June 02, 2007

Transworld sees big growth post-summer
Major facility to be launched at Dubai Logistics City
By Vinod Kumar PK

As Transworld Group, one of the leading logistics and shipping companies in the UAE, is strategically located in the middle of major projects in Dubai like the Jebel Ali Port and Dubai World Central (DWC), where the world's largest international airport is coming up, the company is biding its time for the harsh summer months to get over to announce major plans.

These include taking delivery of its new container feeder lines. The group is also in the final stages of negotiations for a big project to be announced at the Dubai Logistics City.

The group, with an annual turnover of $750 million, is today involved in activities like ship management, freight forwarding, container repairs and logistics, besides owning vessels and other activities related to the field. The company that began its operations from Dubai in 1982 has today an international network of partners, providing effective support to clients throughout the Middle East, Europe, North and South America, Asia Pacific and Sub-continent. With unmatched capabilities developed over the years, the company has emerged as an internationally recognised business house of repute.

Today, Transworld is expanding its businesses through innovations stemming from a global perspective. The group's determination to have a global presence is supported by its fundamental philosophy: to explore and discover new business horizons. This is the driving force that propels it forward.

At the helm of the group, which has over 2,000 employees worldwide besides over 200-plus based in Dubai, is Ramesh S. Ramakrishnan, chairman, Transworld Group.

According to him, the company's nerve-centre is in Dubai. "Dubai is strategically located to serve the global shipping industry," he says. "The emirate has always had many successful projects in the past two decades and today it is once again embarking on more ambitious plans. For instance, the Jebel Ali port is now going to be deepened and made larger to handle a capacity of about 50 million containers in the next 20 years. At the same time, we have the Dubai World Central (DWC) project, where the vision of the Dubai government is to handle close to 12 million tonnes of air cargo."

"We are extremely buoyant and confident of Dubai becoming one of the biggest logistics centre of the world. I would say that if today China is a 'manufacturing centre' of the world and Europe and to some extent Middle East are the 'consuming centres', then the biggest 'warehousing centre' of the world is Dubai."

Unlike any other parts of the world, there are no bureaucratic delays and hassles here in the UAE, he says, although some documentation issues come up time and again. "But I do not think that to be a big problem. If there are some serious issues, we take it up with the Jebel Ali Free Zone Authority (Jafza), DWC or any Dubai government authorities, talk to them and we have always found solutions to all the problems."

With regards to the company's expansion plans in the region, as well as the entire Middle East, he says, "the company is very focused and we are very confident that Dubai is the market where we will be seeing significant growth in the coming years, and all our resources, both financial and manpower, is being invested in Dubai which we see as a very strong exit and re-entry point for the region."

Although Dubai faces competition from other ports, it has been successful in pitching itself very strongly. With the fantastic infrastructure, whether it is the seaport, airport or the road network being built, Dubai is emerging as a hub for these activities. "It is servicing the entire Indian subcontinent, Africa, Northern Africa, the entire Gulf and the Middle East region as well as the Confederation of Independent States (CIS). All these countries and region put together make the consuming numbers very big and hence, Dubai will continue to have a cutting edge over other centres in the world in terms of a huge distribution network," he says.

Growth engines
Regarding the importance of India and China in the shipping industry, he says China is one of the most significant contributors to the industry. They are increasingly exporting and distributing more, thereby giving a big boost to the sector. Though India is statistically lesser than China in terms of the total throughput of business, it is fast catching up. "I think India and China are the two powers that virtually control the shipping industry. They are basically the engines of growth for the sector," Ramakrishnan says.

The charter rates in the shipping industry are slowly increasing and the company expects the business in container, tanker and bulk carriers to remain strong for the next two to three years. "The markets were, however, at one of its best position in 2004 and 2005, for both the container operators and charter agencies. But that dropped substantially in the middle of 2006 and continued to fall during the first few months of 2007."

He attributes the main reason for this to excess capacity coming out in the market, but once all the capacity was absorbed the markets returned to stability. "Now that the panic situation is over, we are beginning to see now a gradual improvement, although it is nowhere near what it was in 2005, both in terms of volumes and the charter rates," he says.

Ultimately, size matters
As consolidation is the buzzword of all business, Transworld believes that consolidation is happening in the shipping business as well. "Ultimately, the size matters. Like in any other business, the margins are always under pressure and gets squeezed when new players come in. So, the only way for any company to be successful in its operations is to grow. Growth can come either organically, which can be slow or by mergers and acquisitions. So I think it is important to always maintain the size to consistently maintain your profits," he says.

Like all the businesses, competition is very intense in the shipping industry and more so in Dubai. "That is why for us size matters, along with the ability to be innovative. There is competition in every segment that we deal with as new people come in. Consequently we find that our margins are getting eroded. But I believe if you have been in this business for a long time and are able to provide customers timely and cost effective solutions to all their requirements, then in spite of the competition one can always find committed and loyal customers who stand by the company," he says.

With a tinge of nostalgia, Ramesh says that Transworld started its operations in Dubai in 1982 by his father. "That way, although Dubai is important for me sentimentally, we grew from here and we owe a lot to this country. Today, Dubai offers tremendous opportunities and that is spectacular. I think the business demands us to be at the right time at the right place," he says.

Regarding the growth statistics, he says, "Despite having so many activities like logistics, value chains and supply chain management, what ever we do relates around shipping as that is where our core competence lies. We are recording strong growth rates and have been consistently growing at over 15 per cent year-on-year," he says.

Regarding decision-making, Ramesh says, "Having delegated responsibilities to dedicated teams, every arm of the company has a clearly laid out strategy of growth, which is monitored through monthly and weekly meetings. We are extremely blessed with committed team-members."

Regional uncertainties
There are no risks or uncertainties that this region is facing, he says. "Except if the issue between the US and Iran flares up. Then yes, the region could be facing instability. But, other than that, I can't really see anything that can put this region into risks. I think every country in the region is booming on clear-cut fundamentals.

Despite a robust outlook for the shipping industry and for the companies in the region, the main challenges are the volatility in the shipping industry with regards to the demand and supply. "You find that in the current situation every now and then there is a chance of demand-supply mismatch that sees revenues dip. But once the supply gets fully absorbed, then it again slowly moves northwards," he says.

There is a marked difference between the way you do your business in India and here. "The most important thing for this is the necessity to have a separate mindset. In India there is lot of regulatory controls. So you have to always do things according to what the regulations require. But here that is not an issue. The more you dream, the more you can achieve here and there is nobody to come and tell you to do this or not to do that," he says.

Although the company does not believe in numbers to attain the top slot, Ramesh says, "We want to become one of the greatest company in the world in whatever segment that we operate in. We have won so many awards from reputed organisations. Last year, Lloyds awarded us for being the best ship-owner and operator. We won that award among some of the very well-known global names. We have full commitment in whatever we do, we want to be the best or the greatest in our business and we are striving for this. God willing, we will be able to be achieve that position in the near future."

The group, he says, sailed across oceans and crisscrossed the continents to become a trusted name in shipping and a host of maritime logistics and allied services. "As long as there are new horizons to conquer, Transworld will continue on its voyage of discovery," he says confidently.

A diverse range of companies
Ship owning
As part of Orient Express Lines, Shreyas Shipping Limited and Shreyas World Navigation Pte. Ltd, the group owns 18 container ships of sizes up to 1,250 tonnes equivalent units.

Ship agencies
The Transworld Group pioneered containerisation in India and today represents international shipping companies for containerised and break-bulk shipping across the seven seas.

Ship management
Orient Express Ship Management Limited provides high-quality ship management and consultancy services for containerised vessels.

Freight forwarding
Haytrans offers multi-modal international freight forwarding services and specialises in customs brokering at all Indian ports and inland container depots.

Logistics
Meeting the challenge of supply chain management, Transworld Logistics Private Limited offers a comprehensive range of services from taking cargo from shipper's doorstep at various countries to delivery to the customer.

Marine and container repairs
Albatross Dock & Marine Engineering, a crucial arm of the group, undertakes this essential service.

Container storage
Albatross Dock & Marine Engineering Company offers container storage and repair facilities at various ports and inland locations in India.

Inland transportation
Balaji Logistics owns a large fleet of container trailers deployed for terminal operations in ports and also for stuffing and de-stuffing of containers

International trading
Trident Trading, Transworld's international trading wing, currently exports spices, ready-made goods, finished leather products, onions and chemicals to markets abroad.

Edible oils
Associated Edible Oil Refineries has embarked on the extraction and refining of edible oils in South India.

Event management
Arte Compass is a vehicle formed with the purpose of promoting quality entertainment events.