DPW potential “one-stop shop” strategy risky

In analysis published this month, Drewry questions whether DP World’s purchase is part of a company strategy to transform itself into a “one-stop shop” and maximise revenue by being across as much of the chain as possible. Could the acquisition the forerunner to more cross-modal takeovers by the company, it ponders.

“It’s a risky strategy as it’s not clear whether this is something cargo owners have asked for, or if they will baulk at the potentially restricted choice and dominance afforded to the companies that manage to conquer the whole supply chain, if indeed such a thing is possible,” stated Drewry.

As noted in Drewry’s recently published Global Container Terminal Operators Annual Review and Forecast 2018, DP World has already set course on its strategy to become a “digitised global trade enabler” and is busy developing complementary sectors in the global supply chain both domestically and overseas.

However, Drewry noted: “While the company clearly wants to do more than it used to, and even after purchasing Unifeeder, we are not convinced that it really wants to cover the whole supply chain and compete head-to-head with shipping lines, who after all are its core customers.

“Whether any single company can truly master the entire supply chain is debatable, but carriers would appear to have a jump start over terminals by virtue of actually carrying the cargo on the longest link of the supply chain.”

It added that DPW’s current strategy is motivated more by the fact that carriers’ negotiating power over terminals has increased significantly in the past few years following the rise of the mega-alliances and consolidation. By pursuing cargo owners through industrial zones and the like, terminals can redress some of the power imbalance with carriers by forcing them to call at their sites via shipper demand.