DP World: From containers to e-commerce, how it helps economies grow and nations prosper
How Dubai-bred company has cultivated the global supply and logistics chain
DUBAI: DP World sure knows how to connect the dots on the world map. And it sure knows all that there is to know when shifting shipping containers from one part of the world to another.
From its modest start in 1972, with just one port, Mina Rashid in Dubai, DP World Ltd has become one of world’s largest port operators today. And it's not resting on its laurels.
Going forward, it wants to port its success with global logistics to e-commerce deliveries — and in its own unique way. That’s right, DP World wants it all covered — from containers to ecommerce. At present, its starting point for its foray into e-commerce: Africa.
For one of the integral names in global trade, wanting to get into digital is as much a natural progression as it would be to invest in new state-of-the art cranes at its network of ports, both in Dubai and around the world.
From container to e-commerce
In May, DP World — wholly owned by Dubai Government and one of the two visible faces of Dubai worldwide (the other being Emirates airline) — made an audacious entry into the online world through ‘Dubuy.com’. The e-commerce platform is going live in key African markets, where digital commerce is underserved, and then scaled up to other parts of the world.
On the face of it, this might seem a strange sort of diversification for a ports operator to make. But there’s a clear rationale to DP World’s ambitions in the highly complex e-commerce landscape.
“We have focused our efforts on digitising logistics and developed solutions for several verticals,” said Sultan Bin Sulayem, Chairman and CEO of DP World Group, in a recent statement.
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Pandemic lessons
At a recent forum, Bin Sulayem said the coronavirus pandemic had forced the Dubai ports operator to accelerate its digital initiatives. “When the pandemic came, we were faced with a problem — we were disrupted,” Sulayem said at the Dubai International PPP (Public-Private Partnership) Conference. “We had to adhere to the pandemic restrictions, so we started to accelerate many digital platforms that we didn’t really need urgently.”
We had to adhere to the pandemic restrictions, so we started to accelerate many digital platforms that we didn’t really need urgently.
Logistics, trade investments
To further enhance supply chain efficiencies, DP World has made several investments over the last few years to play a bigger role in the global movement of goods. “DP World isn’t what it used to be — we are logistics and trade enablers,” said Sulayem.
On October 12, DP World announced twins investments: $1 billion for its Africa investment platform (with UK’s CDC group), and another involving Germany’s MAN Energy Solutions for a five-year term decarbonsation venture.
Going deep into Africa
The Dubuy launch coincides with a massive expansion of ports and logistics expansion within Africa that DP World has been honing over the last four years. It has picked up significant speed in recent months. Whether it’s Ethiopia, Rwanda or the Congo, the Dubai company is building up scale as a facilitator of continental and global trade through management of key ports and terminals.
These are backed by billions of dollars in new or additional investments to ramp up the available infrastructure, or even build all-new trade corridors if that’s what is needed.
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From there to delivering millions of African consumers an ecommerce platform is natural progression in DP World’s scheme of things. "Looking ahead, we will continue to be selective on new investments and focus on the integration of our recent acquisitions to drive synergies,” said Bin Sulayem.
And that’s been DP World’s strategy right from Day 1…
• In 1972, Dubai Ports began with a single port, Port Rashid. Seven years later, in 1979, Dubai opened its second port, in Jebel Ali. By 1991 these two original Dubai ports were combined to create the larger Dubai Ports Authority.
• Since then, it has grown from strength to strength, adding numerous ports and terminals to its roster — from ports in Saudi Arabia and the UK to Romania and India, and as well as others on six continents.
• Today, 49 years later, DP World Ltd operates 78 marine and inland terminals, and supported by 128 related businesses. Operations are conducted in over 60 countries. DP World employs a global staff, with 50,000 employees from about 110 nations.
• The Dubai-based logistics giant has become one of the world’s largest port terminal operators.
• DP World reported a strong volume growth of 17.1% in the second quarter of 2021, handling 19.7 million TEU (twenty-foot equivalent units) across its global portfolio of container terminals, with gross container volumes increasing by 17.6% year-on-year. Growth accelerated in all regions, especially DP World terminals in India, Europe, Australia and Americas.
• During the first half of 2021, on a gross basis, DP World handled 38.6 million TEU, with gross container volumes increasing by 13.9% year-on-year on a reported basis.
• It is now making forays into e-commerce with dubuy.com, initially opening in Africa.
No plain-vanilla model
Call it a grand idea, vaulting ambition, or plain far-sighted business sense. When the Jebel Ali Port was on the drawing board, Dubai already had the Mina Rashid (Port Rashid) facility. The obvious thing would have been to build on the existing port, rather than create a new one in a different part of the emirate that was then vast stretches of sand. And nothing more.
DP World isn’t what it used to be — we are logistics and trade enablers.
But that’s what Dubai under Sheikh Rashid set out to do — a second port for the emirate. And then it was immediately followed by the Jebel Ali Free Zone (JAFZ), which itself was a pathbreaker. JAFZ set down the foundation for Dubai’s soon-to-be-elevated role in the world’s logistics and supply chain link.
Trade hub
In more straightforward terms, a trade hub for the world. All of those plans were still in the future when the Jebel Ali Port formally opened on February 26, 1979, with the first ship to call being the HMY Britannia with Queen Elizabeth II on board. Since then, it has built up to become the largest seaport in the Middle East and remains among the world's Top 10 container ports.
Capacity, too, has kept pace — container handling volumes have grown from 18 million TEU (twenty-foot equivalent) to 22.4 million TEU. It acts as the entrepot for over 80 weekly shipping services and connects more than 150 ports worldwide.
Each incremental gain in containers handled and ships calling in were backed up by investments on physical and technology assets. This was just as apparent in 2020, through all the disruptions from the COVID-19 created havoc on trade movements. That strategy is paying off… already.
“The container industry has outperformed the gloomy double-digit decline that some predicted at the start of the pandemic, which illustrates the resilience of the market,” said Bin Sulayem at the time of the first-quarter 2021 results announcement. “DP World has outperformed the industry once again, which demonstrates that we are in the right locations and a focus on origin and destination cargo will continue to deliver the right balance between growth and resilience.”
The container industry has outperformed the gloomy double-digit decline that some predicted at the start of the pandemic, which illustrates the resilience of the market.
Growth journey: It’s all about ‘locations’
That’s right, whether it’s in London, Africa, India, or as far afield as Latin America, DP World is leveraging its geographical reach. What started out as two ports in Dubai has extended to multiple locations for true global outreach. And backed by speedy decision-making too - as soon as the Abraham Accords was entered into between the UAE and Israel, DP World announced that it would be making a joint bid for Israel’s second biggest port, Haifa.
The DP World network has now grown into 128 business units in 60 countries across six continents. With this Dubai entity, it’s never about dreaming big…
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It’s not done yet
There could be more ports that could open up for its management touch. A decision on the Haifa bid is still awaited. But the pieces of the connected network are already well in place for DP World.
“While we remain cautious on the outlook given the continued issues surrounding the pandemic, geopolitical uncertainty in some parts of the world and the ongoing trade war, we are encouraged by the start to trading in 2021,” said Bin Sulayem, who’s been there right from Day 1 of the enterprise and remains one of the longest serving CEOs. “[We] remain positive on the medium to long-term outlook for the industry and our business.
“The strength and resilience that our business continually demonstrates throughout the cycles is due to the investment the Group has made over the years in response to changes in our industry. Our ability to adapt and change has been the key to our success, and we must continue to evolve for continued growth.”