Ethiopian CEO explains airline’s investment in e-commerce logistics hub

Mesfin Tasew, GCEO, Ethiopian Airline

Sade Williams/Business a.m.

Ethiopian Airlines Group built its newly commissioned e-commerce logistics hub in Addis Ababa in order to facilitate the development of e-commerce in Ethiopia and Africa as a whole, Mesfin Tasew, its group chief executive officer, has said.

In an interview Tasew said the airline commenced its construction about two and half years ago, adding that its capacity is to handle over 150,000 tonnes of goods yearly.

“Historically and until now, Ethiopian Airlines has been in the cargo business to transport cargo by air, but our mode of operations was mostly on conventional cargo for small and large cargo transportation.

“But, as you know, e-commerce is the future now; the western world is using e-commerce extensively because they are ready for it in terms of its platform, payment and daily services. Unfortunately, Africa is not yet there. So, Ethiopian Airlines understands that it is a matter of time for Africa to endorse e-commerce as a way of life, as a way of doing business, and trade. So, it has to start from somewhere and Ethiopian Airlines wants to take the pioneering growth in investing and construction of this facility,” he explained.

Tasew noted that though Africa is still trying to meet up with developed countries in terms of e-commerce development, there are a lot of things to be done to really make e-commerce grow in the African continent.

“Gradually, we believe that the portion of e-commerce services will grow in parallel with conventional cargo. It is just the beginning, but there are a lot of things to be done to really make e-commerce grow in the African continent. There should be a payment platform, electronic marketplace and the companies that are ready to do first line, first mile and last mile delivery services. Our focus now is on the logistics part of e-commerce. So, it is difficult to know how much revenue to generate now, but it will start at a small level and continue to grow.

“Until that happens, this facility is going to be used also for mail and parcel services. Today, we do mail and parcel services on a small scale and manually, but this facility would do it automatically and with minimal mistakes,” he added.

Speaking on the partnerships with Ali Baba and other companies, he said Ethiopian airline has signed agreements with two other companies for seamless distribution of goods within Africa.

So far, what we have partnered for is for the construction company but when it comes to operations, we will work with other e-commerce Chinese companies; Ali Baba and the others.

“We transport e-commerce goods from China to other parts of the world and in a strategic agreement with the two companies in China. Now, we have started to do sorting here; we can bring the goods from these companies to Addis Ababa and re-aggregate it and we can ship it to African destinations,” Tasew said.

On setting up a similar facility elsewhere, the Ethiopian airline boss said: “For the time being, we have set up this facility in Addis Ababa. This facility would serve the Nigerian people and its market. We will bring the e-commerce here and sort them, then, deliver them to our Nigerian customers. In the future, this is something to consider to set up a similar type of facility in Nigeria.”

Speaking on the effect of naira devaluation on its operations into Nigeria, he said the airline lost some money but passenger traffic is still high.

“You are absolutely right that naira has been devalued extensively and that has affected our cash management because since we are not able to take out our money, which is accumulating in Nigerian banks and due to the devaluation, we lost some money in the exchange rate, but in terms of passenger volume, we didn’t see any negative impact so far. The load is very good, Nigerians are still travelling abroad and they are using Ethiopian Airlines.The traffic volume is still at the same level,” he added.