by Lloyd's List

17 Oct 2024 (Lloyd's List) - THE Asia-Pacific region sits at the heart of DP World's global logistics expansion blueprint, chairman Sultan Ahmed bin Sulayem declared, as the Dubai-headquartered giant sets its sights on capitalising on accelerating shifts in trade flows and supply chains buffeted by economic and geopolitical realignments.

"We really see APAC as a big growth market, and we see tremendous need for new routes for cargo," Sulayem told Lloyd's List in an interview.

DP World, which started out in port operations, already has an extensive presence in the region, operating 10 ports and terminals across nine locations. In addition to major manufacturing and shipping hubs such as China and South Korea, its operations stretch across Vietnam, Thailand, Philippines, Malaysia, Indonesia and Australia.

But Sulayem's remarks also come amid DP World's swift expansion into broader logistics and accelerating realignments in global trade flows and supply chains driven by geopolitical developments.

The APAC region is projected to account for 40% of global revenue for contract logistics services by 2027, the chairman said.

A flurry of acquisitions and investments in recent years reflects the company's drive to develop freight forwarding capabilities and enable greater integration with industrial parks and inland logistics terminals, with China still seen as a key target destination despite the economic headwinds facing the country.

Sulayem cited last month's acquisition of Hong Kong-based Cargo Service Far East, which enables DP World to strengthen its ocean/air freight offerings and extend its reach into retail and fashion logistics.

"Our concentration now is how to move cargo from one place to another, so if we face an issue, then we may acquire a company to make it work," he said.

Another example was DP World's recent takeover of Singapore-based Legend Global Logistics to gain a foothold in chemicals.

By end-2024, DP World expects to operate over 200 freight forwarding offices globally, with 54 logistics offices in APAC alone.

Create new routes as supply chains shift

As more companies adopt a "China+1" strategy, shifting parts of their supply chain from China to other manufacturing countries, Sulayem said many of their investments are geared toward this trend.

"We are trying to create new routes for trade between China and its Southeast Asian neighbours."

Malaysia's Sapangar Bay Container Port, jointly managed by DP World with local partner Sabah Ports and where the two pledge to more than double the handling capacity, links directly to Thailand by rail. This makes it easier for exports from inland Chinese cities to reach Laos and Thailand, shipping cargo from the Andaman Sea and onward to the Arabian Sea, Sulayem said, "so it's a big saving for them."

Earlier this year, reports emerged of DP World in talks with the Thai government to participate in the country's THB1trn ($30bn) land bridge mega-project, which includes building deep seaports in Chumphon and Ranong, alongside land routes linking the Gulf of Thailand and Andaman Sea.

Sulayem declined to comment on specific projects in their acquisition and investment pipeline. "Everything we acquire, whether a logistics park, dry port or rail operation, relates to the routes we try to connect," he said instead.

He said DP World's investments in China will continue, but the focus is shifting from ports to logistics. "China doesn't lack ports today, but logistics is something we can add value to."

With the reconfiguration making supply chains increasingly complex and fragmented, Sulayem sees enhancing global transportation efficiency as his biggest accomplishment as chairman. This reduces costs and emissions, both much needed today, he said.

Achieving this requires not just connecting more trade lanes, but harnessing technology to streamline and accelerate cargo and information flows, he added.

Sulayem said 60% of supply costs stem outside of the transportation processes, including government bureaucracy, customs delays and storage. "For example, it takes 10 hours to fly freight from Frankfurt to Chicago but 48 hours to release it on arrival. How can we make this easier?"

"So my achievement is really how I can positively impact transportation and supply chains," he said.