United Arab Shipping joins the frontline as other shipping companies retreat

UASC sets up Pakistani subsidiary and launches direct service from Karachi.

KARACHI:

Few shipping companies will apparently be interested in making long-term investments in a country whose imports and exports remained suspended recently for more than two weeks only because truck drivers went on strike over issues like extortion, highway robberies and load-carrying limits.

Against this backdrop, United Arab Shipping Company (UASC) – a leading shipping line jointly established by Bahrain, Iraq, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates in 1976 – seems to be an exception: Not only has UASC set up its subsidiary in Pakistan recently, it has also launched a direct service, which will call on the Karachi port twice a week and link Pakistan with India, West Asia Gulf, the Red Sea, Port Said and Turkey.

“Like most big players in the global shipping business, 2010 was a difficult year for UASC. But our strategy to sail through crucial times included doing away with working via agents in foreign countries and setting up our own office here to control costs and achieve better efficiencies,” United Arab Shipping Agency Company Pakistan CEO Mallick Khalid Mahmood told The Express Tribune in an interview.

“Working through agents results in higher costs because they do not have access to modern cost-reducing technologies that we as a global company do. By reducing our operational costs, we become more competitive in freight costs, resulting in higher cash inflows,” he added.

Roughly 200 shipping agents are registered in Pakistan. Although each of them represents one shipping company in the country, only 100 of them can be categorised as active players on account of cargo volumes they handle annually.

Currently, only seven shipping lines have their own offices in Pakistan. A few other players also maintain a visible presence because of their constant branding efforts, but they prefer to work through their agents.



Changing dynamics

While many shipping companies shut down permanently their containerised operations in Pakistan because of shrinking cargo volumes in recent years, smart ones opted to become ‘service partners’. Such partnerships mean that instead of operating in loss on multiple routes simultaneously, different shipping lines optimise their operations by teaming up together, according to Mahmood.

Referring to UASC’s GEM 1 service, which is the newly launched direct service in Pakistan, he says his parent company has partnered with China Shipping Container Lines Company. “We needed eight vessels for GEM 1. UASC provided it with seven vessels and the eighth one came from Chinese-based partner,” he says.

“Similarly, in our Middle East/Indian Subcontinent/North America Service (MINA), one of our partners is Hangin Shipping, which provided us with three ships. As for sharing cargo space for the MINA service, we have partnered with K-Line, a Japanese company,” he adds.

Expansion plans

Mahmood says UASC is a diversified company with interests in containerised cargo shipment, chemical cargo shipment, logistics, storage and warehousing, ship repair and container repair. UASC is now planning to enter the logistics business in Pakistan in the near future, according to Mahmood. “We bring containers here and they need to be transported. That is where we are focusing right now.” he says.

Saying that UASC had been expanding rapidly in Pakistan since July 2011, when it first set up its office in the country, Mahmood notes it had already established an empty container park of its own besides starting a crew management unit.

Published in The Express Tribune, December 16^th, 2012.