DP World chairman: global supply chain disruption will take years to clear

Shipping costs will be high for the foreseeable future, Sultan bin Sulayem says in CNN interview

Sultan Ahmed bin Sulayem, chairman of DP World, says if the pandemic was to end right now, "it would still take another two years for the supply chain to adjust to be able to remove the backlog of cargo". Pawan Singh / The NationalShow less

Global supply chain disruptions triggered by the Covid-19 pandemic will continue to linger for years until the backlog of cargo is cleared, said Sultan Ahmed bin Sulayem, group chairman and chief executive of global ports operator DP World.

Even if the pandemic were to end today, "it will take another two years for the supply chain to adjust, to be able to remove the backlog cargo out over the ships into the customer's hand", Mr bin Sulayem said in an interview with CNN. "This year and next year, there is no way we can move the cargo that is stuck."

The Covid-19 pandemic highlighted significant challenges in the logistics sector, with many cargo owners struggling to find containers to move their goods to keep pace with demand and overcome labour disruptions. The acute supply chain bottle-necks worsened during the holiday season in December when the surge in demand was met by severe delivery delays.

The disruptions led to congestion and delays at ports, a shortage in shipping containers and a sharp rise in the cost of shipping goods.

Mr bin Sulayem also said that he believes shipping costs will stay high for the foreseeable future.

“I am optimistic that we are taking steps, us and the shipping lines, to ease the congestion. But I don't believe the cost of shipping is going to reduce. I think it will stay for a while," he said.

DP World has performed well by investing in the entire logistics chain, not just carrying cargo, but also owning ports around the world.

“We have been, I think, fortunate that we are farsighted in investing a lot in logistics. If you notice what we invested in the last six years, it is exactly what the shipping lines are today doing," the chairman said.

"They are acquiring logistic facilities, warehousing, and distribution companies, we did that already and that is what's helping us a lot to deal with cargo, to be able to move the cargo. Six years ago, we only the business we had inside the ports. Today, we are outside the port.”

Dubai-based DP World, one of the world's largest port operators, posted an 8.1 per cent increase in third-quarter gross container shipping volumes, beating the industry average of 6.4 per cent, with all the regions it operates in reporting growth.

The company handled 19.8 million 20-foot equivalent units, or TEUs, across its global portfolio of container terminals in the third quarter of 2021, up from 18.2 million TEUs in the same quarter a year ago.