Ports Industry Update Issue 7, September 2007

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DUBAI PORTS WORLD LAUNCHES MARINE ACADEMY, CONSIDERS PUBLIC SHARE OFFER : DP World has launched a marine academy to train staff for its global operations. According to Dubai World and DP World Chairman, Sultan Ahmed Bin Sulayem, the management graduates of the academy will be crucial to the company’s opertions in its 42 terminals spread across 22 countries. Although no decisions have been made, a spokesperson for DP World also confirmed at the end of August to the maritime press that the company is considering offering shares to the public to raise cash. Other options the company is considering is issuing bonds or entering into loans. DP World is reported to aim to spend about $3.5bn over the next five years on overseas projects worldwide and to double its annual handling capacity to 84m teu by 2016. A listing for Dubai World, the company which owns DP World is not contemplated.

INVESTMENT FUNDS CONTINUE TO MOVE IN ON PORTS: Private investment funds continue to demonstrate an interest in the port sector with Goldman Sachs expressing its intention to invest in the terminals sector as a longterm strategy. Goldman Sachs Infrastructure Partners has bought a 49% stake in Carrix, the parent company of US-based terminal operator SSA Marine. Readers will also recall that DP World’s terminal portfolio in the US, acquired in it’s takeover of P&O was eventually sold, following a significant political controversy, to another investment fund, the AIG Global Investment Group. Concern has been expressed over these institutions’ lack of understanding of the port business, their primary concern of delivering a profit for their investors, lack of a relationship with employees and what impact such deals would have on employee pension funds. In a recent development, an infrastructure fund, has invested in an Indian terminal. Such funds are mostly intended to provide investors with stable, predictable cash flows to meet pension and other long-term obligations and they generally prefer investments in countries belonging to the Organisaton for Economic Co-operation and Development, which are perceived to be economically and legally stable. The fund, backed by Credit Suisse and General Electric has signed an agreement to acquire a 25% stake in the Chennai ContainerTerminal in southern India. The remainder of the interest in the terminal is held by DP World, which runs it.

SHIP EMISSIONS, ENVIRONMENT AND DOCKERS’ HEALTH: The Port of Oakland in the US tested a new cold-ironing system in mid-July and announced that it completely eliminated carbon monoxide and particulate matter emissions from the vessel APL China docked at the port. According to initial estimates, it would cost the port more than $90m to modify its infrastructure and implement a shore-side power system for plugging ships into an electrical grid. Climate change and the impact of emissions, particularly from the transport sector, on global warming is an increasingly live issue in a variety of international and national debates. However, a very important issue – its impact on the health of dockers who bear the full brunt of emissions in their day-to-day work, and the fact that they and their families often live in close proximity to the port area – is often overlooked. The ILWU in the West Coast of the United States has been campaigning on the issue of emissions and released a report in early 2006. The Dockers’ Section is currently liaising with the ITF Seafarers’ Section in relation to the impact of ship emissions on health. A discussion document is being prepared by the Seafarers’ Section for the first of a number of IMO meetings on the subject. This is all being done at very short notice due to the IMO's decision to set up an Expert Group to discuss and develop recommendations by the end of 2007. We are keen to promote the health of dockers as a primary consideration for the Expert Group.

4. AMERICAS & THE CARIBBEAN

CONTAINER SECURITY – 100% SCANNING OF BOXES BECOMES US LAW: The Implementing Recommendations of the 9/11 Commission Act of 2007 became law in the US in August. Among other things, the law provides that all US-bound containers will be scanned in foreign ports. The legislation sets a deadline of July 2012 for achieving this. The European Union has criticised the legislation and argued that it will disrupt global trade and place a disproportionate cost burden on businesses based in other countries, while casting doubt on the effectiveness of the measures to reduce the threat of terrorism.

PERU TO SELL OFF EARTHQUAKE AFFECTED PORT: The government of Peru is reported to be pressing ahead with its plans to privatise the Port of Pisco, located in the area hardest hit by the recent earthquake which claimed the lives of at 513 people and left 80,000 people homeless. The port handles metals and agricultural products and liquid natural gas. The port escaped with light damage despite the fact that the city of Pisco was badly affected by the quake. DP World currently runs a pier in another Peruvian port, Callao.

GLOBAL OPERATORS BID FOR VANCOUVER’S EXPANSION PROJECT: All 4 big names are in the running for the Roberts Bank Terminal 2 expansion project. APM Terminals North AmericaInc./SNC Lavalin Inc.; DP World Investments FZE, Hutchison Ports Development Ltd. and PSA Americas Pte. Ltd have been named as the final list of prospective candidates for the development. Vancouver Port Authority is expected to take 8 months to select a partner for the project, which is anticipated will deliver a terminal with a 2 million teu capacity.

MEXICO TO INVEST IN INFRASTRUCTURE: The government of Mexico is to modernise transport infrastructure as a key element of its economic development strategy. Mexican trade with the US has increased significantly in the past decade. The new government’s strategy is to use improvements in transport infrastructure to give the country a central role in North American supply chains. The infrastructure upgrades would be effected through public and private funding and the idea is to stimulate employment and to make Mexico a more desirable location for foreign investors looking to supply North American markets from Mexico. The government is trying to identify which trade corridors to prioritise to improve the country’s competitiveness. The US Trade and Development Agency and Mexico’s Ministry of Communications and Transportation have started a year-long study to do this. Mexico’s main ports on the Pacific West Coast and in the Gulf of Mexico will be key elements of that infrastructure. The study will also consider the role of inland ports where imported goods are unloaded for distribution within the country and elsewhere by road and rail. These dry ports are already becoming hubs on manufacturers’ supply chains, particularly those who assemble components from overseas and distribute them throughout North America.

CARIBBEAN PORTS INVEST FOR CAFTA TRADE: The Central American Free Trade Agreement is seen as a key reason for the growth of trade to the Caribbean region and a number of ports in the region have invested to accommodate this growth. Kingston in Jamaica, Freeport in Bahamas and Caucedo in the Dominican Repulic act as major hubs with deep-water facilities for transhipment. APM Terminals runs the major transhipment terminal in Kingston while Hutchison operates the Freeport terminal. DP World is the other key player, running the terminal in Caucedo. Among the Central American ports, Puerto Cortes in Honduras, due to the fact that it was the first port servicing the Caribbean Sea to sign on to the Container Security Initiative, is seen to be increasingly important. World Bank documentation on a number of Central American and Caribbean countries reveal that port and labour restructuring is being contemplated to facilitate CAFTA trade priorities.

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