DP World reports drop in shipping container volumes due to 'market caution'
Strong 2017 and softer volumes in the UAE contributed to overall Q3 decline
Dubai government-owned DP World, the world’s fourth largest port operator, reported a decrease in shipping container volumes in the third quarter of 2018, due to a challenging macro-environment, loss of lower margin cargo and softer volumes in the UAE.
The company handled 18 million twenty-foot equivalent units (TEU) – the measurement for container volumes – across its global portfolio in the three months to September 30, a 0.5 per cent like-for-like decline from a year earlier, it said in a statement to Nasdaq, where its shares are listed.
Like-for-like volumes do not include new capacity additions from DP World’s interests at the ports of Berbera, Limassol, Paita, Doraleh and Saigon.
Dubai container volumes declined 6.7 per cent year-on-year in the third quarter, to 3.6 million TEU. That contributed to an overall 1.4 per cent drop in volumes for the Europe, Middle East and Africa region, to 7.3 million TEU.
“As highlighted in our first half announcement, we have seen our volume growth decelerate due to the strong prior year performance and general caution in the market given the current uncertainty in global trade,” said Sultan bin Sulayem, group chairman and chief executive of DP World.
“In the UAE, the volume weakness is mainly due to loss of low-margin throughput, where our focus remains on profitable cargo and, while the near-term volume outlook in Jebel Ali remains challenging, we have taken measures to maintain profitability,” he said.
DP World operates Jebel Ali, a major transhipment port and the largest port in the UAE, and the Mina Rashid port.
Asia Pacific and the Indian subcontinent was the best performing region in the third quarter, with like-for-like volumes rising 0.6 per cent year-on-year to 8.4 million TEU. Growth in Europe also remained robust with strong growth in the London Gateway and Rotterdam ports in the UK and Netherlands, the company said.
“On our wider portfolio, we have made good progress in strengthening our product offering to play a greater role in the global supply chain as a trade enabler,” Mr bin Sulayem said. “We continue to focus on delivering operational excellence, managing costs and disciplined investment.”
Despite softer volumes, DP World is on track to meet market expectations for 2018, he added. On a nine-month basis, the company handled 53.6 million units with shipping container volumes growing by 2.6 per cent year-on-year on a reported basis and 3.7 per cent on a like-for-like basis, the statement said.
DP World is the largest shareholder in Virgin Hyperloop One, a US company that is developing the futuristic transportation concept first envisaged by Elon Musk. This week, Sir Richard Branson resigned as chairman of Virgin Hyperloop One, citing the company’s need for a more “hands-on chair” as the reason for his decision.
“At this stage in the company’s evolution, I feel it needs a more hands-on chair, who can focus on the business and [its] opportunities,” he said on Monday night. “It will be difficult for me to fulfil that commitment as I already devote significant time to my philanthropic ventures and the many businesses within the Virgin Group.”
Updated: October 23, 2018 02:55 PM