Short-sea carrier buy boosts DP World's India market control

Short-sea carrier buy boosts DP World's India market control

DP World estimates the combined Transworld feeder and NVO businesses represent 1.2 million TEU in annual volume at present. Photo credit: DP World India.

The acquisition of a short-sea carrier active in India and West Asia trades by DP World subsidiary Unifeeder aims to deepen the global port terminal operator’s offering of integrated container logistics services and create operational synergies between its marine terminals in the region.

Ending months of speculation, DP World on Wednesday said Unifeeder ISC (Indian Subcontinent) has agreed to purchase three business units of the Mumbai-based Transworld Group: Transworld Feeders FZCO, Avana Logistek, and Transworld Feeders Pvt. Ltd. Terms of the deal were not disclosed by DP World, but Transworld, in a filing to the stock exchange, put the aggregate consideration at $27.7 million. Transworld Feeders controls the Shreyas Shipping brand, which operates a countrywide short-sea network for Indian coastal freight and a regional transshipment link through the Port of Jebel Ali in Dubai, while Avana offers non-vessel operating common carrier (NVO) and freight forwarding services out of India.

“These new activities are in line with our strategy and complement our recent acquisitions of Feedertech and Perma Shipping,” Sultan Ahmed Bin Sulayem, DP World group chairman and CEO, said in a statement. “We now have the capability to offer superior connectivity between Asia, the Indian Subcontinent, the Middle East, and East Africa, and this greater scale and comprehensive network presence will allow us to reduce inefficiencies in the supply chains to the benefit of all our customers.”

DP World said the newly purchased entities will remain asset light, emulating the Unifeeder model, which it believes will drive greater value for customers. It estimates the combined Transworld feeder and NVO business represents 1.2 million TEU annually at present.

“The acquisition of three of our portfolio companies will provide DP World and Unifeeder ISC a robust platform to jointly deliver a more complete range of solutions to our customers,” said Ramesh S. Ramakrishnan, chairman of Transworld.

Shreyas currently owns a fleet of 13 vessels ranging in size from 700 TEU to 4,300 TEU. However, the scope and value of the transaction, expected to close this year, does not include the sale of Shreyas’ vessels and bulk activity. Instead, Transworld said both parties will enter a long-term framework agreement by which Unifeeder will charter Shreyas’ vessels. Shreyas reported a net loss of Rs. 66.14 crore ($8.8 million) in the last fiscal year ended March 31, 2020, despite group revenues remaining relatively flat at Rs. 616 crore.

The latest deal complements DP World’s recent landside expansion in India, propelled by two depot network takeovers.

Demand for short-sea shipping options in India has gained traction following a national cabotage law change enacted two years ago. This liberalization could be a boon for DP World as it looks to pool feeder resources under the combined Unifeeder platform, along with Feedertech and Perma Shipping, added to the fold in December 2019.

DP World operates six terminals across five Indian port locations, and the short-sea and feeder operations are “expected to have a synergistic effect on the terminal business,” a DP World official told JOC.com. The firm’s Cochin terminal, seen as a competitor to Sri Lanka’s Colombo port, handled approximately 36,000 TEU of transshipment cargo last fiscal year out of a total 620,061 TEU of containerized goods flowing through the facility.

Bency Mathew can be contacted at bencyvmathew@gmail.com.