Officials sgining the agreement

Officials sgining the agreement

DP World builds its supply chain plan

The global logistics services provider’s efforts to connect the supply chain have included buying three major feeder companies to improve its regional and transshipment offering

September 2020

Dubai-based global trade enabler DP World has said it has continued to make progress on its strategy of connecting the supply chain despite the effects of the Covid-19 pandemic.

In its half-year results the terminal operator said its portfolio had delivered “a better than expected performance” in the first six months of 2020 but that the near-term remains uncertain.

It saw its revenue fall by 11.6 per cent on a like-for-like basis and earnings before interest, taxes, depreciation and amortisation (EBITDA) by 4.8 per cent. Additionally, it also saw its volumes fall by 3.9 per cent but this is significantly lower than the industry-wide decline of 10 per cent.

DP World : aiming to reduce inefficiencies

DP World : aiming to reduce inefficiencies

“The Covid-19 outbreak has undoubtedly resulted in one of the most challenging periods in the history of our industry,” said DP World Group Chairman and CEO, Sultan Ahmed Bin Sulayem.

“Despite the challenges, we have continued to make progress on our strategy to deliver an integrated supply chain solution to cargo owners. We have focused our efforts on digitizing logistics and developed solutions for several verticals including the Automotive, Oil & Gas and FMCG industries.

“We are pleased to state that cargo owners have responded positively, and we are now delivering efficient solutions to our customers, which bodes well for the future.”

DP World’s efforts to connect the supply chain have included buying three major feedering companies to improve its regional and transshipment offering.

Earlier in 2020 it de-listed from the stock market to protect itself from further instability, as part of a long term plan, returning the company to full state-ownership in a move to help the Dubai government’s investment company repay more than $5 billion to banks. Parent company, Port and Free Zone World, acquired 20 per cent of shares not already owned for $2.7 billion.

“The strength and resilience that our business continually demonstrates throughout the cycles is due to the investment the Group has made over the years in response to changes in our industry,” Bin Sulayem continued.

“Our ability to adapt and change has been the key to our success, and we must continue to evolve for continued growth.

“We believe this long-term approach to business is not aligned with the short term thinking of equity markets and consequently the next stage of DP World’s development will take place as a private company.

“Looking ahead, our focus is on the safety of our employees, integration of our recent acquisitions to drive synergies, containing costs to protect profitability and managing growth capex to preserve cashflow.”

“Overall, we are encouraged that our business has performed better than expected given the Covid-19 pandemic and, while the outlook is still uncertain, we remain positive on the medium to long-term fundamentals of the industry.”

The international port operator’s profits were down 56 per cent for the first half of the year, with earnings sliding to $333 million as coronavirus lockdowns and a global recession impact trade around the world.

The Dubai state-owned company’s $420 million dollar drop in profits for the period between January and June was due largely to a decline of nearly 4 per cent in container volume at DP World ports.

Already, full-year profits had fallen by more than 8 per cent to $1.2 billion last year amid trade wars and other disruptions.

Meanwhile, revenue for the first half of 2020 grew 18 per cent to $4.1 billion from $3.5 billion during the same period in 2019. The company said growth was supported by acquisitions.

DP World said that while the outlook for the rest of the year remains uncertain, trade is expected to recover when economies around the world re-open.

The company operates across 51 countries around the world ranging from Brisbane, Australia, in the East to Prince Rupert, Canada, in the West.

The company said volumes in Europe reflected the severity of government lockdowns there to try and contain the virus. Container volume globally is expected to drop by 8-10 per cent this year.


Acquires feeder

The international port operator acquired three units of Transworld Group for an undisclosed sum. The units acquired are Transworld Feeders, Avana Logistek (including its subsidiary Avana Global) and Transworld Feeders, the containerised Indian coastal and Exim feeder shipping operations of Shreyas Shipping and Logistics Limited, excluding vessels and bulk operations.

The acquisition, made via Unifeeder, through its Unifeeder ISC (Indian Subcontinent) platform, a majority owned subsidiary of DP World, is subject to regulatory approval, and will help DP World in providing better connectivity between Asia, the Subcontinent, the Middle East, and East Africa, a release said.

Transworld Feeders and Avana Global are some of the leading independent feeder and NVOCC (Non-Vessel Operating Common Carriers) operators, offering container feedering services and regional trade solutions connecting a wide range of ports in the Middle East, the Indian Subcontinent and Far East through their dense network.

The central hub port at Jebel Ali (UAE) plays a pivotal role for a large part of the services. Both the companies have a strong presence within trade routes west of the Indian Subcontinent and complement the recent acquisition of Feedertech and Perma Shipping, which have a strong market position in the trade routes towards the east of the Indian Subcontinent.

Transworld Feeders Pvt Ltd. and Avana Logistek Limited maintain a comprehensive coverage of all main ports, terminals and inland destinations in India.

Avana Logistek also provides first mile and last mile delivery solutions within the Indian domestic market. Both are market leaders in providing logistic solutions to cargo owners, traders, forwarders, and shipping lines. Further, they will both complement and expand our ability to offer a broader range of India focused solutions. These new entities will continue to operate an asset-light structure as per the Unifeeder model, which delivers greater flexibility and efficiency for customers.

Bin Sulayem said: “These new activities are in line with our strategy and complement our recent acquisitions of Feedertech and Perma Shipping. We now have the capability to offer superior connectivity between Asia, the Indian Subcontinent, the Middle East, and East Africa, and this greater scale and comprehensive network presence will allow us to reduce inefficiencies in the supply chains to the benefit of all our customers.

“Transworld Feeders and Avana are both strong and well-known brands that handle approximately 1.2 million TEU per annum and operate in fast-growing markets. Our Unifeeder ISC platform will continue to operate an asset-light, independent common-user platform, as we continue to build the Unifeeder brand,” he explained.  

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