DP World’s Nhava Sheva port in Navi Mumbai, India. The group’s terminals handled 7.2m TEUs in the first quarter. Adeel Halim / Bloomberg
DP World’s Nhava Sheva port in Navi Mumbai, India. The group’s terminals handled 7.2m TEUs in the first quarter. Adeel Halim / Bloomberg
DP World’s Nhava Sheva port in Navi Mumbai, India. The group’s terminals handled 7.2m TEUs in the first quarter. Adeel Halim / Bloomberg
DP World’s Nhava Sheva port in Navi Mumbai, India. The group’s terminals handled 7.2m TEUs in the first quarter. Adeel Halim / Bloomberg

The National

DP World shifts more units but activity slows at Jebel Ali port

In the UAE, volumes dropped by 5.9 per cent to 3.6 million TEU in the first quarter because of loss of lower-margin cargo.

Dania Saadi

April 28, 2016

  • English
  • Arabic

DP World global container volumes rose in the first quarter even as activity slowed at Jebel Ali as the ports operator focused on higher-margin business.

The Dubai company handled 15.5 million twenty foot equivalent units (TEU) in the first quarter, with gross container volumes growing by 2.4 per cent on a like-for-like basis, thanks to growth in Europe and India.

DP World’s terminals handled 7.2 million TEUs on a consolidated basis, a 0.4 per cent increase on a like-for-like basis, the port operator said in a statement posted on Nasdaq Dubai.

Consolidated throughput refers to volumes at ports that the company controls. In the first quarter of last year, gross container volumes grew by 4.4 per cent.

“Overall, we remain well positioned to grow volumes ahead of the market, while we con­tinue to focus on driving pro­fitability by targeting higher margin cargo, improving efficiencies and managing costs,” said Sultan bin Sulayem, the chairman. “Our encouraging start to the year gives us confidence in meeting full-year market expectations.”

In the UAE, volumes dropped by 5.9 per cent to 3.6 million TEU in the first quarter because of loss of lower-margin cargo, while conditions in ­Latin American remained “challenging”, he said.

Additional capacity in the Netherlands, India and Turkey will help to boost throughput in the second half of this year, while the upcoming expansion of Jebel Ali and London Gateway terminals later this year offer opportunity for volume growth, he said.

The port operator plans to spend between US$1.2 billion and $1.4bn this year to expand its terminals in Jebel Ali in ­Dubai, the Economic Zones World free zone in Jebel Ali, London Gateway in the UK and Prince Rupert in British Columbia, Canada.

DP World expects to have about 86 million units of gross global capacity by the end of this year, up from 79.6 million units at the end of last year.

DP World’s net profit rose by 30.7 per cent last year, beating analyst expectations, thanks to the port operator’s acquisition of a free zone in Dubai in 2014 and growth in throughput.

dalsaadi@thenational.ae

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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