The Role Of Third Party Logistics Providers In Ethiopian Mining Industry The Case Of Selected Third Party Logistics Providers

Ethiopia’s mining sector is undergoing an enormous transformation with an increase inrnopportunities for investment. According to the publication by Embassy of Ethiopia to USArnEconomy and Business Section, (2008) wide variety of mineral resources are available in Ethiopia.rn19 local companies and 11 foreign companies have been granted prospecting, exploration andrnmining licenses. These are for gold and base metals, platinum, industrial and constructionrnminerals, notably, potash, diatomite and high-quality ceramics raw materials. The logisticsrnchallenges of mining companies are unique and complex. Despite this, investments in logisticsrnpeople, processes and systems often take a back seat to core investments around finding, extractingrnand processing minerals. Logistics costs as a percent of a mining company’s total operating costsrnmay be small, but mining companies can uncover literally millions of dollars in hidden profits byrnreexamining how they address logistics challenges. Third party logistics providers (3PLs) whornspecialize in mining specific services can provide targeted solutions that reduce operating costsrnand improve service levels, while freeing mining companies’ team to focus on strategic initiatives.rnThe purpose of this thesis is to analyze the 3PL service providers’ roles within Ethiopian miningrnindustry supply chain by identifying how the expected roles are performed. The researcherrnobserved that not much has been done on the role of 3PL service providers in the mining industryrnand in terms of academic contribution, this study aimed to fill a gap in the literature by producingrnan up-to-date knowledge. On the other hand, on a managerial or practical level, this study addsrnknowledge about the strategic benefit of logistics outsourcing for the mining companies. In thisrnthesis, an inductive research approach is used and qualitative study has been carried out byrnapplying multiple case studies as a research strategy. The empirical material is gathered fromrnthree 3PL service providers: Ardan Risk & Support Services Ltd, Quadrant Investment GrouprnPLC, and Kal Logistic & Trading. Data was collected through semi-structured interviews withrnopen-ended questions conducted at the three target companies and as the research is explanatoryrnin nature, the findings have been analyzed using explanation building technique. The mainrnconclusions from analyzing the role of 3PL service providers showed that 3PL service providersrnare able to perform their roles through an end to end solution provided to the mining companiesrnfrom the provision of remote workforce accommodation and facilities management to logisticsrnsupport including labour supply and waste management. The study also showed the challenges ofrn3PL companies in providing the service including the current business environment of the country,rnlack of adequate infrastructure, low level of performance from suppliers, security risks of cargosrnand lack of skilled manpower. Finally, the study showed the opportunities for new companies tornjoin the market created due to lack of service providers in the industryrnKey words: Third party logistics, Mining logistics, end to end solution, outsourcing, 3PLchallenge.

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