News: Ministry and freight operators at odds over directive mandating restructuring of transport associations, phasing out of older cargo vehicles

Addis Abeba – The Ministry of Transport and Logistics locks horns with freight transport operators in an escalating dispute over a sweeping directive issued over a year ago.

The directive, which called for a massive restructuring of transport associations into a share company (SC) or private limited company (PLC), has stirred the pot, putting the two parties on a collision course.

The dispute intensifies over a contentious clause mandating the gradual retirement of cross-border vehicles that have been in operation for more than 30 years. 

The general manager of one of the prominent freight transport operators association who talked to Addis Standard on the condition of anonymity emphasizes that the problem lies with the implementing bodies in effectively carrying out the directive.

“During our discussion with officials of the Ministry last year, we recognized the need for issuing the directive,” he recalls. “However, as the decree is now being put into practice, there is a misunderstanding about its implementation, which is causing a dispute.”

Abubeker Seid, operations manager of Continental Transport and General Trading, elucidated the misunderstanding that had arisen between the two parties.

“Initially, we were only requested to purchase one vehicle prior to the restructuring,” he explained. “However, authorities now mandate the acquisition of additional vehicles, which has placed significant strain on our capacity.”

In a recent briefing, Yerga Tadesse, Executive Director of Logistics Services at the Ministry, however, attributed controversy to ongoing efforts aimed at bringing transport associations that have not yet transitioned to the new business structure into compliance with the directive.

“Transport associations that have not yet made the transition to the new business structure, as mandated by this directive, have been given deadlines to comply, which many have failed to meet,” Yerga stated.

The directive mandating the restructuring of transport associations into share companies or private enterprises was issued in May 2023.

It was introduced one year after the House of Peoples’ Representatives passed the Road Transport Proclamation in 2022, which granted the Ministry the authority to issue directives for the effective regulation of both the freight and passenger transport sectors.

Yerga explained that, “Prior to the issuance and implementation of the directive, agreements were reached with stakeholders at various levels through multiple platforms to ensure their input was considered during the drafting process.”

The general manager says through the discussion with the owners of the freight vehicles, consensus was reached about the need for restructuring transport associations into a shared company or a private limited company.

“Unfortunately, the people who have to enforce this law didn’t understand it fully,” he stated.

The directive issued last year also aims to gradually eliminate cross-border vehicles exceeding 30 years of age and promote the adoption of contemporary, high-performance vehicles within the sector.

Indicating the new directive allows older, over thirty-year-old, cross-border vehicles to provide domestic freight operations, Yerga elaborated that there is a sound reason for a provision in the directive that advocates for the adoption of modern, high-performance vehicles within the freight transport sector.

“The increasing volume of the country’s exports and imports has made it difficult to transport goods efficiently using these aging vehicles,” he stated.

The general manager of the association agrees with the government’s position that vehicles that have been in service for 30 years or more encounter challenges when traveling long distances and should be replaced with newer, more efficient trucks.

He further highlighted that, due to concerns over air pollution, there are plans to replace old vehicles with new ones.

“However, there has been no government support to assist owners in replacing their old vehicles with new ones,” the general manager emphasized. “At present, it is the vehicle owner who is expected to bear the responsibility.”

There are more than 12,500 freight transport vehicles operating in the country, organized under over 100 associations.

In an interview with Addis Standard, a freight vehicle driver who regularly travels to the Djibouti Port mentioned that he and his fellow drivers have not been informed about the replacement of vehicles that have been in service for 30 years or more.

“No one has discussed this matter with us,” he remarked. “I think this is something that affects the owners of the vehicles primary.”

The ongoing dispute regarding the government’s proposed plan to phase out older cross-border vehicles, along with the restructuring of transport associations, has led to delays in the issuance of competency certificates for freight transport operators. These certificates are essential for the renewal of business licenses.

Late last week, the Ministry of Transport and Logistics reported a significant increase in customer requests, with over 1,100 applications for competency certificates from freight transport operators being submitted daily.

The Ministry also disclosed that it has increased staffing and extended service hours beyond regular working days to efficiently serve the increased number of customers seeking Djibouti entry permits and other services.

Additionally, Yerga revealed that services are being offered not only on regular workdays but also on weekends and holidays to minimize long queues.

Despite the directive, the Executive Director revealed that cross-border freight vehicles that have been in service for 30 years are being issued entry permits into Djibouti.

“Currently, there is no shortage of vehicles transporting goods to and from Djibouti Port,” he stated.

The general manager of the association concurs with the view that there have been no issues with vehicles traveling in and out of Djibouti.

“The government has extended the deadline for license renewals, allowing drivers to continue their trips while they adapt to the new decree,” he disclosed. AS