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DP World unfazed by challenges

By Muzaffar Rizvi DUBAI -- The global shipping industry may see a tougher year in 2011 compared to 2010 due to rising fuel costs, increasing charter costs and pressure on freight rates, a top official of DP World said.

" DP World 's portfolio of 49 operational terminals has seen volumes grow 12 per cent to 12.6 million TEUs in the first quarter, driven by strong growth in the UAE, Africa and the Americas region," Mohammed Al Muallem, Senior Vice-President and Managing Director of DP World - UAE, told Khaleej Times.

He said DP World - UAE Region pursues a proactive policy of encouraging Emirati talent to join its workforce. "As of May 2011, more than three quarters of our top management are Emiratis." Excerpts from the interview:

How do you see the DP World listing on the London Stock Exchange?

Listing in London is a very significant milestone for us. We have grown over the past 40 or so years from a local to a regional to a global company with operations in 31 countries around the world. Today we are the third largest container terminal operator with around 10 per cent of the world market. We've come a long way in quite a short time and this is yet another step in that "journey".

In terms of being a publicly listed company, we have laid a solid foundation over the last three years with our listing on Nasdaq Dubai , and in response to investors' feedback, we decided that London was the right place for a dual listing -- the regulatory framework is very similar to Nasdaq Dubai 's, a large number of emerging market funds are based in London and, last but not least, the time zones give us an extra day and an additional 12 hours trading over a week. DP World will now be positioned alongside regional companies on Nasdaq Dubai and some of the world's leading companies on the London Stock Exchange -- a great outcome for all our shareholders.

What is the progress on the Jebel Ali port expansion project?

Our continuous in-depth analysis of the local, regional and international business climate plays a strong role in our strategic planning. Terminal 2 began operations in the summer of 2007 and we have an estimated 14 million TEUs (twenty foot equivalent container units) annualised capacity at Jebel Ali.

The foundations for Terminal 3 are already there, and further development will be in line with market demand. It will be located on reclaimed land extending seaward from the existing facilities. The land reclamation work is complete and construction work on the terminal will be initiated in line with market demand.

How much investment is DP World - UAE Region making to upgrade UAE port facilities?

The company constantly invests in terminal infrastructure, facilities and people, and continued to do so though the downturn. Today the focus is much more on technical innovation. Initiatives we have taken in 2009 and 2010 mean we are more efficient now than in the boom times. For example, last year we installed a state-of-the-art Gate Automation System at our flagship Jebel Ali Port that has slashed the time we take to clear a container truck from an average of three minutes to just 30 seconds.

Other technology-driven initiatives at the port are the sophisticated new operation control room, also installed in 2010. It tracks every movement in the port, smart stacking systems and the e-services -- this all adds value to our customers in the supply chain and improve traffic flow. Together they save customers hours of precious time.

Abu Dhabi is fast developing the Shaikh Khalifa Port in Taweelah. Sharjah and Fujairah are also ramping up their port infrastructure. How do you see the competition within the country?

Investment in infrastructure -- be it road, rail or ports -- actively contributes to economic growth because it reduces time and costs for importers and exporters and stimulates business. Efficient infrastructure supports economic growth. The upcoming projects when completed will contribute to the growth of the UAE as a whole. And we welcome this investment. Efficient ports, efficient supply chains, stimulate trade and support economic growth, which in turn benefits those of us involved in the movement of goods.

DP World lost management of Abu Dhabi Terminals . What are the main reasons for this?

The 2006 MSA (Management Service Agreement) between DP World and Abu Dhabi Terminals (ADT) had a five-year term, which expired at the end of last year. The purpose of the MSA was to develop the capabilities of ADT when the ports sector was corporatised in 2006. We are proud of our achievements at Mina Zayed and our success in supporting our colleagues in Abu Dhabi to bring Mina Zayed in line with global standards of operations and service.

We will continue to work closely with ADT and ADPC into the future. Efficient infrastructure supports economic growth and Mina Zayed, and Port Khalifa and its associated industrial park when built, will contribute to the growth of Abu Dhabi and the UAE.

How do you see the shipping business in years ahead in the wake of massive development projects in Iraq, Saudi Arabia and other Middle East countries?

Economists consistently rate the GCC as one of the regions in the world with a high potential for economic growth. As we have seen in Dubai, an efficient port supports growth bringing in building material, machinery and consumer goods, all vital for fast emerging local economies.

Optimising the need for marine terminal infrastructure with economic growth drivers holds the key to the sustainable development of the sector. There is no doubt that efficient infrastructure stimulates trade by smoothing the flow of goods and reducing supply-chain costs. Efficient infrastructure is more than bricks and mortar. What happens at the gate and beyond the gate in the form of broader economic development is very important.

The UAE is a logistics hub in the region. How is the progress on Dubai Logistics Corridor having recently integrated operations with Dubai Airports, Jafza and Dubai Customs?

The successful establishment of direct and seamless cargo movements between Jebel Ali Port and Dubai World Central Al Maktoum International is a great business decision that will continue to contribute to the success of Dubai. Much has already been achieved in integrating the operations of all the stakeholders concerned. Today, customers benefit from single window e-clearance services including customs, and reduced transit time for their freight.

The Dubai Logistics Corridor (DLC) offers a sea-land-air transport link that is designed to deliver growth for all the parties involved -- DP World , Dubai Airports, Economic Zones World and Dubai Customs. The concept of a free zone attached to the port, as here in Jebel Ali has been a mighty force for growth. DLC, inaugurated a year ago, is a logical extension of the world-class supply chain infrastructure that has sustained economic development and turned Dubai into the region's commercial gateway. DLC is a multi-modal model that will help deliver true value to the community.

Automation is an ongoing process at Jebel Ali to ensure the speedy clearance of containers. Are there any recent developments on this front?

The Gate Automation System incorporates highly advanced technology including Optical Character Recognition (OCR) to read container numbers and Radio Frequency Identification (RFID) to track trucks that transit through the port's 26 automated gate lanes at Container Terminals.

It has the capacity to handle more than 2,000 trucks in a peak hour and some 20,000-truck visits a day.

Smoothing the flow of traffic at the terminal gates will improve the circulation of traffic within the Jebel Ali Free Zone and also to the arterial roads feeding it -- Sheikh Zayed Road and Emirates Road.

At the core of the automation process is the Gate Appointment System -- under which each vehicle is issued an E-Token -- to regulate the flow of truck traffic. It is designed to double to 20 the number of truck moves per gate man-hour, reduce gate peak factor by 25 per cent and trim gate turnaround time by five per cent. While it used to take hours to clear a container-loaded truck loaded, after Gate automation has been implemented, the process takes only 30 minutes.

How do you see the outlook for the shipping business? Is it fully recovered from the global financial crisis or is it still facing a slowdown?

Industry analyst Drewry Shipping Consultants forecast slower volume growth for 2011 and beyond from 7.5 per cent to five per cent and that, according to Drewry, could see lines' profit recovery slow. They believe the industry could see a tougher 2011 than 2010 for several reasons:

• Rising fuel costs, in part caused by regional political upheavals
• Increasing charter costs.
• Pressure on freight rates as carriers jostle for market share.
• Potentially higher commodity prices triggered by economic and political instability

Despite this, the trends point to emerging and developing economies being more dynamic than the developed world both in the short term and the longer term. Having said that, in 2010 the industry reported a sustained return to container volume growth, which has continued into the first quarter of 2011. DP World 's portfolio of 49 operational terminals has seen volumes grow 12 per cent to 12.6 million TEUs driven by strong growth in the UAE, Africa and the Americas region.

How did DP World - UAE Region perform in 2010?

DP World - UAE Region handled 11.6 million TEUs in 2010, four per cent ahead of 2009, with the fourth quarter delivering growth of seven per cent handling over three million TEUs. The performance of the region in the second half of 2010 saw a return to peak levels previously seen in 2008, with 6.1 million TEUs handled in the six-month period.

How do you see business growth for DP World - UAE Region in 2011?

We cannot provide forecasts as a publicly listed company. However, we had an encouraging start to this year. During 2010, DP World , UAE region reported continued quarterly improvement in container handling volumes. This has continued into the first quarter of 2011 with three million TEUs handled over the three-month period. This is 12 per cent ahead of the same period last year, although that was relatively weak quarter.

How is Emiratisation going on at DP World - UAE Region?

DP World , UAE Region pursues a proactive policy of encouraging Emirati talent to join its workforce, across various departments such as management, finance, human resources, operations, technical and others.

As of May 2011, more than three quarters of our top management are Emiratis; while some 68 per cent of our Department Managers are UAE Nationals; more than 35 per cent of Middle Management and Supervisory positions are held by Emiratis.

In line with our policy, we recruited 26 Nationals as trainees in the past 18 months. In addition, 22 Emiratis have been inducted in our Marine Trainee Scholarship Programme to train as marine captains, and a further six will join them in August this year.

© Khaleej Times 2011