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Port Operator DP World Sees Lasting Supply Chain Disruptions: ‘Maybe in 2023’

Bloomberg
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October 1, 2021

By Adveith Nair and Manus Cranny (Bloomberg) —

Dubai’s DP World, one of the biggest global port operators, expects supply chain bottlenecks that have rattled global trade flows to continue at least for another two years.

“The global supply chain was in crisis in the beginning of the pandemic,” Chairman and CEO Sultan Ahmed Bin Sulayem told Bloomberg TV in an interview at Dubai Expo 2020 on Friday. “Maybe in 2023 we’ll see an easing.”

The effects of shortages and the accumulated delays is reflected in the skyrocketing costs of shipping goods, he said. “Freight rates will continue to increase and the shipping lines are having an amazing time.”

Global supply chains are struggling to keep pace with demand and overcome labor disruptions caused by Covid outbreaks. The world’s largest shipping line, A.P. Moller-Maersk, has also warned bottlenecks may last longer than expected, and some companies have pledged to cap spot rates

DP World is one of the world’s largest operators of marine ports and inland cargo terminals, stretching from gateways in London and Antwerp to hubs in Africa, Russia, India and the Americas. It recently announced a string of deals as it attempts to become a more diversified, integrated logistics company.

Meanwhile, it continues to look for ways to cut debt. DP World is considering offering international investors a chance to buy into the Jebel Ali Free Zone, a prized asset that helped transform Dubai into a hub of global trade, people familiar with the matter have said.

The company is also reviewing costs related to office space after effectively navigating disruptions caused by the pandemic, and Bin Sulayem said DP World has canceled plans to build new headquarters and rent out a bigger office. 

“We are re-engineering the way we operate. Do we need all these offices around the world?,” he said

The CEO also said:

  • “Even now, every time they see an incident of Covid in China, they shut down a port. Many manufacturers around the world are delayed by as much as three years because they can’t get components from China. They’re taking a very, very aggressive approach.”
  • “Belt and Roads was built on everything leaving China smoothly in these six belts — three by rail, three by sea. But today, with the obstacle of Covid coming into the equation, I wonder if they’ll have to review it.”
  • “There’s huge potential in India and that reflects in DP World’s investments. Africa continues to grow, and there’s also Southeast Asia, mainly Indonesia.”

Bin Sulayem was speaking at the Dubai Expo, which runs for six months till the end of March. The event was originally set to start last year, but was pushed back due to coronavirus. Organizers have stuck to a target of 25 million visits — both virtually and in person — and hope Expo will lay the platform for a recovery after the pandemic devastated the key tourism sector last year.

© 2021 Bloomberg L.P.

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