Ethiopia Going into Trucking Business to Cut Produce Export Cost

By William Davison
(Bloomberg) — Ethiopia said its state-run trucking company will offer subsidized pricing to cut the cost of hauling fresh produce as the Horn of Africa country tries to boost fruit and vegetable exports 20-fold.
The state-owned Ethiopian Shipping and Logistics Services Enterprise may halve the price of getting goods to market, Horticulture Development Agency Director General Haileselassie Tekie told reporters in the capital, Addis Ababa.
“Inland transport was a bit expensive,” he said yesterday at an investment conference. “Part of this will be shared or subsidized by the government.”
After its success in exporting flowers, the landlocked country plans to increase earnings abroad from fruits and vegetables to about $900 million a year by mid-2015 from an estimated $45 million this year, Haileselassie said.
Ethiopia, which has 50,000 hectares (123,500 acres) available for growers, plans to export produce including strawberries, mangoes, grapes, broccoli and tomatoes, mainly to the Middle East and Russia, he said.
ESLSE was created in November by merging three state-owned organizations, according to its website. Its “rushed incorporation” and monopoly on import procedures has caused 1,500 containers to stack up at Djibouti’s port, the Addis Ababa-based Fortune newspaper reported on July 1, without citing
anyone.
Ethiopia can be “more competitive” than the continent’s biggest produce exporters, Kenya and South Africa, because of cheaper labor and proximity to large markets, Henock Assefa,
managing partner at Precise Consult International, which helped organize the conference, said in an e-mail yesterday.
Poor trade logistics “nearly eliminate” Ethiopia’s wage advantage, the World Bank said in March. High transportation costs are caused by the 800 kilometers (497 miles) between the capital and Djibouti, lack of trucking competition, the absence
of railways and high fuel taxes, it said.