Several years ago, I remembered reading an article about how great companies think and the various definitions of corporate success, and while many economists and capitalists would agree that the bottom line is the only critical benchmark, I, along with many others, would argue that the true extent of great companies reaches beyond profit and into their net positive effect on the societies in which they operate. It is the very nature of how they impact employees, partners, consumers and, to a greater extent, the cities and nations in which they grow. Today in the UAE, we are fortunate to have a significant trade and logistics sector; however, without DP World, I believe our business landscape and international significance would be very different.
Long before the UAE formed as a nation just over fifty years ago, its status as a trade hub connecting the Far East to Europe dated back over 4,000 years, with some 12,000 artefacts found buried approximately 60 kilometres from where Dubai has since flourished. From the recently discovered metallurgical neighbourhood of Saruq Al Hadid, which peaked during the Iron Age, to the emirate’s more widely known status for pearls, trade has always been more than just a business focused on revenue but a way of life that has driven the formation of cultural and creative ideas.
Several decades before the unification of the Emirates, Dubai Creek and Khan Creek in neighbouring Sharjah were amongst the primary trade destinations in the region, with merchant ships anchoring offshore awaiting barges to discharge their cargos at customs. However, due to silting, the creek needed to be dredged in 1959 and again in the 1970s, and while the import of a mechanical, dockside crane from Scotland was meant to improve efficiency, it was only able to make a slight improvement due to the volume of goods arriving. With most cargo unloaded on the sand, some shipments were pulled either by labourers, donkeys, or trucks, if lucky, to their respective godown, or lockups, before being ready for collection or distribution.
As a state in its nascency, in addition to the effects of the global recession of 1973- 1975, the gamble to invest in Port Rashid in 1972, before expanding to Jebel Ali in 1976, thereafter completing its first phase of development by 1979, was indisputably one of risk, but one based in the firm belief that the UAE had more to offer than its historically traditional commodities.
By the 1980's Port Rashid had developed into a major port, with almost 70% of its containers never entering Dubai but instead being marked for re-export. Meanwhile, Jebel Ali was struggling - not only due to its perceived distance from Dubai but also due to its management contract, which had gone to U.S-based Sealand Shipping, making other shippers reluctant to use them.
As stated in Jon Cuthbert’s, ‘The 40-year history of UAE logistics’, “By 1990, Dubai Government faced a dilemma. They owned two ports – Jebel Ali Port and Port Rashid. Each was managed by different contractors who acted as rivals, competing with each other for the same business. Port Rashid was full to overflowing and demanding substantial government investment in new berths, dredging and equipment. Jebel Ali Port had minimal throughput and extensive under-utilised facilities. Dubai Government’s response was to terminate both management contracts and absorb the management and staff in both ports into a new government owned (but commercially independent) company called Dubai Ports Authority. Shipping lines resistance was overcome by offering inducements to relocate to Jebel Ali Port and consignees’ perception changed by using Jebel Ali Port’s trucking fleet to move containers between the two ports at no cost to the consignees. The net result was that throughputs started to grow at both ports. By the late 1990s, it became apparent that Jebel Ali Port did not have sufficient space to handle future cargo projections or accommodate Port Rashid’s throughput should the strategic decision be made to close Port Rashid. Port Rashid’s location in the centre of Dubai had always been a significant advantage in its early days but increasing heavy road traffic generated by Port Rashid’s operations and Dubai’s expansion meant Port Rashid’s traffic now presented both an environmental hazard and a road safety hazard to commuters. Eventually it was the substantial extensions to Jebel Ali Port which began in the early 2000s, which enabled Port Rashid to close operations in 2008.”
In its contemporary form, DP World was established through the merger of Dubai Ports Authority and Dubai Ports International in 2005 and has since emerged as one of the world’s largest port operators, handling more than 70,000 vessels across 82 marine and inland terminals present in over 40 countries. As a result, its development led to it being responsible for approximately 10% of the world’s container traffic.
Outside of the apparent benefits of increased trade, DP World achieved two significant milestones that are often overlooked. Firstly, by establishing the UAE brand as a collaborative partner and strategic investor, it promoted greater awareness of Dubai’s position as a destination for trade, tourism, and commerce. Secondly, DP World’s success can broadly be cited as a driver for the development of Abu Dhabi's rapidly emerging ports and logistics industry.
Having started its foreign direct investment strategy just six years before its complete formation, DPI had already collaborated on Jeddah's South Container Terminal before developing port operations in Djibouti, Vizag, and Constanta. These were only the preliminary steps for what would become DP World's most significant and strategic investment period.
After outbidding Hutchison Whampoa Ltd and PSA, amongst others, DPI acquired the global port assets of U.S-based CSX Corp in a $1.15 billion deal that included critical existing port operations in Hong Kong, China, Australia and Germany. It also included the Dominican Republic’s Punta Caucedo, a port that handles more than 60% of the country's market share and has since become one of the most important trade centres in the Americas region and among the top 15 ports in Latin America.
Just a year later, in 2006, DP World purchased P&O, the fourth largest port operator in the world, after outbidding Singapore’s PSA in a deal that included 29 ports in 19 countries, including Australia’s Sydney, Melbourne, Brisbane and Fremantle container terminals, the United Kingdom’s Southampton and Tilbury terminals, as well as numerous ports across North America, including Canada, where operations have now expanded to include Prince Rupert, Vancouver, Nanaimo and Fraser Surrey.
Other vital ports, acquired over time but only recently in total, include DP World Santos, which started with a minority shareholding in 2009 before being bought out in December 2017. Today, it is one of Brazil's largest and most modern multipurpose terminals, covering 848,500 square metres and strategically located next to the highway and railway network. Thanks to its technologically equipped quay, DP World Santos can handle up to four Super Post-Panamax vessels simultaneously, enabling an annual trade of more than 1.2 million TEUs.
Arguably, its greatest master stroke came in June 2007, when the company offered investors a 19.55% stake amounting to 3,245.3 million shares through an IPO in November 2007. Not only was it oversubscribed by 15 times, but its proceeds of $4.22 billion made it, at that time, the largest IPO in the Middle East.
With further significant investments taking place in the following years, most notably, London Gateway, the Port of Berbera, and the construction of a $1.13bn deep-water port at Ndayane, near the Senegalese capital of Dakar, it would be fair to say that in just under a couple of decades, DP World had well and truly earned its name, having reached almost every corner of the globe.
Never resting on its laurels and with a clear focus on enhancing value, safety and sustainability across its assets, DP World continues to leverage digitisation throughout its organisation while finding new ways to save time through the practical application of technology.
Thanks to projects such as DP World Cargospeed, which will enable the possibilities of “freight at the speed of flight and closer to the cost of trucking,” or BoxBay, which is currently being piloted at Jebel Ali and enables direct access to containers through a fully automated stacking system up to eleven stories high, DP World has understood where its strengths lie and how it can maximise value for its customers and partners.
Guided by its four principles to create growth, drive results, make others excel and adapt and evolve, DP World is indisputably the leader of a community of port operators and trade organisations that have successfully repositioned the UAE as a global trade hub while expanding its sphere of influence. Whether you see it as just a business or a nation-building vehicle that has played a significant role in the development of the UAE, DP World continues to function as a far-reaching emissary for the UAE and its ever-expanding role in global trade.
For me, it is a working example of the Greek proverb, "A society grows great when old men plant trees in whose shade they shall never sit."
Actually, a recollection that truly depicts the extraordinary path of this worldly important conglomerate and its leaders. Amused to say the least.