In an exclusive interview with CNN’s Richard Quest, DP World Group Chairman and CEO Sultan Ahmed Bin Sulayem discussed supply chain disruption and the ripple effect of the Covid-19 pandemic.
Sulayem said that even if the pandemic ended today, “It will take another two years for the supply chain to adjust, to be able to remove the backlog of cargo.”
The DP World Chairman spoke about the disruption in the supply chain cycle, explaining that manufacturing and port disruption caused the issue. He told Quest, “Usually you have a cycle, the cargo is put in an empty container, empty container is sent by a ship, reach Los Angeles, deliver, empty container goes back. Well, the problem is there is no empty container because all those containers are full, and it will take time for this to become empty.”
Sulayem clarified that the current problems were not a government issue, “I don’t think so. It’s not in the hand of the government, it is basically a supply chain problem. You know, when they opened the port in Los Angeles 24 hours, it didn’t really help.”
The CEO said that DP World has performed well by investing in the whole logistics chain, not just carrying cargo, but owning ports, “We have been, I think, fortunate that we are farsighted in investing a lot in logistics. If you notice what we invested in the last six years, it is exactly what the shipping lines are today doing. They are acquiring logistic facilities, warehousing, and distribution companies, we did that already and that is what’s helping us a lot to deal with cargo to be able to move the cargo. Six years ago, we only the business we had inside the ports. Today, we are outside the port.”
Sulayem also warned that he believes shipping costs will remain high for the foreseeable future, “I am optimistic that we are taking steps, us and the shipping lines, to ease the congestion. But I don’t believe the cost of shipping is going to reduce. I think, it will stay for a while.”
SULTAN AHMED BIN SULAYEM, DP WORLD GROUP CHAIRMAN: The big problem really is supply chain disruption, delayed cargo arrival, congestion — variable effects of the pandemic that in my opinion will continue for a while. I mean, I can tell you this, if today the whole world said, that’s it, the pandemic is gone — behind us. Still, it will take another two years for the supply chain to adjust, to be able to remove the backlog cargo out over the ships into the customer’s hand.
RICHARD QUEST, CNN INTERNATIONAL: Wow. You think — you think it could be as much as another two years before this is finished?
SULAYEM: This year and next year and there is no way we can move the cargo that is stuck. That has not been manufactured yet, demanded, required, and that is being — as you know, most of the automotive companies already, Porsche another announced delays in delivery, even iPhone 13 is not available today. It is a big disruption.
QUEST: But what actually caused it? Was it, you know, this sudden increasing consumer demand for online shopping? In your view, why did it happen?
SULAYEM: Well, disruption in the sense that factories were closed. They couldn’t manufacture. Or ports were closed, and they couldn’t open and what that ended up doing is that usually you have a cycle, the cargo is put in an empty container, empty container is sent by a ship, reach in Los Angeles, deliver, empty container goes back. Well, the problem is there is no empty container because all those containers are full, and it will take time for this to become empty. And then on top of that, the demand that the world requires every year hasn’t been met, and you can see the disruption in the deliveries in Christmas, many items did not arrive even somebody like Amazon are renting or buying ships to deliver themselves. A lot has happened to make this worse, definitely.
QUEST: Do you think that — that there is more that governments could do? Now for instance, in the U.S., Los Angeles, open 24 hours a day, the port there, but you can’t suddenly build new ports. You can’t build new infrastructure. So do you think there is something that governments can do to make things better?
SULAYEM: I don’t think so. It’s not in the hand of the government, it is basically a supply chain problem. You know, when they opened the port in Los Angeles, 24 hours, it didn’t really help.
QUEST: If we look at DP World, where are you headed with this? Where are you now looking to put your future investment as we come out of Covid?
SULAYEM: Well, we have been I think, fortunate that we are farsighted in investing a lot in logistics. If you notice what we invested in the last six years, it is exactly what the shipping lines are today doing. They are acquiring logistic facilities, warehousing, and distribution companies, we did that already and that is what’s helping us a lot to deal with cargo to be able to move the cargo. Six years ago, we only — only the business we had inside the ports. Today, we are outside the port.
QUEST: But if you go into the logistics business in a big way, aren’t you competing with your other customers, the shippers?
SULAYEM: It is the other way around, actually, shippers are only carrying cargo on their vessels. Now, they own port just like us. They compete, their own logistics facilities. We are actually providing facilities so that we can deliver to the customer end to end solution. Everybody in the supply chain talks about last mile, last mile is important. In my opinion, today, as you see today, first mile and last mile. Supply chain isn’t just on the ship, supply chain from the factory, supply chain from the warehouse. Supply chain from, you know, the supplier. A lot of things has to be done. I am optimistic with the result of it now, and I am optimistic that we are taking steps, us and the shipping lines to ease the congestion. But I don’t believe the cost of shipping is going to reduce. I think, it will stay for a while.
CREDIT: CNN’s Quest Means Business
