Interview with CEO DP World in Romania, Cosmin Carstea for Intermodal & Logistics Magazine
- The blockages on the worldwide transport chains accentuated in 2021, almost all the trading routes worldwide being affected. What is the situation at the current moment? Taking into consideration that the shipowners redirect including the ships with a more reduced capacity towards USA, where the demand is very big, The Port of Constanta was affected, in the sense that certain voyages have been cancelled or are to be cancelled?
The pandemic crisis generated a profound change in the way in which the end consumer is spending. Therefore, we have seen during the entire year in 2020 the decrease of the expenses on services, the increase of savings and the spending on physical products. This last chapter of expenses must be put into the context of the period of time in which many production centres worldwide stopped their activity as response to the intensification of the pandemic.
The effects of these changes are being felt today, one of them being the increase of trade between China the United States of America. This phenomenon generates in itself a bigger demand of containers, which leads to the attraction of volumes of containers from other routes (for example China-Europe). The container deficit is accompanied by the increase of the tariffs for the maritime containerized shipping, but also to the congestion of a large number of ports.
In regards to the Port of Constanta, in comparison with the year 2020, we have noticed 2 trends: on one hand, the increase in the number of full containers, originating from imports and, on the other hand, a decrease in the number of full containers visiting the port in transit.
At the same time, it is important to outline that, in comparison with the ports from the Adriatic Sea or from the Northern Sea, the Port of Constanta is not congested, being able to respond rapidly to the needs of the clients. At the same time, the infrastructure connecting the Port of Constanta and the main centres of consumption and production from Romania is under parameters of normal operation. This means that, in the context of the current crisis of containerized shipping, both the container terminal from the Constanta South Port, as well as the supply chains using this terminal are capable of delivering their services under parameters of flexibility, efficiency and productivity also in use before the moment of the crisis.
- What is the impact of this crisis on the producers/importers from Romania? What solutions have they identified and how DP World supported them in overcoming their challenges?
The main impact felt by both importers as well as by the exporters was the increase of the maritime shipping cost by approximately 5 times in comparison with the one existing in January 2020. Another impact was the duration of transit of the goods from origin to destination, which increased significantly against the background of the capacity crisis of the ships.
Another very important aspect to be outlined is the one that both importers as well as exporters can influence to a small extent the price of maritime shipment but, through the pressure they can exert on the maritime shipping lines, can influence decisively the increase of the shipping capacities for Romania.
In order to meet the requirements of the clients and their increasing need for integrated services, we set up a new company. DP World Logistics România is capable of offering services covering all the needs of the clients for the cargo leaving the port up to the shelves of the stores.
At the same time, we are facing a series of challenges not seen before, we started to provide our clients consultation in regards to the most adequate multimodal solutions according to the end objective of the client: predictability, flexibility or efficiency. Through DP World Logistics Romania we have the capacity to implement these multimodal solutions.
- What is the impact of this crisis on DP World in Romania, of the operations within the terminal and of the number of containers operated in the terminal?
Overall, on all our activities, we are not affected the same as other industries, even if there is a decrease of the volumes operated. In regards to the segmentation of these volumes, we have noticed a decrease of the empty containers, but also a, increase of the full containers, especially originating from imports.
- To what extent has the pandemic affected the investment strategy of DP World Romania and what are the development plans in the following years, both in the terminal from the Port of Constanta, as well as in the hinterland?
The investment strategy of DP World in Romania was not affected by the pandemic. Our company based its investment strategy on a long-term vision and on solid financial results, both valid at the present moment. On the other hand, DP World developed in Romania as a strategic partner of the state, and, at the current moment, we are aware that the investment in infrastructure is one of the necessities of Romania.
The first major project, where the physical works shall start at the beginning of 2022 is the one regarding the complex development of an area of over 16 hectares from the existing terminal. This development shall lead to the occurrence of new products for the Port of Constanta: a modern RORO terminal, provided with facilities for the authorities and a terminal for out-of-gauge, large size products.
The second important project shall also start at the beginning of the year 2022 and has as objective the development of an intermodal terminal in the Aiud area. It shall have a two-fold role: on one hand, it shall operate as an extension of the maritime terminal and, on the other hand, it shall offer the possibility of transferring the cargo between the railway and the road transport modes.
The third project is related to the development of a class A logistic warehouse, on an area of 45,000 sq.m. from the Port of Constanta. Through this development, we intend to offer our clients all the benefits incurred by the proximity of the maritime terminal and under the free zone regime existing in this location.
- What new services have you launched this year and what services do you intend to develop further?
This year we have had a premiere – the organization of shipment and of the logistics for our client from the Greater Island of Braila (Insula Mare a Brăilei) on three shipment modes: road, railway and inland water. The road transport was organized using semi-trailers with tarpaulin as well as containers. For the usage of the inland shipment, besides the actual transport part, we also had to organize the logistics and the port operations from the Greater Island of Brăila, being the first time when such a shipment was organized in this area.
Besides the benefits related to efficiency and flexibility, the introduction of the railway and of the river transport in this project meant a reduction of the CO2 emissions by over 100 tonnes, fact which was in line with the sustainability objective DP World has in view in all its projects.
Another successful project developed in 2021 was that of the transformation of the terminal from the Port of Constanta into a LCL hub (less than container load). This type of product has a series of specific requirements, which we can fulfil at a high standard of quality in the terminal of Constanta.
Also, this year DP World Logistics Romania started supplying the customs agent services, increasing therefore the range of services provided.
- What are the perspectives for the year 2022? Is an end of this crises foreseen and in what conditions?
From the perspective of shipment and logistics, we can foresee no big changes in 2022 in comparison with 2021. Therefore, in what regards the price of shipment, we must take into account that the current level was reached following some constant increases registered in the last 12 months. Therefore, we estimate that the decrease of price shall be done during a same period of time or even in a longer one.
I consider that the new state of normality will be different from the normality of the year 2019. In the new normality, the stress shall be put firstly on agility. At the same time, the new normal shall be influenced by the reduced capacity existing in the European Union ports. In this respect, the Romanian ports have a competitive advantage in the part of the excess of capacity which exists at the current moment.
In this context, the multimodal products our company can supply, as well as the new products derived from the investment which shall start at the beginning of the year 2022 (RORO cargo, out-of-gauge cargo) occur at the right time.
- Until the end of this situation, what advice would you offer to the manufacturers and importers, to DP World clients to reduce the risks from the supply chain and to ensure the necessary of goods and raw materials? How should they approach this issue?
To approach the existing challenges from the lean perspective. This means the on-going search of the points of congestion from the supply chain and the optimization of these points. If the price of maritime shipment is difficult to influence, the exporters and the importers can use the influencing of the transport capacity through the pressure they can exert on the maritime shipment lines.
- The maritime container crisis exposes the weak links from the global supply chain. Which are, in your opinion, these links and how could they be consolidated in order to avoid such crises in the following years?
More global distribution centres. The pandemic situation we are going through showed the dependence of the supply chains on the production from China.
More regional logistic centres. This point is related to the first one because the occurrence of several global production centres shall be done only if there is sufficient capacity to sustain this production by the supply chains. We are talking here also about the regional logistic centres connecting isolated manufacturers to the important logistic centres, opening new trading routes.
Several modes of transport. The current deficit of drivers from the United States and England is one of the sources of congestion in the ports from this area. The logistic service suppliers must be capable of using all the shipment modes to offer a safe service for their clients.
More digitalisation. Through the compilation of the data coming from various stakeholders from the supply chain, we can create a supplementary capacity in a virtual form. The various digital tools can, at the same time, supply an even greater flexibility to the owners of the cargo in the shipping process.
More infrastructure. The crisis generated by the blocking of the Suez Channel, from the start of this year showed to what can lead the dependency on a certain route of transport. The major investment in the transport infrastructure must always be performed with an eye on the future demand.
- At the supply chain level, what do you consider that are the tendencies and the trends which shall transform the industry in the following years?
We consider that, in the following years, one of the trends which shall define the supply chain activities shall be related to sustainability. The solutions which will provide reduced CO2 emissions shall be more and more searched for, and this fact shall be a challenge for all the partners from the supply chain.
Also related to sustainability are the actions of retrieval and reusage of the packages related to the goods sold, another phenomenon which shall have a significant impact on the entire supply chain.
Another important trend which is already unfolding is represented by the introduction of a greater transparency in the supply chain. This objective can be reached through technology. The physical delivery of the service must be preceded and followed also by the sharing of information. This way, we can follow: the quality level of the respective service, its impact, the performance reported to the initial objectives and the sustainability.
- How do you translate at the present moment the DP World engagement towards the environment at the level of the group and in Romania? What projects do you implement in order to make the terminal operations friendlier with the environment and with the employees?
At the group level, the sustainable development objectives are a set of 17 global objectives developed by the United Nations which define the global priorities and aspirations for the year 2030. These objectives are important for DP World, because they are aligned with its engagement to develop its activity in a sustainable and responsible way.
At the local level, DP World Constanta cooperated with the Association „Plantam fapte bune” (`We are planting good deeds`) with whose help we planted tree lines in the peripheral areas of Constanta county, and starting with this year we started a project in which we intend that, until the end of the year, to plant 150 trees and 225 bushes in the terminal area, contributing like this to the improvement of the air quality, the reduction of the CO2 emissions, as well as to the change of aspect in the port area.
On the other hand, in regards to the increase of sustainability of the activities in the terminal from the Port of Constanta, we focus our attention on 2 directions: the reduction of the carbon emissions by 38% until the year 2030 and the generation of green energy in the terminal for the usage of daily operations and the injection of the surplus into the national network.
- At the company level, what are the initiatives DP World Romania support or the programmes it initiates? What fields do you focus on in the CSR field?
Firstly, I want to point out that we do not limit ourself only to CSR, but we also have in view a complex responsibility, which targets all the aspects of a company’s life: community, environment, clients, partners and employees.
In 2021, DP WORLD became the main sponsor of the new worldwide MAIDEN tour, which targets the increase of the visibility and the gathering of funds for the global education of girls. Education and the support for the development of women are two of the areas through which the sustainability strategy „Our world, our future” of DP World attains to create a better and more equitable world. Through its support for Maiden Factor, DP World shall encourage the participation and the education within the STEM disciplines, especially, by transferring the necessary abilities in order to succeed in the shipping and logistics field to young women. The Maiden Mission is to gather funds and to support the communities in order to allow the girls to enter into education, to help them during adolescence, to reach their full potential and to create a better future for all.
At the same time, DP WORLD Constanta is involved at local level, with the support of our partners from the Association „Împreuna pentru Viitorul Constanţa”, in order to support and guarantee the access of young girls, as well as of children to education, both through the education programmes we took part in at schools, through teams of volunteers, colleagues of ours, who taught to children from the grades 5-8 courses about port activity or through the sponsorship of young girls from high school from deprived families in order to take part in the ECDL courses in order to obtain the certifications necessary for a future career.
The support we gave to our local community was also directed to causes from the medical and health fields, organizing gatherings of funds and donations in order to equip the maternity from Medgidia with modern equipment for the rescue of babies born prematurely, together with the Association „Salvaţi Copiii Romania”, but also through donations through our partners, the Association „Dăruieşte Aripi”, which presented causes we could not refuse, especially taking into the consideration the period of the pandemic. Here, we can mention: the refurbishment of the spaces from the Pneumo-phthisiology Hospital from Palazu at the beginning of the pandemic, the allocation of funds for the support of treatment at home of children sick of cancer from the rural areas of Constanţa county, but also the purchasing of a performant PCR testing equipment which was donated to the Public Health Directorate Constanta in order to increase its testing capacity.
- What thoughts do you have now, towards the end of the year, what would you tell the ones from the supply chain?
I wish to openly thank the people working and who are related to the supply chain, providing continuity for the basic activities of the economy. The pandemic we are passing through pushed us to a series of changes in the way the supply chains operate. Even if a part of these changes shall attenuate in time, a good part of them shall define the new normal. The flexibility and the predictability of the services supplied, together with the sustainability component shall continue to influence the way in which the consumers of these services shall choose their suppliers. We feel that through everything it built in the last years, DP World is capable to offer its clients solutions adapted to the current needs: flexibility through multimodality, predictability through technology and sustainability.