Gaps in Digitalization of Ethiopia’s Logistics Sector

The global logistics sector is at the forefront of embracing innovative technologies, such as the Internet of Things (IoT), logistics information management systems, artificial intelligence, big data analytics, logistics cloud computing, and blockchain. For the logistics industry in Ethiopia, adopting these global trends will enable logistics companies to operate at lower costs while offering efficient quality services

A report by the United Nations Economic Commission for Africa (UNECA) and the Ministry of Transport remarks Ethiopia’s logistics systems are still in the early stages of development compared to global best practices and have not adequately enabled the country’s international trade competitiveness.

The global logistics sector is at the forefront of embracing innovative technologies, such as the Internet of Things (IoT), logistics information management systems, artificial intelligence, big data analytics, logistics cloud computing, and blockchain. For the logistics industry in Ethiopia, adopting these global trends will enable logistics companies to operate at lower costs while offering efficient quality services. However, the logistics sector in Ethiopia has been slow to adopt the latest digital technologies.

The report noted no national-level logistics system has been adopted or developed and there is no interface among key logistics stakeholders. The few exceptions are:

 – the Ethiopian Customs’ electronic customs management system (e-CMS), in its infant stage and with limitations, and

– the Ethiopian Shipping and Logistics Service Enterprise (ESLSE)’s Enterprise resource planning (ERP) system, that does not interact with other systems.

Some logistics companies have adopted digital technology, such as warehouse management systems (WMS), transport and fleet management systems, and internal business support systems (like ERP for procurement, finance, and human resource). However, these systems have interoperability gaps. Among the 345 exporters, importers, freight forwarders, and shipping and customs clearing agents:

  • A significant number use e-mail, fax, the phone, or in-person communication to exchange information while 6 % use social media as there is no central logistics coordination and information exchange.  
  • Only 1.6% mentioned their use of ERP systems.
  • The primary reason for service delays, cited by 27.9% of respondents, is forex availability. Internet connectivity is another major factor, with 27.1% of respondents citing it as a reason for delays.
  • 70% do not use digital platforms and did not have access to a cargo, commodity, or truck tracking system.
  • 65.5% said their organization did not use software to run its business and 39.9% replied that they have not started to digitalize their business processes. 
  • 47.4 % said ICT infrastructure and digital strategy were prerequisites for digitalization in their organization. However, 66.3% said their organization did not have a digital strategy.
  • 19.6% see leadership and senior management involvement as prerequisites for digital adoption. However, 54.7% of top management and the board of directors were marginally supportive of digitalization, while 25.6% did not support or resisted it.

The major factors holding respondents’ organizations back from optimizing the digitalization of  their business processes were: 

  • Lack of IT experts to run, control, and support digitalization.
  • Lack of enforcing government policy.
  • Uncertainty about future technological development.
  • Belief that digitalization will not benefit the organization.
  • Lack of availability of technologies to purchase.

Most respondents are actively searching for emerging technologies to use. 68% are interested in artificial intelligence, 66.4% in the Internet of Things, 55.2% in chatbots, 48.6% in emerging technologies related to big data analytics, and 45.8% in mobile technologies. 

Of the respondents piloting or initiating the use of emerging technologies in their organizations, a significant number were not interested in robotics and automation, virtual reality, machine learning, and cloud computing.

The report raises the need for a sustainable system to stay competitive in the disruptive global logistics system, with institutionalized human capital development and a platform for research and development. It suggests the digitalization of the logistics sector in Ethiopia should follow a holistic approach with clear inclusive requirements. The digital platforms needed to do this are:

·         integrated cross-border smart fleet management,

·         integrated cross-border electronic cargo management,

·         integrated scanning machine terminals,

·         integrated logistics, parks or hubs management,

·         integrated logistics freight information exchange management,

·         national central logistics information hub, and

·         integrated national warehouse registry management.

 Read the full report here.

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