Expanded Unifeeder links markets in evolving global economy
Restructuring of global trade has been accelerated by Donald Trump’s latest US tariffs, but in truth the spread of supply chains had begun even before the first wave of tariffs were introduced in 2018-19.
One company that was considering how supply chains were in flux was DP World, which began its discussions on what its customers needed as long ago as 2014.
Ganesh Raj, global CEO of DP World marine, which includes carrier Unifeeder told Seatrade Maritime News: “A question was being raised all the way back from 2014 when we were asking ourselves can we continue doing what we're doing and still remain relevant with our customers? Especially with what was happening with the consolidation of shipping lines and the formation of the consortiums.”
The answer to these questions was an emphatic requirement to evolve, to change the company’s perspective.
“We started to look at different aspects of our business and say what is it that we need to do to in order to better integrate ourselves, make sure our customer base is expanded and our relevance in the overall supply chain [is maintained].”
The answer according to Raj was to buy a small European feeder operator, headquartered in Denmark, expand its operational profile and use the carrier to provide the links between its fixed assets, which along with rail connections offered a more comprehensive logistics operation than that of traditional port operator.
European operations were defined by their focus on business outside of the ports, said Raj, DP World’s trimodal operations were focused along the Rhine.
“We had direct engagements with the end customer [on the Rhine], so we were quite keen to expand that, and that's where the journey started and Unifeeder was one of those first elements of being able to go beyond port boundaries,” explained Raj.
The acquisition of Unifeeder was closed in 2019 and the company has expanded fast to operating over 120 vessels, many of which are on charter, and its operational scope has also expanded rapidly to take in China, Asia including southeast Asia, the Subcontinent, and Africa.
“I still remember having this conversation with our chairman and trying to convince him that this is the right way to go,” Raj said, “asking question as to why Dubai Airport is more successful than airports in in Abu Dhabi and we said that the reason is because it's got a higher level of network connectivity to its surrounding destinations.”
Unifeeder was effectively an asset light company that allowed DP World to de-risk existing businesses, making it a good fit with the Dubai company’s overall plan to evolve its geographical presence from Europe and Mediterranean to the rest of the world, explained Raj.
When the company moved Unifeeder into Asian and African markets it also acquired Singapore-based feeder line Feedertech and about two years later the feeder and logistics company Transworld. This allowed DPW to adapt its services to meet the requirements of the different markets it was operating in.
“In the Middle East and Asia there tends to be a mix of SoC and CoC (shipper-owned and carrier-owned containers) cargo. In the SoC sector you have Non-Vessel Operating Common Carriers (NVOCCs) and third party NVOCC operators as well as Main Line Operators (MLOs). Whereas if you look at European and Mediterranean services, that tends to be largely focused on providing feeder services to mainline operators with some element of short sea shipping,” explained Raj.
Linking consumer centres with manufacturing regions has become more complex with tariffs initially seeing China outsourcing production, to southeast Asia, India and Mexico boosting Unifeeder’s opportunities to expand further.
“China will continue to remain a manufacturing powerhouse, I don't think there is another country out there which is capable of producing as much as China,” said Raj who added, “but the fact of the matter remains that there is significant opportunity of being able to develop corridors, from Vietnam or from India, into different destinations.”
Raj points to the growth of cargo from India to Africa which has increased substantially as near-shoring gathered pace, “It is something which is of great interest to us and we are quite closely focused on that cargo.”
India has seen consistent growth of 5%-6% annually according to Raj and Unifeeder has benefitted from the Subcontinent’s increased trade both from the Far East and Middle East.
Africa is also evolving fast and DPW has benefited from entering the market some time ago, bit its focus up to now has been on links from the Middle East to East Africa.
“We are committed to Africa,” said Raj, “We primarily serviced the citrus market in Maputo, but now, this has slowly grown into South Africa as well as Dar es Salaam, Mozambique and other areas as well.”
Services began with 10-day frequencies and have developed into weekly products in collaboration with Cosco and ONE out of East Africa.
East African markets have focused on fruit and reefer cargo said Raj, but the under-developed port industry on Africa’s western coast will target mineral exports.
“We so far don't have a presence in West Africa, but that's something that we look forward to correcting in the near future,” Raj said.
It is a question of having the right product in place, according to Raj, with Nigeria a one of a number of possibilities for Unifeeder to extend its services, but the vessel operator will be able to extend its west African links as further port developments get under way.
DP World has already committed to developing port facilities in two west African states, the Democratic Republic of Congo (DRC) and Senegal.
“There's quite a bit of pharmaceutical growth that we bring in from Europe into Africa,” Raj revealed, to add to the mineral shipments out of the African interior.
Last month DP World announced it had awarded the contract to develop Banana Port in the DRC to construction company Mota-Engil.
In the first phase of development will feature a 600 metre quay and a handling capacity of 450,000 teu with 30 hectares of storage area. Phase two will extend the quay wall by over 2km.
Further north in Senegal, DPW has begun its $1.2bn development of the Port of Ndayane, some 30 km south of the capital, Dakar.
Construction work started last December the dredger Willem Van Rubroeck, operated by Jan De Nul, began dredging the 5 km access channel.
Phase one includes an 840 m quay and will have an annual capacity of 1.2m teu, phase two will see another 410 m quay added.
Investment on the African continent will be mutually beneficial for the Dubai operator and the local population, according to DPW, but the company is also viewing an expansion into US markets, should the right opportunities arise.
“DP World has got a fairly large presence in the US, not necessarily in the ports and terminals business, but in terms of logistics and supply chains, we have a fairly significant presence in the US so if the right opportunity presents itself and it fitted our objectives, we would certainly look at investments in the US,” said Raj.
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