How Brazil and Mexico Became Strategic for Dubai Ports, Partner of Rumo and Suzano

DP World is one of those state-owned companies from the United Arab Emirates that you’ve probably never heard of but should know about. With a multibillion-dollar operation funded by Dubai’s oil revenues, the multinational plays a vital role in explaining global trade dynamics.

After being forced to divest its assets in the United States at the start of this century (more on that shortly), DP World turned its investments to other countries in the Americas, focusing on Brazil, the second-largest economy in the Americas.

The company has also worked on port facilities in Canada and, more recently, engaged in talks with Mexican authorities to begin operations in the country, which Claudia Sheinbaum now leads.

For DP World, Brazil’s well-known logistical infrastructure deficiencies represent a business opportunity. Fabio Siccherino, CEO of DP World Brasil, says the strengthening of Brazilian exports in recent years has made infrastructure investments straightforward. The country needs to reduce transportation time to ports and lower the costs of these operations.

“When we look at Brazil’s competitiveness in global trade, we see a significant gap between the infrastructure we have and the infrastructure we need,” said the executive.

DP World’s history in Brazil began in 2013 when it inaugurated its container terminal in the Port of Santos. This is not a concession; it is a private terminal.

The company’s entry into Brazil is part of an international expansion effort by the Dubai-based firm. The firm’s story is intertwined with the development of the emirate as a global center for trade and logistics, driven by the Rashid and Jebel ports—the “Dubai Ports” that form the “DP” in its name.

DP World is controlled by Dubai World, a state-owned investment company that manages a broad portfolio of businesses for the government of Dubai. A parallel could be drawn with the role of Mubadala, a sovereign wealth fund from the Emirate of Abu Dhabi, which has a global reach and invests in everything from highways to Burger King in Brazil.

DP World… Brazil

Like Mubadala, DP World had to learn how to do business in Brazil amid a major crisis in capitalism. DP World had Odebrecht as a partner in the Santos terminal and only became the sole owner of the asset in 2017 when it bought out the Brazilian company’s share. From then on, the terminal began operating under the DP World Brasil banner.

In March 2024, DP World Brasil and Rumo, the logistics arm of the Cosan group, announced an agreement to build a new terminal at the Port of Santos for exporting grains and importing fertilizers.

The new infrastructure will require R$ 2.5 billion in investments from Rumo, while DP World Brasil will be the exclusive operator of the complex in a 30-year contract. The complex is expected to handle nine million tons of grains and 3.5 million tons of fertilizers annually.

This agreement with Rumo was not DP World’s first deal with a major Brazilian company. In 2017, Suzano signed a 25-year contract to export cellulose from DP World Brasil’s structure in Santos. The agreement required multibillion-dollar investments and transformed the terminal, which had been focused on handling finished goods transported in containers, to also handle raw materials requiring different equipment.

Today, DP World Brasil handles five million tons of Suzano cellulose in Santos and has invested R$450 million to expand the terminal’s container handling capacity.

The diversification of services is part of DP World’s global transformation in recent years. The company has bought logistics companies worldwide that operate at different stages of the goods transport process, some with regional operations and others with a global reach. In 2021, it purchased the U.S.-based Syncreon for $1.2 billion, strengthening the Dubai state-owned company’s complex supply chain market presence.

DP World Brasil is preparing for new projects and is eyeing the upcoming auction of the Port of Itajaí (SC), which is expected to occur next year. DP World already has an office in the city, and CEO Fabio Siccherino said the company is keen to become the port’s operator. The final decision, however, will depend on the contract model offered by the government. The auction is expected in 2025.

DP World’s vision is to create an integrated logistics network that incorporates internal transport services, cargo handling, customs clearance, and delivery to the final destination.

“If we already have connectivity between our terminals, why not integrate everything and offer something more competitive? This is the direction in which we have grown and invested here in Brazil,” said Siccherino.

The American Dream

Eighteen years ago, DP World faced a significant setback in its global expansion plans. In early 2006, it acquired the British company Peninsular & Oriental Steam Navigation. Through this acquisition, it gained control of five port terminals on the U.S. East Coast.

However, it had yet to count on one thing: American politics. The 9/11 terrorist attacks had sparked an ongoing wave of anti-Arab sentiment. A congressional committee opposed a UAE state-owned company controlling critical infrastructure in the U.S. This political pressure forced DP World to divest its assets in the country.

DP World then turned its attention to its northern neighbor, Canada. In 2006, it bought management of a terminal in Vancouver, and since then, it has expanded its presence in the country, focusing mainly on port infrastructure.

In recent months, DP World has looked southward, intensifying its efforts with Mexican authorities to negotiate the establishment of a large industrial complex similar to the Jebel Ali Free Zone, which helped cement Dubai’s position as a global maritime trade hub.

The new plan is to increase the share of trade headed for the U.S. by “surrounding” the country—to the north, with its infrastructure in Canada, and to the south, with the complex in Mexico. Once within U.S. territory, goods pass through several logistics centers controlled by DP World. The only restriction is on ports.

At least for now. In an interview with The Wall Street Journal, DP World CEO Ahmed bin Sulayem said the company has not given up on U.S. ports and believes the political climate in Washington is different compared to two decades ago.

However, here’s an important note: Sulayem’s statement came a few months before Donald Trump’s victory in the U.S. presidential elections. Trump will return to the White House in January 2025, bringing with him a nationalist and protectionist rhetoric that could undermine—or delay—the company’s long-standing ambition for a U.S. port of its own.

(Contributed by Rikardy Tooge)

Source: InvestNews

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