London: DP World, the world's third largest port operator, has said it will invest another $1 billion (Dh3.67 billion) in the London Gateway project over the next three years, which will create 36,000 jobs.
DP World's London Gateway, Britain's new global port and logistics centre project, is set to open in the fourth quarter of 2013 with an initial capacity of 1.6 million TEU (twenty-foot-equivalent units) and is built to accommodate the world's largest container ships. The total cost will be $1.6 billion.
Sultan Ahmad Bin Sulayem, Chairman of DP World, made the announcement yesterday in a press conference held at London Gateway, saying: "This is a unique project; it's the closest, deepest-water port near London, a city with a surrounding area where many consumers and retailers are available.
"This is the biggest project in Europe."
This was the first mention of the final date for the project and Bin Sulayem said the board had given the green light to start it.
Modelled after Jebel Ali
"We are modelling this project after the Jebel Ali port and we are proud to take our UAE expertise abroad. The warehouse facilities will be able to accommodate up to a nine million square foot logistics park."
The biggest similarities between the two ports have to do with logistics; the fact that there's a port and free zone right next to it.
"With many ports around the world it's not easy to find space next to the ports. We were fortunate in Dubai to plan it that way and also in London," Bin Sulayem said. The experience in how they were able to attract people to Jebel Ali will also be useful here, he emphasised.
Funding of this project is completed now, according to Bin Sulayem and Mohammad Sharaf, chief executive of DP World.
"Part of the funding is from DP World and another part is long-term loans from financial institutions," they said. Already $600 million has been spent on the foundation work, which began in early 2010, and another $1 billion is expected to be invested over the next three years.
Also in attendance for this announcement yesterday was UK Business Secretary Dr Vince Cable, who outlined three reasons why the project is important: it is a big step forward in the country's infrastructure; it would create jobs for 36,000 people; and it is a boost to Britain's reputation as a host of inward investment.
Already 600 jobs have been created and DPW announced that another 1,000 will be created in the next months. UK businesses are expected to benefit from this project.
London's importance
Explaining why London was chosen for this mega project, Bin Sulayem said it was "mainly to give facilities to the shipping industry that is trading in this part of the world".
He added this was a unique opportunity because of the inter-nodal facilities (sea to rail to road) which will provide various forms of transport and be useful for giant companies.
Bin Sulayem also highlighted the fact that this project will provide logistics services.
Besides being close to London, the port will be one of the most important environment-friendly projects. It will have more than 148,000 tonnes of carbon dioxide savings per year. Bin Sulayem reiterated DPW's commitment to the UK economy saying: "Building a port is a long-term investment and you must look at the whole project. This will be welcomed by the shipping family."
Bin Sulayem also spoke of the need to open the port as soon as possible. He said: "This was the right timeframe and also a reflection of customers' demands and needs."
Worst of crisis over
Even at a time of global economic crisis, he said this project will provide savings for everybody involved. According to DPW studies, the worst time for the shipping world was in 2009. From then on, Bin Sulayem said, there's been growth which "gives us comfort as it suits the direction of supply and demand." Asked by Gulf News whether DPW was concerned about the econ-omic crisis hitting Europe, Sharaf responded: "Crises will come and go. The economy will continue to be here and London is a port city."
He added: "London will be expanding and we are bringing the port back."
On the so-called Arab Spring of 2011 and whether the changing dynamics of the Arab world have made DPW look at potential opportunities in the region, Sharaf said: "We look everywhere." In Egypt, he said, they are currently expanding the port, which is expected to be completed by the end of the year.
Asked about benefits specific to Dubai, Sharaf said: "This is a company that is based in Dubai and therefore profits return to us."
He also added that the UAE and Britain have very close ties and this project would benefit both countries. It could also encourage Britain to invest further, he said.
Bin Sulayem also explained that more people will be employed in Dubai as a result of this project seeing as that is where the company's headquarters are.
Further commenting on why this project was chosen, as opposed to focusing more on emerging markets, Sharaf told Gulf News: "We always have a formula for choosing new projects and unless it meets the criteria, we won't do it."
Need for projects
He was quick to point out: "In England, there's a need for a project like this; it's close to a market that can't be served efficiently. It's an opportunity and we see that."
Sharaf said DPW's policy remains to develop infrastructure in all markets although the focus has been on emerging markets because they lack the infrastructure.
"London Gateway is not a normal infrastructure proposition," according to Sharaf.
On whether DPW was interested in the US market again, Sharaf said: "We don't have plans to enter the US market at the moment. We serve its needs through our Vancouver ports, Peru port, and Dominican Republic port."
He also said there were no immediate benefits in entering the US market.
A key project for the future
Dubai: This is a major investment commitment by DP World at a time when the business outlook remains gloomy.
"The market will not be surprised by this announcement. London Gateway has been talked about since the beginning of DP World's story," said Kareem Murad, senior vice-president at Shuaa Capital.
"The project was postponed in 2009 as a result of the drop in global trade but most estimates predict positive growth [in trading volumes] over the next few years," he said.
"London Gateway is a key development for DP World, particularly because of its design, with a logistics park, close proximity to London, which is one of the most important trade hubs in the world, and because of it is the only port they own freehold."
Long-term outlook
He said in the long run it will certainly contribute towards the company's top and bottom lines.
"But we will not see any impact on revenues until 2014 at the earliest. The positive news is they have been implementing infrastructure on London Gateway for some time and they are committed to going forward with the plan," Murad said.
