Djibouti prohibits NVOCCs as Multimodal Operators

Djibouti’s regulatory body announced that non-vessel operating common carriers (NVOCCs) are not permitted to serve as multimodal operators in Djibouti, even though the Ethiopian government only approved the entry of three more participants a week ago.

For almost 13 years as a VOCC, Ethiopian Shipping and Logistics (ESL), a state-owned operator of deep sea vessels on the continent, has been the only multimodal. Recall that the Ethiopian government has authorized the participation of three more NVOCC operators in the scheme, in addition to the already established ESL.

However, according to a notice released on Sunday, March 17 by the Djibouti Ports and Free Zones Authority (DPFZA), the port authority that owns and oversees the logistics activity in Djibouti, a bill of lading (BL) issued by NVOCCs is not acknowledged within Djibouti Ports and Corridors due to their legal status.

Furthermore, the notification, which is signed by Aboubaker Omar Hadi, Chairman of DPFZA, states that NVOCCs may not guarantee the complete payment of logistics chain costs along the corridor, posting concerns regarding security, traceability, and accountability.

“In adherence to our regulations and policies, BLs issued by multimodal transport operators, specifically by shipping lines, are the only legally recognized documentation for cargo transport operations within Djibouti ports, free zones, and corridors,” the notice continued.

It emphasized the need for anyone working in the logistics industry to follow the rules.

The letter made it clear that “observing these guidelines is imperative for all entities involved in maritime transport and logistics activities to avoid any operational disruptions within Djibouti ports, free zones, and corridors.”

Experts predicted that the newly chosen multimodal transport companies would find it difficult to start their operations in light of the new notice.

Sources in Djibouti, however, voiced worry that it would have an impact on ESL activities, in addition to the three multimodal operators that were just chosen.

“ESL transports approximately 90 percent of its containerized cargo through slots operated by other vessel operators, so even though it is a VOCC, it also functions as an NVOCC,” they stated.

According to Capital sources, the Ethiopian Embassy in Djibouti has already notified the Ministry of Transport and Regional Integration of the issue by letter.

The ministry should form a technical committee to handle the issue with the Djiboutian side, as advised by the diplomatic mission.

The Djiboutian side did not send any formal letter to ESL, a senior official at the company said, adding, “as a result, we would not have any comment on the issue.”

Yared Shiferaw, a former head of ESL’s legal department and industry expert, said that ESL would not be concerned about the matter. Even if the majority of containers are moved by slot arrangement, it will not be a problem for ESL. “The two parties have an agreement,” he stated.

Yared noted that ESL was seen as multimodal operators during the 2006 negotiations with the Djibouti government.

He told Capital, “In the same token, it will be the Ethiopian government’s responsibility to solve the issue through their bilateral channel regarding the new players’ concern.”

The international marine lawyer said that since it is guaranteed by the Ethiopian government in a manner comparable to that which was provided to the ESL, the Djiboutian side would not be concerned. The industry experts stated, “The government granted these companies a license in accordance with the thorough assessment and based on their capability and extensive experience.”

“They express concern that cargo passing through the system unchecked poses health and security risks,” experts explained about the Djiboutian authorities’ concern.

According to the industry’s worldwide standard, if they have any suspicions, they can look into regular cargoes that arrive during normal business modalities, they added.

Panafric Global, Tikur Abay Transport, and Cosmos Multimodal Operation are the recently selected companies to operate under the multimodal scheme.

Tikur Abay operates by Amhara region administration, while Cosmos is formed by renowned logistics provider Tradepath International and Oromia region’s enterprise, Geda Transport.

One of the logistic firms in existence, Panafric has formed a partnership with a company of a prominent businessman.

According to industry analysts, the most recent action represents a significant turning point for the logistics sector.