The Role of Third Party Logistics Providers in Ethiopian Mining Industry: the Case of Selected third Party Logistics Providers

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Addis Ababa University


Ethiopia’s mining sector is undergoing an enormous transformation with an increase in opportunities for investment. According to the publication by Embassy of Ethiopia to USA Economy and Business Section, (2008) wide variety of mineral resources are available in Ethiopia. 19 local companies and 11 foreign companies have been granted prospecting, exploration and mining licenses. These are for gold and base metals, platinum, industrial and construction minerals, notably, potash, diatomite and high-quality ceramics raw materials. The logistics challenges of mining companies are unique and complex. Despite this, investments in logistics people, processes and systems often take a back seat to core investments around finding, extracting and processing minerals. Logistics costs as a percent of a mining company’s total operating costs may be small, but mining companies can uncover literally millions of dollars in hidden profits by reexamining how they address logistics challenges. Third party logistics providers (3PLs) who specialize in mining specific services can provide targeted solutions that reduce operating costs and improve service levels, while freeing mining companies’ team to focus on strategic initiatives. The purpose of this thesis is to analyze the 3PL service providers’ roles within Ethiopian mining industry supply chain by identifying how the expected roles are performed. The researcher observed that not much has been done on the role of 3PL service providers in the mining industry and in terms of academic contribution, this study aimed to fill a gap in the literature by producing an up-to-date knowledge. On the other hand, on a managerial or practical level, this study adds knowledge about the strategic benefit of logistics outsourcing for the mining companies. In this thesis, an inductive research approach is used and qualitative study has been carried out by applying multiple case studies as a research strategy. The empirical material is gathered from three 3PL service providers: Ardan Risk & Support Services Ltd, Quadrant Investment Group PLC, and Kal Logistic & Trading. Data was collected through semi-structured interviews with open-ended questions conducted at the three target companies and as the research is explanatory in nature, the findings have been analyzed using explanation building technique. The main conclusions from analyzing the role of 3PL service providers showed that 3PL service providers are able to perform their roles through an end to end solution provided to the mining companies from the provision of remote workforce accommodation and facilities management to logistics support including labour supply and waste management. The study also showed the challenges of 3PL companies in providing the service including the current business environment of the country, lack of adequate infrastructure, low level of performance from suppliers, security risks of cargos and lack of skilled manpower. Finally, the study showed the opportunities for new companies to join the market created due to lack of service providers in the industry Key words: Third party logistics, Mining logistics, end to end solution, outsourcing, 3PLchallenge.



Third party logistics; Mining logistics; end to end solution; outsourcing; 3PLchallenge.