OBG talks to Jamal bin Thaniah, Vice-Chairman, DP World

Interview: Jamal bin Thaniah

To what extent is there an oversupply of capacity within the GCC given the amount of investment in either new or upgraded port facilities?

JAMAL BIN THANIAH: The Gulf region is both a vital hub serving 2bn people in the wider Middle East, North and East Africa, and the Indian subcontinent, as well as a significant gateway for goods originating from or destined for the growing GCC market. With many GCC nations implementing plans to reduce their reliance on petrochemicals, they may soak up extra container capacity. Future demand will also be absorbed from neighbouring areas where there is underdeveloped infrastructure such as Iran, Iraq, Pakistan, Afghanistan and East Africa. Additionally, the expansion of ports is also being driven by the Asian boom, and while the economies of India and China have recently experienced something of a slowdown, the region itself still has huge potential for growth. We believe that the rapid increase in infrastructure such as ports and rail coming on-line is actually needed to support that growth as they contribute to the efficiency of the supply chain overall, which is very good for trade. International shipping lines are ordering larger vessels to achieve greater economies of scale and ports need to keep pace to meet their needs in the most efficient manner possible. Currently there is not enough capacity in the region, and unless economies in the region slow down it is unlikely there will be overcapacity. Therefore, I strongly support the rapid construction of additional infrastructure.

What is your outlook in terms of gross volume of throughput? What evidence supports your decision to increase capacity at Jebel Ali?

THANIAH: Throughput data reflects a continuation of solid growth, which reached 7.5% for the first six months of 2012. We handled more containers in the second quarter than the first quarter. Despite macroeconomic uncertainty and a challenging global environment, our growth has been enabled by the diversity of our portfolio of more than 60 terminals across six continents and our focus on the emerging market portfolio, which constitutes 75% of our business.

Our flagship port, Jebel Ali, is the gateway for cargo going into the Middle East, Africa and the Indian subcontinent region, which continues to grow. We are responding to this growth and are thus adding 5m twenty-foot equivalent units (TEUs) to Jebel Ali to take capacity to 19m TEUs by 2014.

Also, our customers continue to order the new-generation mega-vessels of 18,000 TEUs and want to use Jebel Ali as a hub for the region. The new capacity will allow them to make the most of the economies of scale and efficiencies of the new vessels. We as an industry need to work to meet those new demands and meet them efficiently where and when needed. Productivity is extremely important. A ship at anchor costs the shipping line money and so we in the terminal industry need to invest in equipment, training and technology to move their cargo as quickly as we can.

How does the incidence of piracy in regional waters affect Dubai-based shipping companies, and what is the impact on the international community?

THANIAH: Pirates know no borders and pose a threat internationally as well as regionally on human, political and financial levels. This is why it is imperative that regional – and indeed international – coordination to counter piracy be stepped up to address both the immediate problem of continuing attacks on merchant vessels and the long-term problems that represent the root causes of piracy in the region.

The human cost on seafarers and their families is appalling, with still 200 seafarers being held captive, some of who have been held nearly two years. But the economic impact of piracy is also grave, with studies estimating losses to the international community as high as $6.9bn in 2011 alone. Piracy not only affects seafarers, their families, shipping lines and governments, it is also has an impact on consumers who are paying the price of increased insurance fees and shipping costs.