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Outlook challenging, says DP World

DP World said on Thursday the outlook for the global container industry is a cause for concern as the timing of a trade recovery from the economic crisis caused by the new coronavirus pandemic remains uncertain.
In a statement, the global ports operator, which is returning to full state ownership, said its gross container volumes decreased by 1.7 per cent year-on-year on a reported basis and up 0.3 per cent on a like-for-like basis.
The Dubai government owned company said it handled 17.2 million twenty-foot equivalent units, TEU, across its global portfolio of container terminals in the first quarter of 2020.
"Reported volumes declined in Asia Pacific and India Region due to the expiry of concession in Surabaya, Indonesia, and disposal in Tianjin, China," the company said.
Jebel Ali Port handled 3.4 million TEU in the first quarter 2020, down 3.4 per cent year-on-year, due to loss of lower-margin cargo. Like-for-like growth in Asia, Middle East and Africa was offset by weakness in India, Europe and Australia, it explained.
DP World terminals handled 10.3 million TEU at a consolidated level during the first quarter of 2020, increasing 12.9 per cent on a reported basis and up 0.9 per cent 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 in the Dominican Republic, acquisition of container terminals in Chile and commencement of operations in Posorja, Ecuador.
Group chairman and chief executive officer, Sultan Ahmed bin Sulayem, said that despite DP World delivering a "resilient performance" in the first quarter, with like-for-like throughput broadly flat year-on-year, the real impacts of current global developments will be seen from the second quarter onwards.
He said the company is now focused on protecting profits and preserving cash flow by limiting costs and managing capital expenditure.
"Global trade and container volumes are forecast to decline in 2020 and the wide range of estimates by industry specialists - like Drewry at minus 3.0 per cent and Sea-Intel at minus 10 per cent - further emphasises the short-term uncertainty faced by our sector. Similarly, the timing of any recovery is uncertain with trade expected to pick-up as and when global economic activity normalises," he said.
"Given the more challenging environment, our near-term focus is on integrating our recent acquisitions to drive synergies, containing costs to protect profitability, managing growth capex to preserve cashflow and maintaining our investment grade rating.
"On a more positive note, DP World's investment in digital technology and automation has allowed us to minimise the disruption faced at our ports and we remain operational. Importantly, we continue to work with our customers and various governments to ensure supply chains remain open for the movement of essential and critical cargo across the world," he said.
Sulayem said overall, the outlook is a cause for concern, but DP World remains positive on the 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."
The Dubai state-controlled company just last month said it was seeing demand bounce back as Chinese factories restarted, though the global spread of the virus has since drastically worsened, forcing many industries to a near halt.
issacjohn@khaleejtimes.com