STRONG IN CHOPPY WATERS
TBY talks to Flemming Dalgaard, CEO of Gulftainer, on weathering global headwinds, cooperating with local authorities, and the company's contribution to Sharjah's economy.
BIOGRAPHYFlemming Dalgaard is the CEO of Gulftainer. Prior to joining Gulftainer, he was Senior Vice President for Group Strategy at DP World in Dubai. He has also worked on various marine terminal projects for the A.P. Moller-Maersk Group in Germany, the UK, and China, where he served as the Regional Vice President. He holds a degree in international shipping and has completed many executive programs, most recently at Wharton University, London Business School, and the CSEP at Columbia University. He is a Chartered Director at the IOD and a Chartered Fellow at the UK Institute of Logistics and Transport.
How do you foresee the logistics sector within the context of the current slowdown in Chinese and European markets?
We will not see the same rates of growth that we have seen in the last few years; the market has indeed softened. For us that will mean that we will not have double-digit growth, but we will still grow. The UAE is well positioned as a gateway for the Gulf, for East Africa, and for India, Pakistan, and Iran to an extent, and has a number of free zones, too. Therefore, the UAE can maintain strong logistics operations despite global economic factors. We can also add to that the benefits of a clear and transparent financial system, a good legal system, good infrastructure, excellent audits, and quality controls. Most of that is Dubai, but many of the SMEs are based in Sharjah, so Sharjah will continue to benefit.
The region is struggling with low oil prices and geopolitical instability, while Brazil is in one of its worst crises in decades. How do these factors affect Gulftainer's operations?
Brazil is not doing well right now, with a financial and governmental crisis plaguing the country. Other areas like Saudi Arabia are doing well and we have not seen a significant slowdown there, although there has indeed been a slowdown, with various projects on hold. Iraq is doing well and growing fast. If Yemen finds a political solution, it will also have a huge economic impact on us. Once Iran is reintegrated into the international community, it will also have a major positive effect, being a market of 80 million. Hopefully oil prices will climb a little before stabilizing. I doubt that the price will ever return to USD120 per barrel, but it is at least unlikely to drop back down to USD25, so we are cautiously optimistic. We are optimistic about the global market, and we would like to continue growing and adding new ports. Our core focus is Southeast Asia, the Middle East, Africa, the US, and South America. We do not consider Europe, Northeast Asia, or Australia. We work with ports of around 1 million TEUs in capacity rather than 5 million-TEU ports.
How is the company cooperating with the Sharjah Port Authority to increase the capacity of the Sharjah Container Terminal?
We have a strong relationship with the port authority and both of us always look at ways to expand. The challenge for Sharjah is that the port is in the middle of the city, so there are constraints to how much it can grow. That was the reason behind Khorfakkan's establishment 20 years ago. Sharjah has been growing at 8-12% per year, and that is all local cargo with no transshipment. Even though Khorfakkan has been growing in terms of productivity, there are still big margins to improve productivity. This year we decided to introduce bigger cranes, and we have been using our existing space more efficiently. We can grow without expanding physically, which is what we have been doing.
How has Gulftainer contributed to the sector's growth and to Sharjah's economy overall?
We have invested billions in the country in terms of equipment, cranes, logistics, and so on. I came here in 1988 when Sharjah handled 60,000 containers, while today it handles seven times that amount. We have continued to invest to serve the industry here in Sharjah. On top of that, we have established Momentum Logistics, which covers logistics, warehousing, trucking, custom clearance, container repair, and more. That also adds and contributes to growing the economy and expanding the sector in Sharjah and the UAE. We also have a company called Avalon Logistics, which does long-haul trucking, and that enables businesses and people to export more to the GCC by truck. We help all these companies to get their products out to other countries. Beyond that, we provide employment for 3,500 people.
STRONG IN CHOPPY WATERS
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