DP World chief Sultan bin Sulayem on growth in India, Iran and prospects around the world Political and military events
DP World chief Sultan bin Sulayem on growth in India, Iran and prospects around the world
The ports operator DP World says that it remains positive on the medium- and long-term outlook for the industry in an environment of slower global trade and low oil prices.
Sultan bin Sulayem, its chairman and chief executive, highlights key markets for the company’s growth, including in India where it will spend more than US$1 billion over the next few years and in Russia where it has a US$2 billion joint venture planned. He also says it is “business as usual” after the UK voted to leave the European Union.
What is the latest update regarding investments in expanding ports in India?
Earlier this year, during the visit to New Delhi and Mumbai by Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, we announced our intention to seek opportunities in India worth more than $1bn over the next few years. We have already invested a capital of $1.2bn and we are the only foreign operator with six port concessions in the country, including in Gujarat and Kerala. The investments could cover the expansion in brownfield container terminals, long-term greenfield container concessions, inland container depots and the expansion of existing intermodal rail services for rolling stock.
Being one of the strongest emerging economies in the world, India offers immense potential for growth in the maritime sector. DP World currently supports more than 30 per cent of India’s container trade. With Nhava Sheva (India) Gateway Terminal (Jawaharlal Nehru Port), the new 330-metre berth, we will contribute even more to India’s growth, offering our customers the ability to grow and expand their business.
To streamline our operations in India, DP World created rail connections to the hinterland and have a national rail license from the government to operate seven container trains from major hinterland markets to our major gateways in Mundra (Gujarat) and Nhava Sheva.
What is the latest update regarding the $2bn planned investments in Russia?
We announced the launch of a new joint venture company targeting ports, transport and logistics infrastructure in Russia earlier this year with the Russian Direct Investment Fund (RDIF). DP World has an 80 per cent shareholding with 20 per cent held by RDIF.
Under the name DP World Russia, the company is targeting marine, dry ports and logistics infrastructure in different parts of Russia. DP World Russia is expected potentially to invest over time a total of $2bn in upgrading Russian port facilities, while introducing international best practices in operations to improve trade connectivity for the benefit of Russian businesses, consumers and community.
Russia has always been an attractive origin and destination market for us with huge long-term growth prospects. This joint venture allows DP World and RDIF to build on each other’s strengths in bringing economic prosperity to Russia.
What are plans to tap the bond market?
We continually review all our financing arrangements and requirements depending on the circumstances and in line with our global growth strategy. Our balance sheet is strong and if a good opportunity arises and fits our investment strategy, we will certainly look at it. We announced last month the listing on Nasdaq Dubai of a $1.2bn Sukuk.
What is the latest regarding entering Iran?
We constantly explore opportunities around the world. We don’t comment specifically on any unless there is something to announce.
What is the latest regarding entering Black Sea and Baltic countries?
We already advise the government of Kazakhstan on the development of the Khorgos Special Economic Zone and the Port of Aktau on the Caspian Sea. We look at all opportunities that fit with our global strategy and where our customers want us to be.
My recent meeting with Nursultan Nazarbayev, the president of Kazakhstan, at the St Petersburg International Economic Forum, was focused on investment opportunities in dry ports and free zones for DP World and the growing importance of multi-modal transport systems. DP World contributes significantly to upgrading the transport and logistics infrastructure in Kazakhstan, as it will assume a strategic location on the New Silk Road. From our experience, New Silk Road countries need to continue developing trade-centric solutions. They bring together all the ingredients required to encourage trade – from marine and inland terminals, free zones, customs and logistics underpinned by smart technology, to create a thriving business environment. Trade and investment opportunities in the New Silk Road are immense, connecting three continents and 65 countries. It is also the world’s largest economic corridor with a population of 4.4 billion and economic output of $21 trillion, while representing 40 per cent of global GDP. Meanwhile, the Eurasian Economic Union offers a combined market of 180 million people and a total GDP of almost $6tn.
Where is container growth coming from this year?
With the industry facing some strong challenges this year with lower commodity prices, currency fluctuations and political issues, the rest of the year will be challenging for global trade. The forecast by Drewry [shipping consultants] for the industry is around 2 per cent growth. We have made an encouraging start to the year and current trading is in line our expectations. While there is an impact on the growth of trade, we remain positive on the medium- and long-term outlook for our industry. Overall, we expect to continue to deliver ahead of the market and remain confident of meeting full-year market expectations. Despite challenging market conditions, our recent throughput and full-year results show the resilient nature of our business.
In our recent volumes announcement for the first quarter of this year, we said that growth was largely driven by a stronger performance from our European and Indian subcontinent terminals.
By the end of 2016, we expect to have about 86 million TEU (twenty foot equivalent unit) of gross global capacity, an increase of about 15 million TEU since 2012, and more than 100 million TEU of gross capacity by 2020, subject to market demand.
What is the impact of the Brexit vote on growth in the UK?
DP World provides world-class marine and logistics services across the UK, Europe and the rest of the world, and we continue to provide our customers with the highest standards of service they expect to receive. Our ability to continue facilitating UK trade with the rest of the world remains unchanged, regardless of the UK’s membership of the EU. It is very much business as usual for DP World in the UK.
What is the outlook for China growth?
With our partners we are investing $1.9bn in China port terminals until 2020 and we already operate three ports there in Qingdao, Tianjin and Yantai. We also recently signed an agreement with our partners in Qingdao to exchange information and grow business between our ports. China is a key part of our global network.
Our joint ventures in Qingdao, Tianjin, Yantai and Hong Kong are very important to us and are a perfect example of the impact of strong partnerships to realise efficiencies along the supply chain.
We will continue to look at opportunities wherever they occur and to meet our customers’ needs. We are well positioned to support cargo movements along the One Belt One Road initiative, which connects China to the west by railways, particularly in light of shifting manufacturing operations to central and western Chinese cities, away from traditional seaports. China is the largest container market and any slowdown in volumes coming out of China will have an impact on the rest of the industry. However, our business is well diversified. China continues to grow albeit at a slower pace.
Source: The National