Veteran of the seas
After many successful years of managing a shipping agency, United Arab Shipping Agencies Company (UASAC Emirates) has a lesson or two it could teach the region’s burgeoning maritime industry.
Thirty years is a long time in business. In the fast-paced and booming world of the Middle East's maritime industry, it can seem like a lifetime. The changes witnessed over this period have been nothing short of phenomenal. For shipping agency, UASAC (Emirates), and its parent company, United Arab Shipping Company (UASC), reaching its 30th anniversary has just been another milestone in its journey.
Originally set up in Kuwait back in 1976, UASC itself was put together by six shareholding states, namely Bahrain, Iraq, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates. The formation was a smart, strategic move to reduce the region's dependence on foreign shipping lines. UASAC (Emirates) was then set up to play the vital role in the growing agency network supporting its parent company's hub operations.
"The six governments acquired a regional shipping company called Kuwait Shipping Company," recalls Abdulla Al Shamsi, general manager UASAC (Emirates). "The strategy was to grow the company to serve the wider Gulf region. We started with very intensive break bulk services - moving onto container ships in the early eighties."
UASC now prides itself in being one of the largest ocean carriers of dry cargo in the Middle East, although a reduced break bulk service does still exist. "We are aware of the need for break bulk services and that's why we have some ships dedicated to that sector," Al Shamsi adds.
Although the head office officially remains in Kuwait, it has been Dubai's vibrant and thriving economy which has provided the backdrop for much of UASC's current and, indeed, future development. The war in Kuwait had been the original instigator of the company's search for an alternative base, and led to it settling on Dubai.
"In 1991, I joined UASC as a branch manager, immediately after the invasion of Kuwait. It was at that time the corporate office moved from Kuwait to Dubai," Al Shamsi remembers.
After some years, when the situation in Kuwait had settled, part of the company went back and part stayed on in Dubai. "For practical reasons, the board decided to keep the commercial and operational units of the company here, and I would say that more than 80% of the firm is represented in Dubai," he says.
The decision has proved to be a very fruitful one for the operator and Al Shamsi remains very excited about the potential in the region. As he points out, Dubai has long been recognised for its strategic location as the ‘city of traders'. "Dubai has grown and invested a lot in this sector and new ventures such as Dubai Maritime City are already attracting big players. The new dimension of globalisation is further benefiting the region in terms of import and export and it has become a world class maritime hub for shipping activities between the East and West," he enthuses.
Al Shamsi himself comes across with a quietly assured manner, full of commitment and belief in his company. He is especially proud of the way the company proved its dedication to customers by providing as uninterrupted a shipping service as possible throughout the various conflicts in the Gulf region.
"During those tough days, some lines shied away. But we proved ourselves by continuing to serve the needs of the region and this was recognised by our customers," he highlights. "We had to mobilise the agency in such a way that it could handle the increased volumes and maintain good relations with customers and the ports. That was a very hectic time as there was a lot of uncertainty due to the conflicts, but we managed very well."
In all, Al Shamsi has been based with UASAC for nearly 18 years - and during that time, the company has gone from strength to strength. In 2007, UASAC (Emirates) reported handling an impressive volume of 1.2 million TEU of containers through UAE ports, and discharged 90,000 freight tonnes of break bulk cargo. UASC's fleet has also grown componentially, now totalling 32 owned ships and 15 container ships on charter.
This includes an order for eight additional vessels, of which six have already been received from the Korean shipbuilding giant, Hyundai Heavy Industries. "In terms of containers, our target capacity will be about 300,000 TEUs by 2011. Our new A7 class ships can carry around 6919 containers each. By October we should have received all of the new ships and one by one, they will be phased into service," Al Shamsi explains.
The first six of these super-vessels has already been put into service this year. UASC recently announced a US$1.5 billion contract to Samsung Heavy Industries to build nine A13 type container ships, with a capacity of a staggering 13,100 TEUs.
Due for delivery between 2010 and 2011, the contract is believed to be the biggest container ship newbuilding order ever placed by a GCC-owned company. Moving away from investing in general cargo ships, the company had been considering the order for some time, waiting for an opportunity to come up whilst markets for ships orders were slow to get a good deal.
Of course, the natural question to be posed is what has driven the need for such a huge fleet expansion. "That's a good question," he laughs. "Years ago, the board sanctioned a big programme in terms of investment in ships and containers for the basic reason that trade is expanding and if we don't expand with it, we will disappear." In terms of world ranking, Al Shamsi places UASC at an impressive 19th.
"We need to invest more in our capacity, so we need more ships and more space," he emphasises. "If we don't invest, we run the risk of becoming less than one per cent and so we need to protect our market share globally."
Undoubtedly, as Dubai's thriving shipping industry continues to attract competitors into the region, it is imperative that UASC keeps up with the big players. The company's plan is quite simple - to be a major player in container shipping in the region, and the investment in bigger ships is a repositioning of the company's size to compete with other major players - namely the European and Asian carriers.
In order to maintain its pole position, and give the competition something to worry about, UASC has been actively forward planning. It has a significant master plan up its sleeve, and this has all been laid out in its future strategy report entitled ‘Towards 2012'. The report presents not only the plans for UASC in terms of its major fleet expansion programme, but also the many structural changes to the company and its subsidiaries which accompany its future growth.
As part of this, UASC implemented an integrated shipping software solutions system called TRUST. "It's a major solution to our shipping requirements, in terms of handling the ships, bookings, customer relations and so on," says Al Shamsi. To facilitate the smooth operation of the system and optimise UASAC's services further, the company also launched a ‘Model Agency Structure' initiative aimed at enhancing the ability of its third party and owned agencies to cope with its fast-paced growth. This included re-structuring the agency processes, adopting best practices in the business and continuous training. "As our volume of business grows significantly, we need to control our processes and outputs effectively," Al Shamsi elaborates. "For us, having a ‘flat' organisation structure allows better decision making and less hierarchy."
To develop this structure, UASAC implemented a business process mapping exercise, following each process from beginning to end. "As every organisation does when it restructures, you focus on the core business and look to outsource or get rid of any unnecessary assignments or jobs," he says.
This led to jobs being re-defined, and layers of management significantly reduced. Two years later, and it all seems to be paying off. "We had to do this to ensure the smooth running of the new IT system," Al Shamsi adds. "As time goes by, we try to fine-tune and modify what needs to be done."
As the general manager for UASC's shipping agency in the UAE, Al Shamsi has been instrumental in implementing this ambitious strategy with its agents, represented in more than 50 active ports throughout the world. "UASC had a plan to manage worldwide agents, and it was important that all agents were in line in terms of IT, our vision and plans for expansion," he explains. "We needed to invest in agents and as a result needed to ‘own' them in order to control the substantial future growth and quality in those areas."
This was, in fact, a very tactical business manoeuvre. By restructuring the agencies, the company could create a UASC-controlled globally recognised agency network to sell the UASC brand. To achieve this, the firm looked to having a majority shareholder in all its active agents - a strategy that has been paying off. In the Gulf states, it now has more than 60% ownership of its agents, with majority shareholding also being achieved in other regions such as Europe, Asia and the United States. Al Shamsi values the important role that efficient shipping agents play for the sea freight industry. He has served as vice president on the board of the Dubai Shipping Agents Association (DSAA) since 2004. "The aim of the DSAA is basically to foster and promote the ethical standards of the shipping agencies in Dubai," Al Shamsi explains. The association represents 74 active agents at the moment, and this continues to grow.
With so much experience under its belt, and an exciting strategy at hand, UASAC is in a great position to steer a course towards another 30 years of success. "We know we are growing and need to grow in order to maintain our level of service and ranking," concludes Al Shamsi.
"We have to keep the confidence of our customers; their needs are expanding and we need to expand with that."
What does DSAA do?
DSAA represents the interests of shipping agents doing business in the ports of Dubai. It's a non-profit making organisation, aimed at being a forum to pool resources and raise the profile of shipping agents in the region. It also serves to facilitate interaction with government authorities, and international and national bodies.
DSAA is a member of FONASBA (Federation of National Association of Ship Brokers and Agents).
What role does it play for shipping agents?
By providing a platform, where agents can discuss common issues and problems with relevant government authorities without the fear of any Ã¢â‚¬Ëœbacklash'. Every quarter the association organises a Ã¢â‚¬Ëœmeet and greet' series of events with DP World and Customs to discuss such current issues. The association also acts as a form of Ã¢â‚¬Ëœwatchdog' for the sector.
Does it provide training?
DSAA aims to raise the level of professionalism in the industry.Ã‚Â It offers members special reduced rates to attend its seminars and events, and has recently introduced evening classes on topics relating to the shipping industry. Last year, DSAA joined up with Dubai Chamber of Commerce & Industry to run training courses and qualification seminars to enhance the awareness of shipping laws and regulations.