Ask the expert: John Ewin
Question: How important is location when creating a maritime cluster to support the shipping industry?
Expert: John Ewing, Business development director, Dubai Maritime City
The term cluster originates from the 1950s and is a scientific description of how industries naturally migrate into small geographical areas. An evolving term, the amount of value that clusters can add to a location is becoming increasingly recognised. Traditionally, maritime clusters came about as a result of the need to control trade in locations and develop the expertise that supports the industry.
As time has gone by, the location requirements of clusters has evolved and factors such as rising pulations, cheap labour and increasing market opportunities have made regions like Asia a hot bed for clusters.
This of course, adds value to an economy and what we see happening in Asia is also forming in the UAE with the creation of Dubai Maritime City (DMC).
All about location
The formation of clusters is largely about location, location, location. Let's take Seattle as an example, which has an acute focus on aviation. This does not necessarily stem from a natural expertise in aircrafts, but more from the strategic location that attracted the industry to the area.
Likewise, the positioning of the Middle East also contributes to its growth in the shipping industry.
One of the region's main assets is it's centralisation to both Europe and Asia. Dubai is therefore an ideal location to support the international maritime community and this is one of the reasons DMC originally came about.
DMC's proximity to Dubai International Financial Centre (DIFC) adds business support, while it's location on the water proves attractive for both businesses and residents in the area. Location is therefore crucial for both the DMC and the formation of clusters.
Clusters increase productivity and efficiency, as specialist knowledge from industry professionals is intensified. DMC consists of smaller supply chains, dedicated workforces and specialised services, all of which provide easier access to big players from a range of industries at competitive costs.
Within a cluster there will be a rapid fusion of best practices that encourages the area to develop and grow.
With such a professional environment, individuals are incentivised to compete and simulate innovation to create a haven of expertise and creativity. DMC's aim therefore is to act as a cluster that creates a community with unrivalled knowledge and to become globally recognised.
The region has a strong strategic focus due to its geographical location, living environment and tax competitive benefits. Furthermore, Dubai is commerce friendly and has the credibility to make things happen quickly. All these factors support the creation of DMC.
The minimal government interference supports the evolvement of DMC and its innovative learning environment, proximity to customers, accessibility and skilled cost efficient staff. All of this contributes to the success of the maritime and shipping industry.
Furthermore the Middle East is expected to have a high annual growth rate over the next 20 years giving the region a substantial share in the shipping industry.
We did a survey on various locations and essentially the results showed that traditional markets minate the services and financial opportunities for the shipping industry. Emerging markets like the Middle East have proven results in the industrial sector. However, the main value generated from clusters is primarily in the shipping and services side.
The region therefore needs to migrate and lay greater emphasis on the service and financial factors in order to be competitive. Singapore is a market that is achieving more equilibrium in its contribution to services, finance and industry, but the Middle East is somewhat weak in terms of ownership and legal regulatory systems, as well as access to capital.
The question marks surrounding the credit crunch and the possibility of entrusting confidence to obtain more credit is a growing global problem. In order to evade this, the Middle East needs to invest its efforts on generating institutions to have solid confidence in the region's financial forecasts to gain better liquidity.
Finally, the infrastructure as it stands in Dubai is not ideal, but the government is working hard on improving its transport networks. As soon as the region's infrastructure is improved DMC will serve as the ideal maritime cluster for the shipping community, propelling the region into a centre of business excellence.