Dubai Ports World a Multinational Corporation
RENEE MONTAGNE, host:
Bush Administration official brief a Senate panel today on why they approved a controversial ports deal. The agreement would allow a company owned by the United Arab Emirates to operate six ports in the United States. The deal goes into effect next week, but some lawmakers want to block it. NPR's Adam Davidson has more on the company in question, Dubai Ports World.
ADAM DAVIDSON reporting:
Dubai Ports World didn't even exist six years ago, and now it is one of the three largest port operators in the world. The man who is credited with the success is Ted Bilkey, the chief operating officer and an American.
Mr. TED BILKEY (Chief Operating Office, Dubai Ports World): So we're a substantial company with a good record, and we're very proud of it.
DAVIDSON: Bilkey says the company is owed by the Dubai government, but its management is international. There are several Americans, Brits, Indians, and an Australian on the senior team. It operates like any successful multinational corporation.
Mr. BILKEY: We actually don't have anything to do with the government. I mean, the government never speaks to us.
DAVIDSON: He says the Dubai government gave some seed money and has since left the company alone. Neil Davidson is head of port research at Drewery Shipping Consultants in London. Even though it's state-owned, he says Dubai Ports ranks among the best in the industry.
Mr. NEIL DAVIDSON (Drewery Shipping Consultants): Well, the reputation is very good because it's built upon the performance of the home port in Dubai, which has always been a very efficient and well run port.
DAVIDSON: Dubai Ports started off running local ports at home in Dubai. It got so good that its management decided to compete in other countries. This was part of an overall effort in Dubai to diversify away from their dwindling oil- based economy. Dubai Ports operates 19 terminals in the Middle East, Latin America, Europe and Asia. They want to get even bigger by acquiring the British firm, P&O Ports.
Mr. BILKEY: This was a business decision to acquire this.
DAVIDSON: With P&O, Dubai Ports would have operations at 50 ports around the world, including the six on the U.S. East Coast. Bilkey says their size allows them to offer their customers one global contract. Shipping companies prefer that to negotiating lots of agreements with ports all over the world. Dubai Ports' growth is typical of the industry. To succeed these days, port operations need to be big. But they also have to be good, says Neil Davidson.
Mr. DAVIDSON: The most advanced terminals and the most productive terminals in the world are, generally speaking, in Europe and the Far East and not in the U.S., I'm afraid.
DAVIDSON: The U.S. used to have world class port operators, but it doesn't anymore, says Joe Bonney, editor of the Journal of Commerce, the shipping industry publication. In the 1970's and 80's, the shipping business was in a painful downturn. American investors sold off their port assets for more profitable pursuits. But in places like Singapore and Dubai, trading is a central part of the economy.
Mr. JOE BONNEY (Editor, Journal of Commerce): If you look at a map, those are just natural places, natural hubs for hub and spoke cargo systems.
DAVIDSON: Geography forced these other countries to become specialists in running ports, Bonney says, and now they're reaping the rewards. Lately, the industry has shot out of its downturn and is doing quite well. But there are no American companies left that are big enough to truly profit. In fact, Bonney says, whether the U.S. approves Dubai Ports purchase or not, more and more U.S. terminals will be operated by foreign companies.
Adam Davidson, NPR News, New York.
MONTAGNE: You can find background on the issues raised by the ports deal at npr.org.