Why would commodity traders use a broker when it is possible to deal directly with shipping lines?
As a broker acting for many different types of commodity traders we ship about 55,000 TEUs per year, so we receive beneficial prices from the shipping lines.
In the vast majority of cases this filters down to much better prices for traders who are shipping in smaller batches.
Brokers can apply economies of scale beyond those of our customers, and take advantage of the fact we have a long-standing relationship with the shipping lines.
There are more established brokerage centres around the world, in London, Singapore, and Hong Kong. Why open offices here?
Dubai has very quickly become a major global hub.
The volume of goods moving through and the amount of new business done is increasing year on year.
Last year imports exceeded 1.5 million TEUs and this year it looks likely to exceed 2 million TEUs.
Of course, there are major brokerage centres elsewhere, but our clients find it very useful having us here.
Keeping the lines of communication short is good for business.
Most of the traders have opened offices here to be closer to their clients, so this is effectively what we have done too.
It is more convenient for us to be here.
What commodities in particular are coming into the region?
Most of what SUKAJO deals with in the UAE is food imports.
There is a lot of refrigerated cargo coming into the GCC, and Dubai is the central hub for handling a large proportion of the goods fed into the regional supply chain.
In break bulk we arrange brokerage for a variety of goods, but particularly steel, wheat, grains and coal.
Of course, construction is big business here, so there are building materials too.
The Middle East is also an important market for sugar, although this tends to be transported in containers.
Will the new office here act as a springboard for business beyond the UAE?
So far, here in Dubai we are concentrating on container brokerage, but now we are thinking of expanding the operations and management side of the business into North Africa from here, initially into Algeria, Syria and Morocco.
We’re well placed here in Dubai to expand the company’s reach into these markets.
As the population and incomes across this area rise we’ll be here to take advantage of that.
What will keep the services you offer more attractive to customers compared to a rival logistics provider?
We are not trying to attend to the whole market.
We think we work well as a focused niche service provider, at present we specialise in containerised cargo for the food industry, and in handling imports from Brazil, Canada, Europe, and the US.
We take advantage of our local expertise and existing relationships in these countries, and marry that with the preferential transportation rates we can offer as part of a larger shipping family.
Has the move to the Middle East been a successful one?
Yes, the revenues have been very encouraging and we’re poised to expand our operations starting here in the Middle East.
The population here is growing which will continue to fuel demand for food imports and there is also a growing export market of dates and vegetables to the GCC and beyond.
Beyond the firm’s expansion plans what do you see as the most significant challenge in the brokerage market?
One thing we have noticed is that there are local companies who prefer to deal direct with the shipping lines, but brokerage still offers many advantages for global commodity traders.
The most significant challenge for brokerage firms operating here in the Middle East is the level of competition in the market.
The market is not yet crowded but there is very stiff competition.