers)
- Skill gap in reviewing charter parties

Regulatory Institutions
- Duplications of efforts
- Regulations are not flexible for freight forwarders
- Lack of standard rules and procedures
- Staffs are not well qualified
- Not systematize
- Regulations are not implemented
- Their mandate is not clearly identified
- Do not have preferential treatment for humanitarian cargo
- Requiring too many documents
- They have no known standard of regulation
- They have no concern for any delay of the cargo

Inland Warehouses
- Limited space
- Not suitable to unload trucks
- No trained workers/Laborers/
- Not enough as the current market required
- The existing WH is not constructed with standardized quality

49
 - Inaccessible for the main roads
- There has no enough space to enter the compound for load on/load of
- No ventilation system
- Lack of WH machinery to stack properly
- Most of WH are for bagged cargos not for bulk grain
- Unavailability of clear WH space
- In some locations there is no WH totally
- Monthly WH renting cost is very high
- They are conventional and small in size
- There is no modern WH at different level
- Low capacity
- Lack of HR in WH management
- Corruption
- No standards and procedures
- Shortage of WH in number and capacity
- Poor unloading system
- No unloading facilities
- Shortage of labor for unloading
- Working hour is short (less than 24hrs the standard)
- Some WH are not accessed to trucks
- Working system is not supported by IT

4.4.2. Interpretation and Discussion

4.4.2.1. Interpretation

From the presentation in section 4.4, it is possible to construe the following analysis.

 The total import performance of the country is increasing from 2012 to 2016 by
11.45% and this volume needs compatible logistics facilities both in Ethiopia and
beyond the boarder as shown in table 4.4 and 4.5. The increment of grain was
higher than that of fuel, general cargo and fertilizer.

50
 As it has been depicted in table 4.4, 22.25% (15.43%+6.82%) of the total import
of the country is grain and fertilizer, while 24.89% is fuel and 54.14% is other
general cargos which have been handled by container and without container. This
shows that if the problems of grain and fertilizer logistics are solved, 22.25% of
Ethiopian logistics challenges will be solved.
 When we come across the corridor utilization, most Ethiopia’s grain and fertilizer
import has been transported via port of Djibouti which accounts 97.48% as shown
in table 4.6. This imbalance corridor utilization affects the logistics performance
of the country as a whole.
 From grain and fertilizer imports, 81.9% have been imported by Government
importers and 18.1% has been handled by international organizations as
illustrated in table 4.7. This shows that if the logistics problems of these
government imports are identified and get solved, almost 82% of grain and
fertilizer logistics problems will be improved.
 The vessels discharge productivity at sea port is very low comparing with plan
and the actual amount of cargo. The plan of the daily average discharge was
7,000 Mt; however the performance was below 50% (table 4.8). This means,
there was delay of vessels to get departure with completing the task of
discharging. This delay also incurred 37.8 million USD cost for vessels as
indicated in table 4.8.This cost was only for the additional days of vessels for
waiting to berth which was 2520 days (table 4.8). If the cost is calculated for the
total days of vessels at seaport, it will rise to 65.20million USD (4347
days*$15,000). Therefore, the vessel owners will suffer by spending this much
amount of costs when they enter an agreement to transport Ethiopian cargo and as
a result they tend to increase the sea freight by projecting that there will be delay
of vessels at Djibouti Port. The delays are due to poor facilities of the port like
narrow berth, old equipments and truck shortages as explained by Mr. Dawet
Kidanie EMAA Djibouti branch office Manager.
 The Daily Average Dispatched (DAD) is the average of all day’s volume
transported from the seaport to all inland destinations in Ethiopia, hence, the data
51
 shows that it has considerable amount of difference between the plan and actual
performance in each year. This means that there was a difference between what
was discharged to sea port and dispatched to the country. In 2012, the average
actual daily discharge was 3044Mt, and the average actual daily dispatched was
1715Mt, and this shows that there was a shipment around 1330 Mt. transferred to
silo and warehouses at sea port (Table4.9). After 10 days of free time, the 1330
Mt cargo was subjected to storage cost per ton per day around $0.20 for the first
14 days and $0.30 after 14 days as stated in the SDTV tariff.
 As shown in table 4.10, the number of trucks is about 10,510, out of this 54.98%
trucks are between the age of 0 and 10 years, and its uplifting capacity is 30-
40Mt. The rest 45% of the trucks are in between the age 10.1 and 20 years and
its uplifting capacity is 20-29.9Mt. This shows that the type of truck and uplifting
capacity is not in line with the volume of the total import of the country. This was
the reason that the discharged and dispatched productivity were low as shown in
tables 4.8 and 4.9.
 In the logistics and freight transport sector there should be full-fledged policies
and procedures to handle import bulk shipments, however, 93.62% of the
respondents answer in table 4.11, shows that there is no as such organized policy
directions to lead properly this sector. This leads to high logistics inefficiency in
handling of import grain and fertilizer.
 Next to policy directions, there should be regulations and directives to handle
import grain and fertilizer shipments, nonetheless, 68% of respondents replied
that there are no appropriate regulations and directives in the area. Even though
most of respondents have given the above response, 32% of respondents replied
that there are regulations and directives to handle especially humanitarian grain in
international organizations (Table 4.12).
 The organizations that involved in the logistics system of import grain and
fertilizer should have well designed organizational structure; however, 59.58% of
respondents replied that there is no workable organizational structure to hold
grain and fertilizer logistics in their institutions (Table 4.13). And 95.74 % replied
52
 that there is no well trained man power in those sectors of importers, regulatory
institutions and logistics service providers (Table 4.14). Not only that there is no
coordination among those sectors in the area of import grain and logistics
facilitations as 82.98% of respondents replied (table 4.15). IT utilizations in all
chains of import grain and fertilizer process are very poor or not available as
stated by 76.59% of respondents in table 4.16.

Different problems are listed by respondents in various levels of the operation of

import grain and fertilizer logistics. Therefore those problems are discussed in the
next section.

4.4.2.2. Discussion

As it has been presented in the previous sections the recurrent challenges and bottlenecks
of Ethiopian logistics system especially in the handling of import grain and fertilizer are
collected from respondents and subdivided in to the actors which the problems are
emerged. These actors are suppliers, Ship-owners, Seaport Authorities, Custom
Authorities, Banks, Road Transporters, Freight forwarders, Inland Warehouses
operations, Importers and Regulatory Institutions. Therefore, it is vital to discuss each
problem depending on the actors and the nature of the problem by formulating major
parameters like policies, organizational structure, and human capacity, working
procedures and regulations, ICT, hard infrastructure and facilities and ethics of the
industry as follows.

A. Suppliers

The suppliers of fertilizer to Ethiopia are living in different countries, but most of them
have office at Dubai and bring fertilizer from different countries. The source of the
fertilizer actually varies from year to year, however Morocco, Ukraine and Russia are
among the suppliers in the last 5 years according to the data taken from AISE.
On the other hand the suppliers of grain (wheat) are Indian Merchants, Sudanese Traders,
and other International Companies.

53
 Hence, the problems of the logistics operation in grain and fertilizer import to Ethiopia
on the side of the suppliers are categorized under the following logistics management
requirements.
Table 4.17: Problems Matrix on the side of Suppliers
S.N Policies Organizati Human Working Procedures ICT Hard Ethics of the Rem
and onal Capacity and regulations Infrastructure Industry ark
Strategi Structure and Facilities
es
Lack of Unwillingn Fail to send all Fail to provide the Problem of
coordinatio ess in Fail to send all the required appropriate empty meeting agreed
n with its solving necessary original documents bags quality
similar problems at documents on time to
suppliers different importers
level
1 The quality of grain is Communication High price of Sometimes they
not as per terms of barriers products request additional
agreed quality between considering price beyond the
importer and logistics agreement
supplier inefficiency at
Djibouti port
2 Late delivery of
Consignment
3 Price variations (cost) Lack of proper Problem of
communication meeting agreed
with the schedule
receiver
4 Inappropriate Fail to send the
agreement with right amount,
stevedoring companies quality and type of
at port grain at the right
place and time
Total 1 1 5 3 2 4
Source: Own compilation from respondents answer, 2016

From the above table 4.17, problem matrix one can understand that the suppliers of bulk
grain and fertilizer have their own problem regarding working procedures, Ethical issues,
ICT utilization and others which leads to poor logistics flow.
B. Ship Owners
The ship-owners are the carriers who are nominated by the suppliers or the agent of
importer to transport grain and fertilizer from different port of origin to the port of
destination that Ethiopia uses, namely Djibouti Port, Berbera Port and Port Sudan
(Nathan, 2012)
Therefore, the respondents have identified critical problems on the side of carriers that
affect the Ethiopian logistics system especially bulk logistics.

54
 Table: 4.18– Carriers Problem Matrix
S.N Policies Organiza Human Working ICT Hard Infrastructure Ethics of the Rema
and tional Capacity Procedures and Facilities Industry rk
Strategies Structure and
regulations
1 Poor handling Lack of proper Some of the vessels Schedule and actual
of cargo communication have no crane and arrival has much
onboard during with cargo other discharging gap
sea passage receiver facilities
2 - Availing old fleet Fail to deliver the
right quality and
tonnage of grain
Total 0 0 1 1 2 2

Source: Own compilation from respondents answer, 2016

C. Seaport Authorities and Operators

Sea Port Authorities and operators are placed under this category. These include Port
Authorities such as Sea Ports Corporation of Sudan, Djibouti Ports and Free Zone
Authority and Berbera Port Authority. Sea Port operators are companies which have
license or agreement with Port Authorities to operate inside seaport and they may be
government or private entities. Therefore, seaport operators in the import logistics of
grain and fertilizer to Ethiopia are, SDTV in Djibouti which has the task to unload grain
and fertilizer from vessel to directly the bagging line or to silo and to load on the truck,
MTSE is an Ethiopian company has the responsibility of port clearance services. The
major Ship Agents in Djibouti port which has a responsibility to handle the release of
grain and fertilizer from the vessel are ISS, KHOTHARIE, SABA and INTERMODAL
(PAID, 2012). Therefore problems of these institutions inside the port are presented
below in Table: 4.19 matrixes.

55
 Table:4.19 – Problem Matrix at Seaport Authorities and operators
S.N Policies Organizational Human Working ICT Hard Ethics of Remark
and Structure Capacity Procedures Infrastructure the
Strategies and Industry
regulations
1 Monopoly Low level of Poor Delay in Slow Poor facilities Pilferages Security
nature of integration safeguard process Information of goods trait (eg.
port among parties exchange Berebera
operators inside the port Port)
2 Monopoly Poor Not giving No real Low equipment Corruption
nature of Management priority for time data capacity
Stevedoring system humanitarian available
companies (Berbera cargo (at Berbera
Port) and Port
Sudan)
3 Shortage of Levying new Lack of berth or
skilled tariffs Have no adequate
Dockers at without pre– berth space( Draft
all ports notification and Length of
berth
4 Low High cost of Bulk terminal
operation stevedoring bagging machine
efficiency in companies at Djibouti port
discharging fails frequently
due to technical
problems
5 Stevedoring Shortage of
activity is warehouse and
below silo at Djibouti
standard and Berbera ports
6 Limited parking
facilities
7 Failure of bagging
machines
frequently
8 Absence of
different facilities
for drivers
9 Shallow draft for
bulk carrier
10 Limited number of
berths (Berbera,
Djibouti)
Total 2 1 4 5 2 10 2 1
Source: Own compilation from respondents answer, 2016
As shown in the matrix above table 4.17, the critical problems of seaports and operators
in the port are infrastructures, facilities, working procedures and policy issues. Especially
at Djibouti port the number of berths available for grain and fertilizer is not much with
the number vessels arrived at port for the last 5 years as clearly explained by EMAA
Djibouti branch office during the interview.

56
 D. Custom Authorities
The custom authorities in any country are the main actors in international trade of that
country. In Ethiopian case, Ethiopia Revenue and Customs Authority, Djibouti Customs
Authority, Sudan Customs Authority and Somaliland Customs Authority are the parties
which are directly involved in the inspection and clearance of import grain and fertilizer
destined to Ethiopia. Hence, in all countries of customs there are sort of problems
identified by the respondents who were interviewed for this study. The problems are
shown below in Table 4.20 matrix.
Table 4.20. Matrix Problems of at Customs

S.N Policie Organizational Human Working Procedures and ICT Hard Ethics of
s and Structure Capacity regulations Infrastructure the
Strateg Industry
ies
1 Poor Lack of Delay in checking at boarder No Lack of modern Corruption
coordination knowledge about comp inspection
with the nature of etent equipments (X-
Forwarding humanitarian IT rays and scanning
companies and cargo syste machine)
cargo owners m
2 No care about High number of regulations affects Cause to delay of Employs at
trade facilitation operations (Sudan) truck movement custom are
due to poor not
checking system committed
and facilities to facilitate
transit
3 Lengthy process for single shipment Unsuitable
working areas at
the border (Galafe
post)
4 Many custom checkpoints

5 Regulations revised frequently and

affect operation(Djibouti)
6 Lack of structured and modern
system (Ethiopia)
7 Rigid customs procedure (Ethiopia)

8 Unavailability of preferential
treatment for humanitarian cargo
9 There is no harmonized custom
operation and procedure between
Ethiopian Custom and Djibouti
custom
10 Long procedures in both countries
(Djibouti and Ethiopia)
11 Documentation redundancy
(Cumbersome number of
documents)
12 Not solution in case of document
delay to proceed the clearing
Total 0 1 2 11 1 3 2
Source: Own compilation from respondents answer, 2016

57
 From the table 4.20, it clear that most of the problems of custom authorities are working
procedures and regulation implementations. Poor infrastructure at customs posts and
corruption are also challenges to the smooth flow of import cargos.

E. Road Transport Issues

The import grain and fertilizer of Ethiopia is handled via three corridors, namely Ethio –
Berbera corridor, Ethio – Djibouti corridor and Ethio – Sudan corridors. Bulk shipment
statistical data revealed that 95.23% of the import grain and fertilizer is handled via port
of Djibouti and therefore, most of the problems regarding road transport are observed at
this corridor. These problems are listed below in the matrix table 4.21.
Table: 4.21.Matrix of Problems at Road Transport
S.N Policies Organiza Human Working ICT Hard Infrastructure Ethics of the Remark
and tional Capacity Procedures and Industry
Strategies Structure regulations
1 No Transport Operational Transporters are Unable to Low uplifting capacity of Fail to deliver High traffic
Transport companies planning not abide by the locate where trucks the right quantity accident
policy(Dra have no gap agreement they the trucks are (always shortage along Ethio
ft only) clear entered with (no system) record) –Djibouti
structure importer corridor
2 Poor Lack of ICT Poor technology Fail to respect Unsafe
Management utilization utilizations (GPS) custom driving
system procedures (
smuggling )
3 Lack of Unavailability of spare Critical
skilled labor parts corruption cases
due to axel load
regulation.
4 Most of Roads are in - accessible
transport during rain
agents at
seaport are
not qualified
5 Low skill of Not availing enough
drivers trucks
6 Most of the trucks are not
suitable to load different
type of cargos
7 The capacity of the road
to Axel load is limited.
8 Technical failure of old
trucks on the move
9 Bad road conditions
(Specially at Djibouti and
Somaliland)
10 The road is too narrow
from Djibouti to Galafe
and Dewale to handle
more than 1000 Trucks
per day
Tota 5 1 2 10 3 2

Source: Own compilation from respondents answer, 2016

58
As explained in the problem matrix above table 4.21, the major road transport problems
are poor road infrastructure and facilities, shortage of trucks, lower skill about transport
management and corrupt behavior of the actors in the sector. Moreover there is no
adopted transport policy for the country.
F. Banks
Both National Bank of Ethiopia and Commercial Bank of Ethiopia, have involved in the
import process of grain and fertilizer. Hence, on this regard there are some problems
perceived by respondents from importers and regulatory institutions.
Table: 4.22- Matrix on problems on bank issues
S.N Policies and Organizational Human Working ICT Hard Ethics Rem
Strategies Structure Capacity Procedures and Infrastructu of the ark
regulations re Industr
y
1 Shortage of Unable to get Long time to get Frequent Absence of
foreign currency all services in foreign currency System banks in
all branches of failure rural areas
banks
2 High cost of Slow response to
transfer/transaction the request fund

Total 2 1 2 1 1

Source: Own compilation from respondents answer, 2016

In the above table 4.22, the most recurrent problem of the bank side is unable to provide
foreign currency when it is needed and working procedure problems are lead to delay of
logistics operation at different level.

G. Freight Forwarders
Freight forwarders are logistics companies which have the responsibility of clearing,
packing, transporting and storing of goods until they deliver to importer or cargo owner.
Hence, in grain and wheat logistics there are few companies which have agreement to
handle the mentioned activities. MTSE is the sole agent of AISE and EGTE at Djibouti
port. NDRMC, CRS and WFP have different agents at seaport and in Ethiopia also.

Therefore, these freight forwarding companies have great impact on grain and fertilizer
logistics and some problems are listed below in table 4.23.

59
 Table: 4.23 – Problems on Freight forwarding activities

S.N Policies Organiz Human Capacity Working ICT Hard Ethics of the Remark
and ational Procedures Infrastructure Industry
Strategi Structur and and
es e regulations Facilities(Road,
Port, Warehouse
etc)
1 Not have financial Delay in Low Not providing the Lack of
as well as human documentation information right number and commitment
resource capacity exchange type of trucks
with clients
(Importers
2 Most of them are No service level Limited asset and Fail to take
not qualified agreement with facilities responsibility
any partners for any delay
3 Lack of internal
capacity and human
resource
4 Unprofessional
work
Tot 0 0 4 2 1 1 2
al
Source: Own compilation from respondents answer, 2016
The above matrix in table 4.23 shows that the skill of freight forwarders to logistics is
very limited and they are inefficient in handling or import procedures. They do not have
enough facilities and assets to carry out their job effectively.

H. Inland warehouse

There are different warehouses in Ethiopia owned by both private and government
enterprises. Among these grain and fertilizer warehouse are concentrated in major cities
of the country like Addis Ababa, Adama, Dre Dawa, Mekele, Kombolcha, Bahirdar,
Debremarkos, Asela,Shashemene etc.
Respondents have listed some of the problems that Ethiopia faces on the side of inland
warehouse managements.

60
 Table:4.24– Problems at Inland Warehouses

S.N Policies and Organization Human Working ICT Hard Infrastructure Ethics of
Strategies al Structure Capacity Procedures and and Facilities(Road, Port, the
regulations Warehouse etc) Industry
1 Monthly WH Most of WH No trained No standards and All Limited space Corruption
renting cost have no workers/La procedures Working
is very high known and bor system is
clear structure not
and supported
responsibilitie by IT
s
2 Lack of HR Poor unloading Not suitable to unload trucks
in WH system
managemen
t
3 Shortage of Working hour is The existing WH is not constructed
labor for short (less than with standardized quality
unloading 24hrs the
standard)
4 Inaccessible for the main roads
5 There has no enough space to enter
the compound for load on/load of
6 No ventilation system,
Lack of WH machinery to stack
properly
7 Unavailability of clear WH space
8 In rural locations there is no WH
totally
9 They are conventional and small in
size

10 There is no modern WH at different

level
11 Low capacity
12 Shortage of WH in number and
capacity
13 No unloading facilities
Total 1 1 3 3 1 13 1
Source: Own compilation from respondents answer, 2016
As shown in table 4.24, the most common problems regarding inland warehouses are
limited in number; poor quality regarding materials made of, less facility inside the
warehouse, poor management system, have no known procedures and standards
regarding offloading of trucks, receiving, stacking, distribution and loading on trucks as
most of respondents explained.

I. Importers of Grain and Fertilizer

The importers of grain and fertilizer to Ethiopia are Government Enterprise and
Nongovernmental International aid Organizations. Therefore, these organizations have
their own problems as indicated by the respondents below in table 4.25.

61
 Table: 4.25.Problems on the side of Importers

S.N Policies and Organizational Human Working Procedures ICT Hard Ethic
Strategies Structure Capacity and regulations Infrastruc s of
ture the
Indus
try
1 Unable to decide Low level of Shortage of Fail to provide all the Lack of
on finance matter salaries and trained man necessary documents to information to
(Government incentives to power freight forwarder meet logistics
importers like attract senior service
EGTE,AISE,ND experts providers
RMC)
2 Lack of Poor Poor contract Lack of
coordination with planning administration system ( comprehensive
similar importers system with transporter, freight information
forwarder, ship owner etc) about the cargo
and logistics
procedures
3 Lack of Fail to order Purchase term is C&F and
collaboration the right this leads to high cost on
quality and the product and
type of grain unscheduled program
4 Poor monitoring Skill gap in
and follow up reviewing
system about their charter
cargo status parties
5 Lack of dedicated
unit to handle all
logistics
operations from
procurement to
delivery
Tot 1 5 4 3 2 0 0
al
Source: Own compilation from respondents answer, 2016
As depicted in the above table 4.25, the main problems of importers are isolated
organization structure to handle government and similar commodity, lack of skilled
manpower, poor planning and working procedures in the logistics sector especially grain
and fertilizer logistics management.
J. Regulatory institutions
Regulatory institutions have great role in the logistics and transport system of grain and
fertilizer import to Ethiopia. These regulatory organizations are Ministry of Transport,
Federal Road Transport Authority, Ethiopia Maritime Affairs Authority Ministry of
Health and Ministry of Agriculture and Ministry of Trade.

62
 Therefore, these regulatory have impact on the smooth flow of grain and fertilizer to the
destination. Some of the recurrent problems observed on regulatory are listed below in
table 4.26.

Table 4.26: Problems on Regulatory Institutions

S.N Policies Organizational Human Working ICT Hard Ethics of the Remark
and Structure Capacity Procedures and Infrastructure Industry
Strategies regulations and
Facilities(Road,
Port,
Warehouse etc)
1 They have Duplications of Staffs are Lack of standard Not IT They have no
no efforts not well rules and system concern for
logistics qualified procedures any delay of
the cargo
2 Regulations are Do not have
not implemented preferential
treatment for
humanitaria3n
cargo
3 Their mandate is Requiring too
not clearly many documents
identified
4 They have no
known standard of
regulation
Total 3 4 1 0 1
Source: Own compilation 2016

The major problems of regulatory institutions are basically they have no clear policies
and organizational structure, and they lack well designed procedures and standards as
shown in table 4.26 above.

To understand and further analyze the dry bulk logistics challenges in Ethiopia, different
operation sites were visited and observations have been conducted.

The locations that observations take place are Djibouti Port, Port Sudan, importers
warehouses at Adama, Mekele, Bahirdar, Driedawa, Kombolicha, the new Ethio –
Djibouti Rail way.

Djibouti port is located to the East of Ethiopia along southern part of Red Sea and
Northern part of Indian Ocean. Port of Djibouti is the main gateway of Ethiopia starting
from 1993. In addition the opening and expansion of Suez Canal makes Port of Djibouti
very congested due to much transit vessels to Europe and America from Asia. In Djibouti
port there are different operation sites like Doraleh Container Terminal (DCT), Port
63
Authority International Djibouti (PAID), Djibouti Ports and Free Zone Authority
(DPFZA), Horizon Oil Terminal, Doraleh Multipurpose Ports (DMP). These all ports
have their own functions and only PAID is visited which is grain and fertilizer operation
takes place.

During the visit out of 12 bagging lines of SDTV only 5 are functional due to technical
failure as it has explained by experts in SDTV.

As it has been observed, 7 bagging lines are not properly working and they are closed.

The other location that was observed is the road from Ethiopia to Djibouti Port, hence,
the road from Addis Ababa to Galafe 678 km (Ethio – Djibouti border) is more or less in
good condition. At Galafe, the checking point is very narrow (8-10 meters) and up to 2
km queue of truck for checking are waiting.

The office of Ethiopia Custom is not well equipped with scanning machine, competent
experts and other utilities like electric power and infrastructures. Inside Djibouti, the road
from Galafe up to 70 km in Djibouti is deteriorated and creates many obstacles on
drivers. Moreover the road is very narrow and accidents are common due to high traffic
and inappropriate road size and quality.

The second sea port that has been observed was Port Sudan in the Republic of The
Sudan. Its distance from Addis Ababa is 1881 km, in Ethiopia up to Metema/Galabat
978 km and in Sudan from Galabat/Metema up to Port Sudan 903km. During the visit
there was vessels discharging fertilizer to Ethiopia and its discharging capacity was
2000Mt per day as explained by the Port operation Manager Mr. Ibrahim Dirar. The
Sudanese trucks are loading fertilizer directly from the vessel to Ethiopia and their
uplifting capacity was 70 - 100 Mt which is higher than Ethiopian trucks (35 - 40 Mt).
However, the problem raised by Sudanese Transporter such as El-Nefedi plc Operation
Manager Mr. Tarig Beshir Elnefedi, the axel load limit has issued by Sudanese Chamber
of Transport and it prohibits loading more than 55 Mt, which will increase the cost of
transport from Port Sudan to Ethiopia.

64
The port is very organized, there are more than 12warehouse with the capacity to store
about 50,000 Mt each and in between each warehouse there is rail way to load and unload
the cargo. At a time it is possible to accommodate up to 10 different vessels, and during
the visit only 2 vessels were at berth.

Even though it was not captured in the objective and scope of this study, the third area
which was observed and has high impact on the import grain and fertilizer of Ethiopia for
the future is the new Ethio – Djibouti Rail Way that covers from Sebeta / Addis Ababa to
Port of Djibouti. The total length of the Rail Way is about 764.2km, out of which
682.2km in Ethiopia and 82km in Djibouti. There are total of 20 stations built, 17 stations
in Ethiopia and 3 stations in Djibouti. Out of those stations Negad(Djibouti), Melika
Jebidu (Dri Dawa), Awash (Afar), Adama, Mojo and Endodi (Oromia) have freight
stations to handle all cargos to and from Ethiopia (MoPE, 2016). In this line there are 32
locomotives and 1100 wagons, out of this wagon 640 are for general cargo including
container, 110 for fuel shipment and 350 are for dry bulk cargo like grain and fertilizer.
As Mr. Elias Kebede operation manager of ERC explained that, one wagon has a capacity
to carry 70 ton and one locomotive has a capacity to pull 35 wagons. With this capacity,
35 wagons (one locomotive) will have 2450ton (70ton*35wagon) uplifting capacity and
350 wagon (10 locomotive) will have 164,150ton (10*2450ton*6.7trips). This will cover
136 trucks per day which has the capacity of 40 ton. Using this projection the annual
grain and fertilizer uplifting capacity of the new rail way will be 1.969 million Mt grain
and fertilizer with 4.5 days for one trip and 6.7 trips per month as Mr. Elias explained.
Therefore, this will have considerable and positive impact on the dry bulk uplifting
capacity of Ethiopia from port of Djibouti within the free time. However, challenges are
still there in inland distribution centers as there is no well cross-docking facilities and
vessel scheduling to seaport. Therefore, unless those issues will be solved, the efficiency
of the rail will go down as Mr.Elias stated.

65
 4.4.2.3. Conclusion

In general, the import grain and fertilizer logistics gaps are analyzed based on the
statistical data and respondent’s interview response. The statistical data of import grain
and fertilizer are total import volume, Daily Average Discharge, Daily Average
Dispatched and other inferred data are tabulated and discussed in detail. The interview
results of respondents concerning grain and fertilizer import logistics, they have listed out
many problems that they face in daily operation and these problems are discussed in the
form of problem matrix. Sea Port and corridor observation findings are also discussed in
this chapter. The conclusion and recommendation of the study are dealt in the next
chapter.

66
 CHAPTER FIVE

CONCLUSIONS AND RECOMMENDATIONS

5.1. Introduction
In conclusion the persistent logistics management challenges of Ethiopia are identified
and listed as follows based on the findings, presentations, interpretations and discussions
in chapter four.

5.2. Conclusions

The logistics demand is increasing from time to time which shown by the growth of all
import cargo volume from 9,288,396.08 MT in 2012 to 15,100,581MT in 2016, this
shows 62.57% increment within 5 years.
The growth of Grain and fertilizer import volume is significantly high, which increases
from 2,085,396 MT in 2012 to 3,439,623 MT in 2016, this shows 64.93% growth.

When we see the supply side of logistics i.e. the policies, infrastructure, skill and
knowledge in the sector, legal and institutional capacities are very much limited
comparing to the demand.

From total import of Grain and fertilizer to Ethiopia 81.9% is handled by Government
Institutions. The rest 18.1% is carried by international aid organizations. Those importers
have their own isolated planning, procurement and logistics system. This unharmonized
planning system leads to bring more than 20 vessels to one port which has very limited
berth capacity. That means they are planning independently to use one port (Djibouti),
one logistics service provider, one bank, the same transport companies etc.

The Logistics service provider (Except Transport) for all those organizations almost 98%
is Ethiopian Shipping and Logistics Service Enterprise (ESLSE). Therefore, this
arrangement hampers the logistics system in different ways; the ESLSE capacity is very
limited in its facility and organizational structure, importers have no skilled man powers,
standardized logistics procedures and competent benefit scheme for experts. Poor grain

67
storage facilities, slow operation systems at each destination have big impact on the dry
bulk logistics management system.

The seaport institutional setup is very poor which are all Dry Bulk logistics services are
handling by one company in Djibouti without competition and the capacity of this
company is very limited.

Regulatory bodies of import grain and fertilizer like ERCA, EMAA, NBE, MOFEC,
Ministry of Trade, Ministry of Transport and Ministry of Agriculture are the most
involved Authorities. Therefore, their working situation has its own problem regarding,
policy formulations coordination of efforts, controlling procedures and systems and
facilitation mechanisms. They have also limited knowledge of the logistics sector how it
hampers the economy of a country.

It has been identified that the documentation process is very long and takes much time
due to delay of original documents from suppliers to importers. This in turn creates
obstacles on importer to deliver the documents to freight forwarders. Even though the
vessel may arrive at sea port, unless documents are available there are no on time
operations of vessel discharging.

The transaction systems of the bank start with the application of foreign currency by
importers and Commercial Bank of Ethiopia gives foreign currency depending on the
availability of the currency. Therefore, at this situation most of importers have great
problem of getting currency on time and port services charges are not paid on time this
affects smooth flow of the grain and fertilizer operation.

The major and recurrent problems that hamper vessel discharge are the limited number
berths at Djibouti port and low capacity of the stevedoring company.

The total numbers of dry bulk vessel berths are 5, but the appropriate berths are 2 that are
berth number 14 and 15. Therefore at a time 10 - 28 vessels used to arrive at sea port, but
the berths are not able to accommodate all vessels, then the anchorage time of the ships
will go higher.
68
Besides to the limited berths, the capacity of dry bulk stevedoring company is technically
limited and vessel discharge rate per day is low as compared to its plan.

The plan of SDTV to discharge was 7000MT/Day while the performance is very low at
2972.54MT/day (table 4.8).

Therefore the dwell time of vessels at anchorage and berth was very high and 5 year
average was 29.16 days compared with other seaports like Mombasa 4.5 days to
discharge 50,000 DWT vessels with daily average discharge of 11,000 MT. This means
that total 322 vessels for the last 5 years each waiting 29.16 days at port of Djibouti to
unload grain and fertilizer. Therefore, 29.16 - 4.5=24.66 days are costs for vessels at Port
of Djibouti. And 24.66*322*15, 000$= $119,107,800 is cost for the last 5 years, which
was $23,821,560 per year.

As it has clearly stated in data analysis, truck shortage was hampering the grain and
fertilizer transport. Most of transport companies have no transparent organizational
structure and working procedures. And they have no technically well equipped experts in
the sector, and have financial constraints. They have old vehicles about 45% and the cost
of spare parts is high. Therefore, grain importers are obliged to use None – Ethiopian
Transport companies for example, WFP brings 100 trucks from Sudan in 2016, EAWC
use Sudan Transporters to bring 150,000 MT Fertilizer in 2014 and 2015, this is
continuing for 2016and 2017.

Besides to the limited capacity of freight transport companies, the road and other
facilities are not good to drive safely. Especially Ethio - Djibouti corridor has high traffic
flow, but the road quality and size is not totally acceptable to handle more than 1000 high
size trucks per day. Ethio – Somaliland corridor has also problems regarding road
infrastructure, it is very poor even though there is a move to repair it on the Somaliland
side.

69
On the side of Ethio – Sudan Corridor the road to Metema is in good condition but the
axel load limit to be 55 Mt per truck issued by Chamber of Transport of Sudan and
undulating nature of the road in Ethiopia affects high size Sudanese truck.

The volume of grain and fertilizer import and the number and distribution of warehouse
in the country doesn’t match. Hence, there is a complaint of delay in trucks unloading at
different warehouse like Adama, Kombolicha and Dri Dawa.

The new Ethio - Djibouti rail way has projected a capacity to uplift 1.969 Mt grain and
fertilizer annually to Ethiopia, and challenges will face at seaport and inland distributions
centers and cross - docking facilities which affect the efficiency of the rail.

Generally, International trade volume of Ethiopia is growing by faster than its logistics
management system, The Ethiopian Logistics Management System has vicious circle
challenges which means the delay of vessel at seaport to discharge is because of the
shortage of trucks and this is due to poor planning which leads to bring more vessels to
seaport in the same time and creates delay of vessels at seaport due to unavailability of
berth; therefore, it needs high level Government policy makers involvement with
practical policy measures to unlock the critical problem.

5.3. Recommendations

Based on the data analyzed and conclusion of findings, the following recommendations
are given to solve vicious circles of logistics problems in Ethiopia, especially import
grain and fertilizer logistics. These are:

 FDRE Ministry of Finance and Economic Cooperation should have National

Policy regarding Government Dry Bulk Purchase System by making the importers
of Grain and Fertilizer organizations as Central Dry Bulk Procurement Agency.
And should have a policy to establish sectoral commercial banks, like Bank of
Transport and Logistics, Bank of Agriculture, Bank of Education, Bank of

70
 Health…etc, and this should allow participating selected international financial
institutions with strong controlling mechanism.
 To make fine the gap between logistics demand and supply, the FDRE Ministry of
Transport should diversify its seaport utilization among all corridors by investing
more on those idle corridors like Berbera, and Port Sudan and should have to
involve in port development program as a joint venture or by any other
arrangements especially at Djibouti and Berbera by establishing National
Company engaged in International Sea Port Development.
 FDRE Ministry of Transport, ERA, ERCA and EMAA should give serious
attention on the road expansion as well as custom facilities on the Ethio – Djibouti
transport corridor. Hence, selected road construction and expansion projects
should be given to international private companies with the modality of
investment agreement, and then these companies will construct the road and
collect their return from road users by establishing a mechanism.
 The current Djibouti Port of Dry Bulk has failed to handle the demand of
Ethiopian grain and fertilizer. Therefore, it is better to install bulk handling
facility inside Ethiopia and bring the grain and fertilizer in bulk tankers and trains
to Ethiopia at selected destinations like Modjo and Kombolicha and bag it there
with participation of private sectors.
 Inland distribution centers should be transferred to private operators and get
special investment privileges for its modernization by FDRE Ministry of
Transport to receive both trucks and trains.
 New dry bulk transport trucks which have high capacity tanker should be
promoted and give privilege for truck importers to facilitate this issue.
 Logistics and Supply chain Management Training Center; Logistics Information
System (LIS) laboratories should be established by selected universities.
 Regulatory institutions should have to raise their long hands from logistics and
the New Ethiopian Maritime and Logistics Commission (EMLC) should be
established, and regulate all issues handled by different organizations, health,
trade, custom, Agriculture etc.
71
  Private operators like freight forwarders, transporters, and warehouse operators
should involve in the logistics services of government grain and fertilizer import.

5.4. Conclusion
In chapter 5, the reviews and findings of the study are summarized in the conclusion
section and possible solutions are recommended for different actors in the logistics
system of import grain and fertilizer in Ethiopia.

72
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Appendices

I. Interview Questionnaires of Regulatory institutions, Transport

companies and Importers

ETHIOPIAN CIVIL SERVICE UNIVERSTY

COLLAGE OF URBAN DEVELOPMENTAND ENGINEERING
DEPARTMENT OF URBAN INFRASTRUCTURE AND TRANSPORT
Objective of the Questionnaire
Dear Respondent
This interview questionnaire is purely academic prepared to conduct a study to
understand the major challenges in grain and fertilizer logistics management of
Ethiopia and to propose a recommendation; hence the researcher will fulfill to
award Msc. Degree in Transport Planning and Management from Ethiopian Civil
Service University.
Therefore it is my pleasure if you attempt to answer all the following questions
below.
1. Background Information
Name ------------------------------------------Job position ------------------------address
Tell----------------------------fax------------------Email-----------
Age ------------ Sex------------- Educational level-----------------Work Experience---
Questions
Instruction: Give your answers for the following questions in the space provided
and you can also use the back side of the paper.
1. Do you believe that there are full-fledged Government policies regarding
grain/fertilizer import logistics? Yes------- No-------
77
2. If your answer is ‘yes’ in question number ‘1’ please list few of them.
----------------------------------------------------------------------------------------------
3. Do you think that there is enough regulations, directives, standards and
manuals to handle import grain/ fertilizer in your company/institution? Yes ---
------No----------
4. If your answer is ‘yes’ in question number ‘3’ please list few of them.
---------------------------------------------------------------------------------------------
5. Do you think that there is standardized Structural organization to handle
import grain/Fertilizer in your organization? Yes---------No-----------------------
6. Do you believe that there are well trained experts in grain/fertilizer logistics
management in your organization? Yes-------------No------------------------------
7. What are problems regarding infrastructure to handle grain/fertilizer from sea
port to destinations.
----------------------------------------------------------------------------------------------
8. Do you think that there is harmonized coordination among stockholders and
with your organization in logistics issues of import grain/fertilizer? Yes --No--
9. If your answer is ‘yes’ in question number ‘8’ list name of organizations that
work in coordination with your company.
----------------------------------------------------------------------------------------------
10. Is there well designed and integrated ICT utilization in import process of
grain/fertilizer in your company? Yes-----No------
11. What are the persistence/permanent/ problems in import logistics of
grain/fertilizer at different level?
A) Supplier
------------------------------------------------------------------------------------------
B) Carrier /Ship owner/
------------------------------------------------------------------------------------------
Sea Port
------------------------------------------------------------------------------------------
C) Custom
78
 ------------------------------------------------------------------------------------------
D) Transporter /Road/
------------------------------------------------------------------------------------------
E) Banks
------------------------------------------------------------------------------------------
F) Freight forwarders
------------------------------------------------------------------------------------------
G) Inland warehouse
------------------------------------------------------------------------------------------
H) Importers
------------------------------------------------------------------------------------------
Regulatory institutions (Ministry of Health, Ministry of Trade, Ministry of
Agriculture, etc)
------------------------------------------------------------------------------------------
I) Others
-----------------------------------------------------------------------------------------
12. What are possible solutions you propose to different problems in import
grain/fertilizer logistics?
----------------------------------------------------------------------------------------------
13. If you have any comment on logistics system of import grain/fertilizer in
Ethiopia, please give your opinion below without any hesitation.
----------------------------------------------------------------------------------------------
14. Do you think that the documents required to import grain /fertilizer is too
many in banks, custom and Seaports etc? Yes-------------No-----------------------
15. If your answer is ‘yes ‘in question number ‘14’ which document is not
necessary to this regard?
----------------------------------------------------------------------------------------------

79
II. Interview Questions of Port operators

ETHIOPIAN CIVIL SERVICE UNIVERSTY

COLLEGE OF URBAN DEVELOPMENT AND ENGINEERING
DEPARTMENT OF URBAN INFRASTRUCTURE AND TRANSPORT
Objective of the Questionnaire
Dear Respondent
This interview questionnaire is purely academic prepared to conduct a study to
understand the major challenges in grain and fertilizer logistics management of
Ethiopia and to propose a recommendation; hence the researcher will fulfill to
award Msc. Degree in Transport Planning and Management from Ethiopian Civil
Service University.
Therefore it is my pleasure if you attempt to answer all the following questions
below.
2. Background Information
Name -------------------------------Job position ------------------address Tell------------
----------------fax---------------Email------------------Age ------------ Sex-------------
Educational level---------------------------Work Experience-------------------------
3. Questions
Instruction: Give your answers for the following questions in the space provided
and you can also use the back side of the paper.
1. Do you believe that Port of Djibouti/Berebera/Port Sudan have well
equipped facilities to handle grain and fertilizer? Yes --------------------No-
------------------------

80
2. If your answer in question number ‘1’ is ‘no’ what are the facilities you
recommend to be fulfilled?
------------------------------------------------------------------------------------------
3. Do you think that the grain and fertilizer handling operator at Djibouti
port/Berbera/Port Sudan have enough capacity to handle all grain and
fertilizer destined to Ethiopia?
Yes------------------- No-----------------
4. If your answer in question number ‘3’ is ‘no’ what is your suggestion to
fill such gap?
------------------------------------------------------------------------------------------
5. What are the most critical and persistent problems at sea ports in handling
of grain and fertilizer?
-----------------------------------------------------------------------------------------

81