DP World: Why We Did It

When the Council of Supply Chain Management Professionals (CSCMP) scheduled a conference “The Bottom-Line Value of Supply Chain Management” in Dubai, it didn’t expect to be front stage in a developing controversy. Mohammed Al-Muallem, senior vice president and managing director UAE for DP World, stepped in for the company’s CEO to deliver a keynote presentation describing some of the global trends driving growth in maritime volumes and leading DP World to develop a global expansion strategy that included acquiring P&O Ports. It was that deal and the ensuing controversy in the United States that led to Al-Muallem standing in for his CEO.

Outsourced manufacturing, said Al-Muallem, has been driving ever-increasing volumes of cargo into the ocean trades. In fact, the top 10 origin ports account for 81.8% of import volume, and the top three (64%) are in China.

China dominates the origin countries for imported goods as well, at 76.1% in 2004. Number two on the list, Thailand, accounts for only 4.3%. India, often mentioned as developing a stronger role in outsourcing, ranks third at 2.4%.

Global container throughput is expected to grow at 9% per year to 2010, continued Al-Muallem. The current 2006 projection calls for 524.3 million twenty-foot-equivalent units (TEUs) to rise to 613.6 million TEUs by 2010. Both origin and destination ports are affected by this rapid rise in volumes. Ports face significant challenges to develop new capacity and expand existing infrastructure as well as improving productivity if they are to deal with this growth, Al-Muallem points out. In Europe and the U.S., he said, lead times on development are increasing.

Highlighting seven developments which will add 14 million TEUs of capacity by the end of 2008, Al-Muallem indicated the earliest of these, in Aden, Yemen will be operational in 2006. Yarimca, Turkey and Vietnam’s Ho Chi Minh City will be operational by 2007. Two developments are in India (Kulti and Vallarpadam), one in China (Quingdao) and the London gateway in the United Kingdom will be operational in 2008.

DP World operates a joint venture 5.4 million TEU mega hub in Pusan, South Korea. It has also partnered with the port authority at Constanta, Romania to develop a Black Sea hub for emerging Eastern European markets. In Cochin, India, it partnered with the regional government to develop a gateway operation that will reduce India’s dependence on foreign tans-shipment ports. The Yarimca, Turkey development is 100% owned by DP World and will handle 1 million TEUs.

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