DP World Is Seeking to Build a Trade Hub in Mexico

Port terminal operator DP World is talking to Mexico’s government about allowing it to start operations in the country, which would enable the Dubai-based business to handle cargo heading into the U.S. from the south.

DP World hasn’t been able to extend its ambitious global growth plan to the U.S. since hitting political roadblocks some two decades ago. Instead, it has invested in five terminals on Canada’s East and West coasts that feed into the U.S. from the north.

A presence in Mexico, where foreign government-controlled entities are barred from ownership of port facilities, would allow DP World to effectively surround the American market in hopes of gaining a bigger slice of U.S.-bound seaborne trade.

Sultan Ahmed bin Sulayem, chairman and chief executive of the Dubai-based operator, said he is looking ideally for a Mexican port with nearby land large enough to sustain a huge industrial park. He pointed to the template he used as chairman of the Jebel Ali Free Zone, a port and industrial park complex that helped cement Dubai’s place as an ocean trade hub.

“We would love to have a combination of both port and industry” in Mexico, said Sulayem. “It really provides a lot of cargo for the port and makes it so easy for people producing to ship it immediately.”

DP World has spoken with Mexico periodically over several years about a port investment, but no agreement has been finalized, according to a person familiar with the matter.

Sulayem said he didn’t think Mexican law would be an impediment to DP World’s Mexico ambitions. “We have faced this in other areas and eventually it was resolved,” he said.

DP World hasn’t been able to overcome political opposition in the U.S.

The company was forced to divest of five East Coast terminals in 2006 after buying the assets as part of a takeover of U.K.-based Peninsular & Oriental Steam Navigation. U.S. politicians raised security fears about the critical infrastructure being owned by a United Arab Emirates-based company not long after the Sept. 11 terrorist attacks.

Sulayem said he is still interested in U.S. infrastructure. “We haven’t given up on U.S. ports,” he said. A DP World official said the company believes sentiment in Washington is different today than 20 years ago.

Mexican ports and factories are booming as geopolitical tensions and tariffs push more companies, including Chinese companies, to set up manufacturing in Mexico, closer to U.S. consumers. Logistics specialists expect the nearshoring trends to foster larger ecosystems of parts suppliers and bring more cargo volume from abroad to feed parts into factories.

DP World has grown through a series of acquisitions into a global ports operator and extended its reach in trade by buying logistics providers. It has more than 113,000 workers covering sectors such as freight forwarding, warehousing and trucking and counted a profit of $1.5 billion in 2023 on revenue of $18.25 billion.

The company owns or operates more than 70 ports and terminals, including facilities in Dubai, London, Hong Kong and Santos, Brazil.

Although DP World hasn’t sought a U.S. container terminal since being rebuffed in 2006, it is expanding its U.S. presence through inland logistics businesses.

The company in 2021 paid $1.2 billion for Syncreon, a Michigan-based logistics provider that specializes in technology and autos. The following year it opened a more than 1,300-acre industrial park close to the Port of Charleston, S.C. Last year, it bought Long Beach, Calif,-based auto-transporter CFR Rinkens for an undisclosed sum.

Story by Paul Berger for the Wall Street Journal

Write to Paul Berger at paul.berger@wsj.com

Source: https://www.msn.com/en-us/money/companies/dp-world-is-seeking-to-build-a-trade-hub-in-mexico/ar-AA1rcjtk

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