02 September 2005
Controlling Jebel Ali, Rashid, Mina Zayed and Fujairah ports in the UAE, as well as Jeddah and the recently acquired Aden ports on the Red Sea coast, Dubai Ports International (DPI) has built up an enviable portfolio of regional operations. Combined with its concessions in Asia, some claim DPI's control of the shipping lanes has given it a monopoly, dictating which ports shipping companies use and starving other ports of business.

The issue is compounded by the fact that DPI is owned by the government, effectively making it a state-owned company with access to substantial funds. The operator's recent run of success has led some to speculate that it has paid over the odds for its concessions. 'State-owned operators adopt a different risk profile and ethos to certain opportunities due to the amount of cash they can bring to the table,' says Eleanor Hadland, head of ports, at the UK's Drewry Shipping Consultants. 'They tend to approach some concessions that most other operators would avoid.'

Although this benefits ports that may not be considered economically viable, it puts private operators without recourse to a large cash pool at a disadvantage. 'I'd say the biggest challenge we face is having to compete with these state-owned operators,' says one regional operator. 'It gives them a substantial advantage and to be frank is not entirely fair. Several lines have mentioned they might get nervous if DPI has a monopoly.'

Mohammed Sharaf, managing director of DPI Terminals, shrugs off the criticism. 'Our strategy is to develop a global network of port and logistics operations to leverage our customer relationships and to ensure that we can offer the highest levels of service to those customers, whether they call at Dubai, Tianjin or Caucedo [in the Dominican Republic],' he says. 'It's the best way of ensuring long-term, sustainable growth in this business.

'There may be a misconception that, because we are privately owned by the government of Dubai, we aren't run as a commercial business. But the deals we do make commercial sense and what underpins our track record is our ability to deliver the highest standards of customer service in the port industry. We also use the debt finance markets for funding large deals, such as the acquisition of CSX World Terminals. We compete in the global ports industry not because we are privately owned but because we believe our product is truly world-class.'

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