Emirates Shipping Line plans to expand its operations in Africa
Emirates Shipping Line (ESL), a leading operator of container vessels is looking to expand its operations into the African continent to tap into the growing demand for imports, said a senior company executive. But as the liner embarks on an aggressive expansion plan for its operations, it has played down any future plans of launching an initial public offering (IPO) as a fundraising strategy. The liner is particularly keen on expanding services on its route between Jebel Ali and East African ports, where it sees huge potential for business.
"As an emerging market, the African continent is providing us great potential for business given the high level of economic activity, driven by government infrastructural developments and a growing middle class," Vikas Mohammad Khan, Chairman and CEO of Emirates Shipping Line (ESL) told Emirates Business.
"The continent is free from the current global economic woes, so it will be strategic and timely for us to expand our operations there."
ESL will introduce more vessels on the route starting from the second quarter of 2009 and hopes that this will help boost its market share on the continent.
Currently, ESL has the largest sea transport footprint in Africa, with about 15 per cent market share. It operates one 18,000 TEUs (twenty-foot equivalent units) vessel, the biggest on the route to East Africa. "Our philosophy is to enter or expand into markets that are interested in improved services. We don't want to be measured by the size of operation or number of vessels, but the quality of service," said Khan.
He noted that the East African ports of Mombasa in Kenya and Dar es Salaam in Tanzania are the most important on the continent due to the vast hinterland market they serve. More than 50 per cent of all goods shipped to Africa go through the two ports.
The Mombasa container terminal, with a capacity of 400,000 TEUs saw its container throughput grow by 22.1 per cent to reach 585, 367 TEUs last year compared to 479, 350 TEUs in 2006.
The Port of Dar es Salaam, which acts more as a feeder port has a capacity of 7,500 TEUs. While the current vessel deployed is the biggest on the East Africa route, Khan said that the company would be ready to deploy larger vessels once the ports have been expanded to accommodate big ships.
"Our plan is to increase our presence deeply into Africa. We are already in talks with authorities operating some of the ports and we have asked them to embark on expanding the drafts of their ports to accommodate larger vessels," said Khan.
The Kenya Ports Authority (KPA) has already received a government approval to deepen and widen the Mombasa port channel at a cost of $51 million (Dh187m), a move that will allow larger ships to call and end acute congestion at the port by 2010.
Last year, Emirates Shipping Line achieved a 30 per cent growth in its revenues and hopes to maintain the same level of growth this year, above the industry average.
With a current fleet of 13 vessels, the company hopes to double its container capacity in the next two years.
Khan, however, noted that the company would continue to fund its future expansion programme through its own equity and pointed out that an IPO was not part of their financing strategies. "There is no necessity for us to go public and it is not in our plan. We are confident with our current model of financing," said Khan.
Khan also said the company had been hit by the impact from the downturn in the US economy, although it was minimal.
He noted that the company would continue to streamline its services in shipping markets between East Asia, Middle East region and India that have less exposure to the economic slowdown.
"As an emerging market, the African continent is providing us great potential for business given the high level of economic activity, driven by government infrastructural developments and a growing middle class," Vikas Mohammad Khan, Chairman and CEO of Emirates Shipping Line (ESL) told Emirates Business.
"The continent is free from the current global economic woes, so it will be strategic and timely for us to expand our operations there."
ESL will introduce more vessels on the route starting from the second quarter of 2009 and hopes that this will help boost its market share on the continent.
Currently, ESL has the largest sea transport footprint in Africa, with about 15 per cent market share. It operates one 18,000 TEUs (twenty-foot equivalent units) vessel, the biggest on the route to East Africa. "Our philosophy is to enter or expand into markets that are interested in improved services. We don't want to be measured by the size of operation or number of vessels, but the quality of service," said Khan.
He noted that the East African ports of Mombasa in Kenya and Dar es Salaam in Tanzania are the most important on the continent due to the vast hinterland market they serve. More than 50 per cent of all goods shipped to Africa go through the two ports.
The Mombasa container terminal, with a capacity of 400,000 TEUs saw its container throughput grow by 22.1 per cent to reach 585, 367 TEUs last year compared to 479, 350 TEUs in 2006.
The Port of Dar es Salaam, which acts more as a feeder port has a capacity of 7,500 TEUs. While the current vessel deployed is the biggest on the East Africa route, Khan said that the company would be ready to deploy larger vessels once the ports have been expanded to accommodate big ships.
"Our plan is to increase our presence deeply into Africa. We are already in talks with authorities operating some of the ports and we have asked them to embark on expanding the drafts of their ports to accommodate larger vessels," said Khan.
The Kenya Ports Authority (KPA) has already received a government approval to deepen and widen the Mombasa port channel at a cost of $51 million (Dh187m), a move that will allow larger ships to call and end acute congestion at the port by 2010.
Last year, Emirates Shipping Line achieved a 30 per cent growth in its revenues and hopes to maintain the same level of growth this year, above the industry average.
With a current fleet of 13 vessels, the company hopes to double its container capacity in the next two years.
Khan, however, noted that the company would continue to fund its future expansion programme through its own equity and pointed out that an IPO was not part of their financing strategies. "There is no necessity for us to go public and it is not in our plan. We are confident with our current model of financing," said Khan.
Khan also said the company had been hit by the impact from the downturn in the US economy, although it was minimal.
He noted that the company would continue to streamline its services in shipping markets between East Asia, Middle East region and India that have less exposure to the economic slowdown.