By Mohammad Al Attroosh
Egypt’s transition out of economic stagnation will require government-led economic development through the mobilisation of institutions and individuals, as well as the development of infrastructure, said Engineer Medhat Al-Qadi, president of the Egyptian International Freight Forwarding Association (EIFFA) in Alexandria.
Egypt has been “gripped by two revolutions in the last three years” followed by a change in the economic system, said Al-Qadi; “a logical and positive change in the lives of citizens, such that each citizen feels an equitable share of social justice and an improvement in their livelihoods.” Economic concerns were among the main reasons for both revolutions, he added.
Despite average growth rates of 6% prior to the 25 January Revolution, the lack of social justice, combined with the centralisation of economic opportunity had isolated the lower classes and increased the rates of poverty and unemployment in some areas, such as Upper Egypt, while growth was reserved for only a select few regions and sectors.
The government should bear in mind the geographical and sectoral distribution of various industries so that no single industry dominates a particular area, added Al-Qadi. In addition, development initiatives should be distributed across all provinces, a matter which will become clearer in the plans to be drawn up by the state.
According to Al Qadi, Egypt has a tremendous opportunity to benefit from the repercussions of the Arab Spring, which continue to affect a number of Arab countries, by making swift investments in countries in the course of industrial advancement or reconstruction, such as the case of Turkey’s investment in Iraq.
Regarding the recent influences on the commercial relationship between Turkey and Egypt, the EIFFA president said there should be no link between political disputes and commercial relations with any country, especially Turkey, which has huge investments in Egypt, including in the textile sector in Borg El Arab. Al-Qadi further expressed regret for the recession which has drawn down trade traffic between the two countries following the latest political crisis on 30 June.
Al-Qadi dismissed talk of revision of a number of trade agreements, denying that any stoppage of Turkish freight liners had occurred as a result of recent political disputes. Al-Qadi noted that the Turkish freight liner in Port Said, Sessa Lines, where Al-Qadi previously served as an agent in 2011, had ceased operations over financial disagreements with its agents. However, the Turkish liner UN Roro in Damietta continues to work and recorded a large volume of activity in comparison with previous periods.
Regarding the current situation of the transportation sector and maritime transport in particular, the EIFFA president affirmed that the movement of trade in and out of Egypt has been greatly affected in light of recent political developments. This has led to a noticeable reduction in traffic owing to the imposition of curfew as well as the suspension of both public and private projects due to financial troubles.
Meanwhile, the port of Alexandria was among the ports most severely affected during the revolution, Al-Qadi said. Though maritime activity inside the port continues to move at a normal pace, lowered rates of trade have negatively affected shipping rates and the discharge of incoming and outgoing liners.
Al-Qadi indicated that the port’s revenues have fallen by 18% compared to previous years. Furthermore, he said, the occupancy rates at the ports of Alexandria and Al Dahlia have fallen to their absolute lowest due to the complete loss of cruise ships frequenting the Alexandria port stemming from certain countries banning travel to Egypt. In addition, the port has lost a portion of general cargo vessels and oil tankers.
According to Al-Qadi, Egyptian ports are among the most prominent institutions that have not been affected by work stoppages during the last three years. Furthermore, though security issues have plagued numerous other service and investment sectors, he noted that the average performance of the Egyptian ports is roughly equivalent to that of foreign ports.
Land and railway transport have been noticeably affected, added the EIFFA president, insofar as railway traffic has shut down entirely, leading to a complete reliance on land transport. This has been accompanied by a lessening in the number of daily transport runs owing to the curfew and the risk of theft on the roads at night.
Recent political developments have also affected companies operating in the maritime market, added Al-Qadi, though the impact has not yet led to these companies exiting the market altogether. He noted that indeed, a large number of companies in the transportation sector have applied for EIFFA membership and the association reached 500 members this year.
Credit coverage for land transport has increased 25% due to security issues, reported Al-Qadi. This has in turn led to an added risk of insuring various goods and means of transport, such as insurance against riots, civil liability, theft, armed robbery, breakage of glass, breach of trust and other types of insurance in addition to a reduction in the percentage of compensation whereas previously customers had received full compensation after incurring a 25% cost.
According to Al-Qadi, the transportation and logistics sectors are among the most promising and attractive markets in Egypt for investment. Both sectors have still not received satisfactory or sufficient levels of investment, Al-Qadi noted, pointing to the emergence of large companies and entities able to compete and develop their performance over the course of the past few years. This, he said, was owed to a fast periodic rate of return, despite the political fallout that followed the events of 25 January 30 June.
Al-Qadi noted that the methods of trading goods to and from ports can be developed further, and noted the need to attract new investments in logistics and waste management projects.
Freight forwarding companies in Egypt have been able, over the past few years, to develop the profession of freight forwarding, noted the EIFFA president. These companies have also expanded the scope of work and specialisations of shipping representatives in the provision of all services related to the shipping of goods in and out of ports, including dealing with exit customs and even servicing the consumer himself, all with a high level of professionalism.
Al-Qadi said EIFFA had been instrumental in upgrading the suite of international shipping services through training programmes administered by the training committee in addition to certified programmes from specialised scientific centres.
According to Al-Qadi, one of the main programmes EIFFA offers its members is the bilateral education programme which is unique to trade schools, to train qualified technical staff for the labour market. Thus far, EIFFA has established such programmes in three provinces, including Cairo, Alexandria and Port Said.
EIFFA is also an active partner of the College of International Transport and Logistics at the Arab Academy for Science, Technology and Maritime Transport (AASTMT) where EIFFA members have assisted the college in developing curricula according to the demands of the labour market. In addition, EIFFA presents FIATA programmes and certified FIATA diplomas which 300 students have obtained in the last three years.
EIFFA and the AASTMT also recently finished developing special curricula to offer the FIATA diploma, which is considered one of the top specialised diplomas in the world in the field of international transport. Al-Qadi indicated that he expected to obtain FIATA approval to teach the FIATA diploma in Egypt for the first time on the sidelines of the FIATA congress which will be held mid-month.
EIFFA, in cooperation with the AASTMT, has made significant contributions to improving the land transportation sector through the preparation of RRU programmes, in particular the training of local drivers in order to prepare them for and grant them an international driver’s licence. In addition, EIFFA has developed a programme to train company managers with such programmes intended to develop and improve the skills of workers in the field of international transport.
Al-Qadi noted that the EIFFA board of directors is facing the same difficulties and obstacles as all freight forwarders, be it problems with customs and airline companies, customs authorities and shipping lines, or other problems. In addition, the EIFFA board handles the examination and resolution of complaints from member companies through the complaints committee headed by Abdel A’al Ali, EIFFA vice president.
Furthermore, he said, most problems faced by freight forwarders stemmed from the absence of a definition for freight forwarding in Egyptian law and maritime law. Al-Qadi noted that the EIFFA board had completed preparation of a special definition of freight forwarding and that this definition had been added to the new customs law following the approval of the relevant authorities, including the Egyptian Customs Authority, which was recently hosted in an EIFFA salon forum overseen by engineer Khalid Sabry, EIFFA secretary general, where several discussions were held regarding the law with legal experts in maritime transport.
The law has since been sent to the Egyptian Customs Authority which placed a definition of freight forwarder in the draft customs law which was scheduled to be debated in the now dissolved People’s Assembly and Shura Council in addition to being sent to the Ministry of Transportation to be added to the maritime transport law.
The aim of defining freight forwarder and recognising this term in the law, Al-Qadi said, is to determine such a person’s responsibilities and duties. The law would furthermore ensure the freight forwarder’s rights should he face indictment for illicit goods found inside a container with his name registered on the bill of lading despite his not being the importer or having an import record. Similarly, the law would protect him from being held accountable by air or maritime lines for dereliction of duties owing to the shipper’s failure to perform his duties as required.
Al-Qadi clarified that the relationship between EIFFA, which represents 500 companies, and the various chambers and shipping companies is one of integration and that meeting and seminars are held continuously between the two. In addition, EIFFA strives to establish joint protocols with maritime lines whose response has been one of great understanding.
Al-Qadi revealed FIATA’s intention to implement a project to convert the paper bill of lading system in Egypt to an electronic system with the assistance of EIFFA. Al-Qadi indicated that this project aims to facilitate and simplify the procedures for shipping and customs so that it resembles airline ticketing procedures. EIFFA is currently calling for FIATA to speed up the implementation of the project in the near term.
The project will be implemented in its first phase in conjunction with five companies who are also EIFFA members and have been trained in this regard. A preliminary report will be prepared regarding the pros and cons of the project for FIATA and the Egyptian government prior to its implementation throughout Egypt.
This advanced system will ultimately replace the paper-based system that has remained in use until now. The new comprehensive system will simplify all shipping procedures, including preparing and sending documents to customs officials whether local or global.
Al-Qadi stressed that the air freight committee will lay out the difficulties faced during the air freight shipping process with IATA on the sidelines of the FIATA congress.