Abstract
Kuwait-based finance company Kuwait Financial Centre (Markaz) is projecting
that throughput at DP
World, the world' s fourth largest port operator,
will fall by 14.5% in 2009, as global trade declines. BMI
agrees that DP
World is in for a tough year. According to our port throughput forecasts,
container
throughput at most ports where DP World has operations will
decline in 2009. As reported by the Khaleej
Times, Markaz predicts that
the UAE-based port operator will handle 40mn twenty-foot equivalent units
(TEUs) in 2009, down from 46.8mn TEUs in 2008. The decline will hit the
company’s earnings, with
Markaz estimating that revenue will fall by
54% from US$572mn in 2008 to US$265mn in 2009. In
January 2009, DP World
announced it was expecting a tough year and in its annual report for 2008
stated
that it had started to feel the impact of the downturn in H208. In
a statement in January 2009 the
company’s CEO, Mohammed Sharaf,
announced that DP World was engaging in a cost cutting strategy
' to focus
on minimising the impact on margins and preserving cash, which includes
reducing costs and
taking a prudent approach to our working capital
position.'
In our latest UAE Freight Transport Report, BMI concludes that
freight carried growth across all modes,
measured in million tonne-km
(mntkm), will average a 3.5% per annum in the 2009-2013 forecast period.
Various factors support this prediction. The current global recession will
take its toll, with the UAE
economy contracting this year, but we still
expect the UAE economy to grow by an average of 3.2% per
annum over the
next five years, providing support for the freight business, albeit at a lower
level than
previously. Infrastructure investment will also remain high,
with the emirates continuing to focus on a
variety of ambitious transport
projects in aviation and shipping. Overall, BMI believes the UAE freight
sector will slow on the short term, but will remain well-positioned for the
eventual recovery. The UAE
economy is dynamic and now more diversified and
shows evidence of robustness to withstand external
shocks. Strong
investment in transport infrastructure and the global ambitions of companies
like
Emirates Airlines and DP World will be positive factors.
We
expect the fastest-growing mode of transport in the 2009-2013 forecast period
to be air, with an
annual average of 6.5% growth in freight carried,
followed by sea freight and pipeline throughput both at
3.6%, and road
haulage at 3.4% per annum, just ahead of GDP. With a score of 66.1 out of 100,
the
UAE’s freight rating is one of the best in the Middle East and
Africa (MEA) region. It scores particularly
well in terms of political,
economic, and infrastructure environments. The UAE has one of the most
liberal business environments in the region and foreign investment is
encouraged in many sectors.
For the forecast period, we expect the
transport and communications sector to continue outpacing the
economy as a
whole in value terms. It will achieve average annual growth of 3.5%, versus
3.2% for
overall GDP. The total value of transport and communications GDP
will rise to US$24.6bn in nominal
terms by 2013, representing 6.8% of the
UAE’s GDP.
| 
View Cart
