A WHOLE NEW WORLD

Dubai 2017 | MARITIME | FOCUS: GLOBAL REACH OF DP WORLD

The familiar strategy of strong centralized leadership coupled with envious capital reserves and an aggressive acquisition strategy has lead DP World to global recognition within two decades. Today, the company's global positioning can be used as a tool for developing infrastructure in high-growth markets for larger benefits of UAE investment and trade.

Strong leadership, with no financial barriers. This is a familiar narrative that can similarly be pinned to Emirates and Etihad's rise to prominence. DP World's trajectory has probably seen fewer headlines, given the nature of the less-glamorous ports and container business, but the company sits pretty, rated number three in the top-five port operators in the world, handling 9% of global volume. With substantial and strategic investments being made in port infrastructure in fast-growing markets, DP World looks set for further growth.

Looking eastward, the UAE hopes to make the markets of China and India its two largest trading partners. With movement of goods into the giant economies, it makes sound business sense for DP World to facilitate, and subsequently cash in on, that through its own ports and the duties on those goods. Between the two countries, DP World has 10 ports, with China accounting for three, and India the remainder. China's Cosco Shipping Ports have just returned the favor to neighboring Abu Dhabi and will invest USD400 million in building a new container terminal at Abu Dhabi's Khalifa Port, which will add 2.4 million TEU capacity, roughly doubling the overall capacity. The Chinese presence is already significant in the UAE, with 200,000 workers and Dubai International Financial Centre playing host to China's four biggest banks.

The importance of developing Chinese relations are even more salient given the re-ignition of the old Silk Road, through the One Belt, One Road strategy. This strategy, if tapped correctly, can yield market access to Afghanistan, Kyrgyzstan, Russia, and Tajikistan. Within South Asia, DP World already operates Mohammed bin Qasim port in Karachi, where it faces local competition from Hutchinson's Karachi Port, the largest port in the country. Karachi is the largest and most populous city in Pakistan, home to 10 million residents, making it the second-largest city in the Muslim world. Karachi's ports account for 95% of Pakistan's foreign trade. DP World's positioning, in both China and Pakistan, is expected to be fortified by the development of the China-Pakistan Economic Corridor, which has been earmarked for USD46 billion of investment as part of the Silk Road plan. Both China and the UAE are investing heavily in the market, and in the previous fiscal year, the UAE was second only to China in terms of FDI to Pakistan, with a total of USD111 million.

Looking southward, DP World is making shrewd investments in sub-Saharan Africa, building ports in strategic countries to gain further access to landlocked markets in the interior. The best example is DP World's exploits into Somaliland following Djibouti's cancellation of its port concession with Dubai after a corruption case. Both moves were a bid to gain access to the growing trade with Ethiopia, which lost direct access to the sea after Eritrea's successful bid for independence. The 30-year concession with Somaliland, with an automatic 10-year extension, has cost up to USD442 million for the company, but has developed a market place of at least 100 million people, in an area of the continent that is seeing impressive and consistently high annual GDP growth.
In Latin America, the UAE's influence is substantial. For example, Peru's largest port is operated by DP World, the country's largest energy plant is 36% owned by one of Abu Dhabi's sovereign wealth funds, and the largest food companies are owned by Abraaj Holding, a Dubai-based family business. Since 2010, Peru has received USD1.7 billion in investments from the UAE.

DP World, in just two decades, has grown from a start-up to a globally positioned company with a market capitalization of almost USD15 billion. All over the world, in a symbiotic relationship, investment in the nation's maritime infrastructure offers a corridor for growth and development that benefits both parties. Despite uncertain market conditions, DP World's impressive growth figures are representative of a robustness that has come with the operator's focus on high growth markets. The government-controlled company stands on track to expand its capacity to a 2020 target of 100 million TEU per annum to benefit many markets beyond the UAE's borders.