By Keith Norbury
It’s only been since 2006 that Dubai Ports World, better known as DP World, has lent its name to port operations in Canada. However, the history of those operations dates back to 1923, when Canadian Stevedoring Limited was founded in British Columbia.
Over the years, Canadian Stevedoring changed owners several times until it was ultimately acquired in 2006 by DP World during its purchase of U.K.-based Peninsular & Oriental Steam Navigation Company, a.k.a. P&O. Now called DP World Canada Inc., and doing business as DP World Vancouver, the company has operations at 16 B.C. locations. The stevedoring division accounts for only about a fifth of DP World Canada’s revenues. The lion’s share of business is at Vancouver’s Centennial Pier.
“Eighty per cent of our revenue locally comes from the container side, which is essentially operating the terminal here in Vancouver,” said Maksim Mihic, General Manager for DP World Vancouver. In fact, containers account for a similar share, around 80 per cent, of DP World’s global business, which in 2012 included handling more than 56 million TEUs worldwide.
Mr. Mihic’s involvement with the company goes back more than 17 years to when Canadian Stevedoring still operated the terminal through a subsidiary. That subsidiary, Casco Terminals Ltd., was formed after Canada’s National Harbours Board decided in 1968 to invite private industry to take over running of the government’s deep-sea piers, according to a history on the DP World Canada website.
In 1998, the B.C. government bought Canadian Stevedoring and the subsidiary and formed BCR Marine, Mr. Mihic explained. That deal also included Canadian Stevedoring’s operation at Fairview Terminal in Prince Rupert, although BCR closed its Fairview operation in 2002. Fairview has since reopened as a container facility operated by New Jersey-based Maher Terminals. P&O acquired Canadian Stevedoring and Casco in February 2003 to form P&O Ports Canada Inc. About three years later, in March 2006, DP World bought P&O to become one of the four largest container terminal operators in the world. Vancouver is part of DP World Americas, which include ports in the Dominican Republic, Argentina, Brazil, Peru, and Suriname.
Globally, DP World now operates more than 65 marine terminals, including new developments, and employs 28,000 people on six continents. While its major owner is Dubai, one of seven emirates of the United Arab Emirates, DP World is a publicly traded company on the Dubai, NASDAQ, and London stock exchanges.
DP World formed in September 2005 when Dubai Ports Authority and Dubai Ports International merged, according to a history on the DP World website. The authority had focused on the ports of Jebel Ali and Rashid while DPI “had been set up to export this success internationally.” Jebel Ali, which is in Dubai, is DP World’s flagship port, handling an average of over a million TEUs a month, with capacity currently to handle about 15 million TEUs annually. “It’s our pride, obviously,” Mr. Mihic said. “It’s been rated the best seaport in the Middle East for 19 years.”
DPI’s first project after its establishment in 1999 was at the Jeddah Islamic port that same year. That involved the collaboration with a local partner to manage and operate the South Container Terminal. That terminal in 2003 became the first in Saudi Arabia to handle over 1 million TEUs a year. From 2000 to 2003, DPI also developed successful port operations in Djibouti, India, and Romania. That foreshadowed much larger developments in 2005, when DPI acquired CSX World Terminals. That gave DPI (and later DP World) a “strong presence” in such locales as Hong Kong, China, Germany, Venezuela, and Australia – although DP World monetized about 75 per of its Australian holdings in 2010, forming a joint venture with Citi Infrastructure but still managing four terminals there.
Today, DP World is practically in a third place tie with APM Terminals among the world’s leading container terminal operators. According to 2012 rankings from Drewry Shipping Consultants Ltd., DP World and APM each have about 5.4 per cent of the world’s “equity-based” container throughput. PSA International, at 8.2 per cent, and Hutchison Port Holdings, at 7.2 per cent, top the table.
In Vancouver, DP World has about 20 per cent of the container market, placing it second behind Global Container Terminals, which through its Terminal Systems Inc. subsidiary operates Deltaport and Vanterm. Together, the TSI terminals handle over 75 per cent of Vancouver’s container traffic. In 2012, DP World Vancouver handled about 532,000 TEUs and is expected to handle a similar volume in 2013. That is still down from the 608,206 TEUs the terminal handled in 2008 on the eve of the global economic downturn. Mr. Mihic said it’s hard to measure how well the terminal’s business has bounced back since the recession. That’s at least partly because some shipping lines have changed terminals in Vancouver since 2008. However, container traffic at Port Metro Vancouver recovered fully by 2011.
On the plus side, container cargo through DP World Vancouver is “well balanced,” which is unusual on the west coast of North America, Mr. Mihic said. “Actually we are almost a 50/50 per cent match for the import and export,” he said. What tilts that balance in B.C.’s favour is its lumber exports to Asia, which are now shipped almost exclusively in containers.
About 500 of DP World Canada’s approximately 700 employees work at the container terminal. The remainder work for the stevedoring division at other port facilities across B.C., including Port Alberni and Nanaimo on Vancouver Island, and at Annacis Island on B.C.’s lower mainland. For the most part, that stevedoring involves unloading vessels, such as automobiles from roll-on roll-off ships at Annacis Island and Fraser Wharves “to the first point of rest,” Mr. Mihic said.
DP World stevedores, who are all unionized members of B.C. locals of the International Longshore & Warehouse Union, also load grain onto ships at Viterra Inc.’s Cascadia and Pacific elevator terminal on the south shore of Burrard Inlet, and at the Richardson International terminal on the inlet’s north shore.
The federal government’s decision in 2012 to remove monopoly control over Canada’s wheat exports from the Canadian Wheat Board has had a positive effect on the container business, according to Mr. Mihic. Deregulation of the wheat market, as occurred in Australia four years earlier, has made it more attractive for exporters to ship smaller volumes of wheat at favourable prices, rather than having to sell and ship in bulk. “The advantage of sending it into containers is that the sellers are getting the price at the time of selling,” Mr. Mihic said. The emergence of this new fragmentation has resulted in about a 15 per cent spike in containerized grain shipments. We had expected a big jump and we are already seeing it in the first year,” he said. “And probably in the next year and year after, we’ll see it more.”
Other DP World Canada operations include a new containerized barge service from Vancouver to Nanaimo that began in August 2012. At present, those containers land at Nanaimo’s Duke Point deep-sea terminal. However, this summer Nanaimo Port Authority received a $4.5 million grant from the federal government to build a dedicated short-sea container handling facility at its downtown Assembly Wharf. The project, expected to be completed by mid 2014, will create a “mini Centerm” in Nanaimo, Bernie Dumas, President and CEO of Nanaimo Port Authority told Canadian Sailings.
Looking ahead, DP World is building capacity to meet future growth in the container trade. Today, its global capacity of about 70 million TEUs is expected to grow to more 100 million TEUs by 2020, depending on market demand. Within the next decade, the total annual global container trade is expected to reach one billion TEUs. “Our expertise is management of the terminals,” Mr. Mihic said. “So we would expect, of course, to gain, not necessarily on the competition, but definitely on market share.”
To capture its share of that market, DP World is planning new terminals and acquisitions, particularly in growing economies of the southern hemisphere. In a statement on DP World’s 2013 brochure, group CEO Mohammed Sharaf said the company is looking to invest for the long term. The company doesn’t have any expansion plans for North America, although Mr. Mihic hinted that DP World is always looking for investment opportunities. Vancouver underwent a significant $160 million facelift in 2006, which was announced in 2004 before DP World acquired P&O. The 72-acre terminal now boasts six quay cranes, including a trio of ZPMC super post-Panamax machines. That re-engineering project also involved converting the mode of operation to rubber-tired gantry cranes from a top-pick based operation. The RGT-based operation enables a greater density of containers because it can stack containers higher and access them from the front or top, Mr. Mihic said.
The RTGs are equipped with a Position Detection System (PDS) which utilizes GPS technology to track container inventory in real time, using the Navis terminal operating system. “When the RTG picks the container from the truck, the system knows exactly which container the RTG driver is handling,” Mr. Mihic said. “So when the driver puts it in the stack and then unlocks from that container, the position of that container is automatically updated.” The terminal also uses optical character recognition (OCR) technology to partially automate truck gate and rail operation.
Meanwhile, in 2007 the terminal received security certification to ISO/PAS 28000 standard. And along with the rest of DP World, it is a partner in U.S. Customs and Border Protection’s Customs-Trade Partnership against Terrorism initiative, a.k.a C-TPAT. “Achieving the C-TPAT certification marks out DP World’s commitment and contribution to securing the global supply chain and ensuring continued free flow of international trade,” says a posting on the DP World website. “It additionally provides DP World, and its customers with C-TPAT benefits such as reduced cargo exams, priority clearance of containers, training, sharing of information, etc.” In addition, in 2012, DP World Vancouver received Canada Border Services Agency Partners in Protection (PIP) certification, the Canadian equivalent of C-TPAT.