The Effects of Outsourcing Logistics Activities of Ethiopian Airlines on its Logistics Performance

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Addis Ababa University


The impracticality of excelling at every task force companies to outsource some of their activities especially logistics activities mostly considered as support activities by many companies. The purpose of this study is to learn the rationale of Ethiopian Airlines behind outsourcing of its logistics activities and study the impact of outsourcing Logistics activities of Ethiopian airlines on logistics performance. The study is carried out using descriptive survey method. The researcher included 42 respondents using census. Data was gathered from the respondents by using questionnaires and interview, respectively. Frequency, percentage and mean were used to analyze data collected through questionnaire while the data obtained through interview was analyzed qualitatively. The study discovered that the main reasons of Ethiopian Airlines for outsourcing its logistics activities is need to access outside expertise, efficient utilization of company’s asset and saving in capital investment. Further, the result indicated that Ethiopian Airlines benefited in the form of access to outside expertise, saving in capital investment and efficient utilization of company’s asset. The study revealed that the main challenge faced by Ethiopian Airlines is inefficient management of outsourced freight forwarding activities. The major performance metrics Ethiopian uses to value the freight forwarding service providers is based on time delivery of their shipments, responsiveness and flexibility to the needs of Ethiopian by the service providers and overall quality respectively. Finally, it is recommended that, in collaboration with the Ethiopian Customs and Revenue authority Ethiopian Airlines should avail customs clearance training to its employees so that they could be licensed as it will help them control and support the TPL providers and it is also one step forward for their long run plan of performing freight forwarding and customs clearance activities in house. Building up its employees’ ability to enable them to monitor outside service providers and strict application of performance metrics on the freight forwarding service providers are the other recommendations forwarded. Key words: Logistics, Freight forwarding, Logistics Outsourcing, Logistics Performance, Performance metrics



Logistics; freight forwarding; logistics outsourcing; logistics Performance,; Performance metrics