Gulftainer Sharjah Leading Shipping Company in Sharjah

The Far Eastern Freight Conference has reported a growth of 21 percent in the second quarter of 2007 compared to the same period of 2006. From the Far Eastern Mediterranean liftings were up by 25 percent. How do you assess the international commerce and growth within the sector?

Regarding the sectors in the Middle East, the Middle East is always going to be a developing region; it’s always going to be attracting shipping from Western areas and also from the Far East. Both shipping lines now are looking for the most lucrative trade to get a return on, and it fluctuates. It is almost like a wave that goes through, because sometimes the freight is better if they are dealing directly with the Far East to Europe, and other times it is as good if you’re dealing from the Europe to the Middle East. So we can always tell at what point we are on the wave. In the last five years, it’s been one big gigantic wave without any troughs. Prior to that we used to have ups and downs, where trade in the Middle East used to slow down as people gathered their breath, and then the next projects would start. But for the last five years, the projects have been continuous and they’ve just been growing in size. So the 25 percent growth that you mentioned there is nothing unusual in this region.

How does the growth in the region compare to these numbers? Is it even higher?

I think you’ll find that the growth here is on par with that 25 percent.

Do you think we may be heading into that lower period, as you mentioned?

No, I think we’re still on the way up. The dollar has obviously affected it in a way, but still there are sufficient reserves, money, obviously with the price of oil the way it is, to get over the currency adjustment that has to be done, because as you are aware the UAE dirham is linked to the dollar, so obviously it’s buying power has reduced the same as the dollar has reduced.

Is the infrastructure ready to contain such growth?

If you are stuck in the traffic the way I was this morning, you would say no! But it’s getting there. The growth has really outgrown the infrastructure and now it is a case of catch-up. You must have seen the tremendous works that are going on both in Dubai and Sharjah; new roadways being built, new bridges, new monorails, just trying to alleviate some of the traffic problems because the growth is phenomenal. Sharjah in a way is behind Dubai, I mean Dubai’s vision for being the commercial center of the Middle East has been in existence now for the last fifteen years. His Highness the ruler of Sharjah is constantly trying to focus on development in the cultural heritage and education aspects of the region. We have a university complex that covers over 50 square kilometers of land on the outskirts of Sharjah, which is now known as the learning center of the UAE if not the Middle East. Its recognition is now worldwide.

At the same time Sharjah is an industrial powerhouse.

Yes, at the same time, the private companies have realized that there is a great deal of investment available in Sharjah that is linked more to what I’ve just mentioned, which is the cultural heritage and educational aspect, and development has been at a slower pace than Dubai, and was initially centered around those two aspects. However, in the last five years, the non-oil industrial growth of Sharjah has really shown through. Sharjah now holds about forty percent of the non-oil generated revenue within the UAE. We started out with two industrial zones; we’re now on Industrial Zone number 20, and that is all in the space of five years. It shows you what tremendous growth there is there.

The Gulftainer Company Limited was established in ’76 in Sharjah to manage and operate the continent terminals at Port Khaled and Khorffakan Container Terminal on behalf of the Sharjah Port Authority. Gulftainer Company Limited today owns one of the largest heavy transport fleets in the UAE, an inland container depot, a container record company, and a shipping division that undertakes local ship cargo agency work and actively pursues international port management opportunities. So how do the different units complement each other and what advantages do you derive from this structure?

Gulftainer started in 1976 when it was awarded the contract of Mina Khaled Port here in Sharjah. We were awarded the contract for Khorffakan in 1986. The two ports are really ideally situated geographically on either side of the UAE. Khorffakan is even more of an advantage because it is outside of the Hormuz Straits, so what we were finding is that we were getting a lot of interest from shipping lines about calling in to Khorffakan, dropping their cargo there, and then looking for someone to obviously move the cargo from there in Khorffakan into the industrial areas of the UAE. So that was when Gulftainer took on board the trucking division. And we operate what we call a mini-bridge between Khorffakan and Sharjah or Dubai which means you can drop your container at Khorffakan on the East Coast, and then have it trucked through to Dubai within three and a half hours. If you were to actually sail around to Dubai it would take you twelve and a half hours. So although that doesn’t seem like a long time in the non-industry mind, in actual fact it is very important here, because obviously with the boom in industry we have what we call “just in time cargo.” So instead of people buying a large stock in and then starting their project, they’re actually timing their equipment and their goods to arrive at certain times in the schedule. If their timing is out, and the materials are late, it causes delays which have a tremendous expensive effect on the actual overall cost of the project. So we have to really provide a service to the shipping lines and to the consignees to make sure the cargo is delivered on time. Now by calling at Khorffakan Port, you are actually handing over your cargo at that point to Gulftainer, and then Gulftainer looks after it from there all the way up to the consignee’s actual warehouse or needs. Whereas other ports in the UAE in the case of shipping lines will just drop everything off at the port and it’s up to everybody else to sort out. We provide door-to-door service.

Can you tell us more about the state of the art technology and the best practices you are using?

Yes, I am very proud to say that Gulftainer’s Khorffakan Port has been voted as the most productive port in the world. We’re actually attaining higher productivity on our cranes there than any ports in China or the Far East, any ports in Europe, and definitely any ports in the Middle East. This was taken on by four of the top twenty shipping lines who actually call at ports around the world voted Khorffakan as number one. Now the way this is achieved is by staying on top of all the designs, all the technology and advances that are done within the port-handling equipment. All the equipment at Khorffakan is state of the art, it includes all the latest technical advantages to make for speedier, safer movement of containers from ship to quay. But it’s not just that, it’s actually having a a very high-tech computer system that monitors the movement of the containers throughout its total process. As soon as a crane latches onto a container in the shipside, it’s logged into a system, and is then followed and monitored and directed by the computer system to its location in the yard, which will facilitate its quick onward delivery via speed trips to the consignee.

Do you see a lot of interest from the international players’ ports to basically facilitate the exchange of expertise?

Generally. Two of the largest shipping lines in the world have approached us to allow their own people to sit in our terminals and watch how we do it, learn how we do it, so that they can then go to their own terminals elsewhere in the world and educate those.

So you are setting a benchmark for the industry?

Definitely, we have set a benchmark.

You also have an ambitious goal to increase the capacity of this port to 4 million containers by 2012. How are you progressing with your efforts?

It has gone really well; 2008 has started out as an excellent year. Our productivity and our work have actually started to reap the benefits. Our existing shipping lines that are presently calling at Khorffakan are actually diverting of the services and other volumes that used to call at or be handled by other ports through to Khorffakan, because they know that they’re going to keep receiving the first top-rate service. So already in the first quarter of 2008 we’ve seen a growth of fifteen percent in the same period last year.

What about your capacity – by how much you grew over the past few years?

In 2004, His Highness made the decision to expand Khorffakan Port, and we took Phase 1 of what is a two-phase expansion of the port. It is on the reverse side of the port, actually allows for another 200,000 square meters of stacking land, and another 800 meters of quay to be available to the shipping lines calling at the port. When that is completed, which will be in the middle of this year, that will give the total capacity of the port about 6 million TU’s. So when I say I was intending to increase the through-put of Khorffakan up to four million TU’s there, I was being on the cautious side.

Sounds like it is going to be a huge expansion! You also mentioned that Abu Dhabi, Sharjah, and Ras Al Khaimah were building their own ports, not to mention Dubai , which offers a huge opportunity for shipping lines to invest within the UAE and the region. Do you think that in the future, competition might intensify?

I think that the competition will intensify. Without being derogatory to Abu Dhabi or Ras Al Khaimah, think the biggest advantage that Sharjah and Gulftainer have got is where Khorffakan is located. Abu Dhabi and Ras Al Khaimah are mainly ports that are going to deal with the local imports or re-exports from that particular region, whereas Khorffakan Port is a world well-known transshipment hub. We handle over 2 million containers a year in Khorffakan, and that is done because truly people see the benefit of transshipping their containers via Khorffakan to places such as India, Pakistan, Iran, Iraq, and the Gulf countries, rather than calling at those locations themselves. There is a big international significance to this, which is growing all the time; in 2006 the price of a ton of bunker fuel, which is the fuel that ships use, was about $250. I think yesterday it reached $612 a ton. A large container ship that can carry maybe nine thousand containers actually burns 250 tons a day. If you’re clever with maths you can quickly work that out to see that saving 12 hours coming into the gulf and 12 hours going out of the gulf is one day. If you save that on a weekly service you can actually save 52 days. Times that by the amount of money saved on the bunker fuel, it’s in the millions.

It’s also saving the environment, which addresses part of corporate social responsibility.

Absolutely.

Which brings up another important question: how do you address corporate social responsibility?

Gulftainer is a very active member of the Arab Forum for Environmental Development. We’ve been a member now for just over a year, and we’ve contributed greatly to this organization. Everything we do in our ports is done in a very safe and environmentally-friendly way, even down to the washing of our vehicles. The vehicles are only allowed to be washed in certain areas where the waste water from that wash is then totally recycled to be used again. People say you can drink it but I’ve never tried! We try and do as much as we possibly can to save the environment. With the design for the expansion of Khorffakan Port, His Highness actually brought in environmental experts because the port actually protrudes from the Bay of Khorffakan, and just off the Bay there is an island called Shark Island, and it is also an area where green turtles breed, so we have to be very careful with how we develop the port, making sure that the actual design of the breakwater that protects the port didn’t affect the natural currents in that area, so it still allows for the free flow of fluid for the nesting grounds for the turtles.

In the shipping industry, there are Big Four: DP World, Hutchinson, NFL Terminal and PSA International. They are the big players and they are fighting to be the number one in the world. What is your competitive edge compared to these Big Four, and is it your ambition to become one of them?

In all honesty, I don’t think so. I don’t think it’s Gulftainer’s desire to get into the top four. I always relate this, and I don’t know if you’ve been following football at all, to the premiership league and then there’s the Coca Cola league. The Big Four are in the premiership league, and we’re in the Coca Cola league, and I want to take us to the top of the Coca Cola league. I think we are virtually on our way there.

As you mentioned before, you are now poised for international expansion; last year you won the contract to manage Port Comoros and later you entered Pakistan with a joint venture in a transport and logistics company, and this year you are going to Turkey – you are starting your international expansion. Can you comment on this?

I think that when Gulftainer looks for an international expansion, we look for a niche market. We’re not just out there to put our flag and our name in a port. We approach things a lot differently than the Big Four. Gulftainer usually forms a partnership with the port authority or the company that we are going to join venture with or partner with. It’s not a case of taking over or buying out, it’s about the partnership that is formed, and I think that is the big difference.