DP World’s Unifeeder move is a bid to redress the power imbalance with carriers: Drewry

British shipping consultants Drewry have given their verdict on terminal operator DP World’s surprise move to acquire Danish shipping line Unifeeder, suggesting the purchase is a “risky strategy”.

DP World is paying $765m to buy Unifeeder, a deal that has sparked much comment and debate on this site.

“While the company clearly wants to do more than it used to, and even after purchasing Unifeeder, we are not convinced that it really wants to cover the whole supply chain and compete head-to-head with shipping lines, who after all are its core customers,” Drewry stated in a report, published this week, adding: “Whether any single company can truly master the entire supply chain is debatable, but carriers would appear to have a jump start over terminals by virtue of actually carrying the cargo on the longest link of the supply chain.”

Drewry reckoned DP World’s current strategy is motivated more by the fact that carriers’ negotiating power over terminals has increased significantly in the past few years following the rise of the mega-alliances and consolidation.

“By pursuing cargo owners through industrial zones and the like, terminals can redress some of the power imbalance with carriers by forcing them to call at their sites via shipper demand,” Drewry suggested.