DP World

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DP World

P.O. Box 17000
Dubai,
United Arab Emirates
Telephone: +971 04 8811110
Fax: +971 04 8811331
Web site: http://www.dpworld.com

State-Owned Company
Incorporated: 1972 as Dubai Ports Authority
Employees: 4,500
NAIC: 488320 Marine Cargo Handling; 488510 Freight
Transportation Arrangement; 493110 General Warehousing and Storage Facilities

In just a few years, DP World has lifted itself to the top ranks of the world's port terminal operators. The Dubai-based company, owned by the Dubai government, is the world's second largest operator of port terminals, handling more than 40 million TEUs (20-foot container equivalent units) at the beginning of 2006. DP World is also one of the fastest growing port operators. Acquisitions have enabled DP World, backed by the deep pockets of Dubai's government, to grow quickly in the mid-2000s. In 2005, the company acquired CSX World Terminals from U.S. railroad group CSX. At the end of that year, the company also agreed to pay nearly $6 billion to acquire the port terminal business of Britain's Peninsular & Oriental Steam Navigation Company. That controversial purchase doubled the group's total capacity and added nearly 100 port terminals operations around the world. DP World also has been expanding organically, launching greenfield terminal construction projects in Turkey, South Korea, and China. The company has targeted the expansion of its total capacity to more than 70 million TEUs by 2010. In addition to its two port terminal operations in Dubai, the company operates terminals in Australia, China, Hong Kong, Romania, Germany, the Dominican Republic, Venezuela, India, Djibouti, and Saudi Arabia. DP World itself was formed from the merger of Dubai Ports Authority and Dubai Ports International in September 2005. Mohammed Sharaf is the company's CEO.

PORT TERMINALS HUB IN THE PERSIAN GULF

While Dubai has existed for centuries, for most of this time the city was no more than a small village. By the beginning of the 20th century, however, the village had developed a position as one of the Persian Gulf's major trade ports. Traditionally, pearling had been the Dubai region's major industry. Yet the crisis in the pearling industry, which, starting in the 1930s, severely crippled the growing city, encouraged the ruling Al Maktoum family to seek to diversify its economy. The Al Maktoums were members of the Bani Yas tribe, which, for the most part, ruled the region that later became the United Arab Emirates.

Plans were made to improve Dubai's harbor in the early 1950s. In 1959, Dubai, then under British control, began dredging and deepening the creek that separated the city. Completed in 1960, the project permitted Dubai to accept large-scale vessels, establishing the city as the major port in the region. During this time, as well, the discovery and development of the vast oil reserves in the Persian Gulf region had transformed the area into a primary center for the world oil industry. Dubai, too, was able to join the ranks of the oil-rich elite, with the discovery of its own exploitable oil reserves. In the meantime, the city's population had more than doubled, as Dubai became the central hub of the booming Persian Gulf region trade market.

The growing demand for port and port terminal accommodations and services led then-Sheikh Rashid bin Saeed Al Maktoum, who had ruled the city since 1958, to begin developing plans for the construction of a new modern deepwater harbor and port facility. Construction on that project, which became known as Port Rashid, was launched in 1967. The initial plans for the project included four berths capable of accommodating the largest oceangoing vessels and oil tankers; however, with the discovery of Dubai's oil reserves, and the rapid expansion of the region as a whole, Al Maktoum took a risk and soon ordered the expansion of the harbor design to 16 berths.

The decision proved prescient: By the early 1970s, all of the ports in the Persian Gulf were overbooked, and, with a lack of deepwater facilities, many of the largest vessels were forced to wait at anchor in open sea for weeks and even months at a time. The opening of the Port Rashid facility immediately allowed Dubai to secure its position as the trading center for the region. By then, the United Kingdom had ceded control of the region and Dubai had joined in the creation of the United Arab Emirates, and the city's port and trade industries had become important economic motors.

The Port Rashid facility expanded strongly through the end of the decade, with the addition of 20 new berths starting in 1976. The facility also expanded its port services, adding more than 30,000 square meters of container storage space into the middle of the decade. While Port Rashid catered to larger vessels, the Dubai government constructed a second port for smaller dhows and wooden vessels, Port Hamriya. That project was completed in 1975.

By then, the Dubai authorities had begun the development of a still more ambitious port project, the Port Jebel Ali. This facility, to be constructed south of Port Rashid, marked a new phase in Dubai's emergence as a regional trade capital. Completed in 1979, Jebel Ali counted 67 berths and became the world's single largest manmade port. In support of the Jebel Ali port, and in response to the demand for extended facilities, the Dubai government put into place the Jebel Ali Free Trade Zone. That site opened in 1985. Although the free trade zone at first targeted the international trade market, it soon became a major regional manufacturing center as well, attracting companies from around the world. By the late 1990s, the free trade zone counted more than 1,500 companies from 80 countries. Operation of the zone was turned over to a new body, Jafza.

GLOBAL PORT TERMINALS PLAYER IN THE NEW CENTURY

The Rashid and Jebel Ali ports initially were operated as separate facilities. In 1991, in the midst of the Persian Gulf crisis, however, administration of the two ports was merged under a single entity, the Dubai Ports Authority (DPA). The new entity then became the region's leading port, boasting a throughput of more than one million TEUs (20-foot container equivalent units). The aftermath of the war with Iraq, and the subsequent trade embargo levied against that coauntry, helped raise Dubai's profile still higher in the region. By 1996, the DPA had boosted its throughput to more than two million TEUs, and by the end of the decade, the DPA had cracked the global top ten in throughput volume. In 2001, the DPA, Jafza, and the country's Customs office were merged together under a single administration, Ports, Customs & Free Zone Corporation.

COMPANY PERSPECTIVES

Vision: Our Vision is to be the Port of Choice for our customers in each of our locations. To excel in operations, sales and customer service to our clients and to enhance the position of the local communities and countries in which we operate as gateways for global trade.

Mission: Our Mission is to provide World Class port services and to be a global player in operating and managing ports. We will provide value-for-money, high quality services to our customers through motivated and innovative employees. Our people will be empowered to make optimum utilisation of modern facilities, technology and resources while ensuring a reasonable return on investment.

By the end of the 1990s, however, the Dubai government had recognized that, in the face of the country's dwindling oil reserves, it needed to diversify its economy away from its heavy reliance on the oil industry. The government began developing a new economic strategy. As part of that strategy, the international port and port terminals market became one of the government's target industries. In 1999, the government created a new corporation, Dubai Ports International (DPI), which then began investing in foreign port terminals.

DPI's first success came across the Persian Gulf. In 1999, the company joined the Jeddah Islamic Port project, forming a joint venture with a local partner to operate the South Container Terminal there. That terminal grew rapidly in the early 2000s, becoming the first in the kingdom to top throughput of one million TEUs.

DPI's next success came in Djibouti, where it began developing the Djibouti Port in 2000. The company next entered India, where it took over operation of the Vizag port in 2002. Then at the end of 2003, DPI added Romania to its growing list of international operations, when it was awarded an 18-year lease to operate the Port of Constantza, on the Black Sea. Back at home, meanwhile, DPA's operations also had expanded significantly, topping six million TEUs by the end of 2004. Elsewhere, the company's Jafza subsidiary had expanded its own international operations, with contracts to develop and operate free trade zones in Malaysia and Tangier.

DPI prepared to enter the global terminals big leagues. In December 2004, the company shot into the number six position when it paid $1.15 billion for CSX World Terminals, the port terminals business of CSX Corporation. That purchase gave the company control of terminals in Australia, Venezuela, the Dominican Republic, and, of importance, terminals in Hong Kong and in mainland China.

Into 2005, DPI continued to develop its network. In March of that year, for example, the company acquired a 30-year concession for the development and operation of a container terminal at Fujairah, in the United Arab Emirates. The company followed this contract with a new concession to operate and manage the Aden Container Terminal, as well as the Ma'alla Container Terminal in Yemen.

In September 2005, the Dubai government moved to merge its two port terminals operators into a single unit, called DP World. Former DPI Managing Director Mohammed Sharaf was named CEO of the new company, which also included the merged operations of the Jebel Ali Free Zone Authority and its global wing Jafza International. As part of the merger, DP World shed DPA's former regulatory and administrative functions, which were brought under a newly created entity, Dubai Ports and Jebel Ali Free Zone Authority.

DP World quickly returned to its international expansion. In November 2005, the company announced that it had agreed to pay $105 million to build a greenfield port in Yarimea, Turkey. Construction of the site was expected to begin in 2006, and to be completed by 2008. In that month, as well, the company agreed to spend some $500 million to build a new container terminal in Qindao, China, deepening its footprint in the fast-growing Chinese port market.

DP World soon found itself making headlines. At the end of November, the company won its bid to acquire the port terminal business of U.K.-based Peninsular & Oriental Steam Navigation Company. The deal, worth £3.3 billion ($5.7 billion), catapulted DP World into the global top three, adding P&O's vast port terminal operations, with some 100 sites, including six ports in the United States.

KEY DATES

1967:: The Dubai government begins constructing Port Rashid.
1972:: Port Rashid is completed.
1975:: Port Hamriya, for smaller vessels, is constructed.
1976:: Port Rashid is expanded to 35 berths.
1979:: The 67-berth Jebel Ali Port, the world's largest single-location port, opens.
1985:: The Jebel Ali Free Trade Zone is launched.
1991:: Port Rashid and Jebel Ali operations are merged into a single entity, Dubai Ports Authority (DPA).
1999:: Dubai Ports International (DPI) is created in order to enter the global ports market; the first foreign concession is acquired, in Jeddah, Saudi Arabia.
2000:: The company receives the Djibouti port concession.
2002:: The company enters the Indian port terminals market.
2003:: The company is awarded the concession for Constantza Port in Romania.
2004:: CSX World Terminals is acquired for $1.5 billion.
2005:: DPA and DPI merge to form DP World.
2006:: The company acquires P&O's port terminals operations but agrees to sell its U.S. ports operations.

By early 2006, DP World found itself embroiled in a political controversy concerning the wisdom of turning over operation of a number of U.S. ports to foreign ownership, despite the fact the same ports had already been under foreign ownership. In the end, DP World was forced to agree to sell the U.S. ports, despite President George W. Bush's backing of the purchase. Even though DP World CEO Sharaf admitted to being shocked by the controversy, the sale of the U.S. operations was expected to have little effect on the company's overall health. By then, the company's total throughput had topped 40 million TEUs. As it moved forward, DP World announced that it was upgrading its strategic objectives, targeting 70 million TEUs by 2010.

PRINCIPAL SUBSIDIARIES

Jafza International.

PRINCIPAL COMPETITORS

Hutchison Ports International; PSA Corporation; APM Terminals; China Ocean Shipping Group Cos.; Kenya Ports Authority; Tanzania Harbours Authority; Cargill Inc.; SAGA.