Shipping ideal investment for Arab capital, Seatrade hears

Addressing the Seatrade Middle East Maritime conference, which closes tonight (Wednesday, December 8) at the Dubai World Trade Centre, David Taylor, Vice President, Maritime London and Special Adviser to the International Underwriting Association said the development of Dubai as a maritime services centre is "a logical step for this city."

He told delegates: "Geographically Dubai has many advantages to offer the shipping world. Sandwiched between Europe and India and the Far East, a huge proportion of world shipping passes through the Arabian Gulf. Its time zone - three hours ahead of London and only four hours behind Hong Kong - makes it an easy place to control shipping operations in the western and eastern hemispheres."

And Taylor, who is also Permanent Secretary to the Joint Hull Committee of London, said developments within the global shipping industry have made the sector "an increasingly interesting area of business for Arabian investors."

He added: "As we all know, the shipping markets are enjoying an unprecedented bull run across the tanker, dry and container sectors. Freight rates have hit unprecedented highs - for once it has not been the sight of a stricken tanker which has made the headlines, but the news that owners of capsize vessels have been commanding rates of UD $100,000 per day and rumours that tanker owners need not ever work again!

"There has been a perception in the aftermath of the September 11 terrorist attacks that Arab investors have become reluctant to put their money in the markets of the West. Whilst it is correct that an increasing amount of capital has been returning to the Gulf area which might otherwise have been invested in the West, it is unclear whether this change is for political or possibly financial reasons given the weakness of western stock markets in the two years since September 11th.

"It will be interesting to see if the perceived trend continues this year as stock markets have been climbing throughout the western world. Given the high freight rates and profits which have been made in all areas of the shipping business in the last two years, any general return of Arab capital to the Middle East and Gulf area in particular was always likely to result in increased investment in shipping and its related businesses.

"Combined with a growing unease on the traditional reliance on property investments, shipping is becoming an increasingly attractive investment for Arabian capital. After all, surely a region where the economy relies so heavily on its oil should have a greater control over the method of its transportation."

Taylor said the shipping industry had been quick to recognise recent trends and to develop Shariah compliant products for it.

"In Dubai, the Dubai Islamic Insurance and Re-Insurance Company - AMAN - a subsidiary of the Dubai Islamic Bank, has led the way in offering such shariah compliant insurance products," he said.

Taylor said the establishment of Dubai as an international shipping centre is in line with the bigger development of the global economy.

"London-based maritime services companies - shipbrokers, lawyers, insurers and financiers - have always drawn a significant proportion of their revenues from customers around the world. However, the way in which they are doing so has changes. Where once companies largely operated from London and relied upon expensive and sometimes inefficient correspondence with similar companies in different centres, they have been quick to exploit the fruits of globalization and are fast establishing a presence wherever they need to be in the world - usually close to their clients.

"Take a look at any of the fast-growing maritime services centres - Singapore, Athens, Hong Kong and Shanghai - what do they have in common? A base of maritime expertise with a trail leading back to London. This is the model which Dubai should use if it is to succeed in achieving its dream as a city that hosts a maritime services community."

Taylor added that Dubai still had much to do to ensure the freedom of movement of people.

"This is a major contributor to the success of maritime London and the ability of Dubai to attract overseas workers is critical to its success," he told delegates. "Dubai must work hard to sell itself as an attractive place in which to live and work as well as to continue to adopt an open approach to the attraction of overseas skilled workers."

Meanwhile, at Seatrade, MacGREGOR Group, an international cargo flow solutions and service company has signed a co-operation deal with Iran shipbuilding & Offshore Industries Complex (ISOICO) to expand its Middle East operations.

MacGREGOR currently have operations in Abu Dhabi, Dubai and are developing facilities in Qatar.

Under the Iran deal the group will supply tools, test equipment and cargo care specialists to ISOICO's ship repair yard at Bandar Abbas.

Darko Bogdanovic, MacGREGOR's Middle East Manager, said: "The agreement is the first step towards the development of a true partnership that targets a large share of the rapidly expanding Middle East Market."

The Seatrade Middle East Maritime conference attracted over 330 delegates from over 40 countries. Its associated exhibition featured more than 200 exhibitors from 30 countries.

Seatrade Middle East Maritime 2004 was held under the patronage of His Highness General Sheikh Mohammed Bin Rashid Al Maktoum, Crown Prince of Dubai and UAE Defence Minister. The event was sponsored by Dubai Maritime City, Dubai Ports Authority, Government of Dubai Department of Tourism & Commerce Marketing, Gulf Energy Maritime PJSC (GEM) and Islamic Republic of Iran Shipping Lines (IRISL).

Other sponsors included Aalborg Industries A/S (Dubai branch), Aqua Group, Arabian Adventures, Bloomberg, British Airways, BP Marine, Bulk Shipping & Trading (Pvt) Ltd, Clyde & Co, Dubai Metals & Commodities Centre, Edmiston, HSBC, Lloyd's Register, Net Cruises, Nico International, Norton Rose, Reuters, Scan-Trans Chartering LLC and Sharaf Shipping Agency LLC.

Supporters of the event included Dubai Chamber of Commerce & Industry, Dubai Shipping Agents Association, National Association of Freight Logistics, Indian National Shipowners Association, the Nautical Institute UAE Branch and UAE National Ship Suppliers' Association.

Seatrade, the leading maritime publications, conference, exhibition and training provider, is the holder of Dubai Maritime City License 001, the first to be issued by the integrated state-of-the-art marine and maritime development being created between Dubai's Port Rashid and Dubai Drydocks in the United Arab Emirates.