Dec 20 2010 |
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Revived transport sector ripe for new joint ventures
Monday, Dec 20, 2010
Gulf News
Shipping industry has a clear preference for acquisitions
Dubai: Joint venture and acquisition opportunities could be thrown up in the wake of a welcome return of business confidence for the Middle East’s transport sector.
In fact, the upbeat sentiment for the industry is shared to varying degrees in other key territories and a stark contrast to what it was during 2009, according to a global survey by the law firm of Norton Rose.
“The perceived outlook depends markedly on where transport organisations have their principal business operations. Asia-Pacific and the Middle East are increasingly buoyant markets, with the greatest apparent potential for growth in the transport sector.”
“Quite a high level of activity in this area is expected across all regions, but particularly in North America [53 per cent] and Asia [52 per cent].”
Another financing route open to shipping companies would be by way of debt or through equity plays. The Mena territory finds this to be the most appealing, with 71 per cent stating raising of equity and/or debt as part of their future 12-month strategy.
The poll surveyed 679 respondents in the aviation, rail and shipping industries. The overriding feedback was of the transportation industry being able to put the wheels back together again and, as for the journey ahead, foresees less of a rutted path.
“The picture in 2010 is of an industry emerging from a prolonged period of economic struggle,” the report said. “The way ahead is expected to be challenging and uncertain still through 2011, but opportunities are reappearing and optimism within the industry is returning.”
On the rebound
In this regard, the Middle East and indeed Asia as a whole, are seen as the engines driving this mood of optimism. Cargo volumes into and out of the region are definitely on the rebound.
“The Iran situation regarding shipments is a concern, but there are a lot of other regional markets where freight — by sea and by air — are improving with each month,” said a shipping industry source based in Dubai.
“The healthy intake of goods by African markets, especially from Dubai, is the surprise packet of late.
“If this flow is maintained or improved, the local transportation sector is looking at full-blown growth from next year.”
Among Middle East and North African markets, the UAE was rated in the Norton Rose poll as offering the highest potential for investment in transport-related ventures, followed by Saudi Arabia and Qatar, in the next two to five years.
Most attractive
Obviously, with the awarding of the 2022 World Cup football to Qatar, its prospects — and of firms such as Qatar Airways — would get a further shot.
Leading the list of the most attractive destinations from an investment perspective is China followed by India. Western Europe comes third.
As for the Middle East, the recent financials at Emirates airline and the sizeable order books of the other regional carriers invest the region’s aviation sector with a lot of confidence. Businesses are, not surprisingly, taking cue from it.
“Strong performance across the Middle East for the major airlines, together with the growth of low cost carriers, is giving rise to an optimistic outlook to business and investment,” said Campbell Steedman, partner at the Dubai office of Norton Rose.
In the past three months, there has been a sharp increase in freight rates on shipments from the main Chinese ports in Shanghai and Shenzen to Dubai. Cargo from China represents a substantial portion of the imports here, which is why an increase in freight rates has a telling impact on the industry bottom line.
“The rise is attributed to the port congestion in the Chinese ports and something the local trade here is monitoring very closely,” said a freight forwarder in Dubai.
By Manoj Nair, Associate Editor
© Gulf News 2010. All rights reserved.
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