Drewry Sees DP World’s Traffic Jarred by Politics, Rival Port

DP World Jebel Ali
DP World Jebel Ali. Photo courtesy DP World

By Verity Ratcliffe (Bloomberg) –U.S. sanctions against Iran and competition from Abu Dhabi are reducing traffic at DP World Plc’s home ports in Dubai, according to industry consultant Drewry.

Traffic Woes

Restrictions on cargo shipments to Qatar due to an embargo by the United Arab Emirates and some other Arab nations have also hurt container traffic in Dubai. However, the recent surge in tensions over shipping incidents in the Persian Gulf region have had little if any impact on DP World’s second-quarter throughput, said Neil Davidson, senior analyst for ports and terminals at London-based Drewry.

DP World, which operates ports from Vancouver to Hong Kong, released data on Tuesday showing that it handled smaller cargo volumes in Dubai for the fifth consecutive quarter. The company runs cargo terminals at Jebel Ali and Port Rashid in Dubai in the U.A.E.

Davidson also said:

  • U.S. President Donald Trump’s tightening of sanctions on Iran in November was a “significant factor” behind the company’s declining cargo volumes in Dubai
  • Tough competition from Khalifa Port in the neighboring emirate of Abu Dhabi also had an impact, particularly due to Khalifa Port’s joint venture agreements with Hong Kong-based Cosco Shipping Ports and MSC Mediterranean Shipping Co.
  • Jebel Ali will remain the Gulf region’s biggest port, even if expansion of Khalifa Port erodes Jebel Ali’s market share
  • Khalifa Port will be able to handle more cargo this year. Abu Dhabi Ports Chief Executive Officer Mohamed Al Shamsi said in December that Khalifa Port’s capacity will double in 2019.

DP World Chairman and Chief Executive Officer Sultan Ahmed Bin Sulayem said that U.A.E. ports handled less cargo in the second quarter because of “a loss of lower-margin cargo and challenging market conditions,” without elaborating. A company media official had no immediate response when Bloomberg asked on Wednesday for details.

© 2019 Bloomberg L.P.