(DENNIS B MALLARI)
Shipping companies in the UAE are losing hundreds of thousands of dirhams as their containers wait for days in the queues at repair workshops. The problem has been caused by the increasing volume of imported and exported containerised cargo, which has led to a shortage of repair facilities.
Shipping operators find it viable to repair old containers rather than buy new ones. A new 40ft (12-metre) container costs Dh17,000, while an old one can be repaired for less than a third of the price.
The Middle East Container Repair Company (MECRC), which opened a container repair facility in 2001 on a 55,000 square kilometre site at Jebel Ali Port’s Terminal One, has seen a phenomenal increase in demand. The company commands more than 70 per cent of the Gulf market. “The volume of containerised cargo has increased since 2001 leading to an increase in the number of containers that need to be serviced,” said General Manager Poul Joergensen.
“However, our facility has not expanded in size.” The number of 20ft (six-metre) units that pass through Jebel Ali Port increased from 3.5 million in 2001 to 9.5 million last year. Joergensen said the repair business grew by 33 per cent last year compared to 20 per cent in 2006.
His company currently has an annual throughput of 145,000 containers that are serviced at its three facilities at Jebel Ali Port, Port Rashid and Mina Zayed Port, Abu Dhabi. “We are expecting demand this year to rise by 20 per cent and it is very difficult to expand within the port. We are negotiating with DP World to acquire another 55,000 sq km of land at the newly built Terminal Two to reduce the pressure.”
Joergensen and Operations Manager Alexander King answer questions on the history of the company and what the future holds for it.
Tell us about MERC and the services it offers.
The company was established in 1981 after the late Ruler Sheikh Rashid saw the need for a container repair facility at Port Rashid. In 1994, MECRC opened its second workshop at Mina Zayed Port in Abu Dhabi and in 2001 the Jebel Ali workshop was opened. The United Arab Shipping Company (UASC) owns 49 per cent of the company, with the remainder being held by private companies and individual investors in the UAE. The company not only inspects, cleans and repairs all types of containers, it also carries out conversions, pre-trip inspections and repairs refrigerators to international standards.
What are some of the most common types of damage you deal with?
Metal structural damage is the most common. This is caused by heavy construction materials – such as rocks – and machinery that are often transported in containers. Hazardous cargoes are also a major cause. And poor handling with forklifts sometimes damages containers.
Why do you think container repair is an important element of the Emirates shipping industry?
The UAE largely depends on imports for almost everything ranging from food to construction materials – and most cargo arrives by sea in containers. The containers have to be in proper and safe condition to be able to deliver the goods. Containers have a special alignment system that allows them to be packed on top of each other. If one container is not aligned with the other, it is likely to fall off, causing the entire pack to tumble. This, of course, results in losses as goods and other containers are damaged. That is why it is important to have pre-trip inspections to ensure that all containers are suitable for use.
How has the business expanded and what do you forecast for the future?
Business has been growing smoothly since our operations began. We have experienced an annual growth rate of 15 to 20 per cent since we opened the Jebel Ali workshop in 2001. Last year we experienced an unprecedented growth of 33 per cent, but this year we are aiming for 20 per cent growth. Around 145,000 containers were inspected across the three workshops last year. We control more than 70 per cent of the container repair market in the Gulf and our clients are some of the major shipping companies, both locally and internationally, such as Maersk, UASC, P&O, Messina, PIL and Hapag-Lloyd, among others. Damaged containers from other ports in the Gulf are also brought to us for repairs. Since we are located close to the Jebel Ali container terminal it eliminates transport costs for our clients and helps us to optimally utilise the waiting time of the containers at the port to carry out repairs. As the construction boom in the UAE increases and the population grows, we expect a further increase in the volumes of containerised cargo. This will lead to increased demand for repair facilities in the country.
Do you have enough capacity to handle the increasing demand for repairs?
We expect the 20ft (six-metre) equivalent unit throughput at Jebel Ali port to increase by around 20 per cent this year and this automatically translates into an increase in demand for container repair. Shipping companies are also realising that it is viable to repair old containers instead of buying new ones. However, we currently don’t have enough capacity to handle the demand and this sometimes causes delays and hence losses to our customers. We are operating on 55,000 sq km of land at Jebel Ali’s Terminal One and this cannot be expanded. We are negotiating with DP World for another 55,000 sq km of land on the newly built Terminal Two. We will also negotiate with them to have repair facilities when DP World constructs Terminals Three and Four This year we are increasing our workforce by 20 per cent and investing Dh3 million in new machinery as we prepare for the increase in demand.
What are your expansion plans outside the UAE?
We are stretching ourselves beyond the country and looking at various ports within the Gulf region as key targets for our repair business. And we are engaged in a joint venture with Djibouti’s port authority and some business people for a container repair facility near a new free zone being built at the port there. We are doing a feasibility study on establishing a repair facility in Egypt, which is currently experiencing a bubble in the size of imports and exports.
We have also been contacted by Port Sudan, but since we are targeting ports with a large throughput of containers we have to first study the capacity there before we reach any deal.
large new container costs Dh17,000, while an old one can be repaired for less than a third of the price
of the container repair market in the Gulf is in the hands of MECRC
Demand to repair containers rises 33%