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Growing trend of nearshoring and trade regionalisation: DP World

Photo: Informa Markets Abdulla Bin Damithan, CEO and Managing Director, DP World UAE and Jafza No.3 (SMN)[54].jpg
The man at the sharp end of DP World’s global ports and logistics business gave a sober assessment of the progress of world trade at the opening session of Seatrade Maritime Middle East in Dubai.

Abdulla Bin Damithan, CEO and Managing Director, DP World UAE and Jafza (Jebel Ali Free Zone Authority), said UAE trade with the rest of the world totalled over $1 trillion last year, while UAE-India trade increased 23% to $84 billion. Nearshoring was a growing factor in the regionalisation of trade.

Major factors shaping critical business decisions around the world were identified in DP World’s 2023 Trade in Transition report launched in partnership with the Economist at the World Economic Forum in Davos earlier this year. The finding this year at a global level was unsurprising, he said: geopolitical pressure remained the overriding factor, driving the reconfiguration of supply chains.

“As a response, companies are looking to bring down their supply chain costs while at the same time reducing the risk of disruptions. Many are taking action to reduce the length of their supply chains through nearshoring or reshoring. They are thinking long term and are prepared to sacrifice immediate profitability for increased resilience and reliability,” he said.

“We are seeing a push for industrialisation to diversify economies away from oil. It is anticipated that regionalisation and reshoring will help to enable the development of these emerging industries.”

The top drivers of export growth in 2023 are expected to be growing demand in key markets, expansion of operations into new markets, and improved efficiency through digitalisation. DP World’s Middle East region showed a similar picture, he said: rising transport, energy and food costs, as well as anticipated economic recession in key markets.

In April, the UAE ranked in the top 12 of the World Bank Logistics performance index, which rates the quality of logistics services, trade- and transport-related infrastructure and border controls.

“The positive news has continued with Kearney’s 2023 Foreign Direct Investment Confidence Index, which ranks the UAE as the No.1 emerging market across the Middle East and Africa. The UAE is also positioned as third globally after China and India,” he said.

“Our goods trade with the rest of the world passed a trillion US dollars in 2022 with exports and imports increasing due to the higher crude oil price, according to the World Trade Organization.”

Government commitment to economic growth continues. “Take for example Dubai Economic Agenda D33, which is extremely ambitious. It aims to double size of Dubai’s economy by 2033, double our foreign trade and add 400 cities to its foreign trade map in the next decade,” he said.

“Jebel Ali remains by far the largest port in the region and we have significantly expanded our capabilities beyond simply being a port operator. We continue to progress toward our vision to provide logistics solutions from the factory floor to the customer's door.”

At Jafza, he said DP World was committed to the kind of investment that made economic sense for the region. Last year, Dubai Traders’ Market was established to help traders from the region, China and the world to access goods that can be stored, sold, imported, and exported all in one place.

“This is the kind of forward-looking innovation that is necessary to help us realise our future ambitions, as well as an investment in our home-market infrastructure. We are also investing in significantly expanding our logistics expertise beyond Dubai and this region,” he said.

To evidence this, he said the recent acquisition of companies like Imperial Logistics and Syncreon Holdings, which were  already logistics leaders in high-growth markets around the world, would help drive business growth.

The UAE government recently saw a UAE-India Free Trade Agreement, and five further deals with Indonesia, Israel, Turkey, Cambodia, and Georgia. “Many more are in the pipeline. These agreements have huge value for businesses and trade. They open new windows of opportunity and will give us access to new markets. The first of our own bridge initiatives, the India-UAE Bridge, was launched over three years ago, and we will integrate our assets and capabilities to offer trade value and efficiency.”

In 2022, trade between India and the UAE grew by 23% year-over-year to reach $84 billion and the data for 2023 would likely see this trend continue, he said.

In a rapid, challenging and changing environment, DP World needed to adapt and innovate in its business in order for it to flourish in a competitive, noisy and complicated world. “We know that cargo-owning customers are demanding greater simplicity and control and are focused on achieving improved supply chains, cost efficiency and resilience,” he said.

“To meet these customer needs, DP World and Jafza are fully committed to creating more integrated end-to-end logistics services, which deliver significant supply chain improvement, wider market access and ultimately prosperity for our industry.”