DP World looks to build in new and emerging markets

DP World has made a small announcement about the expansion of its Dubuy.com e-commerce platform to Kenya. This is part of a wider strategic initiative by the port terminal and logistics provider to expand, indeed build, the whole of Africa e-commerce market. It is unclear how DP World will manage problems such as ‘last mile’ in Africa but it is explicit about its intention to use its landside logistics infrastructure.

On a dramatically wider scale, DP World has also just announced an intention to invest in Indonesian ports in collaboration with the Indonesian government. A statement from the company said that DP World had signed a “strategic alliance” with the Indonesian Investment Authority to “enhance Indonesia’s maritime and port sector within the global manufacturing ecosystem”, a relationship that DP World said could be worth “up to $7.5 billion over the long term”. Interestingly DP World said that it would look “to leverage its joint investment platform with Caisse de dépôt et placement du Québec (CDPQ) which since its launch in 2016 has invested in 12 port terminals globally across various stages of the asset lifecycle.” This apparent need to create a new channel for funding is somewhat surprising for a company that has been the focus for so much state capital from the UAE. However, it may reflect the scale of the potential opportunity that Indonesian logistics infrastructure could represent and the capital demands it may require. The problem has always been that Indonesia remains a difficult country to do business in with foreign investors are usually at a disadvantage. Possibly DP World’s relationship with the Indonesian Investment Authority may avoid this.

These two announcements from DP World underline the scale of the company’s strategic ambition. Like a number of the other major port terminal companies, DP World is looking to expand along the supply chain yet few others are creating their own consumer-orientated e-commerce platform. And in both the African e-commerce and Indonesian port investment projects, DP World is attempting to make a clear effort to exploit the growth in emerging markets. If DP World is even modestly successful in these projects it will give the Dubai company a distinctly different strategic profile from its peers in the sector.   

Source: Transport Intelligence, 09 November 2021

Author: Thomas Cullen