KT Exclusive: Suez crisis was a wake-up call for global supply chain, says DP World chairman
International community must better prepare for any scenario that threatens global trade, Sultan bin Sulayem says.
The world’s priciest traffic jam in Egypt’s Suez Canal last month has highlighted existing vulnerabilities in global trade, a year after supply chains were disrupted by the coronavirus pandemic.
Sultan bin Sulayem, Chairman and CEO of DP World and one of Dubai’s most well-respected business figures says the international community must better prepare for any scenario that threatens global trade.
Khaleej Times sat down with Bin Sulayem to discuss about the company's strategy and how the crisis impacted the global supply chain, that serves as a wake-up call for companies that rely on existing shipping techniques.
The blockage of the vital artery that handles 14% of world trade cost the global economy $400 million an hour, nearly $9 billion a day. It showed how vulnerable the existing supply chain is, “who’s going to pay the losses?” asked Bin Sulayem.
The DP World chief, who is an expert when it comes to cargo and logistics handling is a solutions-driven leader known for thinking big.
He is one of the masterminds behind the Palm Jumeirah artificial islands and is personally credited with much of Dubai’s economic growth thanks to the introduction of free trade zones in the 1980s.
When asked about how the international community should better prepare for future disruptions, bin Sulayem doesn’t hesitate to propose changes to the landscape, even if they include digging an additional canal from the Red Sea.
Leading one of the largest port operators in the world, Bin Sulayem says there has never been an incident of this severity when it comes to global trade disruption.
“Everybody took it for granted that Suez Canal is open. Now, everybody that was importing something is delayed by a few weeks, and the delay is not going away. We are now dedicating our ports, whether it’s in Jeddah, or Sokhna in Egypt, or in Dubai, to deal with giving relief to the people who are stuck with the cargo.”
Anything that endangers global trade is a major concern to the Dubai businessman. Attacks on tankers like those experienced in recent months require joint global effort, he says, to protect maritime trade routes at all costs, says Bin Sulayem.
“Whether it’s piracy like in West Africa or whether attacks in the Gulf, this is something that needs not just UAE, but a world to stand united against it,” he said. “The [international community] has to use whatever they need to make sure the trade flows normally because it
will cost the world a lot, to have disruption.”
In a year where the global supply chain suffered a significant blow, Bin Sulayem says DP World’s overall portfolio performed better than expected. Profits dropped by less than five percent, and the container industry outperformed the gloomy pandemic predictions, illustrating the resilience of DP world as a global trade operator.
The company’s resilience however isn’t coincidental. Bin Sulayem led changes to the company’s business model by digitizing logistics, investing in technology, and expanding its global footprint to become an integral part of the entire supply chain.
“In 2014, 80% of our revenue came from cargo-handling inside the port. Today only 45% comes from handling of cargo inside the port,” he explained, adding that it was a company priority not to depend solely on the cargo handled in the port. “We have to be part of the supply chain and own some parts of the supply chain. So today we can do an end-to-end solution, from the factory floor, to the consumer door.”
DP World’s operations currently include ports and terminals, industrial parks, logistics, economic free zones, maritime services and marinas. With a team of over 50,000 people working at 150 operations worldwide, being the biggest or the first was never his objective, says Bin Sulayem.
Recently appointed by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai to head the Dubai International Chamber of Commerce, Bin Sulayem’s footprint has long expanded beyond ports.
In 2018 Bin Sulayem became the chairman of the Virgin Hyperloop initiative, a futuristic mode of transportation that will carry passengers and goods at speeds exceeding 1,000kmph.
“If somebody invented technology like that to move cargo between cities, what would happen to our ports? We invested billions in our ports” says Sulayem.
In another strategic move to diversify the business, Bin Sulayem became the biggest investor in the technology and witnessed history last November when Hyperloop completed the world’s first passenger ride. Hyperloop is a disruptive technology, says Sulayem, and its vision is in line with DP World’s core principal, to always follow the cargo.
“If someone wants to move cargo in the north pole, we will be there. But we’ll only go if there’s cargo. We don’t look at how big we want to be, we don’t look at how many ports we want to handle, but how much cargo we can handle. Wherever our customers go, we will be. Efficiently for our customer and profitably for us, these are two criteria for our expansion.”
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