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DUBAI PORTS AUTHORITY SELLS ITS MANAGEMENT EXPERTISE.

The blue and orange gantry cranes working overtime at the East African container terminal of Djibouti are labelled `Port of Djibouti,' but the brains required to run the port efficiently comes from the tiny sheikhdom of Dubai in the UAE.

Dubai Ports International (DPI), a subsidiary of the state-owned Dubai Ports Authority, began operating in Djibouti last June. Under the 20-year concession between DPI and the government of Djibouti -- a French colony until independence in 1977 -- DPI will improve container handling operations at the Red Sea port.

DPI says it has already boosted efficiency from 10.5 container moves per crane hour to 23 in the seven months since it took over operations.

"The ships are working twice as fast as they used to, so they are in port only half as long," said Luc Deruyver, director-general of the Port of Djibouti. "This year, we will improve our performance by eliminating dead time and improving logistical support on the ground, with pre-planning of the yard and inventories. We hope to become a major transhipment port for East Africa. By improving our performance, other ports will have to start competing against Djibouti."

How much DPI is getting paid to manage the Port of Djibouti is unclear. There was no competitive bidding, and the terms of the deal are unclear. But Djibouti's president, Ismail Omar Guelleh, said in a recent interview that his government is investing $50 million in the project, and that DPI is getting only $400,000 a year for its role in managing the port. "They want to help us," said Guelleh, without further elaboration.

John Fewer, director of DPI, noted that while the president's figure was on the low side, he could not be more specific because the agreement is strictly confidential.

"Payments for our services are on a commercially competitive basis that are most satisfactory to both DPI and the government of Djibouti," he told The Middle East. "We believe the agreement is going to mean gains for the Port of Djibouti. It is also a good management contract for ourselves."

At the moment, Dubai Ports Authority manages the Port of Dubai and the Jebel Ali Free Zone, which together handled 3.06 million 20 foot equivalent units (TEUs) and another 14 million tons of bulk cargo in 2000 -- an increase of eight per cent on 1999. Since September 1999, DPI has also managed the Jeddah South Container Terminal in Saudi Arabia, which in 2000 handled 945,000 TEUs, as well as the Port of Djibouti, which handled around 130,000 TEUs last year.

Despite Djibouti's membership of the Arab League, blue-and-white containers belonging to Zim Israel Navigation Ltd can also be seen at the port, though not as frequently as in years past.

"Zim Lines used to have a larger presence here, but for performance reasons they now bypass Djibouti and use Mombassa," said Deruyver. "There is no political reason for this as far as I can see."

The Port of Djibouti, which ranks 104th in the world in terms of shipping volume, provides work to 1,100 people directly and another 2,000 people indirectly, making it Djibouti's largest single employer. Some of them are civil servants, others work under contract for DPI.

James Fewer, a former US shipping executive who spent much of his career in Baltimore and New Orleans, relocated to Dubai in 1989 with Sea-Land to manage the Jebel Ali Free Zone. He later served as operations director for the Dubai Ports Authority before being named director of DPI in June 1999.

"The whole Middle East area is growing at a rate of five to seven per cent a year," he said. "Several ports have now recognised the gains that can be realised by employing a port manager with experience of handling large volumes of port business in the region."

DPI is hardly alone in going after this business, though it seems to be the most successful. Some of its biggest competitors are Singapore's PSA, which is active in Aden, and the Philippines' ICTSI, which has operations in Dammam, Saudi Arabia. In addition, Rival Gulf Stevedoring, a Saudi company, runs the Jeddah North Container Terminal.

"DPI's strategy is to work with ports that can complement our existing services to the shipping lines that are already calling at Dubai," explained Fewer. "We believe this strategy of offering a continuity of management to the shipping line customers and cargo owners will enable our customers to focus on providing a higher level of service to their customers without having to deal with the uncertainty of how each port is structured or managed."

At Jeddah South, around $25 million has been invested since the signing of the contract between the Saudi Ports Authority and Siyanco DPA -- an alliance between Dubai Ports Authority and the Saudi Maintenance Company.

This includes the purchase of four new Hyundai super post-Panamax cranes, each capable of handling ships carrying containers 20-wide on deck. They have a maximum outreach of 55 metres and a twin spreader capable of handling 20, 40, 45 and 48-foot containers, including two 20-foot containers at a time. The new cranes join 11 ship-to-shore cranes already in use at the South Terminal, including a new Fantuzzi Reggiane crane commissioned by the Saudi Ports Authority earlier this year.

In addition, Siyanco DPA will purchase another eight rubber-tired gantry (RTG) cranes in 2001, joining seven RTGs recently ordered from Korea's Samsung. The advanced purchases mean that the South Terminal will have 15 new RTGs available by year's end, compared to the nine envisioned in the original contract.

"The contract is for 20 years, so there is a lot of infrastructure development yet to do," said Fewer, adding that the DPI-led joint venture has also hired Navis Corporation of California to provide software for computerised vessel and yard-planning systems at Jeddah South, while Tech Logic will supply radio data terminals.

"A lot of our shipping-line customers are used to the high level of service we provide in Dubai," Fewer told The Middle East. "They've often said they wish they could get the same type of service at other ports in the region. So it's a win-win situation for everybody."

Besides DPI's operations in Dubai, Djibouti and Saudi Arabia, "we also have ongoing contract negotiations with the Port of Beirut," says Fewer, "but the container terminal there hasn't opened yet. It was scheduled to open early this year, but there has been some delay pending the outcome of contract discussions."

In addition, he said, DPI has signed a memorandum of understanding with the Sudanese government to operate Port Sudan, and is trying to win contracts to operate ports in Mangalore and elsewhere in India.

DPI was also on the short list to manage a bulk-handling facility at Jordan's Port of Aqaba, but negotiations have been in abeyance since last year following a directive from King Abdullah.

"The king organised a ports commission, which started looking at the idea of making the city into a free zone and reassessing the whole management requirement for the Port of Aqaba. They put everybody on hold, but we fully expect they'll be re-issuing a new tender in the future," said Fewer, adding that DPI would probably compete against German, French and other entities for the Aqaba contract.
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Comment:DUBAI PORTS AUTHORITY SELLS ITS MANAGEMENT EXPERTISE.
Author:Luxner, Larry
Publication:The Middle East
Article Type:Statistical Data Included
Geographic Code:70MID
Date:Apr 1, 2001
Words:1211
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