Assessment of Ship Chartering Practice and Challenge: The Case of Ethiopian Shipping Logistic Enterprise

Abstract

The main objective of the study was to assess the ship chartering practices and challenges in Ethiopia Shipping and Logistics Services Enterprise. Descriptive research design was used to describe the current situation of the study area, and qualitative method was used to collect the primary data gathered through in depth interview and secondary data documents has taken from annual reports of the enterprise. The target population covered both the internal and external customers and they were selected by using expert purposive sampling method. Next to that, the demographic data were analyzed using STATA software and also the secondary and interview data were used qualitative data analysis. The result indicated that, there are three types of chartering practicing in Ethiopian Shipping and Logistics Service Enterprise such as voyage charter, time charter and the contract of affreightment. The main reasons, ESLSE to chartered vessels are because of cargo load capacity, specialization of vessels, unaffordability of ports, limited number of vessels, cargos available in ports, low liner cargo demand and not to being vessels idle. Due to having good vessel schedule with the voyage planning, provision of affordable freight rate, having better knowledge about the shipping terms and conditions, good communication, availability of international cargo suppliers and government support most of the trends of bulk cargos shipped in Ethiopia were being showed progress from year to year. On the other hand, the bad weather condition, port/birth congestion, international freight rate fluctuation, weak ICT infrastructural development, fluctuation of cargo demand and supply, taking long time in decision making and cargo/vessel delay are found to be among the most critical challenges of ship chartering in ESLSE.