Abu Dhabi, UAEThursday 1 October 2020

DP World expands footprint in India with acquisitions of feeder and trade operators

The company acquired Transworld Feeders, Avana Logistek and Transworld Feeders

DP World handled 16.7 million TEU (twenty-foot equivalent units) across its global portfolio of container terminals in the second quarter of 2020. Bloomberg.
DP World handled 16.7 million TEU (twenty-foot equivalent units) across its global portfolio of container terminals in the second quarter of 2020. Bloomberg.

Global ports operator DP World expanded its logistics footprint in India by acquiring feeder and trade operators to serve fast-growing markets, as it posted a drop in its first-half profit amid the Covid-19 pandemic.

Unifeeder — through its Unifeeder Indian subcontinent (ISC) arm that is majority-owned by DP World — acquired Transworld Feeders and Avana Logistek, DP World said in a statement on Wednesday. It also acquired Transworld Feeders, the containerised Indian coastal and EXIM feeder shipping operations of Shreyas Shipping and Logistics, excluding vessels and bulk operations.

The transaction is subject to regulatory approvals, it said, without disclosing the value of the deals.

The acquisitions "give us complete coverage in fast-growing markets between East Africa, the Gulf and the wider Indian subcontinent," Sultan bin Sulayem, chairman of DP World, said. "We now have the capability to offer superior connectivity between Asia, the Indian subcontinent, the Middle East, and East Africa, and this greater scale and comprehensive network presence will allow us to reduce inefficiencies in the supply chains."

The Dubai-based company has been growing its logistics operations through a series of recent acquisitions, as part of its strategy to become an end-to-end supply chain solutions provider. Last month, it agreed to buy a 60 per cent share in South Korea's Unico Logistics.

DP World's first half profit declined as its shipping container volumes fell during the pandemic that has hit global trade.

Profit attributable to shareholders in the first six months of the year fell to $313 million (Dh1.1 billion), a drop of 58.5 per cent on a reported basis or a 34.5 per cent decrease excluding a land sale to Emaar Properties in 2019, DP World said in a separate filing to the Dubai Financial Market on Wednesday. Revenue during the period rose 17.7 per cent to $4.07bn from the same period a year ago, driven by acquisitions.

"Overall, we are encouraged that our business has performed better than expected given the Covid-19 pandemic,” Mr Bin Sulayem said. “The Covid-19 outbreak has undoubtedly resulted in one of the most challenging periods in the history of our industry.”

The company's guidance for capital expenditure in 2020 is about $1bn with investments planned in the UAE, London Gateway, Berbera in Somaliland, Sokhna in Egypt and Caucedo in the Dominican Republic. It invested $552m across the existing portfolio during the first half of 2020.

Cash from operating activities stood at $1.1bn in the first half, compared to $1.04bn in the prior-year period.

The coronavirus outbreak, which has prompted governments worldwide to close borders and shutter factories, has disrupted the global supply chains, air travel and international trade.

Mr Bin Sulayem cautioned that the outlook remains uncertain amid the coronavirus crisis but he is bullish about the industry going forward.

"We remain positive on the medium to long-term fundamentals of the industry," he said.

Looking ahead, the company is focused on containing costs to protect profitability, managing expenditure to preserve cashflow and integrating its recent acquisitions to drive synergies, he said.

DP World's new transaction will complement its acquisitions of Singapore-based marine logistics firm Feedertech and Perma Shipping, which will expand the company’s feedering and short-sea networks.

The Avana Logistek acquisition includes its subsidiary, Avana Global. Transworld Feeders and Avana Global are leading independent feeder and operators of non-vessel operating common carriers (NVOCC), offering container feedering services and regional trade services. Their network spans a wide range of ports in the Middle East, the Indian subcontinent and the Far East. The UAE's hub port at Jebel Ali is central to most of their services. Both companies have a strong presence in trade routes west of the Indian subcontinent. They complement the acquisition of Feedertech and Perma Shipping, which operate in trade routes east of the Indian subcontinent.

Transworld Feeders and Avana Logistek have a comprehensive coverage of all main ports, terminals and inland destinations in India. Avana Logistek also provides first mile and last mile delivery solutions within the Indian domestic market. Both companies provide logistics services to cargo owners, traders, forwarders and shipping lines.

Transworld Feeders and Avana handle approximately 1.2 million twenty foot equivalent units (TEU) per year, DP World said.

The new entities will continue to operate an "asset-light structure" in line with the Unifeeder model, it said.

"These acquisitions further strengthen our logistics solution-based capabilities, as we can combine our significant network of ports and market-leading inland logistics offering to deliver compelling supply chain solutions to all our customers," Mr Bin Sulayem said.

The Unifeeder Group, which is fully owned by DP World, is an integrated logistics company with the largest feeder network in the world. It offers feedering and regional trade connectivity in Northern Europe, the Mediterranean, the Northern Africa, the Middle East, the Indian subcontinent and Asia.

Ramesh S Ramakrishnan, chairman of Transworld Group and Shreyas Shipping and Logistics, said the "acquisition of three of our portfolio companies will provide DP World and Unifeeder ISC a robust platform to jointly deliver a more complete range of solutions to our customers".

Updated: August 19, 2020 01:58 PM

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