New port operator leverages Dubai experience

31 March 2015

New port operator will help emirate’s maritime sector keep growing

When Dubai’s financial crisis threatened to deal the emirate a blow that it would never recover from, trade was one the key sectors that kept the economy moving.

Dubai was able to trade its way through the financial maelstrom thanks largely to Jebel Ali Port, the region’s largest and most efficient port. The port is also home to DP World, which after acquiring P&O in 2006 for $7bn became one of the world’s largest port operators, which now manages more than 60 terminals across six continents.

Dubai is now preparing to leverage its maritime experience further with The Ports Customs & Free zone Corporation (PCFC) launching P&O Ports, which will operate small and medium-sized ports around the world. The new company says the move has been welcomed by its customers, principally the major shipping lines, who desperately want to see a wider network of well-run ports around the world, especially in emerging markets where the prospects for growth are strong.

P&O Ports is responding to that need quickly. It has already signed agreements with governments in Albania, Madagascar and Somalia, and it says it is in discussions to manage another 30 ports in the emerging economies of Eastern Europe, Africa, the Far East and South America.

Unlike DP World the company does not plan to build new ports – at least not for now. Instead it plans to use its expertise to make ports that look busy and in need of expansion today more efficient and better utilised, although the company says it may look at expanding the ports it operates once the grow and need additional capacity to be built.

Sultan Ahmed bin Sulayem, chairman of the PCFC, says there are thousands of opportunities for P&O Ports around the world, and by focusing on management, rather than development, the company will be to keep its capital expenditure low and grow quickly.

DP World will also be a benefit. Although run as a separate company, the reputation of the port operator and its operations in Dubai should open doors for P&O Ports, although Bin Sulayem concedes the two companies may end up competing in the future.

For now, at least, the two companies will complement rather compete with one another. And using a metaphor from Dubai’s aviation sector, Bin Sulayem says that DP World is Emirates, P&O Ports is Flydubai.

Like the airlines, by broadening its customer base Dubai will be able to ensure its maritime sector keeps on growing for the foreseeable future. For a market depressed with low shipping rates and fears of long-term overcapacity Dubai may have pulled its latest masterstroke, One that will enable it to navigate through another downturn and remain on course for growth.

Stay informed with the latest in the Middle East
Download the MEED app today, available on Apple and Android devices

A MEED Subscription...

Subscribe or upgrade your current package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications