Breakbulk Magazine: Issue 1 / 2016

TAKING THE FAST TRACK n TRADING PLACES n RIDERS ON THE STORM n SHORE SOLUTIONS

ISSUE 1 / 2016

after dark

SPECIA

2016

L SUP

UP FOR THE

CHALLENGE? PROSPECTING FOR OPPORTUNITIES IN 2016

PLEM

ENT IN

SIDE!

Engineered transports With more responsibilities resting on the shoulders of contractors, managing transport risk is a central factor to ensure operational and economic project success.

BBC Chartering is determined to help by tendering for projects, by engineering tailor-made transports and delivering integrated solutions for any assignment. www.bbc-chartering.com

Visit us at Breakbulk China March 15-17 2016, Booth #502 in Shanghai

contents

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26 REGIONAL REVIEW

TAKING THE FAST TRACK South Africa Steps on the Oil And Gas Pedals

34 REGIONAL REVIEW

TRADING PLACES

Carriers Ride China’s Wave of Africa Projects

41 TRADE NOTES

VICTORY FOR INFRASTRUCTURE

Canada’s Expansionary Growth Plans, Trudeau Style

8 UP FOR THE CHALLENGE?

Prospecting for Opportunities in 2016

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46 CASE STUDY

PATIENCE AND PERSEVERANCE

Devil in Details for Ultra-heavy Moves

50 INFRASTRUCTURE

SHORE SOLUTIONS

Greenfield Ports Drive Project Cargo Opportunities

54 REGIONAL REVIEW

26

RIDERS ON THE STORM

Navigating Australasia’s Rough Project Terrain

BONUS SECTION

BREAKBULK AFTER DARK

6 Editorial n 64 Not-so-free Flow n 68 One Hull, One Vision n 71 Photo Contest 72 Up In Smoke n 73 Chin Up n 74 Breakbulk Index n 78 Dealing With Transition 4 BREAKBULK MAGAZINE www.breakbulk.com

ON THE COVER:

Illustration by Catherine Dorrough Images via WWPC and Shutterstock ISSUE 1 / 2016

d ou Pr LN GP

Membership Available in Selective Markets!

Application: info@gpln.net www.gpln.net

M em ce in

rS be 12

20 Visit us at Breakbulk China in Shanghai March 16-17, 2016 Booth No 004

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2 t.

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editorial

HARD TIMES

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“There is a season ... and a time to every purpose under heaven” – “TURN, TURN, TURN” THE BYRDS

CORRECTION Taylor Machine Works Inc. should have been the company name listed as the BBAM Booth Winner on page 114 of the NovemberDecember 2015 issue.

rom the wringing of hands and gnashing of teeth, some would conclude that we’re facing the end times of the breakbulk and heavy-lift industry.

Mark Twain never did much heavy lifting, but he, too, was quick to point out news of his death was “an exaggeration.”

Granted the oil and gas industry is taking it on the chin. But this behemoth industry hardly has a glass jaw. It’s hard to believe that after seemingly innumerable years of massive profitability, oil and giants have not saved for a rainy day.

Among the executives polled in our annual outlook feature (“Up for the Challenge?”, page 8), no one was crying in their tea leaves as they offered analysis on the coming year. The simple truth is there’s still plenty of business out there for competitive companies that can bring value, and of course the right price, to project customers who find themselves in a buyer’s market.

There’s no crying in breakbulk. By example, our outlook participants drive home the point that successful companies and industry leaders excel based on how they perform when times are hard, and best position themselves for when business improves.

The knee jerk reaction back at the start of the Great Recession, and previous market maladies, has been to downsize and jettison idle resources, including experienced staff, hunker down and hope for it all to blow over.

However, there’s little fruit to be reaped from such frugality when markets turnaround.

6 BREAKBULK MAGAZINE www.breakbulk.com

Instead, a company is forced to play catchup and rebuild its resources, yielding a head start to competitors – who frequently have snatched up the professional expertise and resources they cut loose.

Instead, leading companies are taking care of their current orders, competing aggressively and intelligently on the business that is available under the current market, and are working three steps ahead of the competition.

These companies channel energy into diversifying and exploring alternative markets, shifting from oil to gas projects, or expanding into chemicals, renewable energy or other industry verticals.

Such an approach requires some introspection, honest selfanalysis of service portfolio, and some vision of how it can adapt and grow with market developments, trends and new business opportunities.

Another key approach is, rather than cutting loose in-house expertise, use the down time to train staff, including the cross-training that helps develop the flexibility to quickly adapt.

Obviously, less business means fewer resources to devote to operations. But rather than ruthless budget cuts, the need is for lucid exploration of operational processes to eke out efficiencies to truly do more with less. Such exploration has led to innovations and leading-edge processes that quickly become industry standards.

Due to the interactive nature of breakbulk and project cargo, such development can’t be done in a vacuum. So stakeholders must cooperate and develop partnerships with similarly innovative companies to effectively manage resources and reap the benefits as markets turn around.

If there’s one certainty in the world, it’s that it will turn, turn, turn.

EDITORIAL DIRECTOR Gary G. Burrows / +1 904 535 5460 gburrows@breakbulk.com NEWS EDITOR Carly Fields carly@breakbulk.com HEAD DESIGNER Catherine Dorrough DESIGNERS Mark Clubb Emily Pérez REPORTERS Alan M. Field Malcolm Ramsay Eric Johnson Mary Shacklett Iain MacIntyre V.L. Srinivasan Lori Musser

BREAKBULK EDITORIAL BOARD John Amos Amos Logistics

Ed Bastian

BBC Chartering

Murray Cooper

McDemott International Inc.

Etienne de Vel Fednav Belgium

Dennis Devlin DB Schenker

John Hark

Bertling Project Logistics

Dennis Mottola Bechtel Corp.

William Moyersoen

ArcelorMittal Antwerp Logistics

Albert Pegg

Antwerp Port Authority

Dirk Visser

Dynamar D.V.

Grant Wattman

Agility Project Logistics

MANAGING DIRECTOR Alli McEntyre / +353 21 477 3808 amcentyre@breakbulk.com ACCOUNT MANAGERS Kathleen Pinson / +1 423 598 2264 kpinson@breakbulk.com Manager for West, East & North Africa Kingsley Ekweariri / +1 353 89 952 4754 kekweariri@breakbulk.com

SUBSCRIPTIONS To subscribe, email bb.breakbulk@adsg.info, or call from inside the US +1 855 613 8186 between 8:00 am and 5:00 pm CST. A publication of ITE Group plc Transport & Logistics business 105 Salisbury Road London NW6 6RG, UK.

Gary Burrows Editorial Director ISSUE 1 / 2016

Project & Heavy Lift Liner Services

cover story

UP FOR THE CHALLENGE? Prospecting For Opportunities in 2016

8 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 1 / 2016

Illustration by Catherine Dorrough / Images via WWPC and Shutterstock

Attempting to frame the

apprehension permeating the breakbulk and heavy-lift industry in 2016, several executives diplomatically reached for the word “challenging.”

With all that businesses faced in 2015, and the economic and political issues that loom this year, it would be easy enough to hit the snooze button and try again in 2017.

Instead, we were able to prevail upon 12 leaders to apply sober assessments of global prospects and issues affecting the industry; potential growth markets and those facing a downturn; key issues that will mold and shape business; and how it will all affect relationships between the key stakeholders, cargo owners and carriers.

Of course the continued downturn in oil and gas prices continues to fuel

We are in for a challenging, yet invigorating business and economic climate in 2016. Globwww.agility.com ally, capital projects will be flat at best; oil and gas and mining will see a continuing decline in activity, with persisting margin compression and working capital challenges.

Capital projects, while flat globally, have significant variation depending on markets. The Middle East, Africa and the U.S. offer the most positive news; Europe, India, China and Korea will be sourcing

Grant Wattman President and CEO Agility

tensions leaving a void of projects that EPCs, logistics providers and carriers are scrambling to replace.

With a dim outlook for oil and gas, tempered with some positive regional prospects and potential for infrastructure and renewables, prospects will range from flat to depressed through 2016 and possibly into 2017.

Despite such dismal projections, the following outlooks move towards the bright spots and point towards potential opportunities, true to the ingenuity and perseverance of a unique industry.

Who’s up for the challenge?

countries for these projects. Look to infrastructure across the globe to be one of the bright spots.

We are in a period of oversupply with oil and about to enter the same with gas. This oversupply of gas will become greater with the introduction of supply from the Australian mega projects, starting this year and continuing through 2017. Major oil and gas companies are seeing an impairment on assets, squeeze on cash flow and some are experiencing a downgrade by credit rating agencies.

Combined with declining stock prices, there is increasingly more pressure on any capital available to fund expansion or new facilities, outside of maintenance capital expenditures.

There is some expectation that we are looking to late 2016 for a potential uptick in activity. However, my position is that we will not see this until 2017. A significant number of liquefied natural gas projects will not see the light of day until 2020 or later, with the queswww.breakbulk.com BREAKBULK MAGAZINE 9

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tion being not whether they proceed, but when. Agility Project Logistics is taking a strategic view to those projects aligned with our portfolio and subject matter expertise. In 2016, we see opportunity in petrochemical, power, gas conversion, pipeline and distribution, operating CAPEX and those liquefaction projects that will proceed.

Agility is well positioned with no debt, a strong client base, and exhibited skill sets in emerging markets and remote locations. Agility Project Logistics is focused globally on our portfolio of capital project, oil, gas, mining and marine services. During this period of low activity, we will be investing for the future, refining our solutions approach, adding subject matter experts globally, and expanding our market share by making it easy for clients to engage with our network and consistently delivering on our commitments.

My cautionary note is in the search for the “holy grail” of lowest cost. In the past, those speaking highly of safety, health, quality, security, credibility, capability, and dependability are now silent. Where

transparency was king, now the written word is taken as a reflection of stability and companies are looking for the lowest cost and hoping everything works out.

While all sectors of the industry are affected, perhaps most notable are the ocean carriers. Significant portions of multipurpose and heavylift vessels are owned by banks or other financial institutions. Pricing to make interest payments, entry of nation state carriers, reduction in maintenance expenditures, and a shift in project markets comes amid increasing environmental, security, health and safety regulations. A lowest cost focus buys increasing operational risk: vessel seizures, aging assets, reliability declining, and maintenance on as-needed basis.

Shippers gain the short-term benefit, but what does it look like in 2018?

Would you fund new vessel building in a market that will not provide a return? It’s no surprise that financial institutions look at it the same way.

Declining capacity, increasing utilization, will be the future.

Among shippers, carriers, service providers and others, look for some to fail, some to acquire, others to stay the course. Not new, nor the first time we have seen similar. The question is how long can it be sustained?

Dennis Devlin

those financed by the big oil companies.

Conversely, cheap shale gas did drive chemical plant expansion and construction projects in the U.S., as well as liquefied natural gas export terminal projects. More recently, we saw the oil majors cutting their capital budgets for 2016 by about 20 percent to 40 percent as announced in almost daily, depressing press releases in late December.

But it bears noting that even with significant cuts to their capital budgets, the big oil companies still have very robust budgets. For example, Thomson Reuters recently reported that global oil and gas investments would fall to US$522 billion

Senior Director / Head of Business Development – North America Global Projects / Oil & Gas DB Schenker Inc. www.dbschenker.com

Someone once said, “the only function of economic forecasting is to make astrology look respectable.” The same can probably be said of people who forecast market prices for crude oil and other commodities.

2015 started off a bit gloomy with weak global economic growth, a weak mining sector due to weak commodity demand, and predictions of the cancellation or delay of major projects, especially 10 BREAKBULK MAGAZINE www.breakbulk.com

Someone once said, ‘the only function of economic forecasting is to make

astrology look respectable.’

in 2016 – US$522 billion still represents quite a lot of work.

Similarly, in North America new chemical and other downstream plant projects were announced in 2015, and LNG export projects were approved.

Both are a result of the low costs for natural gas. And while North America is still very active for those reasons, there is also substantial work in other global regions, most notably in the Middle East.

2016 started just like 2015 ended, and will continue more or less along the same path. Predictions for global economic growth are far from rosy, but there is some growth as opposed to recession.

With weak economic growth, demand for energy and commodities won’t increase quickly.

2015 also brought some good news: The U.S. Congress (finally) reauthorized the Export-Import Bank charter, and funded roadway repairs and construction with the US$305 billion FAST Act signed by President Obama on Dec. 4.

I’m neither an astrologist nor an economist, but I suppose I am an optimist. And I think that 2016 will look a lot like 2015 did: weak. But on the glasshalf-full side, there is still a lot of work, and although it is a weak period, that will eventually end. It will be a difficult year for all involved, especially for ship owners, who took delivery of new multipurpose ships in 2015 and have commitments to take delivery for even more new ships in 2016, during a period of weak (and weakening) demand. And everywhere competition will be strong, and there will be downward price pressure. Margins may be weaker. But sooner (one hopes) or later economies will grow faster, commodity prices will rise, capital investments will increase, and the market for project transportation will improve over last year and over 2016.

ISSUE 1 / 2016

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Gerhard Janssen

Director Global Sales and Marketing Rickmers-Linie www.rickmers-linie.com

Industry prospects for 2016 depend on economic development in China, India, Brazil and Russia, and the oil and gas supply situation overall. This coupled with overcapacity in the container and bulk sector means there will be continuous pressure on the multipurpose carrier segment.

Looking at potential growth markets, infrastructure projects – such as rail, power generation, desalination, port infrastructure – will progress in some geographical areas, driven by public investment. We also see continuous activity in renewable energy – mainly wind – and infrastructure related to this sector will be executed on a global scale. We are, however, concerned about the economic development in some regions, such as Brazil.

More positively, bunker fuel costs have come down, which certainly helps us in keeping operational costs

Credit: Rickmers-Linie

12 BREAKBULK MAGAZINE www.breakbulk.com

down at a time when freight rates are low. On the other hand, lower fuel costs negatively affects us as oil and gas projects are postponed or cancelled. Many companies in the sector are hesitating to make any commitments for projects.

There is a chance for some positive developments in the oil and gas industry once sanctions on Iran are lifted and the country can start to invest in infrastructure, power and other industries. However, we only expect this to be visible from the third quarter 2016 onwards.

Container carriers, in view of their overcapacity situation, are increasingly trying to canvass cargo from the breakbulk and heavy-lift sector. Rollon, roll-off and bulk carriers are also trying to take their slice of the cake.

This increased competition comes as the multipurpose sector itself is coping with challenges. That said, at least there is no exaggerated newbuilding program at the moment, which is a problem being faced by the container and bulk segments.

While cargo owners and other shippers will certainly take advantage of the overcapacity, we also believe that prudent cargo owners choose carriers with a healthy balance sheet.

Shippers want to enjoy excellent terms and conditions, including rates, however they remain concerned about carriers’ ability to perform and the state of their underlying financials.

Jake Swanson

Regional Logistics Manager, Americas, Engineering, Construction and Maintenance, Oil & Gas CB&I

2016 has the potential of being another tough year. The price of oil and the worldwide economy is still not where we would like it to be. It is not at a level where you see project owners jumping at the chance to do projects. There are some projects that are already on the books and those will move forward, but I think what you will see is that a lot of the prospective project opportunities will move to the right.

As far as markets showing potential, I think that the U.S. Gulf is a growth market. You will see quite a bit of liquefied natural gas work in this region over the next year. Trucking companies and barging operators will stay busy in this region. East Africa also has the potential of being a growth market in 20162017, specifically towards the latter part of this year, depending on the developments in Mozambique.

Facing the oil and gas industry’s continued downturn, I think that the industry will be cautious this year and see how things develop. Specifically, we will focus on executing the projects that we have on the books and will be careful about our growth prospects. We will focus on increased training for our staff and even cross-training within the other disciplines within our organization.

Beyond oil and gas, I think the global economy affects our industry greatly.

Economic challenges in China, Brazil, Russia, for example, slow down the potential for future investment in projects, which directly affects our industry.

For carriers, 2016 will be another tough year for shipping rates. I do not believe that you will see much upward movement in ocean freight rates this year.

This is obviously not good news for carriers, as current levels are not healthy.

ISSUE 1 / 2016

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The Clarence Henry Truckway, a dedicated two-lane roadway on Port property, makes fast transit times even faster.

The Port also offers near-dock rail and ship-to-barge services. Looking forward, the Port of New Orleans is always innovating and expanding, so you can comfortably do business here.

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cover story

Paul Runge

Managing Director Africa Project Access www.africaprojectaccess.co.za

International financial organizations such as the African Development Bank forecast Africa’s economic growth at between 3.5 percent and 5 percent for 2016. This is despite uncertain global conditions and the strong downturn in both hard and soft commodities, which has led to the freezing of numerous resource-based projects in the region.

Against the backdrop of this gloomy scenario, many sub-Saharan African countries continue to register strong project activity in sectors such as power (especially renewables), commercial property and construction, and information and communications technology/ communications (notably the growing demand for data). Agricultural industries continue to receive attention from a wide array of funders from donor agencies to specialized equity funds.

While gas and mining sectors are stagnant, power, infrastructure, commercial and mixed-use development continue to be areas of opportunities for us in 2016.

Given the subcontinent’s urgent power in addition to the strong interconnector supply requirements and strong donor power transmission initiatives of the Eastsupport, there will be much emphasis on ern African Power Pool. The central rail renewables, from geothermal to solar and corridor and new ports such as Bagamoyo from wind to biofuels.. However, the really in Tanzania are attracting attention. strong theme will be gas-to-power. Vast On the west coast, there has been conliquefied natural gas deposits have been siderable port activity from Saldanha and uncovered in Mozambique and Tanzania, Walvis in the south through to Douala in and “old” established oil countries such as the central area and Abidjan and Dakar Nigeria are giving increasing attention to further north. Saldanha in South Africa, the utilization of their previously flared Takoradi in Ghana, and San Pedro in gas resources.

Côte d’Ivoire are examples of new port A key market for 2016 developments based on the develwill be Ethiopia. Its huge opment of oil and gas hubs. hydropower potential Private concession holders Paul Runge will is being realized to such as the Bolloré group moderate the such an extent that the are implementing port Super Session country will become a improvements. The panel “Business major power exporter capital-intensive nature Opportunities in to eastern and southern of rail is delaying projFrancophone Africa” African regions. The ects in this sector, but at Breakbulk Africa 6,000-megawatt Grand there are concrete develon April 6.

Renaissance Hydro Dam opments such as those Project is being completed. relating to the West Africa Strong efforts have been Loop Rail Initiative. made to improve the supporting Finance and logistics are perinfrastructure in the form of road and rail meating the current debate on African network extensions. Major commercial economic progress during these diffiprojects including new industrial zones cult times. There is a strong need at this abound in Addis Ababa. Ethiopia could important juncture for greater collaboraregister a 2016 growth rate of close to tion and an integrated practical approach double digits. between the logistics operators, the Despite the current political problems project implementers and the wide range in Burundi, East Africa is proving to be a of funding agencies with the pragmatic particularly vibrant region with imporsupport of governments to achieve an tant rail and port infrastructure projects adequately enabled environment.

Philip Ovanessians

Vice President of Supply Chain, Logistics, and Inspection Samsung C&T Corp. www.samsungcnt.com

While gas and mining sectors are stagnant, power, infrastructure, commercial and mixed-use development continue to be areas of opportunities for us in 2016. Key regions of particular growth are in Southeast Asia, Singapore, Myanmar, Cambodia, and Malaysia. We also see pockets of opportunities in the infrastructure sector in Australia and the Middle East such as Turkey, Bahrain,

14 BREAKBULK MAGAZINE www.breakbulk.com

United Arab Emirates and Qatar.

Despite the continued downturn in the oil and gas industry, our company is, fortunately, very well diversified and positioned in other industries. With regards to the opportunities in infrastructure, we are executing, with our joint venture partners in Australia, a multibilliondollar infrastructure project in Sydney. As for mining, we just completed a US$5.8 billion iron ore project in Western Australia. We ISSUE 1 / 2016

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are executing liquefied natural gas projects in Malaysia, Singapore, Thailand, the UK and Bahrain. We are also executing a number of power projects in Algeria, Kazakhstan, Turkey, U.A.E., Saudi Arabia and Qatar. We are also one of the partners on the Riyadh Metro Projects, Qatar Metro, and have been prequalified for opportunities in North America.

Further into the near future we expect to be involved in the pharma-

ceutical industry, as well as, continue to execute capital projects in the technology industry.

As for issues affecting the industry in 2016, from our perspective clients continue to push the envelope to pass down their risk to the construction contractor. For instance, we have seen clients include guarantee clauses in the delivery of equipment and materials. We have also seen clients specify to us which carriers to utilize on projects where

we assume the cost and risk. There is a further trend whereby clients want the construction contractor to also assume the role of program management contractor, or PMC, for large mega projects of more than US$1 billion.

As a parting note regarding carriercargo owner relations, as in the majority of our projects we assume the cost and the risk, the carrier’s health has a direct impact on whether a project is executed successfully and is profitable.

Dominik Stehle

market conditions, and our business model requires constant re-engineering to stay on top of market developments, emerging trends, and opportunities. A critical analysis of our service portfolio, paired with vision and an instinct for new opportunities, will be needed to maintain our strong position in the field of project forwarding. The ability to adapt quickly and stay in tune with changing market conditions is the key to

success when going through tough times.

We stay optimistic as underinvestment in oil and gas projects will hopefully lead to a shortage and a self-correction of the market. While this may not happen in 2016, we hope that the oil and gas market will recover within a reasonable time period, as ultimately both our clients and the entire project forwarding and shipping industry need healthy oil prices to sustain a successful business.

Regional Vice President - North America deugro (USA) Inc.

Due to the downturn in the oil and gas industry, 2016 will be a challenging year for the project forwarding and shipping industry, and the effects will be felt throughout the year and well beyond.

Oil prices continue to slide, with a major impact on many of our customers and ultimately deugro’s business. Tensions in the Middle East could reverse this trend, although in the short term this would be limited to the price of oil and not necessarily business opportunities.

Over the years, deugro has benefited from the energy construction boom, resulting in growth for our U.S. business unit and the hiring of more than 40 employees in the Houston region alone.

While the oil market is focused on finding a bottom for oil prices, deugro is channeling its energy into diversifying the business and breaking into new markets. While the oil and gas industry may be headed for a recession, we see opportunities in the chemical sector as cheap natural gas, which is used to produce derivatives, continues to spur significant investments.

As a dedicated project-forwarding specialist, we are used to inconsistent 16 BREAKBULK MAGAZINE www.breakbulk.com

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John Hark

Regional Director – North America, Chief Operating Officer – South America Bertling Logistics Inc.

We believe the short-term outlook for 2016 is challenging. The traditional client base for projects is struggling with low commodity prices, and this is casting a large shadow and doubt over commitments to new projects and investments.

In 2015, we experienced a slowdown in new projects and the full impact of this will only likely be felt during 2016 and perhaps beyond.

Geographically, we continue to see investment in the Middle East, East Africa and Southeast Asia. Conversely, we continue to see a depressed energy market in Europe, Japan still struggling and Australia coming to grips with lower commodity demand and prices after several years of much investment and activity.

In response to the continued downturn in the oil and gas industry, Bertling is making organizational decisions by reviewing our resource allocation to ensure that we remain a cost leader. We

need to continue delivering the best value for our clients, and are turning our focus to increasing our operational performance and efficiency while seeking out new opportunities.

Beyond oil and gas, we see some of the greatest issues that will affect our industry in 2016 being possible shipping line consolidations resulting in less choice for shippers, bankruptcies and counterparty risk, and continued pressure on air cargo carriers with the depressed economy. Our industry needs to respond by improving on operational processes and increasing efficiencies to do more with less. We need all stakeholders in our industry to cooperate on innovations, which will take our businesses through the market challenges we face now and into the future.

With so much spare capacity it is difficult now to see how the ocean carriers can push through a rate increase, especially given the current low project activity. However, with lower fuel prices, household budgets are somewhat boosted and this could stimulate demand in other areas such as power generation.

The health of the largest and most efficiently operated carriers is not necessarily in immediate doubt.

However, we do expect more consolidation and overcapacity through 2016.

Our industry needs to respond by improving on operational processes and increasing efficiencies to do more with less.

Kyriacos Panayides

We, representing multipurpose/ Managing Director heavy-lift operaAAL tors, have already digested the fact that we will have to carry on navigating the “perfect storm” of negative market influences for at least the short term. What we are experiencing today is akin to the worstcase scenario projection of a business plan.

18 BREAKBULK MAGAZINE www.breakbulk.com

The pie of the MPP/heavy-lift cargo has significantly reduced, driven by low commodity prices which have led to cancellations and postponements of new projects in the oil and gas and mining sectors. We also see that a proportion of remaining cargo volumes are being taken away from us by bulk carriers, such as steel and other light MPP cargo – even windmill components.

Additionally, roll-on, roll-off carriers have taken some of the machinery cargoes and we now see container

lines investing in modified hardware to accommodate MPP cargo.

Living in an extremely aggressive competitive environment leads to freight rates becoming unsustainable to cover the comparatively expensive MPP infrastructure and the cost of the vessels against cheaper bulk carrier operations and lower cost vessel maintenance and operations.

We’ve set in place a flexible business model and infrastructure to promptly cope with such adverse market conditions. This gives us the ability to shift our business focus from one industry sector to another, or from one market to another, to best exploit business opportunities as they arise and limit our exposure to underperforming geographical markets and industry sectors. At the same time, we’ve opened dialogues and formed different cooperations with various stakeholders. We’ve used this model to cope with the new era and to improve our performance and margins, against a backdrop of very challenging market conditions.

Our strategy will continue to seek out and research new global business markets, but always from a local perspective and by harnessing and using local expertise, intelligence and language. This helps us to get closer to our customers and understand their drivers, not as incoming outsiders, but as long-term local partners.

Although we remain cautious about the short term, we see opportunity in a growing number of worldwide wind energy projects coming online in China, South Korea and across Europe into the Americas, driven by demand and favorable legislation. In addition, the lifting of sanctions on Iran will help to kickstart new petrochemical, oil and gas and valuable infrastructure projects.

Finally, it’s also only a matter of time before some of the larger proposed oil and gas projects come back on line, as global demand grows.

ISSUE 1 / 2016

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Svend Andersen CEO BBC Chartering

www.bbc-chartering.com

In 2015, commodity markets lost over all segments, trading on average 11 percent lower for precious metals, 19 percent lower for grains, 24 percent lower for industrial metals, and 41 percent lower for energy commodities, according to S&P Goldman Sachs commodity index (S&P GSCI). This kept the pressure on the project market, which additionally has to deal with an abundance of shipping capacity on the supply side.

With a lack of global trends to commercialize the demand side, we see a project shipping market in transition. In the midst of a volatile dynamic, we currently record good activity out of the Far East and within Southeast Asia attributable to the petrochemical sector and to an increase of cargo volumes especially for wind, gas and other energy related projects. We see much of this being driven by the ongoing global energy diversification trend, although this only partly offsets the missing volumes the market has to accept from the slump in oil and gas driven project activity. A highly

short-term and fast-moving market requires us to react swiftly, and we think that all these factors together forebode another suspenseful year for project shipping in 2016.

As a project carrier and market leading operator, we are bound to offer our services on the back of the available market capacity. However, as the market has to further digest a capacity surplus, we are putting our efforts in ensuring highest levels of service delivery for cargo customers and attaining adequate income on vessels through their above-average utilization. We continue to receive good support and feedback from our customers and business partners, which also translates to a good share of our marketable capacity being booked for 2016 already.

In 2016, BBC Chartering will further focus on promoting our “apac service” (“apac” stands for “any port, any cargo”) as the market-leading service vehicle to consolidate and match cargo and vessel owner demands. The “apac service” idea centers on BBC Chartering operating the world’s first and only global high performance service platform for general, breakbulk, heavy-lift and project cargo transportation. Above all, we strive to live up to what our customers value, and we believe that delivering quality, reliability, flexibility, professionalism and integrity stays important for the health of the industry in general and will hold sway also in 2016.

Credit: BBC Chartering 20 BREAKBULK MAGAZINE www.breakbulk.com

Mohammad Jaber

Chief Operating Officer, Regional Director – Project Logistics, Middle East & Africa Agility (Abu Dhabi) PJSC www.agilitylogistics.com

Despite the global economic landscape being overshadowed by ongoing sluggishness in China and Europe the outlook is still positive thanks to signs of recovery, signified by the rise in interest rates by the American Federal Reserve for the first time in seven years. Coupled this with the potential of emerging markets from Indonesia to Malaysia, the United Arab Emirates and Saudi Arabia, alongside Africa; many of these fast-growing economies represent significant opportunities for the industry.

Agility’s own strategy, which is focused on these emerging economies, will see continued investment and commitment to Asia, Middle East and Africa to meet the needs of the growing consumer class. From contract logistics to the expansion of our domestic footprint in these markets, Agility is well poised to benefit from projected growth in these economies.

To take one example, Africa Agility is building a series of distribution parks offering power, security and connectivity to enable business, with the first opening in Ghana in the first quarter of 2016.

Gulf Cooperation Council countries and Iraq look poised for a healthy 2016, with investments in capital projects (oil and gas, energy and petrochemicals) still ongoing despite the drop in oil price. The growth of interregional trade across the region will also boost the economies of local markets due to enhanced fabrication capabilities, though ship owners will likely face challenges and ISSUE 1 / 2016

Rolling stock, metals, machinery, project cargo, forest products, and more. We’ve expanded capacity with new on-terminal warehousing and rail infrastructure. Couple that with experienced, productive labor and South Carolina is an ideal fit for whatever you send our way.

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aggressive price competition due to the pressure of engineering, procurement and construction companies, or EPCs, on cost and ship availability. In the markets of Kuwait, U.A.E., Oman and Saudi Arabia specifically, EPC awards will keep our logistics market busy in the coming few years.

Africa will be a major area of focus for Agility in 2016 as the first of our world-class distribution parks open.

With the continent home to 10 of the fastest growing emerging economies across the globe, Agility’s early entry into the market makes it a reliable and trusted business partner for both multinationals looking to expand in the continent and regional players that are in the stages of expansion to meet the needs of the growing consumer class.

While we cannot control external factors such as oil prices or economic

22 BREAKBULK MAGAZINE www.breakbulk.com

trends, in response, Agility has been and will continue to be looking at innovating wherever possible to stay ahead of the competition.

Within the Middle East-Africa region, one of our responses has been to develop new products and new tactics to enhance our capabilities and strengths in the region. Modules transport is an example of our core focuses, which is coming under increasing demand owing to its cost effectiveness for EPCs. Our creative and attractive solutions offer EPCs a strong platform for collaboration between ship owners, heavy-lift carriers and other industry players.

Agriculture and food security programs are also proving to be a healthy source of growth and revenue for us at Agility, demonstrating significant demand for governments and we expect this trend to continue into the future.

Conflict and political instability in the region will remain the primary area of concern for the industry in 2016. This in turn will have a significant impact on insurance costs and increase services costs due to the continued risks involved, ultimately adversely affecting the end user.

While oil prices have seen a global downturn, cargo owners are requesting a lowering of rates, which in reality exceeds the real value of the drop in oil prices. Furthermore, the increase in modules fabrication reduces the number of voyages significantly and also shifts the volumes to special vessels and barges instead of general cargo vessels; modularized 500,000 freight tons of cargo can move in 12-15 voyages of barges, instead of around 40 to 50 vessel charters fully, or partially in the case of a stick build scenario.

ISSUE 1 / 2016

Phillip Brown

Product Director – Logistics - Fluor Supply Chain Solutions Fluor

Fluor sees that the global economy continues to be sluggish and commodity prices remain depressed. Lower commodity prices have impacted our clients’ cash flow and therefore their ability to fund projects at the same pace. There are still several major projects scheduled to move forward in 2016, but the low price of oil and market uncertainty will likely delay some of these projects.

Our clients are focused on their per-unit costs, such as dollars per barrel. They are cautious about deploying their capital through new projects – only projects with a lower capital spend and high rate of return are moving forward

Cis4435_CSAL_Ad_Breakbulk_124x178_p.indd 1

in this environment. We do expect clients to move forward with these types of projects, especially those that are replacing depleting or deteriorating assets. For example, oil and gas customers need to add production to replace their declining production base, as well as to meet the new regulatory demands. We see a number of projects moving forward globally in the downstream and petrochemical markets.

In response to the oil and gas industry downturn, our clients are asking for innovative project solutions, certain performance and accountability from their contractors to deliver the capital efficiency they need for projects to move forward.

This environment creates opportunities for Fluor to add value by engaging

with our clients as a strategic partner and delivering this capital efficiency to them at a time when they need it most.

Our focus on capital efficiency and cost and schedule certainty is resonating with clients and is a true differentiator for Fluor.

Our ability to offer integrated solutions to our clients enables them to move forward on projects that would otherwise be uneconomic.

In its relationship with carriers, Fluor is focused on delivering capital efficiency and schedule certainty to our clients.

These requirements flow down to Fluor’s contractors, which means that we rely on the strategic relationships that we have

2016-01-15 2:43:55 PM

www.breakbulk.com BREAKBULK MAGAZINE 23

cover story

with our carriers to guarantee the success of our projects. With the current low cost of bunkers, ocean freight rates have been artificially deflated over the past year.

It’s important for us to keep in mind the effect of low bunker prices on the overall freight rates and not under-budget for future shipments when the bunker prices may rise again. We also check the pulse of the market through our strategic carrier partners to ensure that we do not potentially overload any one carrier on any particular trade lane. BB

The Chevron El Segundo Refinery Coke Drum Reliability Project involved the lifting of a 1-million-pound, six-derrick structure. The lift was required so that the old coke drums could be removed and the new coke drums installed.

Credit: Fluor

24 BREAKBULK MAGAZINE www.breakbulk.com

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regional review

The Port of Saldanha, used mainly to export iron ore, will become South Africa’s oil and gas port.

Credit: Transnet

TAKING THE FAST TRACK South Africa Steps On The Oil and Gas Pedals

A

part from a few windfalls over the years and a short, speculatively driven consumption boom between 2005 and 2007, South Africa has struggled to find the magic required to transform its economy.

With South African President Jacob Zuma dogged by claims of lackluster performance, prolonged key strikes and labor unrest in its major industries, a weakening currency and rising inflation, it is a country under pressure.

Having settled into an average 2 percent to 3 percent growth after a short recession in 2009, figures plummeted in 2014-15. South African economists increasingly pointed out that the government’s room for maneuvering was near non-existent. Usual methods of stimulation through orthodox monetary and fiscal policies was simply not going to cut it any more. Add serious energy supply constraints to the mix and it is understandable that confidence – both domestic and foreign – plummeted.

It was in this environment that Zuma tasked his government to come up with an integrated framework for structural solutions that would change the country’s course.

The result? The National Development Plan, or NDP – a long-term 26 BREAKBULK MAGAZINE www.breakbulk.com

perspective that clearly defines the goals required to eliminate poverty, reduce inequality and grow the economy.

Simply put, it’s a practical plan of what needs to be done to pull South Africa back from the edge.

While businesses, investors and ordinary South African citizens alike welcomed the NDP, skepticism around the implementation of this grand plan has been rife.

OPERATION PHAKISA Enter Operation Phakisa. Based on Malaysia’s “Big Fast Results” methodology, the goal of Phakisa since its inception some two years ago has been to fast-track certain aspects of the implementation of the NDP. Phakisa means “hurry” in Sesotho, one of the 11 official languages in South Africa. It is the brainchild of Zuma, who in 2013 visited Malaysia, where he saw the significant economic transformation achieved through a quick approach.

With the help of the Malaysians, the program was adapted to the South African context.

According to Raymond Parsons, a South African economist, university lecturer and special advisor to Business Unity South Africa, Operation Phakisa is an encouraging development that strikes the right note even if there are concerns; the affordability of it all is probably the biggest.

For the South African government, however, there is no other option. It has set itself a goal under Phakisa to unlock the economic potential of the country’s ocean, estimatJacob Zuma ing that it has the potential to contribPresident, South Africa ute up to one R177 billion (US$11 billion) to gross domestic product by 2033 compared to R54 billion (about US$3.4 billion) in 2010.

Bordered by the ocean on three sides, long-term development of its coastline and ocean resources is an obvious route. To ISSUE 1 / 2016

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South Africa, but we are still a long way from there.”

ON THE STARTING BLOCK South Africa’s oil and gas sector is at an early stage.

Production Nigeria 3,005 2,825 Algeria 1,818 Angola 1,684 Egypt 1,171 Libya 414 Equatorial Guinea 276 Congo Gabon 260 Sudan 129 Tunisia 121 South Africa 24 560 Other

Exploration and appraisal wells drilled 142 429 177 511 174 20 57 51 Oil 60 Gas 26 Offshore

9

Onshore

150

* In 1,000 barrels of oil equivalent / Source: Baker Hughes, Spears and Associates, Woodmac

unlock this, South Africa has aspirations of becoming an oil and gas hub (other priorities under this plan include developing marine transport and manufacturing activities such as coastal shipping, transshipment, boat building, repair and ship refurbishment, aquaculture and marine protection services).

It’s a surprising aspiration for a country more renowned for hard rock minerals than its oil and gas achievements.

“Name the mineral and South Africa not only has it but has also mined it successfully,” said Mthozami Xiphu, executive chairperson of the South African Oil and Gas Alliance (SAOGA).

“Oil and gas has never been our specialty, but that is about to change and there is no better starting point for this than Phakisa,” he said.

OIL & GAS PLANS Xiphu is particularly excited about the plans for offshore oil and gas developments. Zuma has set a target of 30 exploration wells by 2025. The focus group responsible for oil and gas within Phakisa estimates that this could produce up to 370,000 barrels of oil and gas per day.

If this is achieved it would create up to 130,000 jobs, with an annual contribution to GDP of US$2.2 billion, said a spokesman for the presidency.

While still in its infancy, the outlook and initial work under Phakisa is extremely positive, said Xiphu.

“The program has for all intents and purposes brought together the various sectors such as business‚ labor‚ academia 28 BREAKBULK MAGAZINE www.breakbulk.com

Mthozami Xiphu

Dave Wright

South African Oil and Gas Alliance

Oil and Gas Consultant

and government. They work together to develop delivery action plans in intensive work sessions called laboratories, and for the first time everyone is on the same page,” he explained. “The value of having all the different government departments around one table alone has been extremely beneficial in itself. Through the collaborative approach taken in the Phakisa process the risk of talking past each other or misunderstanding has been avoided.”

In Africa, projects are often rendered non-viable simply because the right hand has no idea what the left is doing.

Therefore, information sharing between the business sector and government has been a valuable outcome of Phakisa.

But, he said, there was no denying that South Africa – in terms of an oil and gas culture and understanding – was still in its infancy. “This program will bring major project opportunity in

AMENDMENT BILL Indeed, the viability of 30 exploration wells is questionable, said Dave Wright, a South African oil and gas consultant.

“Phakisa as a program in itself must be welcomed. For the first time the country has a roadmap of sorts giving project investors and other stakeholders a clear indication of what the country requires,” he said.

Despite the intentions of delivering fast results with Phakisa – not only in the oil and gas sector, but the mining sector at large – legislative concerns are probably the biggest prohibiting factor at present. Unless regulatory certainty can be achieved in South Africa, development of this program will be slow if not non-existent.

Wright explained that it is all linked up in the amendment bill to the Mineral and Petroleum Resources Development Act, or MPRDA. That bill remains on Zuma’s desk and has yet to be brought into effect. This has raised alarm bells across the mining sector, and could have a major impact on stakeholders in the mining industry at large.

According to Wright, until there is certainty over the implications and impact of this amendment bill mining companies, including the oil and gas sector, will delay moving forward with any plans operationally.

“And that has been exactly the case.

There is major apprehension across the mining sector when it comes to Phakisa because there will be no fast delivery of any projects unless there is regulatory certainty,” Wright said. Effectively, both South Africa’s oil and gas Phakisa and its mining Phakisa are being held hostage by the MPRDA. For South Africa, there is much at stake. Mining exports constitute some 60 percent of the country’s exports and mining itself some 6 percent of GDP. And that is not withstanding its possible oil and gas capacity.

Added to which, while the purpose of Phakisa remains honorable, there’s a question in how reasonable it is in an environment where the government has legislated that the state shall have a 20 percent interest in every exploration and ISSUE 1 / 2016

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production, while reserving the right to increase that percentage at any given time but not declaring by how much.

“It’s vague and uncertain,” said Wright. “In context with an oil price of below US$30 a barrel where most oil companies are cutting back on exploration programs to conserve money, it is unreasonable to expect great interest in a market not only with legal uncertainty but geological uncertainty to boot.”

Upgrades to the Port of Saldanha in the Western Cape are underway, with R9.2 billion (US$572 million) budgeted.

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FIRM BELIEF Government officials, however, are adamant that South Africa has possible resources that will lead to big boons.

“Our development is still in the early phase, but it has the potential to create large value,” said a spokesman. “Developing an oil and gas industry takes decades. In Nigeria, it took 15 to 20 years from the moment of licensing until first production.”

Government admits that uncertainty is large, but maintains that South Africa has possible resources of 9 billion barrels of oil and 11 billion barrels of oil equivalent of gas.

“It will require significant investments,” said the spokesman, “particularly in South Africa’s deepwater offshore environment where a single exploration well can cost over US$150 million. To achieve our goal of

30 exploration wells in the next 10 years, investments in the range of US$3 billion to US$5 billion are needed.”

Given that, on average, exploration

success rates are below 15 percent it’s understandably a risky business. South Africa has had even less luck than that with a 1-to-10 ratio of success. But, said

»

ENERGY INDEPENDENCE ON AGENDA

“The importance of oil and gas in the South African economy is growing.

The vision and plan is in place through Operation Phakisa.”

– Minister of Energy Tina Joemat-Pettersson

Even with Operation Phakisa fast-tracking oil and gas development, South Africa cannot afford five-minute instant gratification solutions, according to Minister of Energy Tina Joemat-Pettersson.

“The importance of oil and gas in the South African economy is growing.

The vision and plan is in place through Operation Phakisa,” she said.

Finding long-term solutions that would reduce South Africa’s long-term dependence on oil and gas imports was imperative, she said. Renewable energy initiatives would increase in the coming years even if not part of the Phakisa process.

“Our agenda is far wider than what is often recognized. Yes, much of what is being planned is still in the early

30 BREAKBULK MAGAZINE www.breakbulk.com

development stages, but there is no short route to achieve the vision. The development of this country’s economy, however, is being linked closely to these plans. Oil and gas, renewable energy and mining will play significant roles in the future. We are encouraging investment in these sectors,” Joemat-Pettersson said.

According to Bheki Mfeka, an economic advisor to the South African president, the oil and gas process in Africa is neither easy nor cheap, but it was essential to forge ahead.

“Through exploration we can determine the real facts and how economically viable they are. The potential of our reserves have yet to be proven, but we can only make decisions once we have the facts,” Mfeka said.

ISSUE 1 / 2016

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Xiphu, there is little other choice but to move forward and determine the extent of South Africa’s offshore oil and gas reserves through exploration.

According to a spokesman for Operation Phakisa, there are numerous barriers to achieving the aspirations for oil and gas success of which infrastructure constraints are in all probability the biggest. “Concerns over the environmental impact of the sector as well as the low integration of the local supply chain into oil and gas exploration and production remain. There is also a lack of adequate local skills and technical capability,” he said. “Ineffective institutional arrangements for managing exploration and production are also a barrier as well as of course the lack of legislative clarity at present,” the source said.

Phakisa has set a timeline to achieve results. The first was to provide legislative clarity and stability by no later

than March 2016. However, most mining experts say this is near impossible. From an infrastructure point of view, the development of a phased gas pipeline has been set for March 2025.

“The plans have been drawn up and there is a clear indication of what is required to deliver on this initiative,” said the spokesman.

IMPLEMENTATION AND DELIVERY But, Wright said that the success of it all lies in implementation and delivery.

“There are arguments that South Africa has left oil and gas exploration too late, especially if one looks at developments in neighboring countries, but that is not necessarily the case. The low oil price is giving the country a major window of opportunity to get its house in order, but it has very little time to spare.”

It all comes down to the credibility

Equipment Corp.

and effectiveness of Phakisa.

In a recent address to members of the South African Institute of International Affairs, Peter Leon, partner with law firm Webber Wentzel, said the inaction in addressing the legal obstacles in the mining sector indicated either uncertainty on how to address the situation or that government was having second thoughts on it.

Xiphu is of the opinion that with the vision set, it is now merely a matter of making it happen. He is hopeful that legislation will be sorted out in the next 12 months, allowing the Oil and Gas Phakisa to move forward.

The government says it is making headway. It says international oil company participation has been established and that its developments for a gas pipeline are ahead of schedule.

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ISSUE 1 / 2016

South Africa is keen to develop a viable oil and gas industry.

Credit: OTC

R9.2 billion (US$572 million) budgeted, to develop it into the country’s oil and gas hub alongside a duty free industrial zone.

In the meantime, government has started work on a skills strategy roadmap to outline how the necessary skills to service the oil and gas sector will be provided. It is in the process of doing financial assessments.

While the process might not be as fast as was initially thought despite the efforts of Phakisa, the South Africa Minister of Energy Tina Joemat-Pettersson said there could be no doubting the message to the world: South Africa is ready and open to do business. BB POSD_BreakbulkAd:Layout 1 9/30/15 10:53 AM Page 1

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regional review

Carriers Ride China’s Wave of Africa Projects

TRADING PLACES

L

egendary Chinese navigator Zheng He sailed fleets of wooden ships across the Indian Ocean in the 15th century, blazing intercontinental sea trails for modern vessels now hauling breakbulk of all sorts between China and Africa.

But today’s breakbulk-carrying liners and tramps, many serving Chinese engineering, procurement and construction companies, or EPCs, BY with projects in ERIC JOHNSON Africa and working closely with Chinese logistics partners, are traveling farther and accomplishing far more than Admiral Zheng ever imagined.

Breakbulk is at the heart of a boom for China-Africa trade relations as well as major, Chinese-led infrastructure construction projects that are having an enormous impact on emerging economies from Angola to Zimbabwe.

The boom began in 2013 when the Chinese government directed its diplomats, state-owned companies and policy banks to start building stronger economic ties with African countries through a campaign that’s undergone several title changes and is now called “Belt and Road.” The government’s initiative got fresh impetus in December when Chinese President Xi Jinping promised a staggering US$60 billion in 34 BREAKBULK MAGAZINE www.breakbulk.com

future loans, export credits and grants to countries across the continent.

Keeping breakbulk carriers busy are Belt and Road-supporting contractors building a railroad in Kenya, a port in Tanzania and hydropower plants Sudan. Africa-bound ships are also hauling China-made cargo for highway construction, mines, power transmission lines and facto-

People work at the construction site of the now-completed electric railway in Dire Dawa, Ethiopia. The railway, a coordinated effort between China Railway Construction Co. and Ethiopia Railway Corp, stretches 770 kilometers and links Ethiopian capital Addis Ababa with the port of Djibouti.

Credit: Liu Yu Xinhua News Agency/Newscom ISSUE 1 / 2016

regional review

South Africa President Jacob Zuma and President of China Xi Jinping have strengthened project ties between the two countries.

Credit: Government of South Africa

“Africa is huge,” he said. “And if realized, this might trigger good demand for specialized carriers calling at remote areas with shallow-draft ports and limited-to-no-infrastructure ports.”

CARGO DIVERSITY

ries, as well as wind farm equipment, locomotives for newly built railroads, and cement plants for various urban projects. Natural resources from whole logs to stone granite are key goods riding the carriers’ return voyages to China.

China’s latest financing plan, which Xi announced at a South African summit he co-chaired with South African President Jacob Zuma, suggests Belt and Road activities will accelerate, at least in the near term, and should lay a foundation for China-Africa project cargo shipments for years to come. China’s state-run media said Xi’s address marked “a new era of win-win cooperation and common development.”

ENTHUSIASM ABOUNDS No wonder breakbulk carriers, logistics firms and Chinese EPCs are more enthusiastic than ever about following Admiral Zheng’s trail.

“Implementing these plans will lead to a huge amount of logistics business, since large quantities of Chinese engineering machinery and equipment will be transported to Africa,” explained Hu Yi Yang, deputy general manager of COSCO Shipping’s Joint African Line and Logs Carrier Department.

Xi’s announcement “will stimulate and strengthen China-Africa economic cooperation and development,” said Ma Shumei, regional director of the Africa Overseas Business Department at SEP36 BREAKBULK MAGAZINE www.breakbulk.com

COIII Electric Power Construction Corp., a Qingdao-based EPC. “These are long-term targets to promote trade between China and Africa,” said Brandy Bee, managing director of Ming Qi Yuan International Freight Forwarding in Tianjin. “President Xi has now put a huge amount money into Africa for construction. So I expect a lot more opportunities for project cargo businesses.”

And while Chinese companies are poised to benefit the most from the Belt and Road initiative – through which the government is also Hu Yi Yang promoting commercial ties to emerging COSCO Shipping markets in Asia, the Middle East and East Europe – nonChinese carriers and logistics firms are also benefiting from breakbulk demand tied to African projects.

For example, last year tramp project cargo specialist BBC Chartering saw “a significant increase for direct bookings between China and Africa compared to 2014,” said David Lloreda Calero, the German carrier’s Shanghai-based commercial manager. He added that Xi’s announcement of future investment bodes well for the project shipping sector as a whole.

The variety of cargo is staggering.

In addition to construction machinery, cement plants and steel for railway construction and other building projects, Hu said COSCO’s multipurpose vessels have proved ideal for shipping railcars and locomotives.

Lloreda Calero noted that Chinese companies’ projects in power generation and infrastructure, including ongoing port expansions in places such as Mombasa, Douala and Walvis Bay, “most certainly require project carriers and heavy-lift capabilities.”

Last year, China Railway Construction Co. and Ethiopia Railway Corp. finished work on 770 kilometers of new track connecting landlocked Addis Ababa and the port of Djibouti. China was expected to supply more than 1,100 freight cars and locomotives for the railroad, which took three years to build.

Most Asia-to-Africa cargo transported via BBC’s apac, or “any port, any cargo,” service is tied to mining equipment, oil and gas pipes, and power plant or other energy projects, such as wind farms, Lloreda Calero said.

Bee said her company handles Africabound machinery, asphalt, prefabricated buildings and rolled steel. EPCs, such as power plant builder SEPCOIII and hydroelectric dam builder China International Water and Electric Corp. (CWE), are taking deliveries on a variety of energy modules and equipment for their projects.

SEPCOIII is focused on projects in Tanzania, South Africa, Mozambique and Botswana, while CWE finished work last year on a hydropower plant in the Republic of Guinea, and has two more under construction in Sudan. Mining ISSUE 1 / 2016

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conglomerate China Minmetals and state-owned oil majors Sinopec and PetroChina are also active in Africa.

Yet the perspectives of non-Chinese and Chinese companies are not entirely alike, especially in terms of forecasting future China-Africa business; it’s hard for a Chinese company to be anything but upbeat.

Despite the fact that falling oil prices have affected Africa’s economic development, COSCO’s Hu said that “more Chinese companies are ready to participate in Africa’s development. Thus for 2016 and 2017, we forecast more project implementation in Africa, and these projects will result in more cargo transportation.”

Last year, COSCO ships carried “large amounts of equipment for building projects,” Hu said, including cement plants made in China by Sinoma International Engineering and delivered to building sites in the Republic of the Congo. The carrier also supplied wind power projects in South Africa and delivered cargo for the 500-kilometer Mombasa-Nairobi railroad under construction since 2014 in Kenya.

Lloreda Calero, though, struck a more cautious tone.

A COSCO Shipping Strong demand for heavy-lift vessel BBC services over carried railcars from the past two years Dalian to Lagos. “has much to do with the allocated Credit: COSCO capacity to the Shipping trade and does not imply a specific

‘China has the technology, equipment, personnel and funds, while Africa is rich in natural and human resources.’

– Hu Yi Yang

trend,” he said. “From what we can tell today, we do not expect any developments that forebode any short-term boost of project cargo activity in Africa, as we think we have good knowledge of the projects and developments that are underway and those that are pending.

“We can appreciate the Chinese decision to boost investments in Africa,” Lloreda Calero said. “But we apply a realistic view with regards to the speed of implementation and expansion.”

Fueling much of this caution is the slowdown for oil exploration and related projects in countries such as Angola, where the Chinese have been actively pumping from offshore wells for years.

“The price of oil, as a lead indicator for future investments in the sector and a major commodity driver, is expected to stay at low levels for a while, which will also put much of the sector’s anticipated investments in Africa on hold during 2016 and 2017,” Lloreda Calero said.

And as BBC and similar companies with Africa business are well aware, Chinese projects are not the only game in town. Lloreda Calero noted that his company was the dedicated project carrier for wind power units selected by the German wind power concern Nordex.

Some 56 turbines made in Europe, 168 wind blades made in Turkey and 50

tower segments manufactured in Indonesia were hauled aboard six of BBC’s heavy-lift vessels between March and August to the Amakhala Emoyeni wind farm in South Africa.

BUILDING RELATIONS Since Belt and Road got underway, Chinese companies have been careful to cultivate friendly relations with African governments as well as the communities where they’re building infrastructure or mining minerals. They hope to avoid the “colonialist” stigma that many European companies have had to bear, while at the same time strengthening commercial ties and turning profits.

SEPCOIII is working to strengthen the market development of the African region, said Ma, as stronger China-Africa relations will be “more conducive” to its market development in Africa, and help more African businesses understand its company.

Breakbulk shippers and carriers are equally interested in how closely Chinese and Africans will be able to follow the blueprint for “win-win” promoted by Xi and spelled out through the Belt and Road program. It’s a blueprint that Xi, when he first introduced the overseas commercial push in fall 2013, said reflects the cooperative and seafaring spirit of Zheng He. Ma said Chinese companies want to help African countries improve their infrastructure, expand local employment and train local workers, while at the same time promoting local economic development and building on Africa’s own abilities.

In Africa and China, Hu sees a perfect match for healthy business relations – especially the breakbulk sector.

“China has the technology, equipment, personnel and funds, while Africa is rich in natural and human resources,” Hu said. “Both sides have the need and desire to strengthen cooperation.” BB Eric Johnson is an American journalist based in Beijing. A graduate of the University of Missouri School of Journalism, he has more than 30 years of writing experience.

38 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 1 / 2016

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after/dark rom dusk to dawn, transport of breakbulk, heavy-lift and oversized cargo never stops. Here we take a closer look at the challenges of nighttime transport.

Included you will find information on health and safety measures associated with after dark operations, advice and innovations from professionals, case studies from the field, a marketplace for all kinds of after dark activities, a stunning photo gallery and nighttime photography tips.

Hope to see you at our next event, Breakbulk China in Shanghai, March 14-17, where we will have a gallery of photos and content from our supplements and photo contests!

Breakbulk Events & Media

A2 BREAKBULK MAGAZINE www.breakbulk.com

CONTENTS

A4

ADVERTISERS’ SUPPLEMENT

A4

A12

Logistics After Dark Planning and Risk Assessment with WWL ALS

A8 What You Need to Know About Safe Heavy Lifts and Transport After Dark An Interview with Donald Catchings, Regional QHSES Manger, deugro North America and Matt Fielder, Director of Specialized Transport, deugro

A16

A12 L ighting Innovation: LEDs for SPMTs Mammoet and Scheuerle Create a New Lighting System

A14 How to Take Better

Photos After Dark Chris Kuhlman, Photographer and Owner of CK Productions

A16 After Dark Marketplace Special Equipment for the Jobsite, Amateur Photographers, Runners, Golfers and even Adventurous Youngsters

A18 Up All Night How to Survive the Night Shift

A19 Bonus Dealing with Jet Lag

A20 Special After Dark

Advertiser Section A30 Nighttime Transport

Photo Gallery Plus Info on Our Next Photo Contest!

On the Cover: Heading Northbound on the A1(M), UK. Allelys Group and WWL ALS gets reel rolling from the UK to the USA!

ISSUE 1 / 2016

THORCO SHIPPING

Project and heavy lift cargoes are an important part of Thorco Shipping and have been a cornerstone of our business. Thorco holds a proven track record of successful heavy lift transports, handled safely and timely. Our dedicated personnel are capable and enthusiastic to make a success of your next projects.

Let us work on your projects together, today and in the future North America

Thorco Shipping America Inc. Tel. +1 (281) 404 4250 usa@thorcoshipping.com

South America

Thorco Shipping Brazil Ltda.

Tel. +55 213 388 0837 brazil@thorcoshipping.com

Europe

Thorco Shipping A/S Tel. +45 6320 3000 europe@thorcoshipping.com

Asia

Thorco Shipping Pte. Ltd. Tel. +65 6922 8620 singapore@thorcoshipping.com

Thorco Shipping www.thorcoshipping.com

after/dark

ADVERTISERS’ SUPPLEMENT

Logistics After Dark

Planning and Risk Assessment with WWL ALS

Moving over-sized cargoes is always a complex process, and becomes even more complicated when performed at night.

It would be tough, if not impossible, to find a logistician in the industry who would prefer to transport project cargo and other oversized cargoes at night.

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“Things can go south really fast in the dark,” Steve Drugan of deugro told Breakbulk. See guidelines for nighttime transport from deugro’s team on page A8.

But sometimes there’s no avoiding night moves. There are a variety of reasons why cargoes move after dark, from man made ones like government permit restrictions to the natural ebb and flow of tides, which may determine when a ship can be unloaded. Planning is critical and risk assessment is paramount.

At a port, the operation plan should include details for loading and unloading the ship, equipment to be used, crowd control, availability of sentries to control the area. It must also take weather into account, and most importantly, include a no-go threshold. For road transport, adequate lighting and escorts are essential. For instance, a small piece of metal on the pavement can wreak havoc with a truck’s brake system, causing damage to the

JANUARY/FEBRUARY 2016

ADVERTISERS’ SUPPLEMENT

Nighttime Safety Considerations Moving over-sized cargoes is always a complex process, and becomes even more complicated when performed at night. Below are a few things to consider:

Twilight Danger: The periods when night ends and day begins and vice versa are the most dangerous transport times. The eyes haven’t fully adjusted and it can be hard to discriminate between cargo and sky.

The Importance of Illumination: Nighttime operations demand adequate lighting. Checking the equipment to make sure it is in good working condition and planning ahead is crucial. This is especially important in remote areas, where there may be few resources.

Proper Clothing: In general, the darker the conditions or worksite, the greater the amount of high-visibility (HV) clothing required.

Spectators: Spectators and crowd control must be considered. It is much harder to spot people at night.

Overnight Security: When the cargo is not moving, it must be guarded.

Route Safety: Consider an early run of the route during daylight hours to make sure it is safe.

vehicle and possibly to the cargo. These big moves can become a magnet for spectators, which then pose new risks to the move.

Last year, oversized cargo and logistics specialist WWL ALS commissioned the transport of a 300-ton cable reel from the UK to the U.S. The first leg of the journey had to be scheduled at night due to local permits. The case illustrates the anatomy of a complex nighttime transport.

For such a technically complex move, it took months of planning and preparation, including thorough route

www.breakbulk.com BREAKBULK MAGAZINE A5

after/dark

ADVERTISERS’ SUPPLEMENT

surveys and arrangements with the Highways Agency (the government branch in charge of England’s roads), multiple police forces and relevant councils to remove street furniture on local roads to allow the cargo to safely pass. A section of the journey involved the closure of the M62 motorway, with the trailer driving against the flow of normal traffic.

WWL ALS UK International Limited’s project team in Hull, East Yorkshire, and its in-house chartering and ship’s agency department arranged the door-to-door move, which began at the steel rope manufacturer Brunton Shaw’s facility in Worksop and would continue by road to Goole. Preparations for the loading included a jacking and skating operation and a trailer configuration build, which took a total of five days to complete, WWL ALS said. With one tractor unit pulling the girder set and two pushing, the combined trailer length totaled 90 meters with 292 wheels.

The 300-ton reel of steel wire rope was safely transported on a 67-kilometer overnight journey using the Allelys Group’s 500-ton-capacity Faktor 5 girder frame trailer. The trailer travelled under police escort.

In a car, the trip takes less than an hour, but heavy loads must travel at very slow -- and much safer -speeds. At night, slower speeds than allowable during the daytime are the norm. The convoy averaged 7 mph and reached Goole in a little over nine hours.

Upon arrival in Goole, the reel was unloaded onto heavy duty stools to enable the use of a selfpropelled modular trailer (SPMT), brought in at a later date, to maneuver the cargo alongside a short sea vessel. The heavy reel was lifted by a 1,000-ton-capacity mobile crane, secured in the hold and then sailed for a terminal in Holland.

In Rotterdam, the reel was offloaded by floating crane, where it was subsequently loaded onto a heavy-lift ocean-going vessel for transportation to the Gulf of Mexico.

The WWL ALS team provided all of the loading, lashing and securing including marine and warranty survey. Force and weight spreading calculations were necessary due to the extremely high point weight loading on the deck.

How to Analyze Risk

For every transport, WWL ALS completes a rigorous risk assessment. The idea is to identify the conditions or elements of an operational plan that might cause harm and how, along with the people who could be at risk. The risk assessment should take into account any controls which are already in place and identify what, if any, further controls are required.

At the end of the process, you should be able to show from your assessment that:

• a proper check was made

• all significant risks have been assessed

• all people who might be affected were considered

• the precautions are reasonable • the remaining risk is low

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Health & Safety Checklist from the UK’s Health and Safety Executive

Workplace transport risks q Do drivers have a safe place to wait during loading and unloading and can they get there without passing through areas of vehicle movement? q Are security and loading staff made aware of the dangers of moving vehicles? q Is reversing minimised?

If it is unavoidable, are alternative measures taken, such as use of additional mirrors on vehicles, CCTV or a suitably trained guide? q Is there a clear one-way system and are there pedestrian/vehicle routes (not a big area of tarmac with people and vehicles everywhere)? q Would a driver arriving at a site know where to go, where to park safely and how to make contact with someone at the premises? q Do vehicle routes have sharp or blind bends/ corners? Are they wide enough and properly maintained? Who plans all this? Who checks all this? q Are all FLT drivers trained, certified and regularly monitored? q Are all FLTs in good condition? q Do all vehicles and trailers have effective service and parking brakes and are there clear instructions on how and when to apply them? q Have you considered alarms that sound if the handbrake is left off? Several drivers are killed every year simply because their vehicles move off when the handbrake is left off when parked. q Are all drivers experienced and do you test them to check their competence? q Are stabilisers always used when operating lorry-mounted cranes? q Do drivers always use trailer parking brakes and not rely on disconnecting the red line? q Are tipping vehicle bodies always propped when people work under them or under tilting cabs?

JANUARY/FEBRUARY 2016

SAFETY

after/dark

ADVERTISERS’ SUPPLEMENT

What You Need to Know About Safe Heavy Lifts and Transport After Dark An interview with Donald Catchings, Regional QHSES Manager, deugro North America, and Matt Fielder, Director of Specialized Transport, deugro

M

oving massive cargoes is always a complex operation and no two are ever the same. Add a nighttime schedule into the plan and the job becomes even more complex.

We had the opportunity to speak with two specialists at international freight forwarding firm deugro who work as a team to ensure that oversized cargoes are moved properly — day and night.

Donald Catchings is deugro’s QHSES (quality, health, safety, environment and security) manager and Matt Fielder is the company’s director of specialized transport division. The pair always start with a JSA — a detailed job safety analysis to identify risks and determine the resources needed to safely execute the operation.

Lighting

Lighting is a critical part of a nighttime JSA, but it’s not just a matter of making sure there’s lots of light. In fact, lighting can create an additional set of hazards. It can create shadows and the potential for blinding if workers have to look directly into the light source. Avoiding these problems comes from anticipating them in the planning process, determining the correct placement for lighting along with positioning personnel.

Fielder said there have recently been several companies looking at ways to increase visibility at night, such as trailer-mounted lighting. The lights are not directed at the cargo, but at the ground for more visibility on the wheels and the tires and allows crews to steer clear of the trailer as it’s moving. This safety issue is particularly important during road moves as more personnel are required.

CONTINUED ON PAGE A10

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JANUARY/FEBRUARY ISSUE 1 / 2016

SAFETY

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ADVERTISERS’ SUPPLEMENT

CONTINUED FROM PAGE A8

“During night moves, you’re going to have more personnel alongside the trailer to provide visual checks because you can’t see as far,” he said. “The more people you have moving with that equipment, the more cautious they need to be as they move.”

“I think it would be great if this type of lighting became an industry standard,” Catchings said. He described a move some time ago using a “bridge jump”, a temporary bridge to span an actual bridge that’s not capable of bearing the weight of the cargo. “We could only put portable lighting on one side of this bridge jump because on the other side was the highway where they were still letting traffic go by. We had 80 feet of trailer that had to be kept straight and centered. There wasn’t a lot of room for error – literally inches on each side. LED lights would sure have been great.”

Communication

The more people you have moving wit h equipment, t he more cautious

To read about a new LED lighting system from Mammoet and Scheuerle, see page A12

Eyewear

Yes, eyewear. Catchings said this tip might seem comical, but it’s not — they’ve seen this mistake happen on several jobs.

“Guys working during the day and then going into nighttime, they forget and they’ll still be wearing their sunshades!” he said. “When you talk about PPE (personal protective equipment), we all know boots, gloves, reflective vests, hard hats with stickers, but this is something that’s often overlooked.”

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t hey need to be as t hey move.

Increased communication for nighttime moves is another essential piece of the logistics plan and during the move itself. “You’ve got to discuss the details and extra requirements of a night move during the predischarge meetings or pre-move meetings, along with the JSA,” Fielder said. “For instance, ask how are we going to have additional visual check? The only way you can do that is to slow down and have additional personnel.”

Fielder also stressed the importance of clearly assigned and defined responsibilities for team members.

Situational Awareness

Nighttime operations require team members to be more observant than they might be during the day because darkness can turn fairly routine situations into danger zones.

“I call it situational awareness,” Catchings said. “You must be far more aware of your surroundings during the night.”

For instance, edges, like the edge of a barge or a bridge, can be particularly hazardous at night because they become difficult to see. “If you’re working on a barge, the edges can really creep on you!” he said.

Regardless of the mode of transport, everyone on the team needs to be constantly on alert, ultra-observant and, most importantly, slow down, the two men said.

“You have to have the right resources in the right places, whether that’s people or equipment,” Catchings said. “Slow down and be much more aware of what’s going on around you.”

JANUARY/FEBRUARY ISSUE 1 / 2016

after/dark

LIGHTING ADVERTISERS’ SUPPLEMENT

Lighting Innovation LEDs FOR SPMTS

Lighting is an essential component of after dark transport at ports, on waterways and on the road. Adequate lighting is a particular concern for self-propelled modular transporters (SPMTs) that move some of the heaviest loads in our business. They may travel at no more than 10 mph, but at night, obstacles can be difficult to spot regardless of speed.

Because they run on power packs, traditional lights can drain battery power fast. To solve this problem, Mammoet and Scheuerle partnered to create a new lighting system using LED lights, which consume a fraction of the energy required by incandescent lights and improve safety for operators, spotters and bystanders.

Based on a lighting system devel-

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oped by Mammoet that could be magnetically attached to SPMTs, Scheuerle tested many different prototypes to find the best light source and the best positioning to prevent unwanted shadows. The system eventually chosen by Mammoet makes use of the latest LED technology. LED lighting requires so little power that it causes no problems with the SPMT power supply.

The LED lights are installed directly over the wheels – one for each axle or 12 LED lamps per 6 axle lines of SPMT – and can be switched and adjusted as needed, ensuring an ideal scope of the light beam. Operators gain improved visibility of road conditions, vehicle position, and operating levers or valves. Flat tires,

as well as any possible leakage of the hydraulic system, are clearly visible so they can be detected and fixed immediately.

The SPMT lighting system improves the operator’s control over the vehicles by making obstacles like stones, bumps or holes on the transport route easier to see. The system also helps to reduce the risk of personal injury by allowing operators to see people approaching the moving vehicle, while those around the SPMT can also see the vehicle’s movements and safely avoid them.

The LED lights also improve visibility back in the shop where mechanics can adjust the lights to clearly see the undercarriage during maintenance and repair operations.

ISSUE 1 / 2016

PRO TIPS

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ADVERTISERS’ SUPPLEMENT

HOW TO TAKE BET TER PHOTOS

After Dark

One of the trickiest situations for photographers pros and amateurs alike is shooting under low light conditions. And the darker it is, the tougher it is to produce a high quality picture. When there’s not much light, photos appear grainy and lack detail. But we’ve all seen stunning after dark photographs. How do the pros do it?

We asked Chris Kuhlman of CK Productions in Houston to let us in on his secrets.

“One of the first considerations of nighttime and low­light photography is to have a stable platform to shoot from,” Kuhlman said. “My preferred method for still photography is a tripod and a timed or cable release of the shutter. Anything I can do to reduce camera shake or vibration will help produce a sharper image.”

Camera settings can also make the difference between a clear shot and a grainy one.

Most modern digital cameras have the ability to shoot at a higher ISO. (ISO is a measure of the camera sensor’s sensitivity to light.) Be mindful that a high ISO can often cause a noisy or grainy image.

“Most consumer cameras can only shoot up to 400 without an unacceptable loss of image quality,” Kuhlman said.

“Pro cameras can shoot up as high as ISO 10,000 and more before the images starts to break apart.”

He recommends photographers shoot in RAW format whenever possible because it provides more data to the image for greater control in post­processing and allows for creative color balance adjustments.

Mechanics are only part of the story. “Everything that makes a great storytelling image during the day applies to night as well,” he said.

“Capturing action, unique angles, interesting foregrounds, blurred lights such as trucks passing by, all make a picture more interesting.”

But before you venture out to a port to test Kuhl-

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man’s tips, a word of caution.

Ports and other private or government­owned facilities likely have security restrictions and may prohibit the use of photographic and video equipment. Know before you go.

“There are vantage points that are accessible to the public but I imagine most ports are highly sensitive to people with cameras,” he said. “Even with the security clearance and access I have, I’m not free to roam around and snap away.”

“CAPTURING ACTION, UNIQUE ANGLES, INTERESTING FOREGROUNDS, BLURRED LIGHTS SUCH AS TRUCKS PASSING BY, ALL MAKE A PICTURE MORE INTERESTING.”

About Chris Kuhlman/ CK Productions Chris Kuhlman has been a corporate photographer and director based in Houston for almost 40 years. CK Productions is a full service commercial production company producing corporate videos and commercials for a wide range of companies. His studio’s close proximity to the Port of Houston and ship channel industries make these some of his favorite subjects. He been documenting the growth of Port of Houston for over 12 years.

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ISSUE 1 / 2016

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ADVERTISERS’ SUPPLEMENT

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After Dark

MARKETPLACE

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o matter what you’re doing after dark, you’ll need some special equipment.

We’ve gathered 10 great things for nighttime activities for workers on the jobsite, amateur photographers (See our After Dark photography tips on page pg. A14), runners, golfers and even young adventurers whose after dark explorations go only as far as the backyard.

16 BREAKBULK A16 BREAKBULKMAGAZINE MAGAZINE www.breakbulk.com www.breakbulk.com

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1 Gopro Light Lens Ring Frame //$11 aliexpress.com

2 Whetstone 75-15211 15 LED Spotlight & Lantern Combo Heavy Duty //$30 newegg.com

3 Bokeh Kit //$25 photojojo.com

4 Glow in the dark golf balls and charger //$50 hammacher.com

5 Tuvizo Reflective Vest //$17 amazon.com

6 Backyard Adventure UV Night Vision Goggles for Kids //$15 oysrus.com

Aumi Smart Night Light //$35

aumilight.com >>>>>>>>>>> www.breakbulk.com BREAKBULK MAGAZINE A17

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ADVERTISERS’ SUPPLEMENT

Up All Night

Working through the night is always disruptive, but there are things you can do to prepare for a switch in schedule so it doesn’t take quite such a toll on your health and well-being. Whether it’s a short stint — you’ve got a lift and transport operation that must occur at night — or a longer one like taking on the night shift at a port — follow these guidelines.

SLEEPING AGAINST THE CLOCK You have an internal body clock in your brain that produces circadian rhythms, which occur in 24-hour cycles. These rhythms regulate a host of body functions such as temperature, alertness, sleepiness, hunger and hormone levels. Your body clock uses these rhythms to signal when it is time to go to sleep or to wake up.

Studies have shown that even people who are in complete darkness, maintain their usual patterns. If you work at night, you must fight your body’s natural rhythms to try and stay awake.

Then you have to try to sleep during the day when your body expects to be alert.

Night shift workers tend to be continually sleep-deprived. They get a daily average of two to four hours less 18 BREAKBULK A18 BREAKBULKMAGAZINE MAGAZINE www.breakbulk.com www.breakbulk.com

sleep than normal, researchers at the UCLA Sleep Disorders Center said.

They are also much more likely to be awakened by noises or people. As a result, their sleep is very light and are less likely to feel well rested when they wake up. It may be impossible to fully adjust to a nocturnal schedule, but you can ease the disruption to your natural rhythms.

TAKE A NAP It is a good idea to take a nap just before reporting for a night shift.

Researchers recommend a nap of about 90 minutes. On some jobs, it may be a good idea to take a nap during the “lunch hour” which will make you feel more productive.

However, this is not a good idea for high-pressure jobs that demand

Photo by Tuscor Lloyd

How to Survive the Night Shift

instant reactions like just about every heavy-lift and project cargo transport.

People need between 15 to 20 minutes to become fully alert after a nap, and as we all know, operators can’t afford such a period of adjustment when avoiding a rock in the road can mean the difference between a safe transport and a multi-million-dollar disaster.

SHIFT YOUR SLEEP SCHEDULE Night shift workers should try to stay on the same sleep schedule every day of the week, even on days off. Keeping a regular schedule will help align your body clock with your sleep pattern. If you have a scheduled night job or are shifting to a night schedule, you can help your body by easing into it. Several days before the change, delay the times you go to bed and wake up by one to two hours each day. Then when you begin the night shift, your body will already be getting ready for the new schedule.

While sleep aids can seem like an attractive solution to sleep at an unfamiliar time, UCLA researchers say

HEALTH ADVERTISERS’ SUPPLEMENT

The Anti-Jet Lag Plan FROM JOHN AMOS, AMOS LOGISTICS

Amos runs the Leadership Summits for Breakbulk events and has spent his career in transport and logistics. To date, he has logged more than 5.5 million miles in the air.

“The minute I get on the plane, I set my watch to the destination and think about the time where I’m going. When you’re faced with those long, long flights, they can really wear you out. Try to sit as far forward as possible — it makes a big difference. Get up once in awhile and stretch, walk up and down the aisle and stop in the galley for a Coke or ginger ale without ice. When I arrive, I check in to the hotel and get settled, take a shower, go downstairs and get something light to eat. And then I take two Aleve and go to bed. Sleep for no more than two hours in a cool room. Don’t think about the “home time.” And if you can’t sleep, you can’t sleep. This works for me, but as you travel more, you’ll develop your own method.”

the risks may outweigh the benefits.

The side effect of drowsiness can be very severe. They may cause you to be sleepy while working or driving and should be used with extreme caution.

They become less effective when used for a long period of time. Sleeping pills cannot reset your body clock.

On the other hand, studies show that using a stimulant may reduce sleepiness and increase alertness on a night shift. While a thermos of hot coffee may keep you awake, you should avoid caffeine within four hours of your desired bedtime. Otherwise, it may keep you from being able to fall asleep once you’re work is done.

Like with avoiding caffeine before bedtime, also avoid “screen time,” especially computers and phones. Any light can make it tough to fall asleep (that’s why many parents with young children bemoan the onset of daylight savings time), but light of shorter wavelengths, such as the bluish tints emitted from LEDbacklit screens, suppresses nocturnal melatonin, according to a sleep study from the Lighting Research Center at the Rensselaer Polytechnic Institute. The brighter the light and longer the exposure, the more difficulty it will cause in falling asleep. Turn off your devices at least two hours before you want to fall asleep. If you must check your phone or you enjoy reading on an e-reader, use the nighttime mode, which displays white text on a black background and thereby vastly reduces the emitted light.

LIGHT THERAPY Artificial bright light can affect the body clock in the same way that sunlight does. Light therapy is used to expose your eyes to intense but safe amounts of light for a specific and regular length of time. In general, using light treatment in the evening should help someone who regularly works nights. In this case, you would also want to avoid daylight when you come off work and go to bed.

Dark sunglasses or special goggles can help. (But don’t use this eyewear on the job — a common safety problem on the jobsite, says deugro’s Donald Catching, page A8.)

Light boxes can be purchased in a variety of makes and models. It sits on top of a table or desk and plugs into the wall. Sessions may take as little as 15 to 30 minutes. More than one session may be needed each day, according to the UCLA researchers. The key is to use the light at the right time of day and for the right amount of time, they said.

STICK TO THE BASICS A healthy diet combined with exercise are essential to health and can play a big role in easing the discomfort of night shift work. Try to avoid fast food, which is tough when that’s all that’s open in the middle of the night.

Plan ahead and pack a healthy meal along with snacks. Drink plenty of water throughout the night. Try to get a moderate workout in on the “morning” of your job.

Dealing with Jet Lag Like with working nights, traveling to different time zones can wreak havoc with your body’s schedule. Here’s how to minimize jet lag: • Select a flight that allows early evening arrival and stay up until 10 p.m. local time. (If you must sleep during the day, take a short nap in the early afternoon, but no longer than two hours.)

• Anticipate the time change for trips by getting up and going to bed earlier several days prior to an eastward trip and later for a westward trip.

• When you board the plane, set your watch to the destination time zone.

• Avoid alcohol or caffeine at least three to four hours before bedtime.

Both act as “stimulants.”

• Upon arrival, avoid heavy meals (a snack, but not chocolate, is OK).

• Avoid any heavy exercise close to bedtime. (Light exercise earlier in the day is fine.)

• Bring earplugs and blindfolds to help dampen noise and block out unwanted light while sleeping.

• Try to get outside in the sunlight whenever possible. Daylight is a powerful stimulant for regulating the biological clock. (Staying indoors worsens jet lag.)

• Contrary to popular belief, the type of foods we eat have no effect on minimizing jet lag.

SOURCE: NATIONAL SLEEP FOUNDATION

www.breakbulk.com BREAKBULK MAGAZINE A19

RO-RO

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ADVERTISERS’ SUPPLEMENT

WORKING DAY AND NIGHT

SHIPPING IS A 365/24/7 INDUSTRY, working around the clock to bring cargo to eager consumers, waiting to enjoy their new products or to the industries that are ready to implement that piece of new equipment that were shipped on board our vessels. Working between dusk and dawn is nothing new to us.

With around fifty vessels in global operation every day and a soon 90 year long history of Shipowning, Höegh Autoliners has extensive experience from cargo operation in many segments.

Shipping has always been a time sensitive business but never has it had the same requirements of agility and fast turnover as today.

The wheels are turning fast “Our customers have their customers and they cannot wait. Today the wheels are turning fast and we have to turn with them.” Says Oskar Orstadius, Head of the Breakbulk Segment in Höegh Autoliners. “We constantly review our efficiency and a key component is to keep time in port to a minimum.

If we spend more time than planned in a port, we might have to speed up sailing in order to reach the next position on the schedule in time. That is not beneficial for the environment nor for us. One way to shorten time in port can be to perform operations during the night, instead of waiting until dawn, if the vessel comes in late.”

Weighing cost over benefit For Höegh Autoliners the same resources are available day and night. The crew is ready on board, the Port Captain is at the location and the vessels are well lit inside, so on board there is no difference between day and night.

Still, it is preferred to load and discharge during day light, if possible. “Yes, and this is because of factors outside of our control. Using stevedores at night adds cost to the operation and with today’s margins, we have to constantly weigh cost over benefit. We also have to consider how well lit the terminal is.

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Most terminals in Northern Europe for example have good lighting and then there is no issue loading at night. But if they have bad lighting, then night operation can be more time consuming.”

Experience matters Preparation is also more important at night operation, when support functions are not as readily available as during the day. “We work with reliable agents with long experience and they always do their outmost to have all paperwork ready during the day, as well as if we do a night operation.

This way we do not risk leaving a unit behind just because the papers were not prepared during the day when the authorities were available.” Oskar continues.

Höegh has loaded Breakbulk for decades, building a wealth of experience in this segment. In combination with a global trade network, shippers can expect a reliable service, well suited for shipments of both single cargo units and bigger projects over multiple shipments.

Regardless of day or night.

ISSUE 1 / 2016

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after/dark

ADVERTISERS’ SUPPLEMENT

MEETING DEMANDS,

AROUND THE CLOCK

THE WORLD OF LOGISTICS IS DYNAMIC AND NEVER ENDING — even during holidays, the logistic chain never stops.

This also reflects into the world of projects and heavy lift transport. In this highly complex and diverse industry, deliveries are essential to meet the strict requirements for multibillion projects worldwide.

Often the demand for supply is around the clock all year in order to fulfill the demands of the clients and make sure the project schedule is on time.

For the same reason it is essential that the logistics providers can comply with these requirements and also work 24/7 all year around. This also means operating outside normal working hours and under different climates from soaring heat to freezing cold.

At the same time night time work is required which can present some additional challenges which need to be well planned in order to avoid incidents.

It is no surprise that operating without daylight is more complicated than during daylight and many factors need to be taken into consideration.

Martin Bencher Group values safety highly, therefore we make a detailed plan for each cargo operation, especially for loadings/discharges without daylight. We arrange tool box meetings before commencement of the job with all the involved parties, including making a job hazard analysis to ensure that all matters have been taken into consideration and the people are aware of their responsibilities.

Visibility is the obvious challenge, so appropriate lighting must be arranged in order to perform a safe cargo operation during night. We recommend that critical lifts, like heavy lifts are performed during daylight for maximum safety.

Martin Bencher Group recently finished a riser project for a semi-submersible drilling rig in South Africa where delivery time was critical. The discharge berth we used was not a commercial berth and no lighting was available. In order to overcome this issue, we submitted an additional HSEQ manual for operating during night to the port authority in order to get their approval for us to arrange sufficient lighting sources in all operational areas. In this way we could operate around the clock and save time for the client and also avoid the vessel lying idle.

In these cases we also have to take various other issues in consideration in order to avoid incidents.

There might be lighting in the areas where operation is going on, but elsewhere in the port area and on the vessel there can be darkness and lim-

A24 BREAKBULK MAGAZINE www.breakbulk.com

PROJECT LOGISTICS

ited visibility. Therefore it is important to block all possible traps like hatches etc. Falling down in any place onboard a vessel can result in serious injury to personnel.

All people involved in a specific operation must of course be wearing full PPE gear – including headlamps for the operational people where necessary.

When operating during darkness, radio communication becomes even more important since hand signals might not be clear. So it is essential that the operational people are clear with the instructions given and that only one person gives orders. Crane and truck drivers must be aligned and have clear understanding of the orders given.

Whether in the port or on the road it is important to keep focus on other traffic and activities in surrounding areas.

Blocking other traffic to keep it at safe distance will enable the team to focus 100% on the cargo operation and they do not need to remove their attention to other disturbances in nearby vicinity.

During night hours it is essential to keep an eye out for fatigue among the people involved. A well-rested crew is a major factor to avoid accidents.

Therefore the crew must at all time follow the resting and working time requirements and must be well rested before commencement of the job.

When our staff is send out to supervise overseas operations, we require that they arrive minimum 24 hours before startup in order to have time to rest and be ready for the job.

For complicated operations we nominate a safety officer in charge during the operation. This person have the full authority on our behalf to stop the operation at any time if he or she can spot any signs of a potential hazardous situation. This can be any of the above mentioned or others.

Safety of the crew and personnel is the top priority even if this means it has a commercial impact on ourselves or the client and we intend to keep our focus to make sure that we avoid accidents to both personnel and cargo.

ISSUE 1 / 2016

Visit us at booth #620

3,133 tonnes modules for the oil and gas industry.

Martin Bencher Group transports all kinds of cargo - and specializes in the handling of projects and oversized/heavy cargo from many different industries; from paper mills, power plants, oil and gas projects to wind turbines and luxury yachts, Martin Bencher Group can handle the transportation of your cargo. Our +130 employees are ready to create competitive solutions tailored to your needs.

www.martin-bencher.com

ROAD

after/dark

ADVERTISERS’ SUPPLEMENT

FULL ROAD CLOSURE

SAFETY

INCREASES

OF NIGHTIME TRANSPORT

Daytime Prep

DUE TO PERMITTING RESTRICTIONS, ALE was required to move two 420-tonne air cooled condenser modules from the port of Port Hedland to the the South Hedland Power station through the night. Thankfully, the nighttime permit included a rolling full road closure.

ALE received the two loads under ship’s hook.

Each module measured 15 meters wide, 50 meters long and 19 meters high.

Once loaded and secured, the convoy began its 30-kilometer journey after 22:00 hours.

ALE used 28 axle lines of conventional trailers in a three-file configuration with three prime movers to transport the ACC modules.

Each module was delivered safely to site in eight hours.

Once onsite, the modules were moved to their final positions and stooled off ready for installation.

The (AUD) $570 million South Hedland Power Station Project is under construction by TransAlta that will own and operate

the 150-megawatt combined cycle power station in the Pilbara region of Western Australia. The power station is being built under an engineering, procurement and construction contract with IHI Engineering Australia and Jacobs Engineering.

The combined-cycle natural gas generation facility will be one of the most efficient plants in the region and is contracted to supply both state energy utility Horizon Power and Fortescue Metals Group, an iron ore mining company.

It will house three GE gas turbines, which were delivered in November 2015. The plant is scheduled to come online in 2017.

A26 BREAKBULK MAGAZINE www.breakbulk.com

Nighttime Transport

Dawn Delivery

ISSUE 1 / 2016

ENGINEERED HEAVY LIFTING, RIGGING & TRANSPORT

Offshore & Marine Petrochemical Power Civil

www.burkhalter.net

800-748-9950

after/dark

ADVERTISERS’ SUPPLEMENT

RUSLAN INTERNATIONAL DEMONSTRATED ITS UNFAILING CAPABILITY IN HEAVY AND OUTSIZE AIR CARGO with the airlift of a 70 ton piece of oil and gas equipment to Iraq, which was negotiated and overseen by its US representative in Houston, Volga-Dnepr Unique Air Cargo (VDUAC).

Ruslan International, in conjunction with Volga-Dnepr Engineering Logistics Centre, transported an oil refinery stripping tower from Bakersfield, California to Erbil, Iraq. This is an operation that many believed simply was not possible due the sheer length of the cargo and the fact that it needed to be transported in one single piece. The lift, performed by one of Ruslan International’s 17-strong fleet of AN-124100 aircraft, was the culmination of more than a month of meticulous planning, drawing on more than 25 years of expertise in logistics, engineering and design.

Manufactured in the United States, the tower was being transported by the Taq Taq Operating Company Ltd (TTOPCO) for use in the Taq Taq oil field in the Kurdistan region

of Iraq. The timing of the delivery was critical to enable operations at the refinery to begin as soon as possible. It was estimated that the tower could refine 40,000 barrels of oil per day, so every day that it remained in the United States resulted in a significant loss of revenue for the client.

Perhaps the biggest challenge associated with the lift was the fact that the piece of cargo, measuring 38.4m x 3.7m x 3.7m, was technically longer than the cargo floor of the AN-124-100 by almost 2 meters.

Adding to the complexity, the ultimate goal was to transport the tower as it was constructed, without cutting it to reduce length or removing any protruding pieces so as to save valuable time and maintain the integrity of the tower. Consideration

A28 BREAKBULK MAGAZINE www.breakbulk.com

AIR

Ruslan International transports stripping tower to Kurdish oil field in first of its kind operation

also had to be given to the fact that the tower had no authorized attachment or lifting points on it – nor had it any loading technologies attached to it to facilitate transport or loading.

VDUAC rose to the challenge, combining the capability of the AN-124 with its advanced engineering expertise to meet the complex logistics requirements of the job in hand. VDUAC designed two transportation cradles, which it developed through the use of 3D modeling technology and drawings provided by the manufacturer of the tower. The cradles allowed the tower to be loaded on to the aircraft via the ramp and rail system used by the AN-124100, and also helped ensure the structural integrity of the stripping tower whilst in transit. Ultimately, the construction of the cradles ensured that all transportation requirements, load bearing concerns, restraint criteria for G-Force restrictions and tie-down requirements of the AN-124100 were met.

ISSUE 1 / 2016

after/dark

ASPA Investments Keep Pace with Market Demand ALABAMA’S ONLY DEEPWATER SEAPORT TERMINALS are located at the Port of Mobile, just 32 miles from the Gulf of Mexico. The seaport handles more than 55 million tons annually and is served by major ocean carriers on Asian, European, Mediterranean, and Latin American trade lanes.

The public terminals are owned by the Alabama State Port Authority. The Authority’s recent investments focused in part on new breakbulk facilities restoring over half a million square feet of general cargo warehouse capacity within the 40-foot draft, main port complex. One major project, Alabama Steel Terminals, constructed a new $36 million steel coil terminal adding 178,200 square feet of covered bay area and 168,000 square feet of open storage. Alabama Steel Terminals’ rail, truck and barge served facility is also equipped with four 50 ton overhead bridge cranes and integrated GPS technology to provide shippers operational efficiencies and real time product location. Expansion planning could add 194,400 square feet of bay area and additional cranes. This project compliments the Port Authority’s $18 million Pier C North investment that modernized 252,000 sq. ft. of open yard, strengthened 90,000 sq. ft. to 1500 psi and added new rail and fender systems. Another project in the works includes a new Ro/Ro Automotive

ADVERTISERS’ SUPPLEMENT Terminal. The Authority is currently seeking a concessionaire to partner in the construction of a 100-acre, Phase I automotive processing and logistics center. The site is located on the 40-foot draft Theodore Ship Channel and will be both rail and highway served.

The public terminals are connected to two interstate systems (I-10 and I-65) and five Class I railroads-CSX, Canadian National, Burlington Northern Santa Fe (Alabama & Gulf Coast Railroad), Norfolk Southern, and Kansas City Southern. The C.G. Railway

PORTS

offers shippers all-water, rail connections into Mexico’s national railroad system every four days between Mobile and Coatzacoalcos, Mexico (Veracruz Region). The Authority’s terminals also connect to nearly 15,000 miles of inland and intracoastal waterways providing shippers with low-cost water access to ports along the Gulf of Mexico, Tennessee, Ohio, and Upper Mississippi river systems.

For more information, visit us at www.asdd. com or on Facebook at www.facebook.com/ AlabamaStatePortAuth

PUTTING THE

“Y’all” IN

GLOBAL COMMERCE.

THE PORT OF MOBILE Alabama State Port Authority www.asdd.com

www.breakbulk.com BREAKBULK MAGAZINE A29

after/dark

ADVERTISERS’ SUPPLEMENT

Photo Contest:

Port of Antwerp, during the transportation of modules of the huge Total Optara project from the terminal where it was unloaded to

AFTER DARK

W

Total’s plant in the port. Antwerp, Belgium

e asked our readers to send us their best photos of after dark transport, and vote online and for which one they like best. The next two pages show the 10 photos with the most votes. Be sure to flip to Page 73 to see the winner!

Year: 2015

Total Optara project ©Thomas Vanhaute

A ballet of multidockers discharging paper out of breakbulk vessel at Fast Terminals in Port of Szczecin, Poland. Year: 2015

The Chevron El Segundo refinery forms the beating heart of Southern California’s petrol production. When six of the refinery’s coke drums had reached the end of their life cycle, Mammoet was approached by Chevron. Mammoet transported the massive new drums straight through one of the most densely populated areas in the USA. Year: 2014

Port of Houston with cityscape. Year: 2012

Photo by Chris Kuhlman, CK Productions

The AAL Shanghai sails under the historic British Columbia landmark, The Lions Gate Suspension Bridge, Vancouver, British Columbia, on her way to deliver Canada’s largest gantry crane for the Seapan Vancouver Shipyards. Year: 2015

A30 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 1 / 2016

PHOTO CONTEST

ADVERTISERS’ SUPPLEMENT

Port of Antwerp, during the transportation of modules of the huge Total Optara project from the terminal where it was unloaded to Total’s plant in the port. Antwerp, Belgium Year: 2015

Shipment of seven of some of the world’s largest engines and their ancillary components; when assembled each unit weighs more than 300mt. They were transported by the BigLift Tramper and went directly to awaiting seven 12 axle railcars for on-carriage to Mexico.

Operations in Corpus Christi began on December 22nd and all seven engines were ready to move by night of the 23rd. Year: 2015

Intermarine discharged four units of offshore reels ranging from 295-345 MT in diameter and 9.6 MTR X 5.0 MTR in width in Tanjung Langsat Port off of the southern tip of West Malaysia. Year: 2015

Heading Northbound on the A1(M), UK. The 300t reel of steel wire rope was safely transported on a 67 km overnight journey by road from manufacture in Worksop, to the port of Goole using the Allelys Groups 500t Capacity Faktor 5 Girder Frame Trailer.

Year: 2015

Rostock, Germany. Assembly of a Liebherr Offshore crane BOS 35000 with two Liebherr mobile harbour cranes, type LHM 600. The offshore crane will be installed on the heavy lift barge Giant 7. Year: 2016

Next Photo Contest: City Transports. Submit your best photos, then go online to vote for your favorite entry. The photo with the most votes will be published in the March/April issue of Breakbulk Magazine.

SUBMISSION DEADLINE: MARCH 11 VOTING DEADLINE: APRIL 4

ALE transported nine modules, ranging in weight from 22t to 360t, from the Port of Antwerp 6km to the client’s refinery in Belgium. The manoeuvres are part of the Optara project involving the expansion of the client’s refinery in Antwerp, Belgium. Year: 2015

www.breakbulk.com BREAKBULK MAGAZINE A31

trade notes

VICTORY FOR INFRASTRUCTURE Canada’s Expansionary Growth Plans, Trudeau Style

T

he Liberal government’s victory in last October’s Canadian federal elections marks a significant triumph for that country’s deficient infrastructure. By association, it’s also a victory for suppliers of project cargo and breakbulk services, who will play a key role in developing such projects in a cost-effective way.

BY ALAN M. FIELD

Trudeau’s Liberals announced plans for a stimulus package of transport projects.

Credit: Prime Minister of Canada

Canada’s infrastructure and construction sector, after contracting by 0.5 percent in 2015 because of private sector cuts to capital investment and a slowing residential sector, is expected to recover in 2016, according to a report from UKbased BMI Research. That turnaround is driven by the new Liberal government’s fiscal stimulus plan, which will double public infrastructure spending over the next 10 years.

Led by its charismatic leader, 43-year old Justin Trudeau, the Liberals have announced plans for “a stimulus package and strong pipeline of social infrastructure and transport projects [that] will help the construction industry post 2.5 percent real growth in 2016 and then average 2.9 percent from 2016 to 2019,” forecasts the BMI Research report.

The Liberal government also hopes to create a Canada Infrastructure Bank to help municipalities in that country finance infrastructure projects by providing them with debt financing and

loan guarantees, and by bundling smaller projects to make them more attractive to institutional investors.

Overall, BMI forecasts that Canada’s “transport infrastructure and renewable energy will outperform [the overall economy] over the next four years, as the Liberals intend to promote export competitiveness through transport infrastructure development, and have stressed their commitment to green infrastructure.”

Eric Miller, vice president of policy, innovation and competitiveness at the Canadian Council of Chief Executives in Ottawa, explains that the Trudeau government shares many views about the vital importance of strengthening infrastructure with the administration of President Barack Obama, now in its final year in office.

“Prime Minister Trudeau and President Obama seem to have hit it off like a house on fire when they met on the margins of the G-20 in Turkey and other venues,” Miller said. “Both have the same basic world view about how to grow an economy and how to seek prosperity.”

In preparation for Trudeau’s state visit to Washington in mid-March – and the first formal state dinner between an American president and a Canadian prime minister since 1997 – Miller’s organization has urged both countries “to put on the agenda certain transformative measures with respect to the border. Early indications are that there is an interest on the part of the Obama www.breakbulk.com BREAKBULK MAGAZINE 41

trade notes

FUNDING CANADIAN INFRASTRUCTURE The following projects have received significant funding from federal and provisional programs in 2015 and 2016:

GREEN INFRASTRUCTURE (CONTINUATION OF EARLIER PROJECT) SUM COMMITTED:

CAD$22.1 million PROJECT:

Second phase of the Municipality of St. Hyacinthe, Québec, enhanced project involving the processing of organic matter using biomethanization.

NOTES: The new

contribution by the government of Quebec is in addition to the CAD$11.4 million already provided by the government of Canada under the Green Infrastructure Fund, and the CAD$14.4 million invested by the government of Quebec under its program for processing organic matter using biomethanization and composting.

ROAD CONSTRUCTION IN ISOLATED ARCTIC REGION SUMS COMMITTED:

CAD$200 million (government of Canada) and CAD$99 million (government of the Northwest Territories) PROJECT: Inuvik

Tuktoyaktuk Highway to the Arctic coast in the Northwest Territories to provide all-weather highway access to Tuktoyaktuk, which has only been served by ice road, barge, and air.

NOTES: The Inuvik

Tuktoyaktuk Highway is a collaborative project of the government of Canada, the government of the Northwest Territories, the Hamlet of Tuktoyaktuk, and the Town of Inuvik.

WASTEWATER PLANT SUM COMMITTED:

administration on that front and a keenness on the Canadian side on that front.”

In addition, a summit meeting of the three North American leaders will incorporate “a more direct and serious discussion than there has been for a long time about North American competitiveness and what the relationship between Canada, the U.S. and Mexico will look like,” Miller said. “Leader visits are actionforcing events and the actions are now being developed.”

INFRASTRUCTURE OPPORTUNITIES Apart from strengthening measures for cross-border cybersecurity, and addressing ways to achieve mutual recognition for skills categories in each of the countries, infrastructure is one of the areas where there will be plenty of new opportunities for U.S. and other nonCanadian firms, notes Miller.

Although details remain to be determined, this much is clear: “The Trudeau government has emphasized its desire to make significant investments in infrastructure; that may mean roads but also urban transit – other types of roads, bridges and facilities – although we are not exactly certain of which projects in which locations,” Miller adds. “We expect some money will flow to the greater Toronto region because the premier of Ontario [Kathleen Wynne] is very interested herself in making that a priority of her government.”

Some federal-provincial cost sharing will be important. People will need to design that infrastructure, provide steel to it, construct it, and will

CAD$14 million

CLIMBING CAPEX:

PROJECT: Develop-

Mining and oil and gas extraction

ing infrastructure at the La Seigneurie wastewater treatment plant in Salaberry-de-Valleyfield, Quebec.

42 BREAKBULK MAGAZINE www.breakbulk.com

Capital expenditures by sector (millions of Canadian dollars) 62,261 88,293 23,635 30,485

Utilities

2010

16,130

Transportation and warehousing Agriculture, forestry, fishing and hunting

require the services of project cargo and breakbulk professionals.

Much of the same kind of thinking that drove the American Recovery and Reinvestment Act in 2009 will drive the infrastructure here, Miller said, because the Canadian economy is in a downward cycle, driven by declining commodity prices. The Trudeau government hopes that infrastructure investments will be counter-cyclical. Certainly, U.S. engineering and construction firms stand to benefit from this, given the fairly open rules of cross-border procurement for NAFTA parties to bid on the infrastructure projects in other countries that are in that pact, which has brought together Canada, Mexico and the U.S. since 1994.

Glen Hodgson, senior vice president and chief economist Glen Hodgson at the Conference Board of Conference Board Canada, said this of Canada is a key reason behind Canada’s renewed attention to strengthening its transportation infrastructure. Canada’s international trade has been mediocre for much of the past 15 years, he said. Exports to the U.S., Canada’s dominant trading partner, were flat 2000-2010, and manufacturing export performance has been poor since 2000.

As the trade picture changed, Canadian exporters found some success diversifying into other growth

27,335 5,635 6,383

2014 (latest stats)

Source: Statistics Canada ISSUE 1 / 2016

markets, especially Asia. Thanks to strong prices, exports of energy and some other resources were robust; in addition, “traded services” emerged as a new area of strength. Now, the trade game appears to be changing and the Conference Board believes that Canada is entering the next trade era.

In Hodgson’s view, four key factors define the next trade era, in which Canada will need to take a more assertive approach to expanding its infrastructure.

First, economic growth in the BRIC countries of Brazil, Russia, India and China has faded – in some cases, badly. Both Brazil and Russia are in deep recession due to the commodity price collapse combined with poor economic policies, and there is no quick turnaround in sight. India is the new growth leader among the BRICs, with the potential to grow by up to 8 percent

BRICKS AND MORTAR:

Projected Canadian construction industry values

10

200

RIGHT AXIS

8

180

Construction industry value, CADbillions

6

160

4

140

2

120

0

100

-1

2014

2015*

2016*

2017*

2018*

annually. China’s downturn and its worldwide impact is profound.

Second, “Canada can no longer afford to be as dependent on exports of its industrial and agricultural commodities.”

2019*

2020*

LEFT AXIS Construction industry value, real growth, percentage year-onyear Construction industry value, percentage of GDP

*Forecast Source: Statistics Canada

Third, the value of the Canadian dollar has slipped back into a more familiar range in the mid-70 cents (U.S.) against the greenback. “The end of the commodity super-cycle has fed the decline in the [Canadian

www.breakbulk.com BREAKBULK MAGAZINE 43

trade notes

dollar’s] value. So has further Bank of Canada monetary accommodation, judged necessary to ward off incipient recessionary and deflationary forces,” Hodgson said.

Fourth, a full seven years after the 2008 financial crisis, the U.S. economic recovery is at last real and sustained,

KEYSTONE COPS U.S. energy policymakers do not always see eye to eye with Canada’s energy sector, and at least one highly publicized disagreement has set back project cargo aspirations.

On Jan. 6, TransCanada Corp. sued the U.S. government to reverse President Barack Obama’s rejection of the Keystone XL pipeline. The proposed 1,179-mile pipeline would run from the oil sands in Alberta, Canada, to Steele City, Nebraska, to join an existing pipe. It could carry 830,000 barrels of oil a day.

In this last-ditch attempt to revive the pipeline, TransCanada’s lawsuit in a federal court in Houston argued that the U.S. rejection of the pipeline was unconstitutional.

In a separate action under the North American Free Trade Agreement, or NAFTA, the company said the pipeline permit denial was

which means that bolstering connectivity between Canada and the U.S. is once again a priority, he said.

BUILDING CANADA There are two major components under the New Building Canada Fund, which was originally established

“arbitrary and unjustified.” TransCanada will seek US$15 billion in damages from a NAFTA trade tribunal. The U.S. lawsuit seeks to invalidate the permit denial as well as a ruling that no future president can block construction.

Eric Miller, of the Canadian Council of Chief Executives, said: “We were very disappointed with the decision. We fundamentally believe that it is important to get oil to market, and we see pipelines as a far better avenue for doing that than things such as rail.

But the oil will get to market and TransCanada has looked carefully at its legal options.”

The controversy over the Keystone pipeline has obscured the fact that Canada and the U.S. are working together along a similar track toward modernizing the continent’s transportation infrastructure in ways that reflect emerging global environmental standards.

Piping to be used for the Keystone XL pipeline from Cushing, Oklahoma to the Gulf of Mexico, sits stacked at a storage yard in the TransCanada Pipe Yard near Cushing, Oklahoma.

Credit: LARRY W. SMITH/EPA/ Newscom 44 BREAKBULK MAGAZINE www.breakbulk.com

under the administration of former prime minister Stephen Harper a decade ago: » The CAD$4 billion National Infrastructure Component (NIC), which provides funding for projects of national significance, with a focus on projects that have broad public benefits, and that contribute to long-term economic growth and prosperity. » The CAD$10 billion Provincial-Territorial Infrastructure Component (PTIC) which supports infrastructure projects of national, regional and local significance that contribute to economic growth, a clean environment, and stronger communities.

The PTIC is divided into two sub-components: » National and Regional projects (PTIC–NRP), CAD$9 billion. » The Small Communities Fund (PTIC– SCF), with CAD$1 billion for projects located in communities of fewer than 100,000 residents.

In December, Canada’s Infrastructure Minister Amarjeet Sohi announced that the Trudeau government will focus the additional federal funding on such projects as highways, ports, and Canada-U.S. border crossings that help speed the flow of commercial goods across Canada and to its neighbor to the south. Sohi said that those projects that are shovel-ready and meet the Liberal government’s policy goals will be getting the new cash. To qualify as shovel-ready, a local municipality will have done all the relevant studies, and engaged in public consultations.

In contrast to the Harper government of the past decade, Miller noted that “the Trudeau government has a strong urban base. They elected many members from Montreal and Toronto and Vancouver, and so one could imagine that priority will be particularly given to its world view about urban planning,” which stresses the importance of reducing urban road congestion. “Light rail might be an interesting area of activity. Road construction will also get a significant portion of the spending given the fact they carry the lion’s share of the burden” of commercial transportation.

ISSUE 1 / 2016

READY FOR ACTION Are Canadian firms ready to seize the opportunities? Hodgson believed so, but funding could be an issue.

“The key limiting factor is weak Canadian business investment activity,” he said. Private investment growth numbers were feeble in 2013 and 2014 and were even worse for 2015. Driven principally by a 40 percent collapse in oil sector investment, private investment contracted by about 8 percent last year, according to the Conference Board of Canada.

Laura Dawson, director of the Canada Institute at the Woodrow Wilson Center in Washington D.C., said that the oil-price decline has had a significant impact on the Canadian economy. “That’s an unfortunate side effect that has revealed the fault lines in the Canadian economy. When you can rely on continuing robust exports of oil and gas, you don’t have to look too closely at gaps in competitiveness in manufactur-

ing of goods and services. You are now seeing the gaps and weaknesses in other areas of the Canadian economy; but that’s not necessarily a bad thing. Being able to trade with the U.S. and export a certain amount of oil has led to a certain amount of complacency among Canadian producers [of various goods]. Nothing focuses the mind as much as a crisis,” Dawson said.

Miller argued that despite plunging oil and gas prices, the Trudeau administration has a strong interest in expanding and reshaping Canada’s energy infrastructure, noting that Natural Resources Minister Jim Carr has launched negotiations with the energy ministers of the U.S. and Mexico about a continental energy and climate accord.

“We welcome seeing a North American energy and environment accord that would include cleaner energy sources, with market access for traditional and untraditional Canadian energy prices.

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How the mix gets put together and what they mean [for the infrastructure and for project cargo and breakbulk service providers] is yet unclear,” said Miller.

He cautioned against accepting the conventional wisdom that views Canada as deeply divided between an environmentally sensitive East, and a politically conservative West. “Regionalism is a long feature of Canadian politics, but the Trudeau government has representatives from every province all across the country.” Although they are very aware of the importance of infrastructure for getting oil from the oil sands to the market, they are also investing massive sums of money in technological improvements that reduce greenhouse gas emissions. BB International correspondent Alan M. Field has reported on trade, logistics and related technologies in North America, Latin America and East Asia over two decades.

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case study

PATIENCE AND PERSEVERANCE Devil in Details for Ultra-heavy Moves

BY LORI MUSSER

M

oving ultra-heavyweight freight – units of perhaps 150 tons or more – calls for patience and perseverance in planning, and a very particular level of logistical savvy.

Shippers have come to rely on a small but skilled sector that specializes in finding and implementing secure, legal and affordable ways to move really heavy items.

From plant to project site, this supply chain is plagued with physical obstacles to mobility, challenging regulations, and a need for specialized equipment. Astute planning is important at every step, and for the overland segments it is absolutely imperative because the potential for glitches is arguably at its peak. Breakbulk looks at several recent projects that highlight the ability to overcome these complexities.

Matt Loll, vice president of project development North America for global logistics provider UTC Overseas, said challenges revolve around the critical handoff between modes, the lack of harmonization of permitting and load limits from region to region, parking and eleventh-hour obstacles. For global moves, he sees the main problems as typically inland U.S. The lack of harmonization on a grand scale is a very tough nut to crack.

Steve Todd, vice president of heavyhaul advocate Specialized Carriers & Rigging Association, confirmed that disparate regulations and permitting within North America, Europe and elsewhere is the greatest challenge to specialized carriers.

He described moving a heavy haul through the Chicago area: “You will 46 BREAKBULK MAGAZINE www.breakbulk.com

need to acquire overweight permits from each state between the port and Cook County and then dozens more from some of the approximately 250 local jurisdictions.” Many still have to be pulled in person, and are valid for only a few days.

Automation of permitting is still in its infancy, according to Todd.

PULP AND PAPER EQUIPMENT Orlando-based overweight and overdimensional carrier McTyre Trucking has been heavy hauling since the 1940s and today serves clients across the U.S. and Canada. McTyre put its experience to the test last December, carrying nine pulp and paper plant evaporator vessels – weighing up to 140 tons each – from the port of Jacksonville (Jaxport) to Palatka, Florida.

The cargo was shipped from China, through the Panama Canal to Jaxport, loaded onto deck barges using ship’s gear, tugged to the Palatka River, then trucked piece by piece over a week-long period to the Georgia Pacific plant nearby.

COO Johnny McTyre said his company used “10 lines of Goldhofer THP hydraulic platform trailers powered by prime movers” for the inland haul.

McTyre believes asset-based companies like his Steven Todd offer an advantage Specialized Carriers & because staff and equipment capabili- Rigging Association ties are known in advance and decisions made quickly. He said working with the forwarder to understand and adjust to intricacies and quirks is all in a day’s work.

McTyre said his in-house project management and permitting staff were hard at work months in advance of the move, addressing the planning process and government needs.

“Their work involves personal, face-toISSUE 1 / 2016

with upwards of two-dozen transformers expected in 2016, and like others in Credit: deugro the supply chain, invested close to a year preparing.

Master riggers undertook intricate calculations to ensure the barge’s suitability and Portus unlashed, unhooked, rehooked and placed the transformer on the waiting barge. “We have a comfort level with both McTyre and SAL Heavy Lift,” Mullins said. “They are first-class operators. With cargo this valuable, you have to be working with ‘A’ players.”

Just a few weeks before the Palatka haul, Georgia Pacific received a 188-ton steam turbine from Florence, Italy, over the port of Pensacola destined for Brewton, Alabama. Suzanne Anderson from the Brewton Mill said the turbine was needed to upgrade the plant’s “recovery island.”

GE Oil & Gas Technology supported the development and installation of the turbine set. GE worked closely with transport partner Sarens, departments of transportation, utilities and others to optimize transport and delivery while minimizing disruption to local citizens, said Dan O’Hara, a GE spokesperson.

Proud of its on-port role in supporting the logistics efforts, Pensacola Port Director Amy Miller said: “The successful and safe transit is also a testimonial to the excellent cooperation and professionalism of all stakeholders from Pate Stevedore and port operations, to Sarens, Gulf Power, FDOT, and local law enforcement.”

The over-the-road element of the journey, from Pensacola to Brewton, takes most drivers an hour. The ultradeugro handled the move of one of the largest rotors ever manufactured.

face meetings and many hours discussing possibilities and configurations. Some of the governmental agencies are actually a pleasure to work with but sometimes they just can’t allow routing over certain structures. So, we find a different route or configuration,” McTyre said.

Georgia Pacific spokesperson Terry Hadaway said the US$70 million investment will help convert excess water from pulp into energy, reducing emissions and energy costs. The company worked with county and state policing, transportation and other officials to minimize public inconvenience and ensure safe delivery.

Hadaway said that early, thorough coordination was essential. “I expected my phones to light up but didn’t receive a single call. People were more interested in seeing the shipment than the inconvenience,” he said.

John Mullins is customer service/ business development director at Portus, the Jaxport operator that received the ship and barges carrying the cargo.

Portus is no stranger to heavy-lift,

heavy haul took four days – a respectable timeframe considering the transit was accompanied by power, telephone, cable, city, county and state bucket trucks and police escorts. The move required the removal of more than 400 obstructions, including power lines, traffic signals and low-hanging trees.

Heavy-lift and engineered transport specialist Sarens USA was integral to the move. Steven Sarens said: “Success came from having the most suitable transport equipment and – even more important – from upfront preparation, collaboration among all parties, and the dedication of our crews.”

TRANSFORMATIVE LOADS Late last year, an 800-ton phaseshifting transformer traveled from China’s Baoding Transformer Works to Rocky Mountain Power in Utah. It was not expected to be an easy move – being, after all, the heaviest over-the-road haul ever permitted in three U.S. states – but throw in a chemical explosion that damaged the export region and port just days before departure, and you have a genuine logistical challenge.

UTC’s Shanghai and Houston offices had coordinated transport from plant to Tianjin port with domestic logistics coordinator Zhongjie Ltd. After the explosion, the two heavy-lift specialists adjusted the routing, made the move, and, incredibly, shaved two days off the 125-mile transit to port, meeting a tight vessel window.

The transformer was shipped to Houston, moved to New Mexico by train, then the two main sections were separately escorted over the road on a million-pound capacity, dual-lane trailer

UTC’s transformer move was the heaviest over-theroad haul ever permitted in three U.S. states.

Credit: Doug Webster Sonoma CRN for UTC Overseas

www.breakbulk.com BREAKBULK MAGAZINE 47

case study

TRUNNIONS NEED NOT APPLY Exacerbating hauling headaches, permits differ by jurisdiction on escort requirements, passage timing and, critically, weight limits for a particular number/spread of axles, or for innovative trunnion axle or dual-lane trailers.

The fact that engineers confirm innovative configurations can better spread loads and cause less stress during transit often isn’t even evaluated by jurisdictions whose engineeringreference data likely pre-dates 3 million-ton loads.

Trunnions – short axles pivoted at or near the mid-point of the truck’s horizontal axis – are severely restricted in much of the eastern U.S., according to Steve Todd of heavy-haul advocate Specialized Carriers & Rigging Association.

The impact of this decision on global competitiveness cannot be ignored.

Todd said that Canada’s situation, with its provincial regulation, mirrors that of the U.S. But ultra-heavy hauling is facilitated within countries, like Mexico, where loads are regulated at the national level.

“Mexican carriers say the ability to one-stop shop is a huge advantage,” Todd said. Nonetheless, harmonization problems still crop up at the national border. “It is a global problem. And as things are being manufactured larger and heavier, those problems will worsen.”

In many places, governments place restrictions on movement of overweight loads, such as after dark, during drive time and on a weekend.

The transit window is complicated as the load crosses jurisdictional lines,

to Monticello, Utah. Jack-and-slide systems were used to move the big unit, throat and small unit to a Goldhofer selfpropelled modular transporter, or SPMT, for delivery to the substation.

“We had done our homework, and evaluated various routes, combinations and configurations,” UTC’s Loll said.

A northern route would have entailed extra permitting and engineering and an expensive 20-axle Schnabel car on rail, whereas the BNSF southern route chosen used a 400-ton, 40-footdeck, 16-axle car that UTC had custom manufactured. The fit was snug. “There was less than a half-inch of clearance

on either end of the exciter unit and it weighed 381 tons.”

Joe Sindelar, of UTC’s Rail Engineering Department, said that pegging the center of gravity of the load in advance was key to placing the load accurately on the rail car and designing the welded tie-downs.

The ultimate truck route hinged on bridge widths, said Mark Lavery, project manager of Salt Lake City-based Intermountain Rigging and HeavyHaul.

Shorter autumnal daylight hours, steep grades, parking availability, road traction and corners were carefully considered too.

“Getting out of the railhead was a bit

McTyre used 10 lines of Goldhofer THP hydraulic platform trailers to move nine pulp and paper plant evaporator vessels from Jacksonville to Palatka, Florida.

Credit: McTyre Trucking

48 BREAKBULK MAGAZINE www.breakbulk.com

Trunnion Axle Configuration

necessitating parking at country or state borders to await a new transit window, a shift in escorts, or a placard replacement.

An almost ubiquitous truck parking shortage has become paramount for the oversize, overweight sector.

tricky. We had to back up around a couple of corners to get to the main road,” he said.

Rocky Mountain Power has about 1.8 million customers in six states. Spokesperson Margaret Oler said the PST will increase capacity, better serve customers, and provide better interconnectivity with renewable generating resources.

UTC’s Loll attributed the project’s successful completion to strong communication and concluded: “After 18 months of planning and execution, we coordinated delivery of this massive cargo safely, on time and within budget.”

GIANT ROTOR MOVE In early November, a 316-ton rotor – one of the largest ever manufactured – was moved in the first of four shipments to the Belo Monte Hydroelectric Project in the Xingu River Basin, Brazil.

The US$11-billion plant is being built on the Xingu River in the Pará state of Brazil. When completed, toward the end of the decade, it is expected to be the world’s fourth-largest hydroelectric plant, providing electricity for about 60 million people.

São Paulo-based deugro Brasil handled the door-to-door logistics. Moving the cargo from Araraquara, São Paulo, ISSUE 1 / 2016

to the port of Santos, hauler Transdata said it used three 750-horsepower prime movers, two sets of 18-axle lines, and a specially adapted girder bridge. The total 354-foot-long transport weighed in at 675 tons.

The project reportedly involved 60 logistical professionals to plan and synchronize movement along the truck route. To overcome numerous challenges, engineering solutions were fundamental and included civil works, electrical obstacles and reinforcement of bridges. A Transdata spokesperson said that the route was completed in 30 days when the preview was 90 days.

Karin Mickenhagen, regional vice president, South America for deugro Brasil, added that the inspection and analyses of the bridge structure over the Billings Dam, done by technical divers prior to the selection of the logistical solution, proved critical. Challenges

were overcome through ongoing interaction between client and supplier, and the selection of the correct over-the-road supplier. She said logistical requirements and deugro standards necessitated modern equipment, innovation, technical capacity and experience in handling complex moves.

Ultra-heavy shipments are infrastructure investments. They represent big-ticket spending and create jobs. The evaporator project, for example, at Palatka’s Georgia-Pacific mill, will create more than 150 jobs during construction and installation, according to Mill Manager Kevin Curry.

This infrastructure builds lifestyle, so there will always be very heavy items for haulers with the right combination of planning, management and equipment.

Stefan Fuchs, CEO of equipment manufacturer Goldhofer, is convinced that the key to a dominant position in

ultra-heavy haulage is equipment. At a time when the weight of cargo manufactured seems to have no upside, carriers have to use efficient and effective techniques and assets.

“For the markets of tomorrow … it is important to react to developments in market demand … If you want to land the contracts for the transport operations involved, you have to have the very best technology available,” Fuchs said.

A healthy dose of patience doesn’t hurt either. “You always come across new considerations – shoring up a rail bridge, permitting, etc.,” UTC’s Loll said.

Persevering despite adverse conditions, from winter storms to hurricanes to chemical explosions, is what is earning the ultra-heavy-haul sector growing business. BB Based in the U.S., Lori Musser is a veteran shipping industry writer.

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www.breakbulk.com BREAKBULK MAGAZINE 49

infrastructure

BY MALCOLM RAMSAY

SHORE

GREENFIELD PORTS DRIVE PROJECT CARGO OPPORTUNITIES

SOLUTIONS W

hile investment uncertainty has subdued growth across nearly every segment of the transport industry, project cargo firms supplying the greenfield port sector are hopeful for a relatively positive outlook in 2016.

Heavy-lift and breakbulk operators stand to benefit from the development of infrastructure for greenfield port projects around the world in 2016 and beyond, as developers will be prepared 50 BREAKBULK MAGAZINE www.breakbulk.com

to pay a premium for experience in handling outsized and overweight cargoes.

Increased competition for access to prime port locations is also expected to drive growth among developers.

Thomas Mikkelsen, CEO and partner of Thorco Shipping, saw opportunities for those carriers and forwarders that are quick off the mark.

“The early stages of greenfield port development are often where we see strong demand, as the technical requirements of lifting cargo to the site are very

different from those associated with standard cargoes,” Mikkelsen told Breakbulk.

Major greenfield ports today are broadly split among four project categories: container; energy; breakbulk; and roll-on, roll-off ports. Of these, the container sector is the most visible with the unprecedented rise of container shipping having changed the face of global trade over the last 50 years.

Standardization provided by containers has streamlined costs and transformed the port sector. As a result, ISSUE 1 / 2016

container sector, nor the concentration of activity into shipping line alliances.”

This divergence between container, energy, breakbulk and ro-ro ports has created very differing outlooks for future growth, with the container and energy port sectors presenting the largest opportunities for project cargo operators.

Thomas Mikkelsen

Neil Davidson

Thorco Shipping

Drewry Shipping Consultants

DRIVING PORT DEMAND

building the latest container hubs involves huge construction budgets and significant amounts of project cargo.

Likewise, the latest energy ports – handling fuel such as oil, coal and gas – are also large-scale projects with an increasing number of developments encompassing vast greenfield sites focused on a single fuel.

This has led to an increase in sophistication, with the latest energy ports matching or exceeding the size of container developments and replacing

traditional import or export routes via mixed breakbulk ports.

“In contrast to container and energy Credit: Woodfibre ports the requireLNG ment for breakbulk ports hasn’t changed dramatically,” said Neil Davidson, senior analyst with Drewry’s Ports & Terminals.

“In particular, there hasn’t been the explosion in ship sizes that has been seen in the Greenfield ports in remote locations lean on the expertise of specialists.

Felix Schoeller, general manager of AAL’s Pacific service, said in a world with ever-changing trade routes, ports regularly need upgrading, while new trading hubs are being developed at a fast rate.

These projects require components that are mostly manufactured in China, Korea, Japan or Europe and then shipped to projects worldwide. “Port infrastructure is an investment in the future of international trade. As we speak, AAL is involved in several port related projects and believes that there is great future potential,” he said.

AAL Managing Director Christophe Grammare said the ship owner had been involved in a number of recent port infrastructure projects in Australia including the carriage of pilings from Asia to Melbourne’s Webb Dock Terminal Expansion Project in Victoria.

The vast investment in China’s Silk Road initiative will see the Chinese government invest an estimated US$42 billion to construct a string of container ports connecting Asia, the Middle East and Europe. These include major new greenfield projects such as the port of Gwadar in Pakistan and Colombo in Sri Lanka.

These huge container ports will not only require project cargo to supply components for their own construction but are set to spur the development of extenwww.breakbulk.com BREAKBULK MAGAZINE 51

infrastructure

AN ADVANTAGEOUS RISK PROFILE

Credit: Thorco Shipping

One advantage that many project cargo carriers have when bidding for contracts on greenfield port projects is their risk profile when compared with larger, well-established shippers.

While large shipping lines may have greater capacity or more price flexibility, the risks associated with damage or delay when shipping vital components will normally outweigh such considerations in a contractor’s decision-making process.

“Insurers, and by extension investors, will typically study the development program closely, and will put pressure on contractors to deliver on time to avoid severe financial impacts,” said Andrew Webster, a partner with Jardine Lloyd Thompson.

“The most effective way to address these concerns is to utilize all available experience in project delivery, both from breakbulk operators and from insurers themselves, to safeguard that construction stays on schedule.”

The skill and experience to deliver outsized or difficult cargoes on schedule is at a particular premium when building a greenfield port, as at nearly every stage the late delivery of a consignment will mean knock-on delays and costs.

With many energy sector megaport projects costing tens of billions of dollars, the need to minimize risks remains paramount.

“Construction All Risk, or CAR, cover is for damage to the project prior to full commercial operation and for greenfield port projects there are generally some major carve outs in contractual conditions which may transfer the risk of damage back to the contractee,” Webster said.

52 BREAKBULK MAGAZINE www.breakbulk.com

sive inland infrastructure as well.

New road and rail links are already planned to connect ports in Myanmar, Pakistan, Kenya and Sri Lanka to the interior, and these will all require project cargo. However, while many of these mega-container projects are approved, investment uncertainty continues to plague the sector.

“The current marked slowdown in Chinese economic activity, and the strategy to change the nature of the Chinese economy from an export focused one to more domestic production and consumption is a key judgement call right now,” Davidson said.

Estimates of growth for shipping lines, and by extension the ports serving them, confirm tough operating conditions in 2016. As a result, many of the largest container port projects are greenfield expansions of existing sites, dredging and building new capacity next to proven locations.

This includes up to 5 million 20-foot equivalent units, or TEUs, of new capacity at the port of Mundra in India, 2.5 million TEUs at Khalifa Port Container Terminal in Abu Dhabi, and 2.5 million TEUs at the Red Sea Gateway Terminal at the port of Jeddah in Saudi Arabia.

“The key challenge for any greenfield port developments is to choose the right degree of sophistication and specialization versus the attractiveness of flexibility,” Davidson said.

PROJECT CARGO NEEDS Although all of these projects involve extensive construction budgets and represent significant opportunities for project cargo carriers, it is the energy port sector that is expected to drive the greatest growth for project cargo operators in 2016.

Projects such as the massive expansion of Australia’s Abbot Point Coal Terminal, and a raft of new greenfield ports in Africa and North America designed to deal with exports of liquefied natural gas, or LNG, are driving unprecedented demand for outsized and custom cargoes.

“The major opportunity for the MPP and heavy-lift sector when it comes to greenfield port development at the moment is with new energy ports. While there is some demand from new con-

tainer ports, the growth in oil, gas and coal ports is a key driver. The mass development of oil and gas reserves off the east coast of Africa is one important area, as is Australia where plans for the largest coal port in the world were recently announced,” Mikkelsen said.

LNG demand in particular is driving growth of new ports, as the cost to transport liquid methane continues to fall and the potential to extract gas improves. Huge greenfield projects include the port of Prince Rupert in Canada, the port of Yamal in Russia and Anadarko’s new LNG port in Mozambique, and the next five years are set to see many more come online.

Behind this growth in greenfield energy ports is an unprecedented demand for fuel from Asia. The International Energy Agency suggests that Asian countries are expected to import two out of every three barrels of crude traded internationally by 2040. As a result, the greenfield energy ports under construction are now among the largest infrastructure projects on the planet.

UNIQUE HANDLING REQUIREMENTS As such, these projects frequently face unique construction demands that not only require the heavy-lift capacity of breakbulk operators, but also the skills and experience in moving outsized and overweight items.

By their nature, greenfield port projects often have unique requirements when handling cargoes as the unloading site is only partially built. This can mean that the developer must rely on detailed planning and careful consideration of both costs and schedule to ensure that equipment is in place at the right time and location.

“Delivery of cranes, such as ship-toshore cranes for container terminals or stacker/reclaimers for bulk export terminals, are generally among the most important cargo for greenfield ports to consider, as they enable operations to commence. Therefore, loss or damage to them during shipment can result in a delay to the operation of the project,” said Andrew Webster, a partner with Jardine Lloyd Thompson, or JLT, a specialist insurance provider, serving the transportation industry, among others.

ISSUE 1 / 2016

Lack of availability of cranes at remote locations is one factor which often favors specialist cargo firms. Firms with the skills and experience to provide customized heavy-lift services using deck-mounted cranes, as opposed to shore-mounted cranes, are often in high demand for greenfield port projects.

“We were involved in a recent project developing the port of Gwadar in Pakistan that required the ability for vessels to accommodate and deliver outsized steel sheet piles,” Mikkelsen said, describing Thorco’s involvement in the greenfield project.

“These steel piles are used to form the foundation of the port, and need to be delivered at an early stage before other heavy-lift equipment is in place. Our ability to maneuver vessels closer to the site to deliver these piles was a key differentiator for the port developers,” Mikkelsen added.

The issue of cost is always paramount in any construction project, and given the level of complexity involved in modern greenfield ports the chance of overrun is high. For this reason, the major decisionmaking factor when hiring project cargo contractors is normally not the transportation cost, but the possibility of delays.

“We hear again and again from project owners that their No. 1 risk is the project being delivered on time, followed closely by the project being delivered on budget,” JLT’s Webster said.

A delay of as little as a few days can easily end up costing millions of dollars, and more extensive delays can even threaten whether the project is completed or not. As such the project cargo carrier plays a key role for investors in ensuring the schedule is maintained.

SAFETY CONCERNS It is not only risks to the timing of greenfield port projects that is a key consideration, however; safety concerns for project cargo carriers also need to be considered.

As most large greenfield projects are in remote locations and often in developing nations there can be relatively few resources already in place. When handling difficult and potentially hazardous cargoes this can become a serious concern for both property and crew.

“Often with greenfield port projects safety at the port itself can be an issue,”

SNAPSHOT OF KNOWN OR CONFIRMED MAJOR PORT EXPANSIONS COUNTRY PORT

ESTIMATE

CONSTRUCTION

Netherlands Rotterdam – Maasvlakte II APMT expansion

Rotterdam – Maasvlakte II RWG expansion Germany Hamburg – Steinwerder Georgia Anaklia Port Italy APMT Vado

Cagliari CICT Spain Algeciras – TTIA phase 2

Valencia – Sagunto expansion

Barcelona – BEST expansion Portugal Sines TXXI Egypt Alexandria - B100 Morocco Tanger Med TC3/TC4 Kenya Mombasa – 2nd terminal

Jamaica Kingston – Goat Island Bahamas Freeport Container Terminal expansion Costa Rica APMT Moin US – East Coast Philadelphia – Southport

Virginia – Craney Island

Jasper County Canada – East Coast Montreal - Contrecoeur Canada – West Coast Port Metro Vancouver – Deltaport T2 Panama Corozal East Timor Dili Indonesia Tanjung Priok expansion

Sorong new port

West Kalimantan new port

South Sumatra new port

Kuala Tanjung Port expansion

2020+ 2020+ 2020+ 2017-2018+ to open end 2017 2020+ 2020+ 2025+ 2024+ 2020+ 2020+ 2025+ Phase 2 – from 2019 Phase 3 – from 2023 TBC TBC to open early 2018+ 2017 2022+ 2025+ 2022+ 2018+ 2017+ 2018+ 2017-2018 2018+ 2018+ 2018+ 2018+

Source: Ocean Shipping Consultants/Royal HaskoningDHV

Mikkelsen said. “Often we may require a site visit, particularly if the new port is in a remote or undeveloped region, to determine the safety and potential for the vessel to approach the site prior to signing contracts.”

Project cargo carriers will normally add value at both the planning and risk management level, and as such the transportation of outsized, overweight or custom cargoes is often the least of the skills that heavy-lift and project cargo carriers bring to greenfield port construction.

The mix of skills, experience and technology present in the modern proj-

ect cargo sector is vital to the success of nearly every greenfield port project and in support of the growth of roads, railways and ancillary infrastructure.

These vital infrastructure and trade arteries all depend on the ability to ensure project cargo is delivered securely and on schedule. As such, the project cargo sector looks set for a busy 2016 delivering to these port projects. BB Based in the UK, Malcolm Ramsay has a background in business analysis and technology writing, with an emphasis on transportation and ports. www.breakbulk.com BREAKBULK MAGAZINE 53

regional review

RIDERS ON THE STORM Navigating Australasia’s Rough Project Terrain

BY IAIN MACINTYRE

B

reakbulk and multipurpose operators in Australia and New Zealand approached 2016 with some trepidation, as weakening demand, overcapacity and horrendous rates combined to challenge the economics of shipping services.

The result has been the trimming or withdrawal of services, with some operators forced into vessel-sharing alliances.

For engineering, procurement and

54 BREAKBULK MAGAZINE www.breakbulk.com

construction companies, or EPCs, the collapse of projects in the Australian mining sector has added to the plummeting oil price and a serious contraction of projects in energy exploration.

The dive in the oil price has signaled a challenge for the economics of major projects in Australia, several of which were conceived on the premise of an oil price nearly twice the current level.

Many companies have cut back hard on jobs and put project plans on the back burner. Chevron, developer of the giant Gorgon gas field off Western Australia,

slashed spending for 2016 by a quarter to US$25 billion after reporting a 10 percent cut to its workforce.

In the mining sector, demand from China has weakened considerably. Output has been curtailed, some projects mothballed and mines put on notice of closure.

Some specialized cargoes have remained a backstop for project and multipurpose carriers, such as the importation of firefighting helicopters for the southern hemisphere summer, during which Australia annually faces huge bushfire threats. Other mainstays of the project cargo trades have included windfarm components.

DOWNBEAT FORECAST No material change to this generally depressed picture is expected in the next 12 months.

This mirrors the global forecast predicted by analyst Drewry, who reported before Christmas that although demand

ISSUE 1 / 2016

growth is expected to recover after a very poor 2015, and supply growth is likely to be minimal, competition from other sectors will maintain pressure on the breakbulk market.

Factors include competition from container and handy bulk carriers, according to Drewry and confirmed by an Australasian industry source interviewed by Breakbulk.

“Southbound cargoes have dribbled away. Inbound steel (in particular structural steel for the Christchurch rebuild after the New Zealand earthquakes) as well as over-dimensional and project-related equipment have reduced drastically in volumes,” the industry source said.

“Australian imports have been very weak. Northbound, some customers have containerized their cargoes, such as lumber and pulp, opening them to more competition, when previously stuffing and de-stuffing costs would prove pro-

hibitive. Poor export revenues mean the carriers can’t justify continuing the same levels of service they were offering,” the source said.

An overview of the Australasian market was summarized by Jeremy Sutton, general manager for liner trades for Swire Shipping. Speaking to Breakbulk, he explained the Asia-Pacific breakbulk sector is traditionally dominated by steel and project cargoes.

“The steel sector faces a reduction in demand and is impacted by antidumping action, which has progressively spread through Asia over the last 12 to 24 months. Similarly, the project cargo sector has declined in the last six months,” Sutton said.

“Meanwhile, the export breakbulk sector from Australia to Asia has suffered from intensification of modal competition from the dry bulk sector and containers,” he said.

Poor pickings in both those sectors

have forced bulk carrier and boxship operators to seek new opportunities to compensate for their depressed home markets.

MULTIPURPOSE ALTERNATIVES There is, however, some confidence that the current malaise is cyclical. When container freight levels reach a sustainable level again, the traditional breakbulk shippers will seek multipurpose alternatives to save on container-related add-on costs, such as stuffing, de-stuffing, empty pickups and returns, box cleaning, repairs and detentions.

In the meantime, carriers are cutting costs and finding operational efficiencies.

Swire’s Sutton said that despite the difficult trading conditions, the focus was on optimizing network coverage, operating fuel-efficient and ecofriendly vessels, and exploring strategic partnerships.

Photo Credit: Port of Townsville Photo Illustration: Catherine Dorrough www.breakbulk.com BREAKBULK MAGAZINE 55

regional review

Swire has entered into a spacesharing agreement with AAL to boost its North Asia to Australia and Papua New Guinea service, providing 18-20 day service frequency from key ports in Asia to the Australasia market.

The load ports are Tianjin, Qingdao and Shanghai in China; Incheon and Pusan in South Korea; Kaohsiung in Taiwan; and Phu My in Vietnam.

Destination ports are Brisbane, Newcastle, Melbourne, Geelong and Bell Bay in Australia.

Swire has deployed two new S-Class multipurpose vessels of Jeremy Sutton 30,000 deadweight tons each, while Swire Shipping AAL has deployed two A-Class 31,000 dwt heavy-lift vessels with 700-tonne combined lifting capacity on the route.

Bringing together two breakbulk specialists takes costs out of each carrier’s operations, but some sacrifices have had to be made in port coverage.

AAL has had to drop New Zealand ports from its schedules, although the line is still keen to pursue inducement opportunities on a non-liner basis. The opportunities for AAL may be better in redeploying its third vessel into more lucrative international tramp business than stay in a depressed New Zealand market.

This may further assist Swire, which has invested in B.Delta39 bulkers to target the New Zealand log trade. Removing multipurpose competition can only assist the company’s financial viability.

ENERGY OPPORTUNITIES Several operators in the project cargo field continue to find opportunities driven by the major energy projects around the Australian coast, some of which have still to reach the production phase.

The US$34 billion Ichthys LNG project in Darwin is a case in point.

SDV Australia is the main forwarder for the project, and with the assistance of Asiaworld Shipping Services’ associated offices in Darwin and Singapore, 56 BREAKBULK MAGAZINE www.breakbulk.com

organized 25 shipments lifted by Spliethoff in the 18 months through 2015.

Spliethoff deployed D-type 18,500 dwt tweendeckers geared with 120tonne cranes for the carriage of offshore pipes for Ichthys, having done similar lifts for the Gorgon and Wheatstone LNG projects.

Looking ahead, many Australian offshore projects have passed the main construction phase, but even despite the downturn in the oil price, others are still providing hope to the project and heavylift market.

An example is Woodside and partners approving the US$2 billion Greater Western Flank Phase 2 (GWF-2) project off the Pilbara coast. The initial project startup is expected in the second half of 2019.

There are also opportunities for forwarders and cargo movers to exploit low rates, but this brings plusses and minuses.

“Many customers are benefiting from the lower freight rates, however many of them are facing corresponding challenges in their own markets,” said Swire’s Sutton.

Despite the challenging market conditions, Swire has found some niches for expansion. It added calls into Tasmania for its multipurpose liner service coverage in November last year.

John Malyon, managing director of Oceanic Navigation, said there is also an opportunity for exporters to consider breakbulk options by understanding their overall cost structure better.

“I wonder if enough exporters fully audit their cost structure, taking into account all of the add-ons?” he asked.

“Sending cargo by container can involve many add-on costs that are borne in the distribution chain, such as terminal handling costs, container washing, hire and off-hire, which are not necessarily transparent in the bundled charge which the exporter pays.

“By comparison, sending by breakbulk means the exporter controls the cargo as far down the distribution chain as possible, and has full knowledge of the cost structure at both ends of the chain,” he added.

ALTERNATIVE EXPORT Malyon said the experience of New Zealand kiwifruit exports, which are controlled by a central organization

(Zespri) and make heavy use of seasonal breakbulk charters, shows that breakbulk does work for large volumes of perishables. Zespri also successfully organizes distribution throughout key markets, choosing a few key entry ports for a region, such as Zeebrugge for North European destinations.

This could act as a yardstick for other perishable exporters, such as apple shippers, who would have the volumes to make breakbulk charters work if they banded together.

He added that breakbulk and containers can work in harmony for exporters.

“Many perishable products have seasonal highs, and this is where breakbulk charters can handle the extra demand for space, complementing the year-round service of the container operators.”

One area where he feels there should be greater clarity for both breakbulk operators and exporters is in port costs.

“Many ports now are investing in container-handling equipment, terminal extensions and dredging, principally to handle container traffic. It does not take much for a self-sufficient breakbulk ship to tie up alongside a flat piece of quayside to load cargo.

“One wonders what level of port charges that are applied to breakbulk operations, actually are going to fund the port’s expansion into containers?” he added.

One key multipurpose port in Australia sees better times ahead. The Port of Townsville has forged ahead with infrastructural investment that foresees a future for breakbulk trades.

It has taken a long-term view of the potential for breakbulk and project cargoes by developing a 30,000 squaremeter cargo laydown area at a cost of A$1.73 million.

The investment means that Townsville is capable of accommodating up to 800 cars at one time, as well as other project cargo that requires a sealed hardstand surface.

It comes after consultation with customers who see the importation of vehicles and project cargo as growth opportunities for the port and the region. BB New Zealand-based Iain MacIntyre has served as news reporter for the country’s national shipping publication for over 25 years.

ISSUE 1 / 2016

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NYK Bulk & Projects Carriers Ltd., a wholly owned subsidiary of Nippon Yusen Kaisha (NYK), Japan’s largest shipping company, is one of the world’s leading ocean carriers of project cargo, heavy lift cargo, steel products, and bulk cargo. Established on 1 October 2013 through the merger of NYK-Hinode Line Ltd. and NYK Global Bulk Corporation, the company’s roots extend back over 100 years to November 1912.

We serve overseas markets through our global offices, which work in tandem with the worldwide network of the NYK Group and a number of agencies to meet all your ocean transportation needs.

OUR MARITIME KNOW-HOW We handle heavy and lengthy project cargo such as that for LNG facilities, power plants, windmills, and oil refineries. We coordinate closely with our customers to create transport scenarios, from pre-loading to delivery for safe, attentive, and reliable services by taking advantage of our maritime know-how.

We are committed to HSEQ (Health, Safety, Environment, and Quality) management, and our key vessels and divisions are all ISO9001/14001 and OHSAS18001 certified.

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Our worldwide sales office remains ready and willing to provide support to meet the individual needs of our customers. Please contact one of our offices for more information or to simply ask a question

SERVICES WORLDWIDE We provide regular semi-liner services at locations worldwide, including Americas, Europe, the Mediterranean Sea, Africa, Southeast Asia, India, the Middle East, and the South Pacific. In addition, we offer on-demand services dedicated to big/heavy lot and multi-destination transportation, as well as modularized cargo transportation and dry bulk services.

58 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 1 / 2016

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ADVERTISERS’ SUPPLEMENT

An interview with Bari Bookout.

Bari is the Chief Commercial Officer for non-container business at the Northwest Seaport Alliance.

What is the Northwest Seaport Alliance and how does it work?

As of last August, Port of Seattle and Port of Tacoma have come together to form a new organization that manages the cargo facilities in both harbors. It is a separate organization managed jointly by commissions for each port. The alliance is responsible for business development and infrastructure investment for the two harbors.

The alliance was formed due to competition between the two ports that resulted in losing market share to other gateways. Coming together allows us to focus that competitive energy outward and to make our investments in new terminals more strategically. We will be making investments to handle bigger container ships, then also realigning terminal capacity and repurposing more for non-container type business at smaller terminals. This is a really big opportunity to expand in the future the non-container breakbulk type cargo that we move through this gateway.

What influenced the ports to decide the competitiveness was not working and there might be a better way?

Both ports realized we needed to make investments in infrastructure to handle the big ships. Our leaders recognized very wisely if we both did it simultaneously, we would end any unhealthy competition and better utilize public dollars. By joining 60  BREAKBULK MAGAZINE  www.breakbulk.com

together, we are able to better position ourselves compared to other ports and other gateways.

It sounds like this could be a blueprint for other ports to follow, after almost 6 months, how would you say it is going?

cargo, such as transformers. We are also a strategic military port. In the North Harbor the biggest piece of project type cargo we have seen lately, was Bertha, a tunnel-boring machine that came in from Japan and moved across one of our terminals.

Does focusing on working It is going really well. Our with another port help with commissions are looking at your operational focus? infrastructure projects. Together we have two plans, one in the south harbor Yes, we have established an and one in the north harbor. These are operational service that has oversight specific to container business, but offer to make sure that all parties are up the opportunity to other coordinating with each terminals to repurpose other and facilitating the for breakbulk and other flow of cargo on and off With More non-container business. In our terminals. We often Facilities and the interim, Terminal 5 in hear from big exporters Seattle is available project about how well their More Flexibility, cargo and breakbulk cargo. cargo was handled here.

The Northwest Movement is managed very closely.

Seaport Alliance Are there plans for Terminal 5 to is Ramping undergo expansion Looking forward Up Capacity or renovation? to the next 12-18 months, where do for Increased Yes, the design is you see the strongest underway, construction growth, what type of Volumes in will start mid to late 2017. cargo do you see as Breakbulk and high points for your region?

Project Cargo What do you see Industries. coming in as far as We are seeing types of project cargo record-breaking and ro-ro? volumes of automobiles.

Agricultural machinery continues to The big moves include agricultural grow. We are a natural gateway for machinery, mining machinery, Asia. Despite the economic downturn construction machinery and a large in China, we expect demand to amount of over-dimensional type stay strong.

ISSUE I / 2016

SOMETIMES THE BEST ANSWERS ARE PRETTY OBVIOUS

What if the complete customer value, operational excellence, benefits to community What if instead of spending time

and the region was increased?

and resources on competing, two ports combined their strengths and collaborated?

What if an international gateway was created with less congestion, closer proximity to Asia and award winning ease of doing business?

We thought it was a good idea.

And The Northwest Seaport Alliance was born.

We don’t just solve problems. We generate solutions.

Proactively. Reliably. Inventively.

Questions? nwseaportalliance.com The Northwest Seaport Alliance is a marine-cargo operating partnership of the Port of Tacoma and the Port of Seattle

ADVERTISERS’ SUPPLEMENT

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An established project freight forwarder, having local roots and global reach, with proven track record of successfully managing many complex projects.

KOG Group is recognized for their one-to-one customer service, providing clients with a single point of contact for all shipments, small or big, whether it be projects, cross trade shipments or one-off deliveries - over water, air, land or rail.

We organize and super-

vise projects from feasibility studies to completion, including route surveys and special transport of heavy lift and oversized cargoes. Regular air freight to onboard couriers, from simple LCL shipments to renting an entire bay on container ships or being the

first to manage a project involving barging a 2700MT unit on barges over high seas – twice - we have done them all and continue to do so.

We are members of C-TPAT program, FCPA compliant and certified with ISO-9001, ISO-14001 and OSHAS-18001. Licensed FIATA and IATA agents, we are equipped to handle Hazardous and Radioactive goods.

We have offices in over 17 countries and are represented by an exclusive agency network worldwide.

Since the beginning of 2015, KOG Transport is a part of the Rhenus Group and has access to a general logistic network of over 350 branches in over 40 countries.

Please contact your nearest project control center for a personalized service.

Zug, Switzerland – for EMEA (Europe, Middle East and Africa) region.

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KOG TRANSPORT, INC. 299 Broadway, Suite 1815 New York, NY 10007 Contact: Colin D’Abreo Telephone: + 1 212 346 9800 Telefax: + 1 212 748 6133 Email: cdabreo@kogusa.com

KOG TRANSPORT, AG Zugerstrasse 1 CH-6330 Cham, Switzerland Contact: Roger Kündig Telephone: + 41 (0) 41 784 2356 Telefax: + 41 (0) 41 781 1530 Email: rkuendig@kogzug.ch

62 BREAKBULK MAGAZINE www.breakbulk.com

Japan

KOG JAPAN KK WBG Marive West 23rd Floor 2-6 Nakase, Mihama-ku, Chiba-shi Chiba 261-7123, Japan Contact: Masahiro Kosaka Telephone: + 81 43 297 3155 Telefax: + 81 43 297 3166 Email: mkosaka@kog-japan.co.jp

ISSUE 1 / 2016

Member of the Rhenus Group

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Truly a Project Forwarder, we work with our clients from feasibility to execution, no matter where the cargo originates or destined, specializing in North America, Europe, The Middle and Far East.

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USA: KOG TRANSPORT, INC. 299 Broadway, Suite 1815 New York, NY 10007 Contact: Colin D'Abreo Telephone: + 1 212 346 9800 Telefax: + 1 212 748 6133 cdabreo@ kogusa.com Email:

SWITZERLAND: KOG TRANSPORT, AG Zugerstrasse 1 CH-6330 Cham, Switzerland Contact: Roger K端ndig Telephone: + 41 (0) 41 784 2356 Telefax: + 41 (0) 41 781 1530 Email: rkuendig@ kogzug.ch

JAPAN: KOG JAPAN KK WBG Marive West 23rd Floor 2-6 Nakase, Mihama-ku, Chiba-shi Chiba 261-7123, Japan Contact: Masahiro Kosaka Telephone: + 81 43 297 3155 Telefax: + 81 43 297 3166 Email: mkosaka@ kog-japan.co.jp

trade notes

NOT-SO-FREE FLOW Politics Stall India’s Common Tax Bill

BY V L SRINIVASAN

I

t was vaunted as an administrative measure that would promote exports, create jobs, boost growth, and save India US$15 billion every year. But the country’s proposed Goods and Services Tax, or GST, has suffered a major setback.

Trucks face numerous checkpoints on their journey across India.

Credit: Asian Development Bank

Promising seamless transportation of goods including project and breakbulk cargo, the GST has been put on hold for at least a year, thanks to political bickering in the Indian Parliament.

The failure in getting the bill passed is a big blow to Indian Prime Minister Narendra Modi’s economic reforms, as GST is at top of the list of demands from industry. The hurdle is also a setback for Modi’s pledge to improve India’s position in the World Bank’s “Ease of Doing Business Index” from 142 out of 189 countries in 2015 to the top 50 by 2017.

The bill supporting the tax was passed in Lok Sabha, the Lower House of Parliament, on May 6, 2015, but the main Opposition Congress and its allies stalled its adoption in Rajya Sabha, the Upper House, for political reasons. Only after both Houses pass the legislation will the bill be sent to the President of India for his assent and then circulated among all 29 states for ratification in their respective legislatures.

The ruling Bharatiya Janata Party, BJP, has a majority in the Lower House, but is woefully short of the same in the Upper House. The government needs at

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trade notes

least 166 members “present and vote” to support the bill in the Upper House but only has 63, including those from its allies.

It is unlikely the opposition parties will support the bill in the budget session beginning in February. So, the BJP will have to wait for 76 Rajya Sabha members, most of them from the Congress-led alliance, to retire in 2016 to be replaced by members from the ruling party and its allies.

A DECADE’S WAIT In a report, Crisil Research, India’s largest independent and integrated research house, said that the rollout of GST would reduce logistics costs of companies by as much as 20 percent. The savings would accrue from a gradual phasing out of Central Sales Tax, or CST; consolidation of warehouse space; and faster transit of goods, since local taxes would be subsumed into GST. However, CST needs to be completely phased out and state-level check-posts must be dismantled for the benefits of GST to be fully realized.

“Currently a vehicle in India runs an average of 200-250 kilometers per day, and for those transporting overweight or overdimensional cargoes, the distance covered is even less. With the implementaRoadblocks and tion of GST, we tailbacks are common expect this to on India’s roads. increase to over 300 kilometers Credit: Adam Cohn per day as vehicles can avoid delays at

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the border checkpoints,” said Nipun Jain, director of PKJ Group in Mumbai.

Jain said that due to the different set of regulations in each state, vehicles are often delayed during transit. The implementation of GST would ensure such bottlenecks are avoided as all states would be integrated into one system.

“The companies that will benefit most are the ones that require bulk movement. Currently, warehousing for bulk movement is done to ensure tax savings, but once GST is in force, warehousing will be done to ensure operational efficiency,” Jain said.

Political parties should set aside their differences, he added, so that the GST enters into force as soon as possible, allowing the focus to be on how best to implement the act. “The government should ensure that there is a single window clearance system at all state check posts so that every vehicle is cleared within an hour of reaching the place.

There should also be single entry and exit forms under GST and the same Road Transport Authority rules are applied in all states,” Jain added.

STOP AND CHECK Holding the interstate border checkpoints responsible for lengthy delays, Pratik J. Shah, an expert on indirect tax service and partner of the Mumbaibased SKP Group, said that though these checkpoints are tasked with material scrutiny and location-based tax compliance, they negatively impact the overall

production and logistics time, as they account for roughly 60 percent of a truck’s transit time.

“These unproductive transit hours coupled with regulatory impediments reduce the efficiency of Indian manufacturers compared with their international counterparts,” Shah said. “Checkpoints and other official stoppages take up almost one-quarter of total travel time.

Eliminating checkpoint delays could keep trucks moving almost six hours more per day, equivalent to an additional 164 kilometers per day – pulling India above global average and to the level of Brazil.”

According to Shah, an integrated market under the new GST regime would assist in smoothing the flow of all cargo, including project cargo, through India.

There are about 650 checkpoints across the counPratik J. Shah try, and each state collects taxes at SKP Group different rates on cargo that move across their borders. As a result, freight that moves across the country is taxed multiple times. Worse, there are often long delays at interstate checkpoints, as state authorities review and examine freight and apply the relevant taxes and other levies.

“The GST is likely to reduce the tax barriers and compliance procedures that the states impose, like waybills under VAT, and ensure seamless movement of over-dimensional cargo within India.

However, for over-dimensional cargo, though the indirect tax laws like state VATs will be done away with, the other laws (non-tax laws) and rules will still prevail,” Shah said.

In the absence of the GST, the Indian Ministry for Road Transportation and Highways launched an official portal in early 2015 to grant all approvals for overdimensional cargoes online. This has brought relief to project cargo, but more could be done. Shah said that the government should introduce “smart cards” for toll gates and check posts which would further ease project cargo transport flow.

ISSUE 1 / 2016

DIFFERING RULES Procam Logistics Director Nilesh Kumar Sinha said that as project cargo service providers, his company’s priority is to ensure safe transportation of goods, but meeting the myriad of rules and regulations that differ from state to state can be problematic. “It is expected that with introduction of GST, such difficulties will be over,” Sinha said.

A common tax structure would, in his view, improve supply chain efficiencies. “It will come with a set of challenges, which if addressed at the right time can take businesses to new heights along with cost savings and ensure seamless movement,” he said.

Sinha added that implementation of GST is expected to open new business opportunities for company like his.

“We have already taken a major step Nilesh Kumar by forming a joint Sinha venture with a leading UK-based Procam Logistics auto component manufacturer for warehousing and distribution management for various automotive projects, rural electrification and other projects which require procurement to line feeding-in-plant to optimize overall cost of end products.”

Kamal Jain, director of Hyderabadbased Cargomen Logistics India Ltd., added that while there would undoubtedly be teething problems in the initial stages, trade would be streamlined in future as issues of interpretation of various laws and paper work would be reduced.

The GST would also improve the scope of domestic trade, allowing India to strengthen as a distribution center, and prompting a rise in imports and exports in line with increased foreign direct investment, Jain said. BB V L Srinivasan is a senior journalist based in Hyderabad, India, covering finance, infrastructure, energy, shipping, transportation, IT, environment and political and regional developments in India and the Gulf Cooperation Council region.

GST IN DETAIL

The knock back of the common tax legislation has been a blow for Indian Prime Minister Narendra Modi.

India’s Goods and Services Tax, or GST, legislation was first introduced in Parliament in 2011 after 11-year discussions with stakeholders. However, it could not be taken up at that time, as industrialized states like Gujarat, Maharashtra and Tamil Nadu opposed it claiming that it would impact on the tax collections of their states.

When the BJP returned to power in May 2014, the bill was in front of the Lower House within a year, and the expectation was that the opposition parties would vote for it in the Upper House to allow it to be implemented in fiscal year 2016-17. This move would have created a single common market in India, without state borders, allowing for seamless transportation of project cargo and other goods. But the lack of support in the Upper House means that the government does not expect to be able to meet its deadline of Apr. 1, 2016 for implementing GST. As a single tax, GST will replace all the indirect taxes that are levied on various goods and services in the country. It is to be collected at the destination and paid by the

Credit: UK Parliament

consumer within the final price of the commodity.

Once the act is enforced, the entire taxation structure in India would be simplified. In an added bonus, the government can expect more revenues as the act reduce the chances of tax evasion by manufacturers and service providers, such as logistics and warehousing companies.

It would also benefit the consumers as manufacturers are expected to pass on the benefit of tax savings to customers, leading to more competition and lower prices.

India has the second-largest road network in the world and two-thirds of its freight is carried by road in about 250,000 trucks, one of the reasons why logistics experts say that GST is critical for the country.

According to the World Bank, reducing delays due to roadblocks, tolls and other stoppages by half could cut freight times by some 20 percent to 30 percent and logistics costs by as much as 30 percent to 40 percent.

www.breakbulk.com BREAKBULK MAGAZINE 67

cargo lens

HULL, VISION Yacht Transport Best Left To Specialists

R

epositioning of leisure craft is big business. Yacht owners may need to move their assets to warmer climes, for urgent repairs, or perhaps to take part in a competition.

One option would be to load the yacht onto a ship with a semi-submersible deck, float it into a holding area to secure it, and give one of the yacht’s crew access to a lounge bar, a swimming pool, a restaurant, a cinema and fitness facilities.

Or owners can go for substance over style, and instruct a professional yacht transporter with the know-how and expertise to load and secure the asset.

Those who opt for the second choice are in good company, as most yacht moves end up with professionals who are focused solely SPMTs are perfect on transporting for the careful yachts from one movement of yachts. region to another.

Credit: Berard “Yacht ownTransportation ers frequently use transport services,

BY MARY SHACKLETT

even though it is more expensive to ship a yacht than to simply get it to its destination on its own power,” said Billy Smith, manager of Trinity Yachts, a custom super yacht builder on the U.S. Gulf Coast.

There are a variety of reasons why these owners choose transport, he said. “Some customers are concerned about the amount of wear and tear that the vessel could incur from the voyage. Other customers don’t deem their yachts as being seaworthy for such a long trip. Still other owners want to transport their yachts as rapidly as they can to different destinations, and having a transporter move the yacht is the best way to do that.”

Smith pointed to the example of charter yacht businesses that operate in Florida and the Caribbean during the winter months, and then move their charter yacht operations across the Atlantic to the Mediterranean Sea for the summer season. The objective in these cases is to get the yacht into commercial locations as quickly as possible.

COMMON ROUTES Sander Schuurman, marketing communications at Sevenstar Yacht Transport, a worldwide yacht transporter, sees similar patterns in yacht transport routes.

The most sailed route is the transatlantic, he said, where most of the transports occur before the start of the European summer season towards the Mediterranean, and then back to the Carib68 BREAKBULK MAGAZINE www.breakbulk.com

bean towards the end of year. But while this is the main trend, there is worldwide business and Sevenstar transports yachts to almost every major economic hub.

Business, meanwhile, is changeable and follows the world economic state.

“Right now, we see a rise in yacht transport in countries where the economy is growing – like the U.S. – and a decline in transport where there is a decline in the economy, like Russia,” Schuurman said.

Much of the business is generally done in the U.S. and in European countries like the UK and Italy.

“The market is also led by where the most yachts are built. Going forward, we expect to see growth in the emerging South Asian markets, specifically China.

This will have an impact on the market as a whole in the coming years as the idea of recreational luxury and wealth shifts from the western hemisphere to the eastern,” Schuurman said.

Like many breakbulk goods, yachts are unique cargo and every yacht is different. But in terms of transportation choices there are two types: ship owners and charter companies, Schuurman said.

“In the first case, the yacht shipping companies are dedicated to transporting yachts and they own their ships. This means, of course, that they have a much better grip on the timings and availability of the transport vessels, which enhances reliability,” he said.

In the second case, transporters do not own their own vessels and instead charter vessels through third parties that have room for extra cargo. The risk here is that control over the third party that is engaged is not as tight, which means that the customer or shipper could experience delays.

ISSUE 1 / 2016

Credit: Sevenstar Yacht Transportation

Important considerations need to be made during the planning process in advance of shipment, regardless of whether a yacht is shipped by a shipper or builder with its own transport vessel, or by a transport company in either an owned or commissioned third party vessel.

“As a yacht shipper, we have to provide detailed structural information about each yacht to a transporter before the yacht transport can begin,” said Trinity Yachts’ Smith. “We have to describe the on- and off-docking sequence for the yacht in great detail, and we also must develop a docking plan that contains all of this information. If the docking method involves dry docking, then elements like putting in blocking to support the boat come into play. Transporters also contact us regarding where to strap down and secure the yacht. In some cases, stan-

chions are needed to keep a yacht from tipping over.”

Schuurman said his company issues an information sheet to shippers that they complete in advance of shipment.

This data sheet includes: » Whether the on- and off-landing points are water or pier. » Whether the yacht is motor, sail, catamaran, or other. » Technical information such as overall length. » Beam and draft max in terms of meters or feet.

Other vital specifications include longitudinal position of the yacht’s center of gravity, and the maximum protrusion below the keel of the propeller, rudder or stabilizer.

Lashing is used if there is a risk that the yacht will pitch or roll from side to side and internal items on the yacht –

such as tables, chairs or other artifacts – are wrapped and secured. “If you go into the interior of one of these yachts before it is shipped, you won’t even recognize it,” Smith said.

PRE-SHIPMENT DEMANDS Transporters also need to define other items, such as stabilizing outriggers, swim platforms and any special adjustments necessary for safe transportation of the yacht. Finally, each yacht must be emptied of fuel – and in many cases, the transporting ships themselves must “burn clear” so as not to ruin the paint on the yacht with exhaust fumes from the fuel that the transport ship uses.

“A lot of work goes into the preshipment process,” Schuurman said. “We begin with a technical assessment of the yacht along with information gathering on docking plans before we begin www.breakbulk.com BREAKBULK MAGAZINE 69

cargo lens

looking for a suitable transport vessel. After this, we contact the port authorities, including the port workers and the boat loaders. We then begin to instruct internal and external operation teams on the move of the yacht, and we contact the client regarding the timing of landing and discharge.” After this coordination is complete, the yacht is loaded, transported and discharged.

In cases where customers navigate the waters with their own yachts, there are still logistics challenges on getting the yachts to and from ports of loading and discharge.

“In the ground stages of the operation, customers might prefer different approaches,” said Braedon Berard, chief operating officer of Berard Transportation. “Some may simply want their yacht loaded to a gantry lift, while others might want a turnkey approach to the load out that includes dry dock and sink.”

Regardless of the approach, Berard says that thorough engineering in advance of the move is the key to successful on-the-ground and to-the-water logistics.

“Typically, the customer’s engineers ensure that the cargo can safely be transported and BTI’s engineers handle it from there,” he said.

Points of consideration include the clearances that will be needed for the cargo; and ground preparations such as cargo supports for the vessel and matching up the cargo with the correct heavy-haul vehicles.

“The end-to-end logistics process can take one to seven days to complete,” Berard said. Preparations are also made to ensure that the yacht being hauled remains level.

Here, Berard uses self-propelled modular transporters that are capable of multi-weight steering in any direction for yachts that can vary from 100 to 15,000 tons. “The SPMT capabilities enable us to get into spots as tight on one quarter of an inch if we need to,” he said. BB

UNDERSTANDING RISKS As with other breakbulk cargo, there are elements of risk in shipping yachts.

Insurers like Lloyd’s of London provide insurance options for yacht hulls and machinery as well as coverage for yacht transporters.

Coverages on specific shipping contracts can vary, depending on the load and discharge locations for each yacht.

In the event that a carrier is transporting more than one yacht on a single trip, securing and managing the various coverages can become considerably more complex.

In assessing yacht transport risks, Sevenstar Yacht Transportation’s Sander Schuurman urged shippers and transporters to not only review their insurance coverages and liabilities, but to also perform a similar vetting of potential carriers, if they are using third parties.

Questions that shippers need to ask to reassure customers include:

If shipping is outsourced, transporters need to carefully vet standards.

Credit: Sevenstar Yacht Transportation

» H ow safe the transport of the yacht will be. » W hat kind of track record and experience the transporter has in transporting yachts. » W hether the transporter has an in-house engineering department where the lifting and stowage plans for the yacht will be created. » How

well trained are the transporter’s loadmasters.

“Another important question that transporters need to answer to customers’ satisfaction is who is responsible for providing the loading materials and cradles? And should things go wrong, what is the conduct of the insurance company?” Schuurman added.

A mutual understanding of how the yacht shipment will be priced is also vitally important to ensure a cooperative environment between shipper and transporter throughout the project.

For example, there are additional fees above the base contract price, such as transport insurance and Suez Canal fees in the Mediterranean area. These should be included in the upfront pricing. All parties should also be aware of the additional costs that can be expected, such as payment for the cost of waiting days when the vessel experiences delays during loading and discharge.

Mary E. Shacklett is a noted technology analyst, commentator and keynote speaker, based in the U.S. 70 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 1 / 2016

photo contest

Credit: Thomas Vanhaute

BREAKBULK AFTER DARK PHOTO CONTEST WINNER: PORT OF ANTWERP LOCATION: In the port of Antwerp, during the transportation of modules of the huge Total Optara project from the terminal where it was unloaded to Total’s plant in the port. Antwerp, Belgium YEAR: 2015

DESCRIPTION: Twenty-nine modules with high-tech assembly parts were transported by the Anne-Sofie (SAL Heavylift Shipping) from Tarragona in Spain to the Port of Antwerp. Each of these modules weighed between 100 and 1,000 tonnes. The photo depicts one of the modules being transported over land by night (to avoid any obstruction to working hours traffic in the port).

Spain-based Técnicas Reunidas was the EPC contractor for the construction and transport of part of the modules for the expansion and upgrading of the Total refinery in Antwerp, Total Group’s biggest and most complex refinery in Europe. The overseas transport was one of the largest in the history of the Port of Antwerp.

NEXT ISSUE: City Transport / Submission Deadline: March 11 / Voting Deadline: April 4 www.breakbulk.com BREAKBULK MAGAZINE 71

thought leaders

UP IN SMOKE Fuel Monitoring A Must For MPV Operators

J

uly 1, 2015, after a two-year legislative process, Regulation (EU) N°2015/757 on the Monitoring, Reporting and Verification for ships, or Shipping MRV, entered into force. The regulation applies to most ships worldwide exceeding 5,000 gross tons, regardless of flag, that call at European Union ports for commercial purposes.

Multipurpose and heavy-lift ship operators have until August 2017 to prepare and submit to an accredited verifier for assessment a monitoring plan describing the procedures, systems and responsibilities in place to monitor fuel consumption, carbon emissions, cargo carried, distance, time at sea and energy efficiency parameters.

These parameters must then be monitored for each ship and each voyage to, from and between EU ports starting in 2018, and reported in an independently

BY JULIEN DUFOUR verified emisVERIFAVIA SHIPPING sions report to the commission and the flag state by April 2019 for the first time. Finally, by June 2019, all ships touching an EU port must hold a document of compliance delivered by the verifier that will be subject to inspection by port state authorities.

To monitor fuel consumption for each emission source onboard, shipping companies can select one or a combination of four standard monitoring 72 BREAKBULK MAGAZINE www.breakbulk.com

methodologies involving amount of fuel onboard, bunker delivery data, fuel flow data and direct emissions measurement.

To determine the cargo carried and calculate the transport work, the regulation only specifies the methodologies for passenger ships, containerships and roll-on, roll-off ships.

This leaves the decision on the determination of cargo carried for other types of ships to the implementing acts, pursuant to the Regulation 2015/757, that are expected to be published in 2016, following an ongoing consultation process at an expert group set up by the commission.

FAIR COMPARISONS The technical rules for the determination of cargo carried for specific types of ships should allow for a meaningful and fair comparison of the resulting energy efficiency parameters between ships of the same type. Multipurpose and heavy-lift ships are not specifically considered in the Regulation or in MARPOL Annex VI, but the discussions on bulk carriers and general cargo ships may be used as reference for the purpose of this article.

The challenge is to decide whether cargo should be expressed in mass or volume, in mass in combination with a correction factor, or in a combination of mass and volume. The use of the dead-

weight carried (displacement at loaded condition minus ship lightweight) is also considered to be a relevant option to recognize the fact that on laden voyages low-density cargoes require the ship to carry ballast water to optimize their loading, and this ballast should not penalize the energy efficiency parameter.

These options are being considered in light of a number of evaluation criteria: accuracy, uncertainty, verifiability, administrative efficiency and robustness for comparison purposes.

While it would be relatively straightforward for multipurpose and heavy-lift ships to report the mass of the cargo carried or the deadweight carried, it may be more difficult to determine the volume of cargo carried, unless a stowage factor is allowed to be used.

The outcome of the discussions will be published in the draft implementing acts and it may be expected that multipurpose and heavy-lift operators will have the choice between using mass (likely the preferred option), deadweight carried, volume or a combination of two parameters.

Another key issue of the regulation for multipurpose and heavy-lift ships is the identification of reportable voyages, considering that a voyage is a movement between two ports of call, with a port of call defined as a stop at a port to load or unload cargo with the exclusion of stops for other exclusive purposes such as refueling. Indeed, these types of vessels are often involved in complex routings with multiple stops including ship-toship and offshore transfers, which may make the identification of reportable voyages and the determination of cargo carried a real challenge.

Although new and complicated, the EU’s MRV regulation is now in force, and the time has come to take proactive measures to understand how to meet the requirements. Analyzing processes and procedures ahead of time to accurately identify any gaps will ensure that everything is on track to meet MRV compliance. BB Julien Dufour is CEO of Verifavia Shipping, a worldwide independent accredited environmental verification, certification and auditing body for aviation and maritime transport, www.verifavia-shipping.com.

ISSUE 1 / 2016

CHIN UP Oil and Gas Glut Changes Game, Doesn’t End It

with the lowest rate will eventually trip on their own badly tied shoelaces when a project fails due to the lack of attention to detail that comes with perennial cost cutting. It only takes one failure to turn the tide.

CRADLE TO GRAVE

W

e are being bamboozled with headlines that talk of redundancies in the thousands at big name oil and gas companies, and exploration budgets that have been slashed by double-digit percentages.

But there’s still billions of dollars being committed to exploration and recovery this year, so project cargo specialists shouldn’t throw in the towel just yet.

The soon-to-be Royal Dutch ShellBG beast has budgeted total capital spending of US$33 billion this year, 30 percent lower than last year, but still a great deal of investment in oil and gas development

BY CARLY FIELDS by anyone’s BREAKBULK standards. And NEWS EDITOR the Shell-BG combo is not alone: ExxonMobil is looking to shave 25 percent off its capital spending this year, but that will still leave US$23.2 billion for its projects in 2016.

Total SA plans to reduce its capital expenditures to about US$20 billion, all the while targeting 1.5 billion barrels of oil equivalent in its 2016-18 exploration program. Meanwhile, Chevron has lopped

about US$8.5 billion of its planned investment spend, but will still be committing US$26.6 billion to its projects this year.

And while its budget for exploration for new oil and gas reserves will be slashed by 66 percent, it will still spend US$1 billion on exploratory work in 2016.

I’m not advocating the burying of any heads in the sand; the oil and gas-related project cargo market is not fantastic whichever way you spin it. However, my point is that there is still work to be had.

While the cuts make the headlines, the continued spends do not, and it’s those that will keep the project cargo market ticking in 2016. It’s not that there won’t be enough work to go around; it’s that there won’t be enough work to keep forwarders and carriers in the manner to which they have become accustomed.

The work will be spread more thinly, or perhaps more accurately, it will be spread smarter.

Quality of service, trust and integrity – those all-too-often underappreciated virtues – will go a long way. This isn’t about slashing prices; freight forwarders and engineering, procurement and construction companies that continually go

If you don’t manage to land any of the still sizable, albeit reduced, amount of oil and gas support work still going on in the world, then perhaps you can offer comfort in the industry’s final moments.

Consultant Douglas-Westwood estimates that 146 platforms will be removed from the UK during 2019-2026 – more than half of all UK platforms. With an average age of more than 20 years, high maintenance costs and comparatively expensive production techniques mean that these aging platforms are uneconomic at sub-US$40 per barrel prices.

With its well-established oil production facilities, the North Sea will inevitably lead the charge on platform decommissioning, but it won’t be the only region where decommissioning will need to take place in the medium term.

True, this is a specialist area, with a gamut of dedicated companies offering decommissioning services, but the sheer scale of necessary decommissioning will more than mop up any spare capacity in the specialist decommissioning sector, leaving rich leavings for entrepreneurial heavy-lift and project cargo operators.

So, keep your chin up, as us Brits would say, concentrate on your strengths and don’t be tempted to sink to the level of the lowest price-cutting denominator. BB

Oil rigs moored in Cromarty Firth.

Invergordon, Scotland, UK. Consultant DouglasWestwood estimates that 146 platforms will be removed from the UK during 2019-2026 – more than half of all UK platforms.

Credit: Berardo62 / Flickr www.breakbulk.com BREAKBULK MAGAZINE 73

INDEX Breakbulk cargo is an eclectic mix, encompassing forest products, steel, pressure vessels, windmill blades, rolling stock and out-of-gauge items.

With this in mind, BREAKBULK INDEX data ranges from steel production to details of planned capital projects.

The global nature of today’s breakbulk and heavylift sectors requires transportation professionals to be on top of economic trends worldwide, which calls for inclusion of focused macro-economic data on prices and events that affect EPCs, the breakbulk community and the multipurpose fleet.

PIRACY WEST AFRICA MARITIME SECURITY INCIDENTS There were 56 incidents from Senegal to Angola in 2015, with 17 robberies, five thefts, eight hijackings and 26 failed attempts. While efforts to combat piracy off the Horn of Africa have been largely successful, there was a hijacking in November, the first since March.

Total Failed Attacks Hijacking Attempts Theft Robbery

April ‘14 4 May 4 June 6 July 3 August 7 September 5 October 9 November 13 December 9 January ‘15 6 February 3 March 7 April 4 May 9 June 4 July 8 August 5 September 0 October 1 November 2 December 7

0 1 5 1 3 1 6 5 2 1 1 0 0 0 0 1 1 0 1 2 1

3 0 1 1 0 2 1 0 0 2 0 0 3 0 1 1 0 3 3 0 0 7 1 0 5 1 1 2 1 2 1 0 1 4 2 1 4 0 0 5 0 4 3 0 1 2 1 4 3 0 1 0 0 0 0 0 0 0 0 0 2 1 3

Note: “Failed” includes attempted robberies/thefts as well as hijackings. “Hijackings” include kidnappings from vessels.

74 BREAKBULK MAGAZINE www.breakbulk.com

SOUTHEAST ASIA MARITIME SECURITY INCIDENTS Attacks totaled 196 in 2015, focused primarily on robberies (50) and thefts (56) for the year. There were 16 hijackings and 74 failed attempts.

Total Failed Attacks Attempts Hijacking Theft Robbery

April ‘14 12 1 May 18 11 June 15 2 July 14 5 August 14 6 September 8 2 October 26 7 November 20 9 December 16 7 January ‘15 18 6 February 11 3 March 15 6 April 16 9 May 21 7 June 18 4 July 12 4 August 25 12 September 22 5 October 20 11 November 8 5 December 10 2

4 5 2 1 2 4 3 4 6 2 1 6 1 4 3 3 2 1 4 8 7 0 5 6 1 3 5 2 4 6 2 3 3 2 2 5 1 4 2 2 11 1 3 5 6 0 5 3 2 3 8 1 7 9 0 5 4 0 1 2 1 6 1

Note: “Failed” category is for attempted robberies/thefts, not hijackings.

Source: Risk Intelligence, www.riskintelligence.eu

ISSUE 1 / 2016

ECONOMY, ASIA-PACIFIC GDP FORECAST Economists largely forecast 2016 GDP growth among Asia-Pacific countries to be ahead of 2015 results.

8% 2013

7%

2014

6%

2015*

5%

2016*

4% 3% 2% 1% 0%

TH AIL AN D

TA IW AN

SIN GA PO RE

PH ILIP PIN ES

ZE AL AN D

SO UT HK OR EA

*Forecast

NE W

MA LA YS IA

JA PA N

IND ON ES IA

IND IA

HO NG KO NG

CH INA

AU ST RA LIA

-1%

INFLATION FORECAST Inflation rates are expected to increase across the Asia-Pacific region in 2016, except for projected decreases in Hong Kong, Japan and Indonesia.

8% 2013

7%

2014

6%

2015*

5%

2016*

4% 3% 2% 1% 0%

TH AIL AN D

TA IW AN

SIN GA PO RE

PH ILIP PIN ES

ZE AL AN D

SO UT HK OR EA

*Forecast

NE W

MA LA YS IA

JA PA N

IND ON ES IA

IND IA

HO NG KO NG

CH INA

AU ST RA LIA

-1%

CURRENT ACCOUNT FORECAST Current account balances are the difference between a given nation’s imported and exported goods, services and transfers and are an indicator of foreign trade trends.

350 300

2013

250

2015*

2014 2016*

200 150 100 50 0

TH AIL AN D

TA IW AN

SO UT HK OR EA

SIN GA PO RE

PH ILIP PIN ES

ZE AL AN D NE W

MA LA YS IA

JA PA N

IND ON ES IA

IND IA

HO NG KO NG

CH INA

AU ST RA LIA

-50

*Forecast, in US$ billions Source: Consensus Economics, www.consensuseconomics.com www.breakbulk.com BREAKBULK MAGAZINE 75

bb index

FOREST PRODUCTS: PULP INDEX EUROPE Pulp prices cost, insurance and freight to main European ports were normalized to 100 in January 2000 and are based on average euro prices of northern and southern bleached softwood, eucalyptus kraft, and northern bleached hardwood kraft pulp, weighted by production volume.

150 125 100 75 50 25 0

JFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASOND 2010

2011

2012

2013

2014

2015

NORTH AMERICA Delivered pulp prices were normalized to 100 in January 2000 and are based on average US$ prices of northern and southern bleached softwood kraft, bleached eucalyptus kraft, and northern bleached hardwood kraft pulp, weighted by production volume.

200 150 100 50 0

JFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASOND 2010

2011

2012

2013

2014

2015

ASIA Pulp prices cost, insurance and freight to main East and Southeast Asian ports were normalized to 100 in January 2003 and are based on average US$ prices of northern, southern and Russian bleached softwood, radiata, eucalyptus and mixed tropical hardwood pulp, weighted by production volume.

250 200 150 100 50 0

JFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASOND 2010

2011

2012

2013

2014

2015

Source: RISI, www.risi.com

EUROPEAN FREIGHT FORWARDING INDEX The index is based on European forwarders’ actual and expected freight volumes. Values below 50 on the zero-to-100 scale indicate a decline.

100 90 Actual

80

Forecast

70 60 50 40 30 20 10 0

M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F 2010

2011

2012

2013

2014

2015

2016

Source: Danske Market Equities, www.danskebank.dk 76 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 1 / 2016

HEADLINE

F R E E

Could Plummeting Oil Prices Make or Break Industry?

FUEL’S

GOLD

Unfulfilled Potential ■ Bridging Mozambique ■ China’s ‘Pearls’ Unstrung ■ MPV Rebound Cloudy

MARCH/APRIL 2015

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China Expands Influence with New Formula SPECIAL FEATURE: for Asian Infrastructure TENTH ANNIVERSARY

Loss of Confidence ■ Serious About Infrastructure ■ Iran: A Re-emerging Power ■ Crossroads of A

SEPTEMBER/ OCTOBER 2015

Harnessing Wind Industry’s Repowering Drive

SECOND

WIND

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SUPPLEMENT

the last word

DEALING WITH TRANSITION

BY JANET NODAR

B Credit: Keith Necaise Photography

China is focused externally on the kind of industrialstrength projects that propelled its own transformation into a booming miracle.

reakbulk Events & Media will soon head to Shanghai and Johannesburg for our spring events.

Both regions are facing telling tests: growth in China’s gigantic economy is “only” 6 percent or so, as the government copes with a jarring transition from ravenous emerging powerhouse to consumer-driven developing nation; while sub-Saharan Africa is reeling from plummeting oil and commodity prices.

This winter, to the surprise of some analysts, the IMF designated China’s renminbi the fifth of its reserve currencies. Later this year, China will need to allow the RMB to become fully convertible to other currencies and let go of some other market controls — this has proved not to be one of its strengths, as evidenced by China’s attempts to control its stock market, something of a challenge.

Going mainstream is necessary, though, because China wants the RMB onstage when it comes to financing its One Belt One Road, or OBOR, network of infrastructure, transport and industrial projects. These would put China at the center of a “new silk route” connecting China, Southeast and Central Asia, Africa and Europe.

Will we ever see the entire 900 or so OBOR projects worth US$890 billion that have been touted? These are very ambitious plans. However, Chinese President Xi Jinping recently toured Saudi Arabia, Egypt and Iran, offering billions in loans and investments that would fall under the OBOR umbrella. There are OBOR projects already underway elsewhere, and one of our Breakbulk China panels will discuss a Chinese/ Western partnership specifically designed to capitalize on these opportunities.

With OBOR, then, China is focused externally on the kind of industrial-strength projects that propelled its own transformation into a booming miracle while, internally, it is struggling to manage the difficult shift from industrial to consumer-driven economy. Its debt is estimated to be about 280 percent of GDP, plenty enough to worry some analysts. Will the world rush to loan China

78 BREAKBULK MAGAZINE www.breakbulk.com

OBOR funding? Will China’s ambitions create a vast interconnected, Asia-centric silk route, or will we be looking at a disparate collection of scattered mega-projects? It’s far too soon to say, but I suspect the answer will lie between these poles.

According to Transparency International, a global non-governmental organization that monitors corruption, China ranked 83rd out of the 168 countries analyzed in its 2015 Global Corruption Index, scoring 37 on Transparency International’s 100-point corruptions perception index. Denmark did best, at 91; Somalia and North Korea tied for last place with eight.

China tied with Benin, Colombia, Liberia and Sri Lanka. Brazil and India scored 38, and South Africa earned a 44.

A recent chat with Duncan Bonnet, a partner with Whitehouse Associates, soon to be Africa House, a Johannesburg based project consultancy, yielded some interesting insights about energy investments in sub-Saharan Africa. Bonnet, who will be moderating Breakbulk’s panel on energy trends in April, sees consistent investment in renewable wind, solar and mini-hydro energy projects across the region, which is badly constrained by a lack of power. Investors are eager to build small power sources that go up quickly, he says, rather than 2,000-megawatt coal- or LNG-based power production.

Oil and commodity prices will tick up some day and those dormant East African oil and gas mega-projects will resume, eventually leading to downstream baseload-scale investment, but for now energy projects on a more modest scale are the regional flavor of the day.

Janet Nodar Content Director

ISSUE 1 / 2016

CONSIDER IT THERE. In a complicated world, RTM makes things simple.

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