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00:00Let's talk a little bit broadly about the war on Iran.
00:03How much of an impact has it had on Africa, particularly in terms of trade and logistics costs?
00:09Yeah, it's had a huge impact because obviously, you know, supply chains being disrupted through what is going on in
00:16Iran
00:17must have an impact on Africa. A lot of our cargo comes through the Middle East into Africa.
00:22So definitely we've seen certain markets on the East Coast being impacted.
00:26The West Coast less impacted in our business on the ports and terminals side.
00:31But what we have seen is shopping lines now doing direct services on the East Coast,
00:35which has mitigated some of the volumes.
00:38So our business is dealing with the current situation.
00:42Well, obviously the fuel price impacts has a huge impact on our logistics business
00:46because we operate over 7,000 trucks on the continent.
00:49So we've got to increase our pricing and that's not great because that results in inflation.
00:55So I think the impact on the consumer and the economies in Africa with what's going on in Iran will
01:00start flowing through.
01:01And that's not good for the consumer economic growth.
01:05So, yeah, so far limited impact.
01:09But certainly if this war continues and the Strait of Hormuz remains closed,
01:14then, you know, there'll be a deeper impact on Africa from our perspective.
01:18What are the numbers for me?
01:20Because you spoke about the price of fuel increasing and you subsequently having to increase your prices.
01:24So fuel has increased in a market like South Africa where we have our biggest fleet by probably 70-75%.
01:32And then in terms of our contracts, fuel is a big component of our cost.
01:37And we pass it through to our customers who then pass it on to the end consumer.
01:41So in a market like South Africa, we work for retailers, FMCG companies, healthcare companies.
01:47So ultimately that, you know, has a knock-on impact on the cost of food, cost of everything.
01:53So, yeah, that's the impact it's had on our business.
01:56But we don't take fuel risk.
01:58So, you know, we have to find a way to pass it on.
02:01Yeah.
02:02And also like speaking from a continental point of view, I mean, UAE is one of the biggest investors on
02:07the African continent.
02:08And there's this worry that the longer the war goes on, just like you said, it's going to affect your
02:13business.
02:13It's also going to affect investment on the African continent existing and that that is supposed to come square that
02:19circle for me.
02:20Yeah, look, DP World has become very well diversified over the years.
02:25You know, only about a third of our business now is in the UAE.
02:28So we're very strong from a company perspective in terms of having operations in America, in Europe, in Africa, in
02:38Asia.
02:38So we can withstand this kind of shock better than, you know, companies that have got more concentration risk.
02:45So now our strategy for Africa remains as it has always been.
02:50We're very bullish on Africa.
02:52We've invested three to four billion dollars in the last five years in ports, logistics and related infrastructure.
02:59And we intend to spend another three to four billion in new port development, corridors, logistics infrastructure.
03:06And this situation in the Middle East will not impact that.
03:10OK, before we get to the ports and corridors, you say over the next three to four years, there's another
03:15three billion dollars that you're going to invest.
03:17Is that likely to be affected by the war or you're still on track in terms of timelines and investment?
03:22No, it's continuing. So, you know, our big projects are in markets like Senegal, the DRC, and those would be
03:29completed Q1 next year.
03:31In the case of the DRC, we're busy with a big project in Maputo that's also targeted to be completed
03:37by Q1.
03:38You know, the thing about port projects, they have long lead times.
03:41So when you commit to it and when it starts going, you know, you've got to see through.
03:48But as I said, from a financial standpoint, you know, we're fortunate DP world is strong because we are well
03:53diversified business geographically.
03:55And speaking of ports that you're working on, Somaliland, the port in Berbera, what are the plans, particularly with the
04:03commitment for a second phase?
04:05So we see Berbera as a very important corridor into Ethiopia.
04:09Today, Ethiopia is very dependent on a port like Djibouti.
04:13And obviously, Ethiopia is a massive consumer market.
04:16And to have just reliance on one port, you know, exposes one, right?
04:22So we invested in Berbera because we see that as an alternative gateway into Ethiopia.
04:29And obviously, with what's going on in the region, you know, there have been some delays with regards to the
04:35transit agreement.
04:36But our business is, you know, operating and we do have plans to continue expanding.
04:42But for now, investment is sufficient for the volume.
04:45Obviously, as, you know, things develop there from a corridor perspective, we'll follow up with more investment.
04:51And you mentioned Ethiopia. How important is this port for Ethiopia?
04:55And so far, how much cargo is flowing through from and to Ethiopia?
04:58Yeah, today, it's not a big percentage of the container cargo that goes through there.
05:03But lots of things like edible oils, fertilizer, clinker, et cetera, goes through a port like Berbera into Ethiopia,
05:11because most of the container flow still goes through Djibouti.
05:13So I would say it's, from a container point of view, quite immaterial at this stage.
05:20But definitely in things like bulk cargo, general cargo, it's a significant part of, you know, the trade going into
05:27that part of the world.
05:27And have you seen that translate also in the shipping routes, Berbera, Jabal Ali?
05:32Have you seen it increase the port throughput?
05:35Yeah, so that's one of our corridors that's been impacted because, obviously, Jabal Ali has been impacted with the war.
05:41But that is a key trade layer, you know, Jabal Ali into Berbera.
05:47And then, you know, the cargo then flows into Ethiopia.
05:49So that has been, you know, something we're having to deal with.
05:55But on the general cargo side, unaffected.
05:58And again, on the Africa side, we're again very well diversified.
06:02We've got, you know, 10 ports across North, West, East, Africa.
06:08So we don't have all our eggs in one basket.
06:10So even though we're having some pressure there from a corridor point of view,
06:14other corridors like Tanzania, in Dar es Salaam's case, doing very well.
06:19Angola, Senegal.
06:21You know, those markets are still continuing to see good volume growth.
06:24Yeah.
06:25Could you tell me a little bit more about the impact on Jabal Ali?
06:29On Jabal Ali?
06:29Yeah.
06:29So obviously with the Strait of Humoz being effectively closed,
06:34you know, the cargo coming into that terminal is limited.
06:38So cargo is now flowing through alternative corridors into the UAE.
06:42So it's still coming to Jabal Ali, but, you know, through other ports.
06:47And that's just because, you know, with the Strait closed,
06:50you know, there's limited shipping activity happening.
06:53Yeah.
06:55Let's shift focus and go to West.
06:57Banana Port.
06:57I want to know so far the estimate for the first phase and what the estimates are looking for all
07:03the phases.
07:04So this phase is a $500 million investment.
07:08And this first phase will be more than sufficient, we believe, for the current market for the next few years.
07:18We obviously have got a lot more key and a lot more yard to expand.
07:22So phase two will involve expanding the key, looking at, you know, opportunities to do transshipment from Banana.
07:30We would look at also doing a free zone in Banana.
07:33So we have enough land and we have a long term concession.
07:36So phase one is $500 million to actually cater for the DRC container market.
07:42And that's sufficient for phase one.
07:43Do you have estimates for all the phases?
07:45Not yet?
07:46No, we will take that, you know, as it comes.
07:49But for now, you know, we've committed the $500.
07:51And as I say, we've also committed to the free zone development.
07:55But, you know, we'll obviously look at those investments, you know, once we got phase one up and running.
08:03As I say, that will only be complete by Q1 next year.
08:07How does it play into the overall DP World Corridor strategy of the African countries?
08:11Oh, very important.
08:12So our business has changed from just being a port business, but becoming more of an ecosystem for logistics, for
08:20trade.
08:22And, you know, one of the reasons we're building Banana is to remove a lot of inefficiency and cost from
08:29the supply chain.
08:29Because today, you know, the way product flows into a market like DRC, it's too expensive and takes too long.
08:35With Banana and the road connectivity into a city like Kinshasa, you'll reduce, you know, supply chain costs massively.
08:43You'll take out time from, you know, the supply chain, which has also got a huge impact from a cost
08:51and efficiency point of view.
08:52So that's one example. We're doing a similar thing in Maputo where we're building, you know, we're expanding the port
08:59there.
09:00We're extending the key and we're deepening the port so that bigger vessels from Asia can come and birth there,
09:05which brings down the cost of shipping.
09:08And then we're linking up Maputo into the northern corridor of South Africa as well as into Zimbabwe.
09:15Dar es Salaam, you know, we have the concession for Terminal 1 there, which is eight berths, doing the same
09:22thing.
09:23We're now investing in, you know, landside infrastructure to connect Dar es Salaam to a market like Rwanda, Zambia, DRC.
09:30And so, you know, it's not just about investing in the port. It's then investment in ICDs and related infrastructure
09:39to create seamless flow of cargo.
09:42And we have a facility here in Kigali. You know, we have a very, very, it's a world class dry
09:49port consolidation hub.
09:50We see Rwanda perfectly located for that in terms of connecting, you know, the eastern DRC and this part of
09:58the world with Mombasa and Dar es Salaam.
10:00So, yes, it's not only about ports and I think, and also digital, right?
10:05So we're investing also in our digitization program in terms of how we can use digitization to also enhance the
10:12supply chain.
10:13So our business is evolving more and more into becoming an ecosystem, enabling trade rather than just a port where
10:20containers are moved on and off a ship.
10:23Yeah. Two things before I let you go. There have been a few diplomatic developments.
10:26You have a business in Somaliland. Israel recognized Somaliland as a state.
10:31How do these diplomatic moments impact your business, bearing in mind the tech that Somali has had with Somaliland and
10:39Ethiopia being dependent on that?
10:42I'm a businessman, ma'am. So we stick to business. And obviously, as I said, our motivation to invest in
10:49Berbera was for a corridor thing.
10:53And, you know, I can't comment on the politics. I'm not close enough to those developments.
10:58But certainly from a business point of view, we see Berbera as an important part of our strategy from a
11:03corridor into the eastern part of Africa.
11:07Because you're a businessman, let's end it on a business note here. There's new leadership at DP World.
11:12How does that change, shift or cannot be the strategy over the next couple of years?
11:17No, it doesn't change it. You know, our previous CEO and chairman was very passionate about Africa.
11:24And he was very passionate about enabling global trade. And that's part of our ethos.
11:30So, no, we continue with our purpose and vision as being an organization that wants to enable trade and connect
11:37Africa to the world.
11:38So, no change there. Yeah. Quick fire one. Because fuel prices, you said, have gone up by about 75%.
11:45If the war persists, what percentage do you think you'll be passing on to the consumer?
11:49So, no. So, like I say, on the transport side, we pass on everything, right?
11:55Because we don't have the margins to absorb that.
11:59So, you know, in terms of our contracts with our clients, we will do what is required.
12:05Where we have more flexibility and it makes sense for us not to, we will look at that.
12:10So, yeah, for now we are, you know, fulfilling our contractual obligations with our customers
12:17and dealing with it as appropriate.
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