DP World, a global port operator, has been operating in Egypt since 2008. Senior vice president and managing director of DP World Middle East and Africa Suhail Al Banna told Daily News Egypt in an exclusive interview that the company maintains its flow of investments to Egypt out of its belief in the country’s potential.
Moreover, he noted that Sokhna port alone accounts for 25% of Egypt’s market share. He added that the Basin 2 container terminal is set to be completed in line with the market’s needs, with an additional 1,300m of quay and 1m twenty-foot equivalent units (TEUs) of capacity.
During the interview, Al Banna praised the government’s national projects, specifically the New Suez Canal, pointing out that reducing waiting time for ships to transit the channel allows shipping lines to deliver goods faster than ever.
What is the company’s vision for investment in Egypt in the current period?
We believe that the current environment is suitable for investing in Egypt. DP World Sokhna has been operating in the Egyptian market since 2008 and it is the oldest multinational company in Egypt, especially in the port industry. Despite the challenges Egypt is facing, there is an ambitious plan for expansion in Sokhna with an additional investment to be made in the development of Basin 2. Sokhna is one of 77 marine and inland terminals we operate across six continents and the third largest investment outside Dubai. Our vision is to lead the future of world trade and we strive to add value, think ahead, and build a legacy. Egypt is part of our global vision.
What are the main investment opportunities in the Egyptian market? What are the main challenges the company sees in the Egyptian market?
DP World Sokhna is strategically located just below the southern entrance to the Suez Canal on the Red Sea. Its proximity to Cairo with 18 million consumers compared to other ports in Egypt opens a lot of investment opportunities in the region. This includes dry ports and logistics centres in Cairo to facilitate the ease of doing business. Bonded warehouses are another area of opportunity for big, multinational, fast-moving consumer goods (FMCG) companies. Tourism represents a new area of investment for handling passenger vessels. By being close to Cairo, Sokhna is a suitable destination to handle such vessels. One of the challenges is the lack of a port community system (PCS) that integrates the electronic flow of trade related documents and functions. There is a need for such a centralised hub for the ports of Egypt and other stakeholders like shipping lines/agents, surveyors, stevedores, banks, container freight stations, customs house agents, importers, exporters, railways, and government regulatory agencies. With our expertise, logistics, and ports experience, we are happy to share our knowledge and offer solutions through the DP World Group, “Dubai Trade”—the premier trade facilitation entity that offers integrated electronic services from various trade and logistics service providers in Dubai through a single window.
Is the Egyptian market still attractive for investment, and why?
The Egyptian market is attractive and one of the most viable in the Middle East and North Africa. One of the main reasons supporting our decision to invest here is that the country is very promising and has a sizeable economy. We also have extensive experience through successful operations in Sokhna which reinforces our optimistic outlook for the future. Egypt enjoys a variety of knowledge industries, enabling many investment opportunities in various sectors. Low labour costs, a skilled workforce, substantial energy reserves, and a large domestic market are key drivers for such investment.
What are the company’s plans in the coming period for the Egyptian market?
We continuously explore new opportunities that add value to our customers and satisfy their current and future needs. Last year, we signed the Basin 3 liquid terminal agreement with Egypt’s Ministry of Transportation to increase the width of Basin 3 at Sokhna Port in order to accommodate gas-carrying vessels and develop a tank farm for the Egyptian General Petroleum Corporation (EGPC) and for the import of petroleum products. The LNG operation has already started. We also have plans for the Basin 2 container terminal to be completed in line with the market’s demand with an additional 1,300m of quay and 1m TEUs of capacity
What is your vision to modernise the Sokhna port?
To provide a modern, safe, and efficient port that stimulates economic development and facilitates the movement of goods into and out of Sokhna. We work continuously to develop multipurpose port and logistics facilities through our services. We hope to introduce our expertise in PCSs to modernise and support the ease of doing business. DP World has heavily invested in world class equipment and infrastructure over the years to complement our strategic position in the region, ensuring good customer service.
What is the capacity of Sokhna port? What were the volumes in 2015, what were the volumes in the first half of 2016, and what is expected towards the end of the year?
DP World Sokhna is a multi-purpose facility with container handling as the main activity. It has three berths and an annual capacity of 1.1m TEUs. It has a 25% market share in Egypt highlighting its importance in the economy. It also handles bulk and petrochemicals with a handling capacity of 10m tonnes. We do not announce volume details for our individual ports nor do we forecast throughput. The port is equipped to handle high volume cargo flows and can service the next generation container vessels as well as roll-on/roll-off vessels, bulk, and general cargo carriers. Sokhna is the deepest harbour in Egypt with a draft of 17 metres and a terminal area of 42 hectares.
How would you evaluate the impact of the New Suez Canal on maritime transport in the region (shipping lines)?
The Egyptian government has embarked on a range of major projects, such as the new Suez Canal, which will boost employment and trade. We see it as a positive development for the country. The expansion is important not only for Egypt, but also for the development of east-west trade. Reduced waiting time in the canal will allow shipping lines to deliver goods faster than before. Southbound transit, for example, will be reduced by six hours, which translates to savings of tens of thousands of US dollars per call. Meanwhile, authorities expect the number of vessels going through the canal to almost double by 2023. This positive impact on trade will encourage port infrastructure development in the Middle East and East Africa to meet growing demand.
Does the old Suez Canal require more depth or does it match the size of ships transiting it now?
Up to 2010, the old Suez Canal could accommodate ships with a draft of 66ft, handling around 17,000 container vessels a year, as well as taking all bulk vessels worldwide. The canal can now handle 99% of all forms of maritime transport.
Are there consultations between you and the Egyptian government to make use of your experience in port management?
The relationship between the United Arab Emirates (UAE) and Egypt is based on firm foundations created by the late Sheikh Zayed bin Sultan Al Nahyan and evolved to become one of the most important that the UAE shares with another country. Sultan Ahmed bin Sulayem, DP World Group chairperson and CEO, recently met with Egypt’s Prime Minister Sherif Ismail to explore future cooperation between Egypt and Dubai, in line with our efforts to boost our presence in the country and consolidate economic ties between our two nations. The petrochemical project, currently underway in Ain Sokhna, will provide commercial opportunities for a variety of businesses and investment activities and will help establish an integrated logistics zone for petrochemical products. Relations with the Egyptian government are very good and have been reinforced with the new deal with Egypt’s Suez Canal Authority (SCA) signed in November for further developing the Sokhna port.
What investment opportunities are you considering in the Suez Canal Area Development Project?
DP World Sokhna provides an ideal location for vessels making northbound trips from Asia, China, the Middle East, and the subcontinent, and on their return journeys from Europe. This will further strengthen its position as the gateway to Egypt on the Red Sea. We always explore opportunities but cannot comment on any specific one until we have something to announce. The Suez Canal Area Development Project is designed to develop the area into a logistics and industrial zone, which will help the country move forward. The project also entails major investment by the government that will prepare the canal for the increasing size of container vessels being sought by shipping lines to stay competitive and reduce operating costs.
You are managing 77 marine and inland terminals across the globe—what are your expansion plans in the coming period?
Whilst macroeconomic conditions and geopolitical issues across some locations remain uncertain, we believe our portfolio is well positioned to deliver volume growth ahead of the market in 2016. DP World’s capital expenditures for 2016 was $1.2-1.4bn. We aim to have over 100m TEUs of gross capacity by 2020.