Dubai: Rival efforts by Dubai and Singapore to acquire British port operator Peninsular and Oriental Steam Navigation Company (P&O) are increasingly being seen as a battle for global shipping supremacy between the two cities already recognised as hubs for tourism, transport, trade and finance.
A successful takeover of P&O by DP World, whose £3.3 billion ($5.9 billion, Dh21.36 billion) bid has been approved by the British firm's board, could make Dubai the world's third biggest port operator.
"One transaction will catapult Dubai into the heavyweight league of port operators. There will never be an opportunity like this," said Neil Davidson, research director at Drewry Shipping Consultants in London.
P&O, which has 29 container terminals and logistics operations in 19 countries making it one of the world's four top operators, has also attracted a £3.5 billion approach from the Port of Singapore Authority (PSA), a unit of the Singapore government's investment arm Temasek.
A takeover by Singapore would turn PSA into the world's top operator, overtaking Hong Kong's Hutch-ison Whampoa.
"P&O is significant for both Singapore and Dubai. Its acquisition will increase their business activity in large amounts in one go," Davidson said.
Diversification
For PSA, taking control of P&O would mean that it will not have to rely heavily on its Singapore operations for business volume. Singapore accounts for more than half PSA's volume. PSA Singapore Terminals handled 22.28 million TEUs (twenty-foot equivalent units) in 2005.
Singapore's container volume also faces competition from Port of Tanjung Pele-pas and Port Klang in Malaysia and it would help PSA to seek overseas assets.
"P&O will allow PSA to spread its business across a large number of ports and countries," Davidson said.
In terms of geographical locations, DP World has a better global presence.
However, the P&O transaction may have little impact aside from the prestige on Singapore and Dubai's economic successes, Davidson said.
Still, control of ports around the world fits Dubai's ambitions to position itself as a business city on par with other global business hubs.
"Once you have become a regional hub, the next step is to go global. It is natural for Dubai to be competing with Singapore," said a former Singapore government official.
Singapore and Dubai are already competing for port concessions worldwide.
As a fulcrum of regional business, Dubai considers ports a key component of its growth strategy.
Chairman of Ports, Customs and Free Zone Corporation Sultan Ahmad Bin Sulayem, who just opened the Pusan container port in South Korea a joint venture between Dubai and Korea's Samsung, said the P&O bid was crucial for Dubai to offer its customers in Europe and North America. P&O also has presence in South Asia, East Asia, Australia, Africa and South America.
In view of India's strong economic growth, acquiring P&O would give DP World a major presence in the country.
WAM
In the right direction
South Korean President Roh Moo-Hyun and the First Lady open Pusan container port along with the Mayor of Pusan, and the Chairman of Dubai's Ports, Customs and Free Zone Corporation Sultan Ahmad Bin Sulayem yesterday.
