Monday, July 27, 2020

TEU Numbers Fall But Nowhere Near Other Transport Sectors as Ocean Freight Supply Chain Holds Up

At a Time of Crisis Reduced Container Handling Turnover Simply Doesn't Look So Bad
Shipping News Feature

DUBAI – In normal times the news that one of the world's major container handling and 'logistics enabling' groups had seen its freight trade fall off by over five percent in the first half of a year would be greeted with glum looks and talks of a recession. These however are very far from normal times and DP World's latest published figures do not seem so bad, especially compared to other transport sectors.

Even as the world went into a tailspin spiralling into chaos, the ports and container terminals continued to ensure the essential foodstuffs and medical supplies got through. So on a day when carrier Ryan Air revealed passenger numbers fell from some 42 million to 500,000 in the period April to June compared to 2019, turning a €243 million profit to a €185 million loss, DP World saw only a 5.3% year-on-year decrease in gross container volumes on a reported basis.

At a consolidated level, DP World’s terminals handled 20 million TEU during the first half of 2020, increasing 2.4% on a reported basis and down 5.4% year-on-year on a like-for-like basis. Reported consolidated volume in the Americas and Australia region was boosted by the consolidation of Australia, Caucedo (Dominican Republic) and the acquisition of container terminals in Chile and commencement of operations in Posorja (Ecuador).

Home base Jebel Ali (UAE) handled 6.7 million TEU in the first six months of 2020, down 6.8% year-on-year, due to Covid-19 and loss of lower-margin cargo. Group Chairman and Chief Executive Officer Sultan Ahmed Bin Sulayem was clearly satisfied at how his company was coming through the global crisis and commented:

"Like most industries, the maritime and logistics sector is going through an unprecedented and challenging period due to the Covid-19 outbreak. As a result, our portfolio has seen volumes weaken by -7.9% in 2Q 2020 and -3.9% in 1H 2020. However, this compares favourably against an estimated industry decline of -15% in 2Q 2020 and -10% in 1H 2020. This outperformance once again demonstrates that we are in the right locations and a focus on origin and destination cargo will continue to deliver the right balance between growth and resilience.

”Also, we are very proud to state that during this difficult period, DP World's ports across the world remained operational and we aim to continue to provide this access to our clients to ensure essential and critical cargo keeps moving. Our early investment in digital technology and automation ensured we faced minimal disruption at our locations.

”Looking ahead, our near-term focus is on the safety of our employees, providing solutions to cargo owners that are facing supply chain issues due to the pandemic, integrating our recent acquisitions to drive synergies, containing costs to protect profitability and managing growth Capex to preserve cash flow.

”Overall, we are encouraged that our business has performed better than expected and, while the outlook is still uncertain, we remain positive on the medium to long-term fundamentals of the industry. Furthermore, our strategy of providing integrated supply chain solutions to beneficial cargo owners leaves us well placed to benefit early from any sustained recovery in the global economy."

Photo: Last month DP World launched the first autonomous security surveillance boat in the Middle East to upgrade security and surveillance at Jebel Ali Port, Mina Rashid, Mina Al Hamriya and other facilities in the UAE.