Expanding its trade network in the UAE, seeking growth opportunities in Africa and creating an investment platform in India are just some of the things keeping DP World busy
Container terminals are the cornerstones of trade in the UAE region and that is not going to change any time soon, a DP World spokesperson told CST, explaining that the global terminal operator’s current focus is to augment Jebel Ali Port by creating a more robust supply chain and expanding its trade network.
Improving the supply chain is important because of the growth of e-commerce in the region with the sector expected to be worth US$48.6Bn by 2022 (BMI Research). “This will lead to a corresponding increase in consumer expectations for services such as same-day deliveries. There is also the potential increase in the quantity of goods moving from the US into the region, thanks to the Souq-Amazon and Noon-eBay connections,” explained the spokesperson.
The expansion of DP World’s trade network stems from positioning itself to leverage changes in the global trade landscape. DP World’s spokesperson said “China’s New Silk Road, or the Belt and Road Initiative is going to be a game-changer in how cargo is moved between east and west, and it will create new opportunities to directly connect the Middle East with central Asia. Businesses will want to make the most of this new connection, and we have to be ready to meet market demand ahead of time.”
DP World’s biggest challenge currently is adapting to how technology is changing the face of the logistics industry, both from an operational standpoint and from market requirements. “Ports are more reactive than proactive when acclimatising to shifting market forces due to their nature, and this makes the rapid pace at which new technologies are being developed and enhanced difficult to achieve.”
DP World has already developed numerous initiatives to deal with these trends. Earlier this year, it teamed up with Oracle to speed up digitalisation and incorporate technologies such as AI, IoT, and blockchain across its operations. It has also invested in automation to improve operational efficiency and productivity. It has expanded container handling capacity at Jebel Ali Port to 19.3M TEU in anticipation of increased throughput in the run-up to Expo 2020 and in line with market demand.
The terminal operator is currently working on a Belt and Road Dubai Station in collaboration with Zhejiang Seaport Investment and Operation Group. It will be a one-stop-shop logistics hub that will open Dubai to new trade opportunities in central Asia, expand its existing trade ties with China, and “serve as a launchpad for further network extension in the future”.
Elsewhere, Africa is a key region for DP World. “The potential for development is enormous with six of the 10 fastest growing economies in the world on the continent. Many of our operations are already working or underway in long-term partnerships with governments – in Egypt, Algeria, Senegal, Mozambique, Rwanda, Somaliland, Mali and Democratic Republic of Congo,” explained the spokesperson.
“We continue to seek growth opportunities in Africa wherever they may be and where our customers want us to be. The horn of Africa region has great potential to be a trade hub. Landlocked nations such as Ethiopia require access to multiple gateways to connect to global markets. 105M people need multiple connections to global markets to encourage trade and grow the economy.”
Challenges remain – the need to build sustainable infrastructure both physically and through new digital applications and technologies; connecting landlocked markets so they become landlinked; providing access to global markets for imports and exports and helping to boost intra-regional trade.
But as a “global trade enabler”, DP World can add value through ports, logistics, free zones, business parks and digital trade solutions, and is encouraged by the African continental free trade area to create a single African market, pending ratification.
In 2016, intra-African trade exports were only 18% of total exports, compared to 59% intra-Asia and 69% intra-Europe, so there is much room for growth. “Our focus is on public private partnerships where we help nations avoid debt for generations. Rather than bringing in foreign labour we are about developing local talent, providing jobs across the community and in small businesses and investing in training,” said the spokesperson.
India growth story
India is also a key area. “We have been a part of India’s growth story for two decades and are committed to building on the historic ties and friendly relationship between the UAE and India,” said the spokesperson. DP World has invested in five international gateway terminals in India, which handle over 28% of India’s container trade.
It has recently partnered with NIIF, to create an investment platform to invest in ports, terminals, transportation and logistics businesses in India. It will invest up to US$3Bn of equity to acquire assets and develop projects in the sector. It will also look at opportunities beyond sea ports, such as river ports and transportation, freight corridors, port-led special economic zones, inland container terminals, and logistics infrastructure including cold storage.
“We are proud to share our expertise and experience in the global supply chain to offer a full suite of services, from quayside productivity to landside storage, distribution capabilities, to world-class supply chain advisory. We will continue to focus on all aspects of the logistics supply chain to provide our customers with last-mile connectivity,” said the spokesperson.
“We appreciate the numerous proactive measures the government has undertaken to promote the expansion of port infrastructure and facilitate trade and commerce. Currently, there are more ports in India than cargo and there is a need for more production facilities, more logistic and infrastructure facilities to further facilitate the ease of doing business.”
DP World also believes that rationalisation of tariffs across terminals would be a welcome move as it will provide all port operators a level playing field and support India’s fast growing export-import trade.
DP World’s spokesperson summed up “India is on the cusp of a logistics revolution and this is an exciting period for us to be playing an integral part in the country’s growth. The major opportunity we see here is the interaction with the end user customer who has to move the cargo inland to the ports through various modes of transportation and vendors.
“The country is underrepresented in terms of infrastructure where logistics is concerned and our partnership with NIIF aims to develop a stronger integrated logistics supply chain including dedicated freight corridors, multi modal logistics parks, inland waterways and industrial corridors. This will make the sector more attractive and reduce the cost of logistics, eliminating inefficiencies and bottlenecks in the supply chain.” The acquisition of Continental Warehousing earlier this year is an example.