Port of call

Serving as a vital commercial gateway between the planet’s most important trading zones, Jebel Ali port has helped cement Dubai’s credentials as a world-leading trade and re-export hub

Considering its long stretches of sheltered coastline, it is hardly surprising the UAE has maritime roots. For hundreds of years, the people of the Emirates have supplemented their pearl and date fortunes by plying international trade east, west and back again. Trade caravans stopped in Jumeirah as they transferred goods between Iraq and Oman; Iranian and Arab merchants stopped their dhows in the sheltered ports on their way to trade with the world. When Iran’s Lengeh port introduced steep taxes at the beginning of the 20th century, Dubai’s port was the main beneficiary.

‘We are essentially making Dubai the de facto centre of logistics in the region’

Salma Ali Saif bin Hareb, CEO of Economic Zones World

Mindful of Dubai’s history as an international shipping hub, Sheikh Rashid moved to tap the vein of seaborne trade. In 1972, the 15-berth deepwater harbour at the mouth of the Dubai Creek officially opened to welcome traders. In the late 1970s, the enormous 67-berth facility at Jebel Ali was opened to accommodate burgeoning demand, followed by the opening of the Jebel Ali Free Zone – JAFZA – in 1985. Today, Jebel Ali is the seventh largest container port in the world and the largest outside Asia. It has been voted ‘Best Seaport in the Middle East’ for 16 consecutive years.

And as the Middle East’s largest shipping facility, it plays a significant role in Dubai’s economic fortunes. “Over the past three decades the port has driven trade; it has been the frontline engine of growth of Dubai,” says Mohammed Al Muallem, UAE Region Senior Vice President & Managing Director of DP World, the Dubai-based company that owns the Jebel Ali facilities.

That Dubai picked up a great deal of trade from Iran’s 1902 tax levies was not a lesson lost on the local leadership. JAFZA is the largest free zone in the Middle East – an area of 48 sq km where companies are totally free to conduct their business, unencumbered by heavy taxation or red tape. “We are committed to creating an ideal environment for investors to use as a gateway to the entire region, and beyond,” emphasises Salma Ali Saif bin Hareb, CEO of Economic Zones World, which manages JAFZA.

Though the free zone was designed as an ideal base for multinationals to warehouse and distribute their products across the region, now it is home to a diverse range of industries, including a growing number of manufacturing and service-based enterprises. Almost 120 Japanese companies (among them Hitachi, Toshiba, Panasonic, Nissan and Fujifilm) have chosen to base their Middle Eastern operations in Jebel Ali. Authorities have also been nurturing relationships with Sweden and Brazil, among others. Indeed, of the companies in JAFZA, 54 per cent are now from outside the Middle East. Between 1999 and the second quarter of 2010, the number of companies in JAFZA surged by almost 600 per cent. With 6,512 companies now housed in the JAFZA free zone, it is hard to dispute that the port attracts trade.

“The port and free zone facilities compare to the best in the world,” says Warren Jacob, CEO of Transworld, a supply chain management company that operates out of Jebel Ali. His company conducts and facilitates logistics operations for large international clients including Panasonic, Sanyo and Shell Markets Middle East. He is a firm advocate of the advantages of doing business in a free zone, adding that the unimpeded environment “absolutely impacted our decision to locate here”.

But it isn’t just seaborne operations that DP World is looking to grow.

“The opening of the Dubai Logistics Corridor last year has created one of the world’s largest sea-land-air supply chain bridges, seamlessly connecting Jebel Ali Port and JAFZA to the new Al Maktoum International Airport,” says Muallem. The 
self-styled ‘aerotropolis’ provides a dedicated link from the container terminal to the sky cargo facilities at the airport. When fully operational, the Dubai Logistics Corridor will allow imports to be fast-tracked from seaport to airport in one of the world’s most modern fast-cycle logistics processes.

“We are essentially making Dubai the de facto centre of logistics in the region,” explains bin Hareb.

In today’s globalised, trade-centric world, the influence a port can have should not be underestimated. Once again, an economic lesson not wasted on Dubai’s shrewd leadership.

DP World has manoeuvred to become an influential player on the global stage. With Jebel Ali as its flagship facility, the company has a portfolio of ports around the globe that in 2010 handled 50 million TEU (twenty-foot equivalent container units) of cargo, considerable against the context of figures from Clarkson Research that estimated global container trade in 2010 at 140m TEU. Expansion plans anticipate that the company’s capacity will grow to 92 million TEU by 2020.

But physical facilities and maritime economic influence don’t always go hand in hand, as Gavin Van Marle, Senior Reporter at Lloyd's List, points out. “London is the recognised centre of the maritime industry in terms of insurance, legal and financial services and has a large ship owner community, but its port operations are negligible. [Conversely] the cities that host some of the other largest container ports – Busan, Ningbo, Qingdao – have no real impact as cities.”

The recipe for success seems to be to establish both. “Singapore is building up a very strong challenge to London’s leadership and has long been the world’s largest container port (although last year it lost that crown to Shanghai),” Van Marle continues. “However, the increasing numbers of maritime professional services in Singapore is as a result of the city-state deliberately targeting and attracting those types of firms. Dubai appears to have a similar philosophy.”

But above all, as you would expect in the logistics industry, it’s location, location, location. “The strategic location of Jebel Ali connects the Far East to the West, the Gulf and the ISC very neatly,” agrees Jacob.

“Currently, the traffic between Asia and Europe is fairly one-way – from Asia to Europe. In that scenario, Jebel Ali is well positioned,” says Van Marle. “If the Suez Canal was closed, or piracy in the Gulf of Aden particularly bad, Jebel Ali would likely be the last port of call before ships went round the Cape of Good Hope. In the case of high-value cargo such as automotive and electronic, Jebel Ali would also benefit from its ability to offer shippers sea-air services, with cargo ocean-freighted to Dubai and then transferred to air freight.”

“The UAE region has gone from strength to strength during 2010,” says Mohammed Sharaf, CEO of DP World. “These results reflect our continued position as the premier gateway for cargo into the Middle East.”

For Jebel Ali, it’s full steam ahead.