View from the top
Peter Richards, the new general manager at Gulftainer, is feeling bullish about the region’s future. However, the port management company must tackle a series of challenges before reaching its full potential, he explains to Sea Freight Middle East.
Growing at terminal velocity?
When Peter Richards joined Gulftainer in 1986, shipping at port facilities in the region was in its infancy. In the two decades since, the Middle East has seen its termini transformed into the most modern facilities in the world, with year-on-year growth to make other global ports pale in comparison. “The current growth levels are very encouraging and I can foresee double digit growth for Sharjah terminals for the next three to five years at least,” he says optimistically.
However, while port investment and expansion continues unabated, Richards also believes key operators are suffering, due to asymmetrical shortfalls beyond their facilities. “All the terminals in the UAE will have to develop to a certain degree,” he continues. “The big problems facing importers and exporters lies in the infrastructural stoppages experienced beyond the port itself. At present there is no rail network, so everything is trucked by road and while the development boom is certainly evident on the maritime side, the upgrades to the road network have not kept up with the increasing traffic load.”
The situation has developed to such a point that distributors who, only three years ago, were capable of getting in and out of UAE ports three or four times a day, are now being limited to one movement in the same timeframe. Indeed, congestion and transit limitations for heavy goods vehicles have led to long queues waiting to enter Jebel Ali port.
In some respects, the situation has created new opportunities for Gulftainer operated ports in Sharjah. “Customers prefer to use our ports and inland container depot, avoiding the congestion of Dubai and Sharjah cities, reducing transportation times and associated costs,” says Richards.
The country’s physical infrastructure is hardly the only challenge facing the sea freight industry. With the advent and apparent coming of age of radio frequency identification (RFID) and wireless sensor networks (WSNs), many firms are facing a massive investment in the latest technological developments.
“We have invested heavily in technology, but I think we need to spend a lot more money too,” says Richards. “At Gulftainer, we’ve been very lucky, because the systems in place leave plenty of scope for further development. We’ve not had to halt operations to implement these upgrades either, because with our IT team, we have the capability to manage a great deal of the conversions in-house.”
He adds that customers are beginning to standardise their electric data interchange (EDI) operations, with the concept of paperless offi ces becoming more evident in the near future. “It’s going to reach the stage, although it’s not quite there yet, where the cargo business is developed to the same extent as the courier business. Customers will be able to track their goods around the world,” says Richards.
“The arrival of this technology is not an added luxury for customers, it’s essential. With sea and air freight in particular, the knowledge that your cargo, which may have travelled many thousands of miles across the globe, will meet or not meet its onwards connection is invaluable to handlers and consignees alike.”
While technological upgrades to the business side are mostly customer driven, the current global security climate has impacted several strata of the sea freight industry, with responsibility mainly falling to handlers and port operators. The implications of tighter regulations and International Maritime Organisation (IMO) compliance have increased costs for the freight handling industry, but the impact has not been entirely detrimental.
“Costs have increased because we’ve had to ensure our facilities and the ships we receive are more secure. We have implemented all of the International Ship and Port Facility Security (ISPS) procedures, but where Europe, the Americas and to a certain extent the Far East have imposed surcharges on their consignees, we have essentially swallowed that cost ourselves,” says Richards.
The Sharjah Port Authority itself has invested in three new container x-ray machines, costing US$3.5 million each, combined with added fencing and gate security. However, Richards is keen, even enthusiastic to add that this is not merely an issue of compliance.
“This investment is inward looking too, it was something that was overdue in the industry and it probably took the IMO to push it through,” he explains. “Shippers and importers recognise that this is a fact of life in today’s climate. It is a responsibility as much as anything else.”
The challenges so far are essentially ones that can, and no doubt will, be overcome in time. However, there is a growing consensus that the biggest challenge facing business in the UAE is the rising cost of operating here. “Major companies already here, and some who were thinking of coming, are concerned about escalating costs. Unless something is done, international firms will begin to look away,” warns Richards.
“The real terms of business are essentially worsening. Rises can be tolerated in the short term, but unless this is controlled there will be a detrimental effect on business. With the rising costs, the UAE could lose its economic advantage.”