Dubai: UAE ports are back to doing what they do best — packing the containers in and getting them to their intended destinations. While everything that is happening elsewhere in the region played their part, the volume growth this year has a lot to do with strong fundamentals as well.
DP World posted a solid double-digit growth at its local port and will now be looking to close out the year on a high. It solidifies the sentiment that regional cargo movements are putting in growth rates higher than at other geographies.
"The ports should see a rise in volume and frequency as the logistics industry diverts its attention away from troubled locations across the region and precipitated by a lack of ‘insurable transportation' in certain parts," said Jesdev Saggar, managing director for capital projects advisory at the Middle East operations of Deloitte Corporate Finance Ltd.
Hardening rates
"The UAE has for a long time been a favoured transit and termination point and Dubai in particular is still home to one of the largest and most efficient ports in the world." So far, the gains in volumes have not been matched by a hardening of cargo rates, though there were concerns that the losses suffered by shipping lines from piracy and the conflict in Libya would have an impact.
It could be that the intense competition among lines for business could have kept the rates from sailing too high.
Power shift
"The massive infrastructure investment by Gulf countries and the increasing investment in the manufacturing segment, particularly in Abu Dhabi and Saudi Arabia, are important in terms of cargo movements and utilisation of excess capacities," said Raghu Menon of Hexomatrixx, MPCL Venture.
"One can see the economic power shift is clearly moving in favour of the East, and with the increasing Chinese presence in Africa, we should expect a lot of Dubai companies' involvement in Africa and further enhance the inward and outward cargo movements.
"Dubai has made extensive investments in facilities and processes, which includes flexible clearing procedures and transportation facilities. This will allow the country to optimise the location and continue to remain a major transshipment hub."
New facilities
For its capital expenditure in the three years to 2012, DP World is allocating 61 per cent of a $2.5 billion (Dh9.1 billion) fund on its new facilities, while a further 27 per cent will be channelled into existing ones. Among the various geographies where DP World has a presence, Europe, Middle East and Africa will take on 41 per cent followed by Asia-Pacific with 34 per cent and Australia — Americas pulling 25 per cent.
This is the global strategy that would push the entity closer to its target of handling 92 million TEUs by 2020.
