Breakbulk Magazine Issue 3 / 2017

SOUTHERN EUROPE’S WIND MOVES n PROJECTS STILL TAKING OFF n HYDROPOWER AND THE GLORY

ISSUE 3 / 2017

TRADE AND TRIBULATIONS Populism Yet Another Project Cargo Rebuff

Vote Leave

MAKE

A C I R E AM N AI G A T A E R G

AU N OM D U PE U P LE

RICKMERS-LINE

GERMANY +49 40 34 999 780 team@cet-hamburg.com GREECE & CYPRUS +30 210 9232 761 contact@lambosmaritime.gr INDIA +9180 56024440 pbn@absmarine.com

GLOBALLY REPRESENTED IN 17 COUNTRIES

ITALY, MONACO, BELGIUM & SWITZERLAND +33 493285334 europe@marinemi.com NORWAY, SWEDEN, DENMARK & FINLAND +47 23085000 mossberg@online.no

ADSB has built a global network of sales agents representing 17 different countries. In turn, ADSB offers a unique set of professional and technical expertise that complements its maritime capabilities.

ADSB specializes in the construction, repair and refits of commercial, naval and military vessels and is widely recognized for carrying out dry docking and major refit projects in-line with stringent international standards.

Contact us directly or any one of our sales agents for more information on our service offering.

Website www.adsb.ae

Fax +971 2 551 0455

Tel +971 2 502 8000

SINGAPORE & MALAYSIA +65 67549175 admin@shoretech.org SOUTH KOREA +82 (2) 205 4443 luis.bong@bnkorea.kr UNITED KINGDOM & IRELAND +44 1908 378822 uk@marinemi.com

PO Box 8922, Abu Dhabi, UAE

Email marketing@adsb.ae

contents

Cover Story

08

14 MARKET SPOTLIGHT

BAROMETER RISING Southern Europe’s Tentative Wind Moves

22 CARGO LENS

PROJECTS STILL TAKING OFF

Air Freight Providers Busy Despite Oil Slump

30 PORT PROFILE

SCALE AND SAVVY Tradepoint Atlantic Seeks Diverse Cargoes

08 TRADE AND TRIBULATIONS Populism Yet Another Project Cargo Rebuff

22

48

36 PORT PROFILE

CHOICE CATALYZES GROWTH

Baltimore’s Paper and Projects Push

44 PROFILE

CUTTING A NEW PATH

Patrick Dick Swaps Dissatisfaction for Determination

48 REGIONAL REVIEW

37

HYDROPOWER AND THE GLORY Energy Project Not Without Opposition

06 Editorial n 40 Carrier Profiles: AAL, Rickmers-Line, HHL n 54 Overcoming Energy Crises n 58 Cyber Tsunami n 61 Thought Leaders 63 Breakbulk Europe Recap n 70 Breakbulk Index n 74 Wonders of Technology Photo Contest 4 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 3 / 2017

editorial

‘FIND A WAY THROUGH’

F

or the project cargo industry, the hits just keep on coming.

Already scraping through one of the worst industry downturns, protectionist interests further obfuscate the road to profitability.

But as Carly Fields notes in our cover story this issue (“Trade And Tribulation,” page 8), project cargo interests must navigate the rising tide of populism and nationalism.

From Brexit, the UK’s decision to leave the European Union, to the results of the U.S. presidential election, to recent elections, uncertainty abounds.

Rather than finding comGary Burrows mon ground, U.S. President Donald Trump’s recent foreign trip only increased that uncertainty, distancing the country from its oldest and deepest trade partners.

Underlining the disharmony were contrasting official descriptions of the trip: while the White House claimed all-round major success, German Chancellor Angela Merkel, right after Trump’s meetings with NATO and the G7 Italy, said it’s time “for us in Europe to take our fate into our own hands.”

Of course, a nationalistic movement does exactly that.

As Fields’ story points out, the “[insert name of your country] first” approach jeopardizes those companies that rely on cross-border project cargo and breakbulk business. It also raises the question of whether a “buy local” agenda can drive domestic business for the sector.

In the U.S., the oil and gas business is seeing growth in the Northeast and 6 BREAKBULK MAGAZINE www.breakbulk.com

the Gulf, despite the trough in oil prices.

Those projects’ success, though, rely on exports, including the country’s growing LNG business.

Domestically, the U.S. has experienced 78 consecutive months of job growth, and the Dow Jones Industrial Average has more than tripled since 2009.

Trump has promised to turbo-charge that growth through tax reform, fiscal stimulus and a US$1 trillion infrastructure spending plan. However, given his inability thus far to overhaul healthcare, and knowing that the administration must push Congress to pass budget resolution before the end of summer, investors are questioning the administration’s ability to deliver on these grand ambitions.

An April PricewaterhouseCoopers “Insight” said that after an initial draw of capital, investors “have pared back their positions from the ‘Trump trade.’ ” PwC also suggests that a proposed border-adjustment tax and potential tariffs on imports could raise consumer prices and impact the domestic jobs that rely on those imports – which are largely “inputs” from China used for domestic manufacturing (such as parts for autos and industrial machinery).

It’s early in Trump’s tenure, though, and the resilience of U.S. industries such as oil and gas give the project industry hope.

Walter Kemmsies, managing director, economist and chief strategist for JLL, pointed out at the Georgia Foreign Trade Conference earlier this year that the U.S. leads the world in industrial manufacturing, a position that Caterpillar and John Deere are intent on maintaining.

In one ray of economic sunshine, PwC reports that uncertainty within markets affected by protectionism is driving investment towards emerging nations – whose energy, infrastructure and other needs offer potential to the project industry. According to research by Roland Berger, 97 percent of global population growth through 2030 will be in the developing world.

While these prospects aren’t on the level of China entering into the World Trade Organization, they are nonetheless positive, and welcome in a world displaying so much uncertainty.

For a resilient project cargo industry, it just comes with the territory. As Nicholas Marshall, commercial director of The Armitt Group put it: “We’re traders, we’re shipping guys; ultimately, we will find a way through.”

EDITORIAL DIRECTOR Gary G. Burrows / +1 904 535 5460 gburrows@breakbulk.com NEWS EDITOR Carly Fields carly@breakbulk.com HEAD DESIGNER Catherine Dorrough DESIGNER Mark Clubb REPORTERS Paul Scott Abbott Alan M. Field Lori Musser Jonathan di Rollo VL Srinivasan Mark Willis

BREAKBULK EDITORIAL BOARD John Amos Amos Logistics

Ed Bastian

BBC Chartering

Murray Cooper

McDemott International Inc.

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 MANAGER Robert Janusauskas / +353 021 477 3808 rjanusauskas@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.

ISSUE 3 / 2017

cover story

TRADE AND TRIBULATIONS Populism Yet Another Project Cargo Rebuff

T

radewinds have

BY CARLY FIELDS shifted dramatically, as a whirlwind of nationalism has trading climate will look like just a few stirred up protecweeks down the line, never mind years. tionist interests Ana Stanič, founder and director of throughout the E&A Law, described the current project trading world. From Brexit to the market as at a “stage of tectonic change,” U.S. presidential outcome, navigating believing that attempts to describe things increasingly troubled waters is the last by way of globalization versus some sort thing an already beleaguered project of populism is simply too black and white. cargo industry needs.

In reality, things are far more complex But like it or and the industry not populism urgently needs to and nationalist find a way back to “There is confidence tendencies are multilateralism. pushing the “buy “But as to how we in world trade local” agenda get there, I’m not long-term growth ... like never before, sure,” she said. it’s the mid-term which could be Pierre Liguori, bad news for those director of global trends that are that have built supply chain creating uncertainty.” their livelihood consulting firm on cross-border Tokema Inter– Pierre Liguori, Tokema International project cargo and national, agreed breakbulk busithat “change” ness. The flipside is the keyword, is that domestic business should thrive “and change is all about our industry.” under these circumstances, a silver linBut within this change, he sees opporing that the sector can cling to. tunities for those hungry for growth, However, it’s the uncertainty that especially in emerging markets: “If goes with this new social and political Asia is the 21st century’s region, Africa landscape that threatens to cause the most will be the region of the next century.” damage. Decisions made in this industry By 2030, there will be 20 percent more have a long tail. A project can take years, people in the world than in 2010 and 97 sometimes a decade, to move from drawing percent of that growth will come from board to reality. Today, no one can say with emerging countries, he said. “There is any certainty what the global business confidence in world trade long-term 8 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 3 / 2017

U.S. President Donald J. Trump addresses a crowd at a rally inside Freedom Hall in Louisville, Kentucky, on March 20, 2017.

Credit: Shutterstock

www.breakbulk.com BREAKBULK MAGAZINE 9

cover story

British Prime Minister Theresa May, ahead of delivering a statement outside 10 Downing Street in London on April 18. In the statement, she announced that she would call for a snap general election on June 8.

Credit: Andy Rain/EPA/Newscom

economic growth is slowing, reflecting the declining role of international trade as a factor of growth,” he said.

As China increasingly moves away from cheaper high-volume exports to focus on imports and domestic production – and higher value items – it is looking to take greater control of the supply chain. The impact of this local shift could mean that international projects cargo forwarders get edged even further out of the Chinese market as domestic companies cash in their homegrown chips.

DEALING WITH CHALLENGES growth; globalization is a long-term trend. There are massive opportunities for logistics providers and freight forwarders long-term, but it’s the mid-term trends that are creating uncertainty.”

THE RISE OF POPULINOMICS

Populism is part of the problem, but could it also be part of the solution for the project cargo and breakbulk industries? Kris Kosmala, Quintiq’s vice president APAC, coined the term populinomics to describe this “loose grouping of tendencies and beliefs that somehow one nation was wronged by the terms of trade with all other nations, and therefore a balance of “right” needs to be restored.” For the purpose of campaign trails, this is summed up as “[insert name of your country] first.”

“Populinomics, without doubt, will play some role in how you will decide about the location of production facilities and how you will decide what to ship from those places, even though it shouldn’t,” he said. “Therefore, it is important to consider the broader sentiments fueling the ‘my country first’ concept.”

Under populinomics, countries are beginning to question the need to 10 BREAKBULK MAGAZINE www.breakbulk.com

Ana Stanič

Kris Kosmala

E&A Law

Quintiq

outsource their production elsewhere, and the U.S. drive to bring back manufacturing from other countries could be replicated in European countries and elsewhere, if nationalist parties take power. Meanwhile, in Asia, as individual economies move up the economic ladder, Kosmala said, they are more interested in replacing imports by producing complex products themselves and offshoring traditional, labor-intensive manufacturing to others.

“You can see it in moves of certain Chinese businesses to Vietnam, Myanmar or Sri Lanka. In the background, global

Brexit – the UK’s vote to leave the European Union – is a stark example of the jolting impact of nationalistic tendencies. With Article 50 now triggered, the UK will formally leave the EU on March 28, 2019, leaving less than two years to negotiate the terms of its departure from the union. Claiming that her attempts to established favorable terms have been stymied by political opponents, UK Prime Minister Theresa May called for a snap general election, which was to take place in June 2017. The move virtually stalled any further negotiations on the terms of Brexit as politicians concentrated on the campaign trail instead. But any scaremongering about what will happen to cross-border trade between the UK and the EU if terms are not agreed before the 2019 deadline is unhelpful.

Stanič explained that if there is no agreement, the UK will fall back on its World Trade Organization, or WTO, terms. “The UK has been a founding member of the WTO since the beginning, so it’s not a question of the UK now becoming a member of the WTO, it’s a question of which tariff schedules apply for the UK under the WTO.” For basic tariffs on goods, Stanič is confident that the tariffs that are in place today for the ISSUE 3 / 2017

cover story

the risk being the potential supply chain disruption; the opportunity being in global trade openings.

Nicholas Marshall, The Armitt Group’s commercial director, was quick to remind project cargo specialists that with more than 90 percent of the world outside of the EU, solutions will be forthcoming. “We’re traders, we’re shipping guys,” he said, “ultimately, we will find a way through.”

THE U.S. CHALLENGE

Protesters, angry over a deal between Nike and the country of Brunei, gather outside a World Affairs Council meeting on the Trans Pacific Partnership in Portland, Ore., in March 2016.

Credit: Alex Milan Tracy/Sipa USA/Newscom

UK will be the tariffs on the day after exit, so project cargo business can continue unhampered.

However, there are potential flies in the ointment: the WTO only covers trade and does not cover services; and there are aspects of the WTO that relate to quotas, which are given for the EU as a bloc. “So, now you have to figure out a way of apportioning the bloc between the UK and the EU,” Stanič said. “That negotiation has to happen, not just between the UK and the EU, but it will involve all the member states of the WTO and other parties. That is where it becomes a multilateral negotiation, so Brexit is anything but bilateral in its origin.”

The project cargo industry has an opportunity and an obligation to be involved in this “moving puzzle of negotiations,” she said. Ultimately, how the trading quotas are accorded will depend 12 BREAKBULK MAGAZINE www.breakbulk.com

on who is more successful at lobbying their respective governments to take a position on the new apportionment.

Some are already preparing for the worst-case scenario. Neel Ratti, Tuscor Neel Ratti Lloyds general manager, said forTuscor Lloyds warders need to consider how Brexit will affect cargo operations and how to best guide clients through the coming years before the full effects of the UK’s vote to leave the EU are felt.

“Before the form of Brexit is agreed, all we can do is try and establish multiple strategies for the future,” he said. “There is not much time for any of us, and we at the ‘business’ end will very soon be the ones who need to mobilize the quickest. We need to be light on our feet and we must respond positively to the challenges ahead.” Thus, Brexit should be viewed by project cargo specialists as a combination of opportunities and risks:

Across the Atlantic, other seismic populist-related rumblings also look to reshape the U.S. project cargo market.

The U.S. formally withdrew from the Trans-Pacific Partnership, or TPP, in January – President Donald Trump making good on a threat that formed a cornerstone of his winning election campaign.

“With respect to Trump, things are far more complex since his policies seem to change from day to day so it’s hard to predict what will happen next,” Stanič said. “But I think what is quite clear is that his policies will continue to be fundamentally protectionist. There is also an attempt to effectively undermine institutions like the WTO and its ability to resolve disputes.”

Trump’s cabinet is also looking at what measures are necessary to support its domestic steel industry. While that would directly impact imports from China, it would also support the domestic breakbulk industry.

Liguori agreed that the U.S. withdrawal from TPP would have an impact on global trade and supply chains, but that it was not the only threat that project cargo specialists have to contend with. “Asia is the biggest region for supply chain growth, but the geopolitics there may affect trade and supply chains.

Key trade lanes are also shifting, so you need to focus on growth areas accordingly,” he said.

But, where will the next global economic and trade injection come from?

China’s accession to the WTO in 2001 was a one-off, and not-to-be-replicated kick for global trade and projects. The dramatic increases in exports and the concomitant liberalization of its trade gave the project cargo industry a welcome boost.

ISSUE 3 / 2017

To get that same jolt again, Jonathan Beard, Arcadis’ head of transportation and logistics consulting in Asia, said the industry could look to the liberalization of India, but that would need to happen on the same scale as China’s liberalization, something that Beard thought unlikely. “The other huge kick we might get would be Africa, but there again it would be a combination of individual countries as opposed to something of the scale of China. It seems that even if economic growth recovers, trade will be quite subdued,” he said.

MONEY TALK

There are issues related to the economic upset partly caused by populism and nationalism that might further upset the status quo. For heavy-lift air specialist Antonov Airlines, currency concerns top that list.

“We trade in euros, sterling and dollars with our customers, and we’re trading in those currencies and more with our suppliers,” Managing Director Graham Witton explained. “When you talk about the Graham Witton price of fuel, for example, there Antonov Airlines starts to be a significant difference between the amount of money you have to pay for fuel in one currency and how much money you’re getting from a customer in another currency.” That can have a bearing on planning and operations, he said.

Multipurpose vessel operator Hansa Heavy Lift does not see the rise of populism as an immediate threat to the bottom line, but there’s concern of its impact in the future. Thomas Gimbel, the company’s director of global chartering, said that if the industry wants to develop further, moving to individualism will hinder that. “As individuals, we are less and less connected, and our ethics and treatment of others is not what it was 15 years ago. Then, you would agree to a deal and you would know it would happen. Now, we find that you perform a contract well and when a similar con-

tract comes up soon after you may not win the job because of a £500 price difference.”

Today, it’s less about relationships and more about the money, he said: “So, you still have to maintain those relationships, but you also have to have a ‘solution’ mentality.”

Ultimately, there will be no quick fixes to this current blend of vagaries, Stanič said. The rise of populism around the world is fundamentally based on beliefs that the mainstream institutions are failing the people. “I think that is probably not an unfair conclusion for the people to make.” So, she asked, how do you transition into this new state of affairs without going through major turmoil?”

Liguori expected the morphing of the freight forwarding industry over the past few years to continue to meet these rising threats. “Over the last 10 years, freight forwarders have been adding value,” he said. “The trend now is for companies to optimize inventories, and the challenge Thomas Gimbel is on for freight forwarders to fit Hansa Heavy Lift in with this strategy.” Project cargo logistics service providers now have to provide even more value-added solutions, further increase their flexibility and remove the transactional focus.

Project cargo freight forwarders will no doubt argue that their reserves are virtually dry, leaving them with very little ability to fulfill that wish list. They will not be alone voicing that opinion, but try they must as the tide-turned-tsunami of populism and nationalism will not wait for a recovery in the markets to make its landfall. BB Carly Fields has reported on the shipping industry for the past 16 years, covering bunkers and broking and much in between.

TRADE WARS NOT A NEW TREND Country-to-country trade wars are nothing new, according to E&A Law Founder and Director Ana Stanič: People easily forget that there is an active trade war going on between the U.S. and the European Union, regarding State Aid. In June 2016, Apple in Ireland was threatened with returning €13 billion (US$14 billion) in payments for what the EU said was state aid granted to Apple for having its European headquarters in Ireland.

It was given a tax benefit of paying only 0.0001 percent of tax in Ireland for having its headquarters there.

However, the European Commission deemed that amount to be state aid. Within a week of that announcement, the U.S. government said that Deutsche Bank was in breach of U.S. Securities and Exchange Commission rules and it was hit with a penalty of a similar size, US$9.5 million.

“So, the idea that the supposed partners in the West are on the same side of trade is actually quite a simplistic understanding,” Stanič said. “The fight between the U.S. and the EU has been active for quite some time.”

Credit: John Rooney / Pacific Press/ Newscom

market spotlight

BAROMETER RISING Southern Europe’s Tentative Wind Moves

BY MARK WILLIS

T

he last decade has witnessed a dramatic rise in global renewable energy output, with the European Union in particular leading the way in development and installation of low-carbon emitting wind, solar, hydro, tidal and other technologies.

Alongside commitments agreed at the 2015 Paris Climate Conference, the EU has set a legally binding goal of achieving 20 percent of final energy consumption from renewable energy sources by 2020.

(Of course, U.S. President Donald Trump’s pronouncement that he would pull the U.S. out of the deal greatly impacts the agreement.) The bloc’s 28 member states have also subsequently agreed to an even

more ambitious future goal of 27 percent renewable energy mix by 2030, as well as a 40 percent cut in CO2 emissions from the levels of 1990, requiring continued wholesale expansion in renewable energy investment over the coming decade.

An update from the European Commission, the EU’s executive body, stated that most member states are on track to meet the 2020 target, with 16.4 percent of total regional energy needs accounted for by renewable energy in 2015, according to available data.

With its legacy of long-term historical public investment, hydropower remains the largest single renewable energy source of European electricity

Construction of Wikinger offshore wind farm, in the German Baltic Sea. Credit: Iberdrola

HEAVY LIFT LEADERS.

market spotlight

generation, accounting for 38 percent in 2015. However, the latest EU statistics also highlight a dramatic rise in wind power energy production, which, having quadrupled from 2004 to 2015, now accounts for about one-third of regional electricity produced by low-carbonemitting technologies.

While slightly less than 10 percent of total wind energy output last year, EU offshore wind development has also expanded rapidly over the last decade, sprouting from total output of 700 megawatts in 2014 to 13 gigawatts by 2016, according to figures provided by Brusselsbased trade association WindEurope.

Highlighting the extent of this recent investment boom, WindEurope data also showed a nearly three-fold acceleration in offshore energy production as a proportion of conventional onshore wind farm energy output during 2012-2016, rising 15 percent compared with 6 percent in the previous five-year period.

Alongside ambitious renewable energy targets, the main drivers of Europe’s offshore wind farm investment boom over the last 10 years have been technological advances, increased cost efficiency and industrial policy.

Crucially, individual country priorities towards the best means of meeting EU carbon reduction commitments have also been a major determining factor behind offshore development. Unsurprisingly, countries with the optimum climatic and maritime conditions bordering the North Sea have been the greatest regional investors, and this is where project cargo and breakbulk companies should focus future business drives.

ENERGY GOALS TO HIT

“EU renewable energy goals have driven market entry of renewables, but not specifically offshore wind, which has primarily been led by national decisions on how best to achieve their share of future targets, and other national objectives, in the long term,” said Colin Morgan, partner at Everoze, a technical and commercial consultancy in the energy sector. “There are also important business drivers, with the large Europe-wide power utilities that enjoy a competitive advantage against smaller independent firms in large offshore projects lobbying hard,” he added.

16 BREAKBULK MAGAZINE www.breakbulk.com

MOVE TOWARDS RENEWABLES Net electricity installations in the EU from 2000-2016

GIGAWATTS Wind 142.6 Solar PV 101.2 Natural Gas 93.5 Biomass 9.6 Large Hydro 7.9 Waste 2.7 CSP 2.3 Other Gas 0.5 Small Hydro 0.4 Geothermal 0.3 Peat 0.1 Ocean 0.0 Nuclear -15.5 Coal -37.3 Fuel Oil -37.6 Source: WindEurope

UK, Denmark, the Netherlands, and Belgium have been particularly prominent investors over the last decade.

Together, these countries account for the vast majority of Europe’s offshore output and investment.

“The North Sea Colin Morgan has strong winds, Everoze shallow waters, suitable seabed conditions for foundations and good connectivity to major centers of population, so it’s only sensible that the countries bordering it have invested most heavily,” Morgan said.

SOUTHERN EUROPE LAGGARDS

WIND TAKES SECOND PLACE

Share of installed EU capacity in 2016, in gigawatts

Natural Gas

Wind

Coal

Large Hydro

Nuclear

Solar PV

Fuel Oil

Other

Biomass

Regeneration of coastal communities damaged by the loss of shipbuilding, oil and gas, and fishing industry employment in the North Sea has also seen national governments encourage burgeoning wind farm investment, according to Morgan.

Reflecting their coastal location, and the suitability of the North Sea to offshore wind farm development, Germany, the

Yet, while offshore wind farm development has taken off in the North Sea, it has proven somewhat disappointing in other parts of the EU, with the countries of Southern Europe bordering the Mediterranean Sea coastline most notably failing to replicate the progress of Germany and the UK. Bordering the Atlantic and Mediterranean, Spain highlights how massive renewable energy investment and a substantial coastline do not necessarily translate into offshore wind energy development. It has instead focused on onshore wind farms and is now the second-largest European producer of wind-powered renewable energy with installed capacity of 23.1 gigawatts at the end of 2016.

The major factors behind Spain’s lackluster offshore performance are the country’s deep surrounding Mediterranean Sea waters, which are unsuitable for installation of conventional wind turbines, and the abundant supply of resources for onshore development, according to a spokesperson at Iberdrola, a Spanish utility company and major investor in European wind farms.

“Since good onshore resources are plentiful and there is land availability, we believe offshore wind will not develop properly in Spain, as there is no need for it,” he said.

Differing government priorities on how best to achieve reduced CO2 emissions ISSUE 3 / 2017

WE SAVED A SPOT FOR YOU

Port Freeport has a 800,000 Annual TEU Capacity And We Have A Spot Saved For You Visit PortFreeport.com or Call 1-800-362-5743

Anchored In

market spotlight

Credit: Iberdrola

have also limited offshore wind energy expansion in Southern Europe, and may continue to restrict investment over the coming decade.

NUCLEAR PRECLUDES WIND INVESTMENT

Jérôme Jacquemin Everoze

Anoucheh Bellefleur Energy Transition

In the case of France, continued major investment in domestic civil nuclear power since its establishment in the 1980s has cemented its status as one of the few European electricity exporters, and delayed the country replicating the move of EU members, such as the UK and Germany, into other low carbonemitting energies, including wind.

“France’s predominantly nuclearpower generation is a good cop in terms of climate change, so maintaining the status quo was a sensible option, with the government only deciding to promote onshore renewables from 2005 onwards,” said Jérôme Jacquemin, partner at Everoze.

Similar to Spain, French waters in the Mediterranean and North Atlantic are also deeper and less suited than those in the North Sea for the installation of conventional wind farm turbines.

18 BREAKBULK MAGAZINE www.breakbulk.com

GERMANY POWERS AHEAD

EU onshore and offshore wind capacity, in megawatts

Germany 5,443 France 1,561 Netherlands 887 UK 736 Poland 682 Finland 570 Sweden 493 Ireland 384 Italy 282 Portugal 268 Greece 239 Austria 228 Denmark 220 Lithuania 178 Belgium 177 Romania 52 Spain 49 Croatia 34 Estonia 7 Latvia 2 Source: WindEurope

Anoucheh Bellefleur, wind energy officer at the Franco-German office for Energy Transition, highlighted that significant topographical differences between German and French waters have stymied investment and reduced profitability potential.

“In Germany, offshore wind farms are built in the North Sea and the Baltic Sea, which are shallow waters, and where foundations of less than 50 meters depth can be erected as far as 100 kilometers from the shore with bearable costs,” she said.

“In France, however, offshore wind farms are developed in the North Atlantic Sea and the Mediterranean Sea, which are deepwater seas, and where foundations must be erected at deeper sea levels, which significantly increase construction costs.”

While conditions are less advantageous than the coastal waters of neighboring Germany, or the EU countries with North Sea coastlines, France has nevertheless moved to gradually develop a nascent offshore sector in recent years, with six wind farm projects totaling 3 gigawatts awarded in tender rounds during 2011-13. Still in the construction phase – these projects are not due for completion until 2020-2023 – these wind farms offer up potential project cargo work in the country.

ISSUE 3 / 2017

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.

breakbulk.scspa.com

breakbulk@scspa.com

843-577-8101

market spotlight

ITALY LESS ATTRACTIVE

The absence of offshore wind farms in Italy is also attributable to the deep coastal waters that have rendered the Mediterranean Sea less attractive to public and private wind farm-related investment. The Italian government only recently awarded the country’s first offshore wind farm license, with a small 30-megawatt development scheduled to take place over the coming years near Taranto in southeastern Italy.

Davide Astiaso Garcia, secretary general of the Italian Wind Energy Association, or ANEV, outlined how his organization is working towards the installation of other developments over the next several years.

“ANEV has established a Working Group to assess the potential offshore wind power feasibility for Italian shorelines, pinpointing the best sites with

regards to wind speed, distance from the coastline, water depth, and other kinds of limitations like environmental constraints, sea bottom typology, main ship routes,” he said. “There are many available sites, and we estimated an offshore potential in the Italian coastlines of about 750-800 megawatts.”

As in Spain, however, expectations are that any future offshore development in Italy will pale in significance compared with current leading regional country producers.

FRANCE’S BETTER PROSPECTS While Southern European countries Spain and Italy are unlikely to meaningfully boost offshore wind output over the future horizon, analysts are more sanguine over investment prospects in France, which is likely to provide the best future opportunities for breakbulk

and project cargo operators.

Having tendered 3 gigawatts of offshore wind farms from 2011-2013, the Paris government announced a new multi-year energy program in October 2016, which included a target of tendering further offshore wind farms with future output capacity of 500 megawatts to 3 gigawatts by 2023. Pre-qualification for tender of one site was initiated in early 2017.

Dependent on the success of existing projects and on the associated job creation, it is possible that additional tenders may be announced towards the end of this decade.

“There is room for another 4-5 gigawatts of bottom-mounted to be constructed post-2025 if industry testify to a notable cost signal in the current tender,” said Jacquemin.

Bellefleur added that the French government has also “engaged a legal and

Introducing the Adjustable Lifting/ Spreader Beam The Modulift adjustable Lifting Beam/Spreader Beam utilises a clamp system that provides a safe, fast, and adjustable beam, enabling users to lift from multiple points. The adjustable lifting/spreader beam (or MOD CLS) is stocked as a boxed product for immediate shipping and eliminates delays incurred waiting for alternative solutions, which often have to be manufactured to order. ●● Available next day as a boxed off-the-shelf product ●● Adjustable lifting points and low headroom capability

For more information call today Head Office: +44 (0) 1202 621511 Email: sales@modulift.com www.modulift.com

●● Easy to convert between a lifting beam and spreader beam ●● Spans of up to 6m and capacities of up to 8.5t depending on configuration

07519_MOD_CLS_ad_Breakbulk_178x124_2017_05.indd 1

20 BREAKBULK MAGAZINE www.breakbulk.com

25/05/2017 14:50

ISSUE 3 / 2017

administration simplification work” to answer the needs of the players in this sector, which should encourage future offshore investment.

Legislative simplification measures introduced include incorporating around a dozen former required environmental permits into a new single contract, procedures to accelerate legal appeals against selected and authorized wind farms, and measures to accelerate tendering based on technical and financial criteria.

In addition, there is a new legal obligation for network operators to ensure grid connection for offshore wind farms within 18 months, with financial penalties paid to the offshore wind farm operators in case of grid connection delays attributable to the operator.

“These reforms have allowed the tender process to be simplified, reducing the timeframe for the offshore wind farm construction phase and clarifying the risk allocation. This has contributed to de-risking offshore projects,” Bellefleur said.

“Commercial scale projects are due to follow before 2025 and may be a game changer depending on the outcome of these pilot projects,” Jacquemin concluded. BB

Mark Willis is a Dublin, Ireland-based freelance journalist specializing in politics and economics.

IBERDROLA BRITTANY NOD

As one of several recent development announcements, Iberdrola has recently received planning consent for a new 496-megawatt offshore wind farm in the Saint-Brieuc bay on the Brittany coast, with construction set to commence in 2021.

While the final investment decision will be taken in 2018-19, the project is likely to entail €2.5 billion of investment, and incorporate 62 88-megwatt wind turbines capable of powering the annual electricity consumption of 850,000 people, according to an Iberdrola spokesperson.

In addition to conventional future offshore development projects, such as Saint-Brieuc, the French government has commissioned a number of floating offshore turbine pilot schemes in the Atlantic and Mediterranean seas, including in the Gulf of Lion, where waters are too deep or lack necessary ground conditions for conventional wind farms, but enjoy strong wind conditions.

Depending on the effectiveness of such schemes – which have already been deployed with some success in Portugal and Norway – floating offshore wind farms could witness further expansion over the future decades. www.breakbulk.com BREAKBULK MAGAZINE 21

cargo lens

BY PAUL SCOTT ABBOTT

PROJECTS STILL TAKING OFF Air Freight Providers Busy Despite Oil Slump

Volga-Dnepr delivered four helicopters to Chile in March to fight that country’s wildfires.

Credit: Volga Dnepr 22 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 3 / 2017

D

espite the current oil and gas industry downturn, air transportation of project cargoes remains active, flying oversize units to meet time-critical demands of aerospace, power generation, manufacturing, military and humanitarian relief sectors.

Specialists believe that moving a wide range of massive project freight units by air remains the best choice in many circumstances, so they’re not waiting for an oil and gas rebound to be busy.

Providers also are looking beyond the workhorse AN-124 craft to additional air cargo options – from other Antonov models to Ilyusin turbofans and passenger craft – to meet varying demands, while deployment of blimps to carry heavy-lift loads looms in the not-too-distant future.

www.breakbulk.com BREAKBULK MAGAZINE 23

A 29.2-ton, 30-foot-long factory rotor is nose-loaded onto a Singapore Airlines Boeing 747 for transport from Central Europe to Los Angeles.

Credit: Volga Dnepr

“We are extremely confident in the long-term future of the air cargo market for the transportation of unique, outsize and heavyweight air cargo,” said Alexander Kraynov, chief commercial officer for charter Alexander operations at Kraynov Ulyanovsk, Russiabased Volga-Dnepr Volga-Dnepr Airlines Airlines, one of two major cargo airlines flying AN-124s.

“By its very nature, it is a difficult market to predict,” Kraynov said, “but there is a clear understanding and appreciation of the value of air cargo from customers in a wide range of industries.”

MARKET REMAINS HEALTHY

Michael Goodisman, business development director of Kiev, Ukrainebased Antonov Airlines, added that the markets these specialized freighters serve remain healthy. He sees the two top sectors today for air transportation as aerospace – inclusive of satellites, helicopters and aircraft parts and engines – and defense, with power generation, construction, vehicle, marine and humanitarian segments also being significant contributors. While the oil and gas industry has historically provided air volumes close to the level of aerospace, it has yet to cycle back to the forefront, Goodisman said.

Volga-Dnepr’s Kraynov said his company’s operation now generates 24 BREAKBULK MAGAZINE www.breakbulk.com

more than 30 percent of its revenue from the aerospace sector, while he remains confident of an oil and gas revival.

“Lower oil prices have impacted some of the projects planned in the industry in the last couple of years, and this has also had a knock-on effect on some other industries that supply oil and gas customers,” Kraynov said. “However, we are seeing positive signs that this business is returning, and this will provide a great stimulus to the project market.

“Over many years, it can also be said that when one industry has been impacted by difficult economic conditions, others continue to thrive and need our services,” he said. “There are very few industries that will not require the support of an air cargo project solution at one time or another.”

Kraynov pointed to advantages of speed, security and predictability that prove beneficial not only in emergency circumstances – such as immediate demand for a component needed to get a power station, factory, cruise ship or airplane back running – but also in long-term protection of customers’ huge investments in research, development, technology and construction.

“Sometimes,” he said, “we are required to operate a flight within just a matter of hours, but we also support major infrastructure projects where it may be years from the initial point of contact before one of our aircraft takes to the air.”

For example, an AN-124-100 flight recently carried four firefighting helicopters to Santiago to help combat an outbreak of wildfires in the Chilean countryside, while a series of Ilyusin

IL-76TD-90VD flights brought mining equipment to a remote Canadian iron ore operation that could not be reached by water due to sea ice.

From a longer-term perspective, Volga-Dnepr was engaged with a liquefied natural gas processing plant project in the southern highlands of Papua, New Guinea. There, much of the cargo was successfully delivered by sea and then land, but challenging weather conditions and poor roads and bridges necessitated the airlift of many heavy pieces.

For the Papua project, Volga-Dnepr was involved five years before its first flight for the endeavor, including being consulted in the building of a new airport with a runway long enough to accommodate the giant AN-124-100 freighters. After the runway was in place, an intensive flying program of 88 AN-124-100 flights in 108 days delivered 6,000 tons of cargo.

CLIENTS OFFERED OPTIONS

Mike Hill, director of group freight for charterer Air Partner, based at London’s Gatwick Airport, said he believes the options offered by the two separate airlines provide favorable conditions for customers compared with the “near monopoly” on AN-124s that had been held by the now defunct Ruslan International.

Hill, who is based in Air Partner’s office in Cologne, Germany, said that, over the course of his two decades in the air charter business, various international broker companies and “one-man bands” provided many options for booking AN-124s before withdrawing for economic and/or political reasons.

In Hill’s opinion, political discord was a primary cause for abandonment of the Ruslan joint venture between Ukraine-based Antonov Airlines and Russia-based Volga-Dnepr.

The Antonov models are by no means the only craft available for moving project cargo by air, Hill said, noting that Air Partner increasingly is booking full ISSUE 3 / 2017

Stevedore and Marine Terminal Operators Operating Locations 

Houston



Corpus Christi



Freeport



Brownsville



Lake Charles

Corporate Headquarters 10000 Manchester St., Suite C Houston, TX 77012 713.926.7611—Phone 713.926.7750—Fax

Recipient of the 2016 Gerald H. Halpin Safety Excellence Award from Signal Mutual e-mail: info@gulfstreammarine.com www.gulfstreammarine.com

PLANE TALKING ON COLLABORATION Antonov Airlines’ Michael Goodisman believes that collaborative efforts involving preplanning and preparations are vital to smooth, seamless movement of project cargoes by air from origin to destination.

“We engage with project managers as early as possible to help build an efficient and realistic plan, which can include early technical study of all cargo planned for air movement,” Goodisman said.

With more than 13,000 staff members in Kiev Michael alone, Antonov Goodisman Airlines has ample human resources Antonov Airlines in this regard.

And the company has varied equipment resources at its disposal.

The AN-124, which has become the industry’s standard-bearer since it first flew commercially 28 years ago, traditionally can offer payloads of as much as 120 tons. But Antonov Airlines’ upgraded AN-124-100M-150 craft can carry up to 150 tons, while the AN-225 is capable of moving units of as many as 250 tons through the air. The smaller AN-22 has a 60-ton payload limit, with the prototype AN-132D turboprop designed to carry cargo weighing as much as 9.2 tons.

Antonov Airlines and Volga-Dnepr Airlines are now the competitive leaders in providing Antonov craft, following dissolution in late 2016 of London-based Ruslan International, which had been responsible for sales and marketing of a joint fleet of 17 AN-124s of the two airlines.

26 BREAKBULK MAGAZINE www.breakbulk.com

charters and partial charters of such wide-bodied craft as Boeing 747s.

“The B-747 operators have become a lot more confident when it comes to heavy-lift cargo, and so I have found that we can transport some very heavy pieces on 747F noseloaders nowadays that would not have been entertained some years ago,” Hill said.

Furthermore, he said, a Sovietdeveloped four-engine turbofan airlifter, the Ilyushin IL-76, designed back in the 1960s to haul loads of up to 40 tons, is well-suited for many projects due to its reinforced floor and ramp-loading capabilities, as well as its ability to operate from unpaved runways.

NOT ‘ONE SIZE FITS ALL’

Volga-Dnepr’s Kraynov agreed that a “one-size-fits-all” approach does not work for air transport of project cargoes. In addition to its ramp-loading fleets of AN-124-100 and IL-76TD-90VD freighters, VolgaDnepr has 17 Boeing 747 freighters and three Boeing 737-400Fs, thereby offering capacities ranging between 20 tons and 135 tons. Shipments for the same project may well move on several flights of different aircraft types, sometimes using charters and scheduled cargo services alike.

“By regularly offering solutions that combine both our charter and scheduled cargo services,” he said, “we are able to provide real opportunities for our customers to save money.”

Volga-Dnepr’s in-house engineering team may also design and manufacture special frames for customers’ oversize cargo. “This makes it possible for very complex, abnormal or sensitive shipments to be flown by air cargo,” Kraynov said. “Sometimes a customer will say they don’t think it is possible to fly their cargo because of its irregular features, but very often we are able to design a solution to make it possible.

“The key is to start the communications process as early as possible, even before the manufacturing stage in many cases,” he said. “The more time we have

to consult with a customer and to understand their requirements, the more we are able to propose potential solutions and cost efficiencies, and eliminate the potential of any delays or unexpected costs at the time of the transportation.”

HOLDS HOLD PROMISE

These days, regularly scheduled passenger flights offer further options for transportation of some project cargoes, according to James Harbi, manager of charters and air projects in the Houston office of Derby, England-headquartered HAE Group.

“In the recent two decades, the hold of the cargo section on passenger flights has increased, which allows carriers to accommodate more cargo on long-destination flights,” Harbi said, adding that a component weighing as many as 20 tons can get from James Harbi Houston to the Middle East on a HAE Group Boeing 777-300 passenger flight in 15 hours or less.

From his office in Houston, Harbi has seen heavy airlifts related to the oil and gas sector decline not only because many projects worldwide have been suspended or cancelled, but also because, for those projects that are moving forward, ocean transport is being selected to save money even though it costs time.

Thus, he said, focus for oversize cargo bookings by air is shifting to industrial projects in such sectors as automotive and aerospace, as well as military mobilization and disaster relief, where rapid transit time, perfect condition of cargo and optimum safety of goods remain paramount.

AIRCRAFT STATIONED

Yet, even with the oil and gas slump and all the aircraft options, Houston’s George Bush Intercontinental Airport is seldom ISSUE 3 / 2017

Heavy lifts

by AIR, SEA, ROAD, RAIL full liner charter/part charter wherever, whenever!

FIRST CLASS IN PROJECTS

www.dakoworld.com

40479 Düsseldorf | Germany | +49 (0)211 5502640

cargo lens

without at least one AN-124 freighter stationed at the ready, according to Brandon Fried, executive director of the Washington-based Airforwarders Association.

Fried, who, before becoming head of the trade association’s staff in 2005, owned and operated the Washington office of global forwarding firm Adcom Worldwide, said he believes moving project cargo by air “has a great potential and is thriving right now.”

Growth sectors pinpointed by Fried include renewable energy components, mining equipment, pollution control devices and cruise ship parts.

“Obviously, it’s a value play, because time is money,” Fried said, noting that the cost of air freight is likely negligible compared with potential losses if a plant must shut down for want of a part.

“Nothing beats the speed of air.”

Fried said freight forwarders OL USA_half page ad_mechanical.pdf

challenged to make money in recent years are finding project cargo an attractive avenue to pursue, but they must be careful not to proverbially bite off more than they can chew in entering a field that demands specialized expertise.

As for what the future holds, Fried said he believes that, within the next 10 years, blimps, such as the hybrid airships developed by Lockheed Martin, will become a viable option for transporting project cargo. What airships lose in speed, maxing out at about 150 mph compared with about 500 mph for an AN-124, they gain in requiring very little space for taking to the air and landing. Plus, prototypes aim to reach payloads of up to 500 tons, twice that of the AN-225.

A veteran transportation writer for the past 40 years, U.S.-based Paul Scott Abbott specializes in maritime topics.

1

5/20/17

2:02 PM

OL USA has acquired

Orion-Marine ConFlo Lines www.ol-usa.com

28 BREAKBULK MAGAZINE www.breakbulk.com

ANTONOV TO INCREASE U.S. PRESENCE Ukraine’s heavy cargo air freight specialist Antonov Airlines is gearing up to increase its presence in the U.S. While the details are still being worked out, Antonov Vice President Orlov Oleg confirmed that the company is “definitely speaking more about the U.S. market.”

He expected to be able to confirm

by July whether a U.S. outlet would be a joint venture or standalone office. “The U.S. is a very important market for us,” he said. “I’ve spoken to my customers and they have told us that they would like to work with us there with our proposal of better

Delivering project, oversized and hazardous cargo to remote corners of the globe.

Local.

Around the world.

ISSUE 3 / 2017

service quality, better pricing efficiencies and better trading conditions.”

The development builds on more streamlined movements of project air cargo for its flights to and from the U.S. through the U.S.-Ukraine Open Skies agreement and the air charter exemptions granted as part of that.

The U.S. Department of Transportation, or U.S. DoT, last year granted Antonov broad air charter exemptions for flights to and from the U.S., and awarded it a foreign air carrier permit. This means that Antonov no longer needs to obtain U.S. DoT statements of authorization for every shipment.

“Now, when we’re working with our U.S. customers, we don’t have to go through the regulatory process to fly into the U.S.,” explained Graham Witton, Antonov Airlines’ UK managing director. “In the past, we were limited

when carrying outsize cargo into and out of the U.S. Now, we’re free to carry whatever cargo we want in and out of the U.S. without having to petition to the U.S. carriers for non-objections and without having to write to the DoT to get their approval. So, our process for the customer now in the U.S. is much, much simpler.”

Special Case

Antonov’s Russian competitors do not benefit from the same exemptions, allowing the Ukrainianbased operator a competitive edge.

“It’s about making the process simpler for the customer,” Witton added.

“The customer comes to us and wants us to do a job from A to B. He or she doesn’t want to have to answer more questions than absolutely necessary to help to complete that task.”

Fresh from its split from the joint

Volga-Dnepr/Antonov marketing initiative under the now defunct Ruslan International brand, Antonov is undergoing a modernization program for its fleet. The 2- to 3-year program will target fuel consumption and the meeting of incoming regulations, primarily on environmental protection and reducing noise from engines.

Antonov is particularly proud of its design bureau and its through-chain understanding of its aircraft. Witton said: “Antonov designs the airplane, they build it and they operate it.

There’s no other airline in the world that can say that they’ve designed, built and operated their own airplane, commercially in the cargo market.”

To keep up with growing customer demands since the split, Antonov has also increased its commercial team in the UK and in Ukraine, where its team has doubled over the last nine months. BB

POSD_BreakbulkAd:Layout 1 1/17/17 4:23 PM Page 1

WE THINK OUTSIDE THE BOX.

The Port of San Diego specializes in specialty cargo.

Everything you need, less of what you don’t.

• Open space • Flexibility • Expertise in handling breakbulk and project cargo

Breakbulk cargo ships a little differently.

Take advantage of being different.

Move your specialty cargo from ship to ground to market much faster. That’s the special advantage San Diego offers.

619-686-6300 maritimeinfo@portofsandiego.org

PORT of SAN DIEGO |

portofsandiego.org/cargo

www.breakbulk.com BREAKBULK MAGAZINE 29

port profile

Tradepoint Atlantic Seeks Diverse Cargoes

SCALE AND SAVVY

Credit: Tradepoint Atlantic

BY LORI MUSSER

T

radepoint Atlantic is rising up from grounds that once held the world’s largest steel plant, at Sparrows Point, Maryland.

It is a massively scaled, privately owned port complex with an industrial and logistics center on Chesapeake Bay, fronting the Port of Baltimore.

New operator Host Terminals is determined to use the 900- to 1,000acre marine zone in tandem with the remaining 2,000 or so acres and assets, to launch a new supply chain operation for breakbulk and bulk commodities.

“We are going to do for those cargoes what containerization did for consumer goods many decades ago,” said T. Parker 30 BREAKBULK MAGAZINE www.breakbulk.com

Host President and CEO Adam Anderson.

While global trade has become more efficient, more advanced, and less expensive for anything containerized, non-containerized cargo has lagged, Adam Anderson introducing opportunity, T. Parker Host Anderson explained.

Revolutionizing the breakbulk and bulk shipping and logistics industries is a lofty goal, but Tradepoint Atlantic and Host have begun by investing US$30 million in an already well-equipped

port complex and heavy industrial site.

Initial plans are to add equipment and infrastructure, lighting, paving and security upgrades, as well as covered storage. Ongoing upgrades are on the drawing table.

Kerry Doyle, chief financial officer of Tradepoint Atlantic, or TPA, said the site’s marine cargo strategy calls for diverse cargoes. “Tradepoint is advantaged in many ways to ease cargo flows from marine to rail to road. A strong and regular flow of bulk and breakbulk cargo is currently occurring, and new investments will increase operating efficiencies.”

He added that forging the supply chain and using all the assets at TPA’s disposal will introduce a level of service the breakbulk industry has never seen before. “With the help of stevedores, ISSUE 3 / 2017

ADDRIVE

POWER YOUR FLEET TO MORE EFFICIENCY!

The new »ADDRIVE« is the perfect combination of the sixth generation of towed modules and long-term experience of self-propelled units. Simply more efficiency for your fleet!

This intelligent solution satisfies and combines all the requirements of a towed module and self-propelled unit in terms of traction, speed, flexibility, availability and economy in every respect.

Goldhofer – The Original.

ADDRIVE

WWW.GOLDHOFER.DE

port profile

terminals and Class I railroad partners, moving cargo through TPA is like using the “easy button,” Doyle said.

Anderson said: “Our focus is real solutions. We look at the customer’s end goal.” With a philosophy akin to Macy’s in the classic movie Miracle on 34th Street, Anderson said that even if it takes passing the business along to a competitor to best serve the customer, he’ll do it.

GREATER PORT BENEFIT

Richard Scher, communications director for Maryland Port Administration, welcomed Tradepoint’s competitive boost. “We are very supportive of what they are trying to do and want them to be successful,” he said. “At the end of the day, it is about the greater Port of Baltimore, which is a lot bigger than the public marine terminals.”

He added that the port’s reputation has been built around public and private

Cis4435_CSAL_Ad_Breakbulk_124x178_p.indd 1

32 BREAKBULK MAGAZINE www.breakbulk.com

marine terminals working in unison.

“The bottom line is, Tradepoint is bringing in new business and new jobs,” he said.

“In logistics, the water seeks its lowest point. If we are the best fit to deliver the whole package, we will, but if not, we’ll hand it over. We add value by aligning our interests in delivering the service and pricing appropriately.

We don’t just give a rate. We couple up the maritime services with rail or warehousing or new processing services or any other partner along the supply chain to compound value and drive more volume,” Anderson said.

Starting with port fundamentals and more and better information, Tradepoint is determined to find the waste, inefficiencies and fragmentation in traditional cargo trades from origin to destination, and wipe it out.

“We want to be transparent. We are a

‘total solutions’ company that winds cost savings and efficiencies for customers around innovative thought and terminal, stevedoring, marine, agency and other assets. We can save customers a ton of money using unique solutions to create efficiencies in the supply chain,” Anderson said.

When a Great Lake port is frozen over, the Class I railroads can deliver via Tradepoint to the Midwest. When a high-duty shipment arrives, it can stay in the Tradepoint free trade zone during processing, to delay duty payment until the domestic company is closer to realizing its profit. When an importer can add great value by crushing or sorting or processing and forwarding straight to a buyer, Tradepoint’s mezzanine sites can eliminate a middleman process. “Lots of space means Tradepoint’s customers can not only tell their own customers that they

2016-01-15 2:43:55 PM

ISSUE 3 / 2017

have a product, they can say they have it in stock,” Anderson said.

TARGETING BREAKBULK

While there is room at Tradepoint for containers, there may be greater potential in industries that haven’t kept up with supply chain innovations, including certain bulk and breakbulk businesses. Aluminum and other metals, liquid bulk, grain, slag and scrap are targets. Large footprint sites will appeal to voluminous cargoes such as wind blades as well as just-in-time businesses such as vehicles. And with 1 million square feet of planned breakbulk warehousing, Tradepoint may pique the interest of a broad cross-section of industrial and consumer goods destined for the massive consumer markets within a day’s drive of Baltimore.

Tradepoint also has its own ninemile short line, called Tradepoint Rail, Credit: Tradepoint Atlantic

www.breakbulk.com BREAKBULK MAGAZINE 33

port profile

TRADEPOINT ATLANTIC AT A GLANCE LOCATION

» L argest multimodal site available for development on the U.S. East Coast » 3,100 acres

» 15 million-square-foot future development » Immediate access to Interstate and regional road network (I-95, I-695, I-895/Harbor Tunnel Thruway, I-295, I-70, I-83)

PORT

» Privately held facilities, within the Port of Baltimore » Deepwater (36 feet to 42 feet with access to 50-foot main channel) and plans to dredge to 40 feet and 50 feet » Protective turning basin » Four berths, including a 2,200-foot linear berth and an 1,150-foot finger pier » Barge pier available

» More than 900 acres for marine operations » Building first 200,000-square-foot multi-use warehouse » Ample laydown acreage

RAIL

» 100 miles of short line

» Connects to CSX and NS Class I railroads » L argest privately owned, dual-served yard on the East Coast » Capable of landing multiple 100-car unit trains » Railcar services and storage on site » More than 1,500 car spots for storage » Additional available services, including cleaning, scrapping, repair and transloading

INCENTIVES

» Sales and use tax exemption on construction materials and equipment » Chesapeake Enterprise Zone (10-year property tax credit, employment and job tax credits) » Foreign Trade Zone No. 74 » BGE SEED Program (Energy for Economic Development) Source: Compiled from Tradepoint Atlantic sources

Credit: Tradepoint Atlantic

34 BREAKBULK MAGAZINE www.breakbulk.com

to provide extra value through switching, transloading, storage and other services, eliminating the need for customers to shop around for different services. And linking up with Class I railroads CSX and Norfolk Southern provides choice. “In our partnership, we have the ability to provide 24-hour a day service, unit trains, 100 car-set trains, transloading, etc. When customers ask, the answer is, ‘Yes, we can,’ ” Anderson said.

Tradepoint’s tenant announcements include big names such as Under Armour, FedEx, Pasha Automotive Services, Atlantic Forest Products, Harley Davidson of Baltimore, among others. Doyle said Pasha is already using a roll-on, roll-off operation at the pier. Cargo moving through TPA includes numerous bulk and breakbulk commodities, such as granulated slag, coal, import organic grain, scrap metal, zinc calcine, gypsum, aluminum, lead and steel.

AMBITIOUS PLANS

More deals are on the horizon. “We expect to do 500,000 to a million tons of breakbulk by 2019,” Anderson said. Because the property was a steel mill, it has space now reinforced to 3,000 to 5,000 pounds per square foot. There is vast acreage suited to project cargo. “Customers don’t have to leave the port to go to a staging area. And with 3,100 acres, we aren’t going to sell out for quite some time. We can be extremely competitive with our storage – and we have both highvelocity areas and low-velocity areas – that’s a great advantage for project cargo,” he added.

Doyle said in five years Tradepoint will be halfway to its full build-out. By that time, the deepwater port, rail and over-the-road connections will be heavily utilized, offering logistics solutions that economize supply chains, and in 10 years Tradepoint Atlantic and its commercial real estate will be at full build-out, generating 17,000 jobs to the region.

Failure is not an option: “We competed for the privilege of operating this. It isn’t a once-in-a-lifetime chance – it is a once-infive-lifetimes’ chance,” Anderson said. “We are going to use that chance and change the way you move cargo. It’s a complex ballet but the reason that Host came to the table is to help.” The secret, he added, is to relentlessly vet the data to continuously find ways to cut overall cost and risk. BB Based in the U.S., Lori Musser is a veteran shipping industry writer.

ISSUE 3 / 2017

CONNECTING THE WORLD A TRANSFORMATIONAL VISION TO DRIVE EFFICIENCY. Host is proud to be the exclusive provider of marine terminal services at Tradepoint Atlantic, North America’s 3,100-acre premier heavy industrial gateway and the largest maritime development in the United States.

Together, we’re investing $40 million in infrastructure improvements to revolutionize the flow of commerce between the U.S. and global markets. With eight berths, two Class I railroads, and over 100 miles of shortline rail on-site, we offer unmatched access to sea, rail, highways, and storage space.

Let us make your goals our goals and find the REAL solution your business needs.

tradepointatlantic.com

tparkerhost.com

port profile

BY LORI MUSSER

CHOICE CATALYZES GROWTH Baltimore’s Paper and Projects Push

36 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 3 / 2017

A

variety pack of cargo suits most ports; a little diversification helps spread the risk and fortify the revenue base. At the Maryland Port Administration’s Port of Baltimore, ongoing diversification contributed to a record 2016, with 10.1 million tons of general cargo handled at public marine terminals.

Overall, the port reported 31.8 million tons, positioning it as 14th in the U.S. It also maintained the top spot for roll-on, roll-off and vehicles.

In addition to ro-ro and containers, Baltimore’s general cargo includes forest products such as rolled paper and wood pulp, other breakbulk cargo, and growing volumes of import and export machinery and other project cargo.

Part of the reason for Baltimore’s success may be its productivity: for container traffic the port scores 71 moves per hour per berth which leads the nation, according to an independent study published in late 2016. Containers taking advantage of the port’s 50-foot channel and other mega-ship infrastructure showed a 23 percent increase in December 2016 versus December 2015.

Breakbulk John Timmins and project cargo tonnage growth Port of Baltimore also speak to the port’s efficiency: in 2016, forest products, led by rolled paper, rose 30 percent to 519,744 tons.

That success is continuing into 2017.

In January, rolled paper was up 26 percent versus January 2016, according to John Timmins, the port’s forest products specialized cargo sales and marketing administrator. He said Finland-based Metsä Board’s new Swedish paper and packaging plant is driving considerable inbound market growth.

Productivity, accompanied by careful handling, has been a crucial factor in attracting breakbulk, according to Timmins. It has also inspired long-term commitment.

UPM COMMITMENT

In late 2016, the port signed one of its top forest-product customers, Finland-based UPM, to a 10-year contract extension.

Baltimore is already one of the leading forest product ports in the U.S., and UPM has been building cargo there for decades.

“UPM is pleased to have extended our commitment to Baltimore,” said Angelo LaMantia, UPM vice president North American supply chain. “UPM has enjoyed a healthy business partnership with the MPA since 1997. Our business relationship with the MPA is our strongest asset. At the core of this relationship is trust, support, openness and mutual respect. The partnership has been a catalyst for both the MPA and UPM to grow and succeed over the years.”

UPM specializes in packaging, direct mail, promotional, postal, magazine and catalogue paper products.

In another coup, about a year ago ro-ro carrier Wallenius Wilhelmsen Logistics, or WWL, committed to serve the Port of Baltimore through to 2025.

According to port statistics, Baltimore ranks first among U.S. ports in autos and light trucks, farm and construction machinery, imported forest products, imported sugar and imported aluminum.

WWL’s multiyear commitment is important because it is the port’s highest-volume ro-ro carrier with 150 ship calls per year, and Baltimore is WWL’s highest-volume port in the Americas.

Last summer, the Port of Baltimore was selected as the exit gate for a John Deere project shipment to Kazakhstan. Mid Atlantic

Terminal, WWL and Plant Site Logistics worked together to coordinate the handling and shipment of 130 combines on two sailings. The combines were trucked to the port from Illinois. The project also included marshalling daily deliveries of tires and crated parts.

The first 65 units were carried by the Tarago and another 65 by the Asian King. Aware of the time sensitivity of the shipment, the team expedited arrangements to prevent delay penalties, underscoring the port’s growing project cargo reputation.

METRO ADVANTAGES

The Baltimore metropolitan region boasts a population of 8 million. The port banks heavily on its location, close to much of the U.S. and Canadian marketplace. A location 150 miles further inland than any other mid-Atlantic port generates a cost advantage to many markets.

The port’s marine terminals have excellent access to the U.S. East Coast’s prime I-95 artery, and 250 trucking companies – including many specialized heavy haulers – plus plenty of on- and off-dock warehousing and laydown acreage that appeal to breakbulk shippers. But port representatives also tout a productive labor force for care and handling of all types of cargo.

Export packers specializing in military packaging, consolidation, vapor proofing

www.breakbulk.com BREAKBULK MAGAZINE 37

port profile

SEEING THE WOOD FOR THE TREES BalTerm has proven to be a strong asset in Baltimore’s quest to grow its forest products business.

With two terminals and 2 million square feet of warehouse space, BalTerm has tripled throughput over two decades, according to President Morgan “Trip” Bailey.

The modern warehousing facility in South Locust Point primarily handles rolls of paper, and the Dundalk facility specializes in wood pulp and lumber.

Maryland Port Authority has invested in warehousing and in modernizing and deepening berths to accelerate growth, and BalTerm has invested in inventory management systems to boost productivity.

“We scan all of our products to ensure that both our customers and our employees have accurate, up-to-date data. We provide direct electronic access for all of our customers, which speeds up the exchange of information, and gives them the tools they need for inventory and deliveries,” Bailey said.

He added that BalTerm takes great care in handling and protecting fragile paper rolls and has invested in the latest clamp technology. If a roll experiences damage on a voyage, BalTerm can repair it so the roll is not wasted.

And the terminal’s two-shift operation – and valued partnership with the Warehouse Local and the ILA – has become integral to maintaining a reputation for damage-free and clean work.

BalTerm offers logistics solutions working with two Class I railroads.

For trucking connections it provides a drop lot that allows trucking companies to drop trailers. “We then bring them to the terminal and load before placing them back in the lot. Truckers save time and money by bringing in an empty, then picking it up as they head out to make their deliveries,” Bailey said.

38 BREAKBULK MAGAZINE

or shrink wrapping, are another important part of the mix, as is heavylift capability, reinforced laydown pads and exceptional rail.

For more than 100 years, Maryland’s short line rail connection to the Port of Baltimore has been Canton Railroad. It has a solid reputation efficiently switching railcars of all sorts – from hoppers to containers to flatcars and more – to carry cargo between the Class I railroads of CSX Transportation and Norfolk Southern Railroad and the final destination, transloading to truck, or delivery pierside for export.

The careful choreography of players including the railroads, marine terminal operators, shippers, and others, as well as attention to safety, reliability and pricing have been keys to the short line’s longevity and success, according to port staff.

TERMINALS AND TENANTS

The Port of Baltimore’s main public breakbulk and project cargo terminals are Dundalk Marine Terminal and North and South Locust Point.

Timmins said: “Late last year we completed Berth 4 at Dundalk Marine Terminal with on-dock rail, to now offer two berths with direct to rail discharge/load for over-dimensional and/or overweight cargo.” He said project business is growing – especially for the heat recovery steam generators needed by natural gas power plants springing up in Maryland and nearby states.

The Berth 13 barge dock is also an important asset for project cargo operators, Timmins said.

Privately owned, non-containerized cargo berths are active at the port too.

Joe Greco, vice president of marine and commercial development of the privately owned Tradepoint Atlantic port complex, said: “TPA, within the wider Port of Baltimore, is working to further increase the competitiveness of the port. Relationships with both the Port of Baltimore and the Maryland Port Administration are quite strong, as Tradepoint Atlantic brings them the opportunity to continue to grow maritime traffic, specifically vessel calls, new tonnage and a broader beneficial economic impact to the region.”

Tenant, Access World, previously known at Pacorini Metals, is a growing logistics and warehousing company with roots in Baltimore. Working with its global operations network it handles and warehouses non-ferrous metals, steel, forest products, bulk and project cargo. It operates 2 million square feet of storage spread across five warehouse sites in Baltimore, and was one of the first tenants to sign on at the emerging Tradepoint Atlantic complex, expanding its leasehold with a 760,000-square-foot building on 12 acres.

This scale of available space – accompanied by equipment like a new Terex 285-ton crawler crane rigged for heavy lifting, a 1,000-foot-long rail siding served by both NS and CSX, and two deepwater berths nearby – reaffirm the region’s commitment to breakbulk, specialized and oversized project cargoes. BB Based in the U.S., Lori Musser is a veteran shipping industry writer.

ISSUE 3 / 2017

The RTM Difference:

When Cargo Requirements Can’t Be Contained

The individualized nature and unusual complexity of Break Bulk cargo requires special expertise. RTM has been a leader in Break Bulk shipping and logistics for over thirty years for the shipping of:

• Cement Drums • Compressors • Carriers • Drills • Engines

• Generators • Oil Rigs • Tanks/TBMs • Transformers • Yachts/Boats

RTM combines in-depth knowledge and expertise with an ongoing commitment to friendly personalized service. For all your trans-ocean Break Bulk and logistics needs, Look to the lighthouse.

SM

SM

RT MLINES. co m • 800. 847. SH IP © 2016 RTM LINES. ALL RIGHTS RESERVED.

BREAKBULK

FCL

HIGH & HEAVY

MILITARY

PROJECT

RO/RO

carrier profiles

BIG IS BETTER

BY CARLY FIELDS

M

ultipurpose ship operator AAL is “strategically refocusing” its fleet and commercial operations based on feedback from customers.

The refocus pulls on several strands, namely the termination of AAL’s alliance with Peter Döhle, a realignment of parent group Schoeller Holdings, and a revision of its fleet list with greater

emphasis on so-called mega-multipurpose vessels. AAL aims to lead this mega-size MPV segment, increasing the number of 33,217 deadweight-ton W-Class vessels on long-term charter in its fleet from four to seven. The operator has the option to increase this by a further four within six months.

After two years of operation, the partnership with Peter Döhle had run its course, and AAL has removed the ships from its position lists. “Unfortunately, the market conditions did not support

AAL Supersizes With Strategic Ship Shift the partnership,” said Kyriacos Panayides, AAL managing director. “In our view, there are just too many ships of that size and specification in the market competing for the same business. That is why we have chosen to concentrate more on mega-size MPVs.” This shift in direction has been supported by changes at parent Schoeller Holdings. Following the merger of Schoeller-owned Columbia Shipmanagement and Marlow Navigation, Schoeller has taken the opportunity to restructure

ABOVE: The 31,000 deadweight tons, 2012-built AAL Shanghai is one of 10 A-Class MPVs in AAL’s fleet. The operator is concentrating more on the mega-class of MPVs. Credit: AAL

40 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 3 / 2017

the group to align the maritime-related subsidiaries. This will allow for “greater synergies” between Columbia, Marlow and AAL, Panayides said, although he stressed that AAL will retain its autonomy from the two ship managers.

AHEAD OF THE CURVE

AAL constructed its 2010-2014-built A-Class, 31,000 dwt series of MPVs specifically to service the mega-size sector.

“We have been operating these ships for many years, and this is where we have been getting more market share and position. With the end of the Peter Döhle partnership, our focus will now be wholly on this larger MPV sector.”

In a drive to further differentiate its market offering, AAL will make its A- and W-Class ships available to both its liner and tramp trades. “In the tramp sector, nobody has tonnage this big,” Panayides said. “By offering them in the tramp sector we will be able to give serious economies of scale to our customers.”

AAL said it is confident that the move will give it specialization in an oversupplied market, and allow it to respond to cargoes of ever-greater dimensions. For example, wind turbine blades are already pushing the 90-meter mark, but are expected to break through the 100-meter ceiling within two to three years.

“We’re upgrading our standing in the market and we see great potential in terms of servicing major projects with these mega-type ships,” Panayides said.

In support of the strategic shift in ship size segment, AAL has consolidated its service offering to give customers one point of contact for any of its three services.

In response to customer requests, AAL will internally pool resources from its tramp, liner and semi-liner divisions to find the most efficient and cost-effective service, regardless of which division received the initial enquiry.

It claims to be the first carrier to consolidate all its range of services under a single solution umbrella.

“Our departments have come together to offer a one-service offering,” Panayides said. “This will be a further differentiator for us.”

RICKMERS-LINE READY FOR ZEABORN-LED GROWTH Ulrich Ulrichs, CEO of Zeaborn-owned Rickmers-Line, has admitted to Breakbulk that its previous Rickmers-Linie and NPC Projects partnership may have been too small for the market, but under Zeaborn, Rickmers-Line has the “right partner to expand our activities in the coming years.”

“Zeaborn Group is expansion-driven and we are already reviewing further opportunities,” Ulrichs said.

“Zeaborn Group wants to expand the liner and tramp activities, and is also looking at investing in ships, used or new, and also time charter tonnage.”

While he added the caveat that the expansion had to make sense organizationally and financially, Ulrichs said that he expected Zeaborn to expand activities before the longedfor recovery appears. He also confirmed that while RickmersLine has its eye on investment in suitable second-hand tonnage or new buildings in the short- and medium-term, there were no plans to send any of its relatively young fleet to the recyclers.

Within Zeaborn Group, Rickmers-Line now falls under

the remit of RZ Carrier, a new entity that is responsible for the chartering of all timechartered tonnage. The different brands, including Rickmers-Line, Zeaborn Chartering and NPC Projects, all act on behalf of RZ Carrier with regards to time chartered or owned tonnage.

There are two divisions within the group: a liner division with a focus on services mainly around the existing Rickmers-Line offerings; and a tramp division through the Zeaborn Chartering and NPC Projects brands. Rickmers-Line retains control of the liner services, but coordinates with its sister units on the tramp side to avoid internal competition.

Rickmers-Line head office management and regional offices remain unchanged, with all staff and charter contracts having been taken over by the new company. But there is inevitably operational overlap that needs to be addressed, particularly with the positioning of tramp vessels, Ulrichs said. He confirmed Zeaborn was addressing this internally and through the joint use of IT systems.

Credit: Rickmers-Line

www.breakbulk.com BREAKBULK MAGAZINE 41

carrier profiles

HHL: CARGO IMBALANCE POLARIZES TRADE Freight rates under pressure in Asia have underscored a growing imbalance between Asian and European project cargo and breakbulk markets.

Thomas Gimbel, director global chartering at Hansa Heavy Lift, told Breakbulk that as container shipping lines had benefitted from a bounce in box cargo volumes recently, there Thomas Gimbel had been less poaching of carHHL goes traditionally carried on MPVs. That trend has given the European MPV business a welcome, albeit limited, boost.

However, Asia freight rates are still languishing. “I do not see a drastic change in this imbalance between the continent and Asia unless volumes significantly increase,” Gimbel said.

The industry has been discussing a “recovery” since 2012, and while last year there were promising signs that the bottom had been reached, Gimbel said that the first quarter of the year had been “bad again.”

That said, improving oil and gas prices have led oil majors to start investing again, a positive for HHL, which remains committed to the offshore market. “We have also seen wind as a driver,” Gimbel added, “but there are now so many players competing for that cargo.”

Commenting on the departure of CCO Joerg Roehl and CEO Roger Iliffe earlier this year, Gimbel said that it’s business as usual for HHL despite the moves. “Joerg and Roger left us a very solid company. Now, it’s business as usual and we are concentrating on performing business in line with the needs of the existing customer base, while simultaneously giving our best effort to grab further market share.”

Gimbel added that HHL has reached the peak of what it can

offer as value-added services for the freight rates being offered. “Now, we find people are pushing terms and conditions and payment conditions.

We are at the stage now where we quote and say, ‘this is the best we can offer’ and if the customer then says they can get it cheaper elsewhere, we say we are out. Our greatest challenge is to find suitable business for our vessels.”

Looking at the regions, Gimbel said that prospects in Asia are lacking, but that could be countered by improvements in Australia with huge mining projects being developed.

Brazil, he continued, had been a dry spot for the past year because of the corruption around Petrobras, but on the flipside HHL has received several enquiries in Argentina for projects at the request for quotations stage. BB Carly Fields has reported on the shipping industry for the past 17 years, covering bunkers and broking and much in between.

Hansa Heavy Lift successfully transported the first-ever ship-to-shore cranes via the Northern Sea Route (NSR), relocating them from the port of St Petersburg to the port of Vostochny, spanning both the European and Far East regions of Russia.

Credit: HHL

42 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 3 / 2017

A PORT AS BIG AS TEXAS They say everything’s bigger in Texas and as the largest breakbulk port in North America, offering over 20,000 feet of docking space and capacity to accommodate cargo of 1,000 pounds per square foot, Port Houston is ready to accommodate all types of bigger-than-life cargo.

The 52 general cargo and heavy-lift City Docks have put Houston at the pinnacle of industry rankings for steel and project cargo. It’s true everything is bigger in Texas... Better too. Call or visit us online to learn more about Port Houston, The International Port of Texas.

PortHouston.com • 713-670-2400

profile

CUTTING A NEW PATH

BY JONATHAN DI ROLLO

Patrick Dick Swaps Dissatisfaction For Determination

D

isillusioned with the laissezfaire treatment of employees in two multinational companies that he worked for in Hong Kong and Bangkok, Patrick Dick decided to speak with his feet. Both companies went through takeovers with 44 BREAKBULK MAGAZINE www.breakbulk.com

big changes in corporate cultures, giving him the nudge he needed to start his own company.

“I didn’t have a plan at the time,” Dick said, “I was frustrated working for multinationals. Within three years I experienced two mergers and multiple management changes. New management believed they could unilaterally change employment agreements. I was just tired of being pushed around.”

So, in 1996, Dick, his Swiss partner and two Thai shareholders established The Freight Company, or TFC, in Bangkok. Just a year later, TFC was

offered a sizable deal by General Motors, or GM, to run a vehicle inspection facility and pre-distribution center. Dick asked the GM executives to guarantee volumes, but they refused. With the deal offered just weeks before the 1997 financial crisis, under a contract that would have been for three years, Dick recalled laughing out loud at the proposal. No cars were moving at that time and to be tied-into such a one-sided deal would have undoubtedly proved foolish, he said.

And he was right to wait: soon after, TFC won the contract to run the complete logistics operations for the Bangkok Transit System Sky Train, including shipping all components from various countries to Bangkok. All cargo was stored in Bangkok except for the coaches and the steel rails, which were delivered onto the tracks at the depot.

To give the illusion of size for a small company, Dick invited his wife and friends along to meetings to improve its stature and promptly secured the deal.

Sometimes, image is everything.

“Those were the ‘good old days,’ ” Dick reminisced. “We were lucky in a sense. Several more major deals soon landed, partly due to meeting the right people including the local owner of the warehouses we currently operate. He gave us sole operator status for the facility which now covers 30,000 square meters.

We landed another two major projects from Siemens, Germany, before the financial crisis in 1997 and while many other projects were cancelled, these two saw us through a couple of tough years.”

DRIVING ASIAN AMBITIONS

Today, Dick exudes enthusiasm and resilience – no doubt buoyed as well as molded by his 40 years in Asia – all the while maintaining his sense of humor. His company now has offices in Thailand and Vietnam and, since 2013, in Myanmar.

Dick acknowledged that the Myanmar office, as the newest addition and in an emerging country, requires most of his attention, and he spends about 80 percent of his time there.

TFC’s core businesses in Myanmar are containers, warehousing for consumer goods, and breakbulk and project cargo.

ISSUE 3 / 2017

Moving a 220-ton generator at night from Asia World Port through downtown Yangon to the site on the outskirts of the city. The move was made in darkness as the local authorities cut off the power in every district of Yangon that the cargo passed.

For safety reasons, the generator and the trailer were illuminated and affectionately referred to as the “Christmas Tree.”

Credit: TFC

www.breakbulk.com BREAKBULK MAGAZINE 45

profile

As a recognized contributor to the logistics profession globally, Dick places a lot of emphasis on education and training talent. He said that Thailand and Vietnam were “miles ahead” of Myanmar on this front, with staff in the former two generally well trained with good industry knowledge.

“International business has really just taken off recently in Myanmar, which means the know-how in any area is not yet readily available,” he said. “I spend a lot of time training and educating, but as in many developing countries new entrants are trying to pinch my good staff away. Generally, this is an issue for all industries entering Myanmar no matter whether it’s the service industry or manufacturing.

The reality is that offering a candidate US$200 more in salary can equate to a 25 percent to 50 percent salary increase for them. Who wouldn’t change jobs in a developing country for that kind of increase?”

DREAMING, NOT DELIVERING

Commenting on the current breakbulk market in Myanmar, Dick described it as having a big dream list, but small actual movement. “Under the previous military government regime, breakbulk was booming and work would start in no time at all. These days, with the new civilian government, not much is moving. Contractors are short-listed then no one signs the documents.”

He attributed this in part to an inexperienced new government.

“The new government has no track record, nor have they ever administrated a country,” Dick said.

This is highlighted by laws that change every other month. Locals that he speaks with have expressed unhappiness with the government’s performance. “So far, I have not seen any decisive action on issues that should be priorities for Myanmar. Instead, we have seen issues of lesser importance raised that are unpopular with the people. I do hope, though, that the government will be forced into action, for example by power shortages, and to move forward with investment in the power sector.”

46 BREAKBULK MAGAZINE www.breakbulk.com

In Myanmar’s hot season, hydropower outputs suffer cuts and consequently power supply cannot be guaranteed. This is not conducive to attracting investors, which Myanmar sorely needs. Project cargo opportunities in power demand will need to ramp up to cater to the 6.4 percent GDP growth reported by the Asian Development Bank in 2016.

That said, Myanmar is still seeing some new projects coming on stream while the rest of the world languishes, and Dick spends much of his time there building up his general cargo business.

Although guarded about the details of TFC’s current major projects, he confided that licenses and approvals are needed from the various government ministries for these to come to fruition.

REACHING A LOW POINT

As the early GM deal proved, Dick will walk away if the deal isn’t right.

But he acknowledged that the market today is being squeezed on several fronts, with rates under increasing pressure and service levels demanded by customers rising. “Customers are looking for financial guarantees such as performance bonds or bank guarantees, credit insurance and anti-bribery training as part of the total service provided. Big multinational company clients now like to micromanage their freight forwarders,” Dick said.

The industry has reached a low point, he continued, and only has itself to blame for selling its services too low. “Prices need regulation and the industry needs to be cleaned up with more professionalism, more investment, more training and, essentially, monitoring.”

Strong leadership is necessary in these challenging times. TFC’s mission statement includes “personal commitment from the management to the individual staff,” but Dick explained that his leadership does not differ across his three offices. “A small project forwarding company is like the ‘mom and pop store’ in Asia, open 24/7/365, whereas a multinational forwarder is the equivalent of a western supermarket chain, closed on Sundays and public holidays.”

Discharging a 220-ton gas turbine from a Hansa Heavy Lift vessel at Asia World Port in Yangon.

Credit: TFC

FORWARD THINKING

Despite the pressures, Dick is already looking ahead at innovations that might improve project cargo handling. He’s particularly keen on innovations in technology, such as airships for moving project cargo, especially heavy-lifts, into remote areas. Myanmar’s new and improved ports and airports in the main cities pose no problems to project cargo moves, but move a little inland and the transportation issues begin.

“Carrying a 450-ton gas turbine into the mountains would be much more easily done by an airship with a long range,” Dick said. “In Indochina and Myanmar, this is one of the biggest challenges, particularly in Myanmar as basically anything above 50 tons that needs to move up the country can’t be moved by road. So, we need to use large rivers, particularly on the flat plains.

In many instances, we have to go up into the mountains and that’s where the headache really starts. Airship innovation is here and I can’t wait until it comes into operation.”

Dick is also closely watching hybrid technology developments which will, he believes, deliver significant value-add for hydro power projects in Myanmar.

While lamenting the missing links in the supply chain in Myanmar, Dick continues to run a successful logistics company through a separate legal entity, Integrated Logistics Services, headquartered in Bangkok. “Every day we get an endless supply of goods primarily manufactured in Thailand delivered to our warehouses. From there, the goods are distributed and delivered all over Thailand and some across the border. For some of our customers we deliver value-added services, such as repackaging and price labeling.”

Dick’s proudest moment was when he was able to deliver a key hydropower project in Myanmar more than 30 years ISSUE 3 / 2017

ago under very difficult circumstances.

At 25 years old, he was one of the first logistics specialists in the country.

Fast forward 30 years and his company played a crucial role in delivering the first two major power stations in the country, a project that also has “very special meaning for me.”

He plans to finish opening TFC and his heavy haulage business in Myanmar before handing both over, allowing him to retire within the next two years. But Dick’s heart beats for heavy-lift and his evident passion for the industry makes one wonder if he will ever be able to give it all up. BB Jonathan Di Rollo is a journalist and international conference speaker, based in Kuala Lumpur. Di Rollo previously worked as a project manager in Kuching, Sarawak, managing the production of development studies for Sarawak State Government.

MAKING PROJECT NETWORKS WORK In addition to The Freight Company, Patrick Dick is founder and owner of the Global Project Logistics Network, or GPLN. “After going alone as an entrepreneur and no longer being associated with global partners, I had to learn to stand on my own two feet,” Dick explained. “The answer was calling my friends in the industry and starting a project logistics network, GPLN, in 2004.”

GPLN now has a larger coverage of project logistics experts than any multinational companies, claimed Dick,

and its members compete with those same multinational companies through more than 100,000 contacts. GPLN also publishes press releases for its members and compiles and distributes a newsletter, featuring stories and photos from members on hot topics.

The network also organizes heavy-lift training for its members.

“GPLN’s contribution to the logistics industry lies in the many companies and their staff and their technical know-how, which we strive to improve,” Dick said.

www.breakbulk.com BREAKBULK MAGAZINE 47

regional review

HYDROPOWER AND Energy Project Not Without Opposition

BY ALAN M. FIELD

ABOVE: The Hatch-led Oxec II

project is a unique cofferdam that will bring electricity to thousands of local Guatemalan residents in the highlands of the country.

Credit: Hatch

48 BREAKBULK MAGAZINE www.breakbulk.com

In the humid highlands of Alta Verapaz, a “department,” or province, in north central Guatemala, poverty and illiteracy are endemic and access to electrical power is anything but universal.

But Soleh Boneh, the oldest and one of the largest construction and civil engineering companies in Israel, is nearing the completion of Oxec II, a unique cofferdam that will bring electricity to thousands of local residents who often speak only an offshoot of the ancient Mayan tongue.

Owned by Energy Resources Capital, this greenfield hydroelectric project on the Cahabón River has been designed by Hatch Ltd., the Toronto, Canada-based engineering firm.

This is hardly Soleh Boneh’s first hydropower project in Guatemala. SBI Group has provided Guatemala with more than 260 megawatts of power, thanks to the construction of such projects as its El Canadá with 47 MW, Montecristo with 12.7 MW, Xacbal with 94 MW, Palo Viejo with 84 MW, and Oxec I – the first stage of the Oxec complex – with 26 MW. Why is there so much interest in hydroelectric power? One of the poorest nations in the Western Hemisphere, Guatemala lacks fossil fuels. Its per capita gross domestic product of only $3,050 in 2015 – about half the GDP per capita of China – is distributed highly unevenly.

Although Guatemala’s national minimum wage is 2,644.50 quetzales (US$346) a ISSUE 3 / 2017

THE GLORY month for agricultural and nonagricultural workers, some workers have reported that they receive as little as 600 to 700 quetzales (US$78.63 to US$91.74) a month.

For all the efforts by various governments and non-governmental organizations to provide Guatemala with technical expertise, its poverty rate rose from 64 percent to 67 percent between 2011 and 2014, according to the United Nations Development Programme. Most of the country’s poor are rural indigenous farmers who have faced land conflicts and competition with imported goods. All the while, funding for public services such as health care and education has dropped, making them inaccessible for the majority of the population.

GEOGRAPHICAL CHALLENGES

The mountainous climate is quite challenging for builders of energy and other infrastructure projects. “We proposed this design to address some very specific challenges and requirements that were unique to this project and the region’s climate,” said Hooman Ghassemi, Hatch’s project manager for Oxec II. “This solution had definite technical benefits and allowed us to maintain the project’s economic viability with respect to budget and schedule. We couldn’t be more pleased with its success.”

While Hatch is involved in a broad range of energy sectors, Ghassemi’s team specializes in renewable energy,

including hydropower and dams. Over the past 12 years, he and his co-workers have undertaken seven full-scale projects, including five hydro projects in Guatemala.

“The interesting part is that Guatemala is a developing country so there is still lots of potential for greenfield projects, as opposed to most of the projects in Canada and North America, which we call ‘brownfield’ – existing projects that are modified and extended. With greenfields, we just break ground in the project and start from zero.” He added that Guatemala is a challenging country for these kinds of construction, mostly because of the very unstable climate and the unstable ground. “You’re dealwww.breakbulk.com BREAKBULK MAGAZINE 49

regional review

Credit: Hatch

ing with seismic and volcanic activities, and also hurricanes,” he said. Ghassemi has been working on Oxec II since 2015 and has just finished the conceptual design for Oxec III.

FIRST OF ITS KIND

In April 2017, Hatch received the Ontario Consulting Engineering Award in the Industry, Energy and Resources category for its work on the cofferdam at the Oxec II project in Guatemala.

“The structure was the first of its kind built in Guatemala,” said Henri Assa, the Oxec II project manager for Solel Boneh in Guatemala. The dam was recognized by stakeholders as “a notable achievement” and the “owner’s preferred option for any future projects with a similar scope.”

What makes the Oxec II project so special? Ghassemi explained that Oxec II is comprised of concrete gravity dams; a spillway and intake with a maximum height from the foundation 50 BREAKBULK MAGAZINE www.breakbulk.com

of more than 40 meters; and overall crest length of more than 200 meters.

The powerhouse has three horizontal shaft S-type Kaplan units with an installed capacity of 56 MW. The first of its kind built in Guatemala, the cofferdam has 29 cells, is nearly 300 meters long, and consists of 2,000 tons of steel and Hooman more than 50,000 Ghassemi cubic meters of Hatch fill. According to Hatch: “The cofferdam resists fast flows, controls the release of sediment, and exhibited high reliability and safety during its installation and life in service, needing no remedial works after flood events.”

Ghassemi added: “On this project,

the owners realized that a conventional cofferdam was not a feasible scenario in terms of schedule and economy, so we proposed the concept of using a similar cofferdam for the diversion of the river.” As a result, “We had massive savings in terms of quantity of excavation for the project – and therefore the cost of concrete. We also managed to save four months out of the schedule; without this change, the project was unfeasible from schedule and cost.” That way, “they could minimize the release of spill, which provided an environmental advantage. And the safety and reliability we offered [was] a very robust option.”

High-magnitude flood conditions dictated a relatively large cofferdam. As such, the temporary diversion required a significant level of construction effort to be completed within a very compressed schedule. The concept had never been used before by the contractor, according to Hatch, so its staff did not have direct experience with it. And there were risks associated with the in-water works and the frequent large floods common to the region.

DEALING WITH OPPOSITION

For all that, not everyone in the region is pleased with Oxec II. In February 2017, the Constitutional Court of Guatemala upheld the suspension of the license for the Oxec II hydroelectric station for allegedly failing to consult indigenous peoples in the area before starting the projects. On the other hand, the Constitutional Court’s decision was viewed by the Guatemalan private sector as a threat to the essential principle of legal certainty in the country. According to press reports, some businesses argued that the fate of other hydropower projects had been placed at risk by the suspension of such an ambitious project as Oxec II. For her part, Ana Valeria Parado, director of sustainability for the Oxec ISSUE 3 / 2017

OUR

CONNECTIONS RUN DEEP In New Orleans, we’re known for letting the good times roll.

But to our customers, our capabilities are as world-class as our food and music.

The Port of New Orleans is America’s most intermodal port.

We connect you to major inland markets and Canada via 14,500 miles of waterways, all six Class-I railways, and a growing number of ocean carrier services, and barge and truck lines. The Clarence Henry Truckway, a dedicated two-lane roadway on Port property, makes fast transit times even faster.

The Port also offers on-dock rail and ship-to-barge services. You can count on use to exceed your cargo handling expectations — and you’ll love our Big Easy hospitality.

portno.com

regional review

projects, told a Guatemalan newspaper that the suspension by the Constitutional Court would “avoid risks to the community and any possible damage to the work that has already been achieved. We believe that the Constitutional Court

adopted a mature and responsible attitude in issuing the resolution.”

By March 2017, however, the situation had changed dramatically. The uncompleted portions of hydroelectric project Oxec II would soon be

COVERING ALL COASTS Providing stevedoring & terminal operations in more than 42 U.S. ports and 80 locations

Our terminals in Baltimore provide complete services for breakbulk, containers and auto/Ro-Ro cargoes, with intermodal transfers and a 50-ft. draft and four super-post-Panamax cranes at Seagirt Marine Terminal.

PortsAmerica.com corporate@portsamerica.com

52 BREAKBULK MAGAZINE www.breakbulk.com

PAChesapeake.com @pachesapeake

resumed, and then completed, it was announced. However, this authorization from the Constitutional Court to resume Oxec II did not formally involve the lifting of the original suspension, only permission to complete certain work in progress to “avoid damages both to the works that had already been worked on, and to communities,” said La Prensa Libre, a local publication.

In an interview with Breakbulk, Ghassemi said he had never been made aware of any such suspension in the first place.

“To be honest, I know as pretty much as you do. Our role is [that we are] the designers for the contractors. We are not involved in any legal aspects.” He said that Oxec II is still scheduled to be finished in 2018.

Canada-based Ghassemi added that such suspensions are neither strange nor uncommon. He likened this project to a large one in Newfoundland, Canada, known as Muskrat Falls. “Any hydroelectric project that I’ve been involved with, they’ve had issues with the communities, and at some point, there have been some temporary halts to the project. There were some project cancellations in Alberta [as well]. We’ve heard the same stories from British Columbia in indigenous communities.

There are always ongoing disputes over lands and resources, and that includes permits and environmental consultations. And usually [also] when the government changes, when the people in the same department change. I know they are working on the [Oxec II] site, so there is no permanent stop on the project.”

A TURBULENT POLITICAL LEGACY

Kirk Sherr, president of Clearview Energy Partners, a Washington-based energy consultancy, noted that for many projects in developing areas the issue is whether remote hydro projects that have a significant environmental impact are the best way to go. “Each case is something unto itself,” he said. “It is really difficult to make a blanket observation.” Some rural community groups in the Guatemalan department of Alta Verapaz argued that SBI did not engage in the community consultations that were needed to smooth the way toward completion of the project.

ISSUE 3 / 2017

For several months, residents of various local communities held demonstrations during which they argued that they were not consulted about the works. Some community leaders demanded community consultations before further construction could be carried out.

The social turbulence was not unexpected, given the instability that marked Guatemala’s recent year. January 2017 marked the 20th anniversary of the signing of Guatemala’s 1996 Peace Accords.

The agreement between the Guatemalan government and the Guatemalan National Revolutionary Unity (URNG) guerrilla organization ended one of Latin America’s longest-running armed civil conflicts. The Peace Accords also led to official recognition by the government of the rights of Guatemala’s indigenous communities for the first time in the country’s history, setting the stage for the subsequent government recognition of women’s rights.

For some indigenous communities, hydropower projects have become the most visible symbol of the struggle against the highly concentrated wealth of the private sector of Guatemala. In that country, as elsewhere in the developing world, “the issue with hydro is that even though the products are longstanding, the local social costs on the impact on the environment can be pretty high,” said Sherr. Moreover, he noted, the social and environmental causes of local groups that oppose such environmentally impact projects are often championed by non-governmental organizations (NGOs) that marshal a wealth of professional prepared analysis in support of the local group’s arguments.

“Historically, such conflicts would have been an almost 100 percent [battle between] a large local utility and a small indigenous or impoverished group hearing an argument that there will be many jobs, and everyone will be better off,” said Sherr. “In today’s world, with the Internet and all the sophistication that NGOs provide, there is a surprising amount of resistance to hydro plants, and an unusually strong capacity to bolster national arguments against them.”

He added: “Often, these are projects that are – as in Guatemala – governmentled projects, and therefore a lot of the contracting and benefits from over-

charges and other anomalies help sway the political decision-making process.

So, irrespective of the potential negative environmental impacts, the projects can acquire a lot of impetus because of corruption.” BB

Alan M. Field has reported on trade, logistics and related technologies from numerous countries in North America, Latin America and East Asia (Japan, Taiwan and Korea) over the past two decades.

Canton Stevedoring proudly offering

Quality Stevedoring Services In the Port of Baltimore at North Locust Point Marine Terminal • Draft – 40’ MLW • Accepting Vessel LOA – up to 750’ • Accepting Vessel Beam – up to 105’ • 400,000 square feet outside storage • 3 Mobile Hoppers • Shore Crane with Hopper

Canton Pier 11 & Pier 8 • 168,000 Square Foot Onsite Warehouse • 14 Acres Paved Outside Storage • 2 x 100,000 lb Reach Stackers & 100 ton mobile crane • Draft – 31’ MLW

Canton Stevedoring

3800 Newgate Avenue • Baltimore, Maryland 21224 (410) 633-1601 • www.cantonmaritime.com www.breakbulk.com BREAKBULK MAGAZINE 53

energy update

OVERCOMING ENERGY CRISES Pakistan Leans on Project Cargo-led Development

BY VL SRINIVASAN

P

akistan perennially faces an acute shortage of power supply due to a growing population and aggressive industrial demand over the years. But a solution might finally be in sight with the construction of several power projects under the multibillion-dollar China Pakistan Economic Corridor, or CPEC. These projects are expected to make the nation power independent within five years, and are already propping up project cargo business in the country.

Although the country’s installed capacity has been about 22.8 gigawatts, actual generation is estimated at about 12.5 GW against a demand of 19.7 GW. While some 1.5 GW was recently added, the deficit is still said to be more than 5 GW. However, power demand is expected to touch 26 GW by end of 2017 and likely to add another 4 GW by the end of next year.

Demand for electricity in Pakistan has been growing about 6 percent to 8 percent per annum over the past few years without a commensurate growth in generation capacity. This increasing shortfall is said to be costing the economy 2 percent of gross domestic product every year.

The resultant power cuts are so acute that people are forced to use fixed and portable generators to meet their electricity requirements. Khyber Pakthunwa, formerly North West Frontier Province, is the only province where the local government is said to have installed several small water-driven turbines to cater to the electricity needs of villages in its territory.

POWER HUNGRY

According to Pakistan Minister of State and Chairman of Investment Miftah Ismail, the power cuts that have plagued the nation will be a thing of the past by December 2017 as a result of government-

A vertical reactor is unloaded at a port to be moved to a project site in Pakistan. / Credit: Noble Shipping Services 54 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 3 / 2017

PROJECTS OF THE CHINA-PAKISTAN ECONOMIC CORRIDOR* Coal

Hydro

Solar

Wind

AFGHANISTAN Rahim Yar Khan, Punjab 1,320 MW Muzaffargarh, Punjab 1,320 MW

Gwadar, Balochistan 300 MW

IRAN

INDIA

Bahawalpur, Punjab 1,000 MW

Tharparkar District, Sindh 3,960 MW

*Includes existing, under construction and planned highway routes

several highways and railways are also being taken up as part of CPEC across Pakistan to strengthen the dilapidated transportation network, which is said to cost the country 3.5 percent of is GDP every year. These networks will link seaports in Gwadar and Karachi with northern Pakistan and in western China and Central Asia.

JOINT APPROACH

Karot, Punjab/AJK 720 MW

Jhimpir, Bhambore and Thatta, Sindh 350 MW

Port Qasim, Sindh 1,320 MW

launched energy reforms. These power shortages have been hurting the country’s growth rate for several years.

“Only 23,000 MW was added in the last 70 years, but with the new and upcoming projects, an additional 25,000 MW will be added in the next couple of years,” the minister said while addressing a recent meeting organized by the Islamabad Chamber of Commerce & Industry.

ICCI President Khalid Iqbal Malik said that the CPEC project has brought together the private sectors of Pakistan and China under longterm partnerships, and that Pakistani entrepreneurs were Khalid Iqbal Malik keen to enter into ICCI joint ventures with Chinese counterparts.

“Lots of power projects are coming up due to CPEC, and I am positive and very hopeful that the energy crisis in Pakistan will be largely solved by 2018. In fact, we will have surplus energy and can even export it to Afghanistan,” he added.

Besides energy-related projects,

Suki Kinari, Khyber Pakhtunkhwa 870 MW

Sahiwal, Punjab 1,320 MW

PAKISTAN

Source: Government of Pakistan

CHINA

Indeed, the CPEC project is considered a game-changer, opening new gates for investment and employment and allowing countries like Iran and those in Central Asia to plan for exports and investments in Pakistan.

As part of CPEC, Chinese firms are investing US$35 billion in 19 power projects which combined will generate more than 12 GW. The investments cover five Thar Desert coal projects, four imported coal projects, four wind projects, three hydroelectric projects, one solar, one 660 kV transmission line between Sindh and Punjab and a feasibility study with regards to another.

Work for 15 of the projects has started, and 12 are to be commissioned by the end of 2018 or early 2019, adding about 6 GW. However, there are signs that not all the projects will be as grand as they were first envisaged. In a report to a

Parliamentary Committee earlier this year, senior officials from Pakistan’s Water and Power Ministry stated that the China Machinery Engineering Corp. in collaboration with Pakistan’s Engro Corp. will construct two 330-megawatt power plants, having initially proposed the simultaneous construction of two 660MW power plants.

For infrastructure required for transmission and distribution of electricity generated from the Thar power plants, a US$2.1 billion transmission Line from Matiari to Lahore and a US$1.5 billion transmission line from Matiari to Faisalabad are also being constructed under the CPEC project.

BOOST FOR CARGOES

The development of infrastructure and execution of dozens of infrastructure and energy-related projects has brought cheer to project cargo movers in Pakistan.

Khurram Niazi, director, commercial of Karachi-based Freight Connection Group, said that as the first logistics company appointed as a vendor to the world’s largest solar park in Pakistan under the CPEC project, his company is fully geared to arrange movements of project cargo in the country. “From the heaviest pieces to the smallest www.breakbulk.com BREAKBULK MAGAZINE 55

energy update

ELECTRICITY SHORTFALL

Supply vs. demand of electricity in Pakistan 2010 to 2017 (MW). Pakistan’s energy deficit needs addressing.

-8,023

36,000 Demand (Summer Peak) 32,400

-4,593

Expected Available Generation Deficit Generation

-3,621

28,800

-2,381 -758

25,200 -1,293 21,600

-849

-60

18,000

2010

2011

2012

2013

2014

2015

2016

2017

Source: Private Power & Infrastructure Board – Government of Pakistan

accompanying bolt, we will arrange everything to make possible import, transport and installation at the final destination,” he said.

Karachi-based Noble Shipping’s Managing Director Capt. Mohammad Inam added that the energy-focused activities have certainly boosted the outof-gauge industry, especially for those handling project cargo from the point of origin to the project site.

“There are about half a dozen companies equipped with multi-axle trucks and trailers and with cranes capable of handling heavy and out-ofdimension loads [in Pakistan]. Although some of the specialized trucks may not be adequately available in town,

the transport companies are managing either by fabricating locally designed transport or by borrowing from one another, depending on availability.”

However, he warned that there would likely Capt. Mohammad be delays when Inam over-dimensional cargo for multiple Noble Shipping projects have to be moved simultaneously from the port.

Two foreign companies, one from China

and one from Germany, have opted to import additional equipment to address such an issue, but Inam feels that more could be done to avoid inevitable bottlenecks.

Operators are also feeling the pinch of short supply of equipment to handle over-dimensional cargo at the project sites. Citing an example, Inam said there’s a contract to transport 85 tonnes of over-dimensional cargo from Karachi port to the hinterland using a floating crane. However, when it came time to move the product, the equipment was declared out of order.

Noble Shipping had two options: hire a shore crane, which would take two days to come from a remote area at an exorbitant rate; or wait for the floating crane to be repaired, which would take equal amount of time.

“While the floating crane was repaired within two days, the stevedore could not find the shackles for adequate safe working limits – 25 tonnes.

Therefore, we had to deviate from the original lifting plan and thus discharged the packages using conventional slings,” he said.

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.

CPEC DICTATES ENERGY MIX Most of the new energy generation capacity under the China Pakistan Economic Corridor, or CPEC, will be coal-fired projects, which are expected to be completed by 2018 or early 2019 as part of the CPEC’s “early harvest” projects.

But the government is also making all efforts to tap unconventional energy resources like wind and solar, alongside hydro and coal-fired power.

Pakistan is also looking at using liquefied natural gas, or LNG, as feedstock for generating power, and 56 BREAKBULK MAGAZINE www.breakbulk.com

signed an agreement with Qatargas, the world’s premier LNG company owned by the state of Qatar, in early 2016. Under the terms of agreement, Qatargas, will supply 1.3 million tonnes per year of LNG to Pakistan for 20 years, with provisions allowing the volume to increase to 2.3 million tonnes per year. The first LNG cargo is expected to be delivered to Pakistan in 2018 by Qatargas-chartered Q-Flex vessels.

As far as nuclear power generation is concerned, the Pakistan Atomic

Energy Commission has set a target of 8 gigawatts, but the current combined power generation by the four nuclear power projects in the country is only 1.04 GW. In fact, the third unit of the Chashma Nuclear Power Plant in Mianwali district in Punjab province was inaugurated only late last year.

Under the CPEC project, China aided the construction of the plant which began around six years ago.

A fourth unit is expected to be commissioned by June. BB ISSUE 3 / 2017

A Breakbulk FIRST 4-6 September 2017 Kuala Lumpur Convention Center Kuala Lumpur, Malaysia

Asia’s Annual Business Development, Educational & Strategic Platform for Transport of Breakbulk, Heavy Lift and Project Cargo

AN EXCEPTIONAL GROWTH MARKET Southeast Asia is one of the fastest-growing markets for project cargo transport and infrastructure development. The countries that comprise this dynamic region represent a thriving trade and economic hub with a combined GDP of $1.9 trillion.

Secure Sales Create Buzz Drive Leads Create Awareness

WHO SHOULD ATTEND? Key government ministers and oďŹƒcials, transport and logistics directors at oil & gas and energy companies, engineering, procurement and construction companies, international and local forwarders, specialized transport providers, equipment suppliers and others involved in the breakbulk supply chain.

PHOTO COURTESY OF DEUGRO

EXHIBIT & SPONSOR Colin Ho Sales Manager, Southeast Asia colin.ho@ite-ap.com +603 7842 9863 (Ext. 8186) Petaling Jaya, Malaysia

For more information, visit breakbulk.com/ breakbulk-southeast-asia

10101

10101011101010101 0101 010010

001 0

1 01

010 0

10

10 10 10

10

10 10

01

01 01

01

01 01

01 10

10

0

10 1 00

00

01

10

10

10

10

001

010

1000

10 10001

01010010101010101

001

01 0101

010

01

0 0010 1 0 1 01 0011000 1 0 1 0 0 1 10 1 0 01 10100101010101001010101 010 01 1 01 10 0 00 1 010 00 1 0 101 101 0001 0 1 0 1 0 10 0 0 1 0 1 0 1 0 0 1 0 1 0 1 0 1 0 10 1 0 0

10

CYBER

01 0

10

1 00

1

TSUNAMI Breaking Down Technology Threats

T

he word tsunami might have its roots in 19th century Japan, but its meaning bears a striking modern day relevance to the technology-based issues crashing down on the breakbulk and project cargo industry today.

The Mother Nature-induced maritime phenomenon can have devastating effects on individuals, 58 BREAKBULK MAGAZINE www.breakbulk.com

communities, infrastructure and business; cyber incidents threaten to do the same from a technology standpoint.

Cyber breaches are rising rapidly around the world affecting most industrial sectors at different speeds, and the breakbulk industry is no exception. Jenny Gao, AAL Shipping senior IT manager, put it plainly: “We should not imagine that, as a niche shipping segment, the multipurpose sector is any less prone to cyber attack.”

Gao pointed to a recent UK government survey of 1,500 businesses – most of which had no e-commerce interests – which indicated that 46

BY JONATHAN DI ROLLO

percent had had at least one cyber security attack in the past year, and concluded that 74 percent of businesses agreed that cyber security was a high priority for their senior management. And that is just a fraction of global businesses that face now daily threats of cyber attack.

RISING TIDE

The breakbulk industry is increasingly at risk from an exponential rise in cyber security threats, especially through specialist vessels and ports.

“EPCs, freight forwarders, ships’ crew, ports and associated industries may have recently experienced one ISSUE 3 / 2017

1

010

01

10

10101010100010101010101 101001010 010101 101010 0101 0100 10100 1010 101 01 1 1 010 101 010 10 10 0

10

01 01 00 01

10

10 1 01 01 00 10 10 1

010 10

01 01 01 01 0 1 01 01 01 00 10

0 10101

0100101010101010010 101 0101 100 010 010 10 10 100 0 1 1 10 0 00 1 10 0 01 1 10 10

0101001 01 0100 001 10 10 10 0 00

1000 10

1

10 10 10 00

00 10 10

10 10

0101000101000 101 01

10

00

100010 010 01 01 01

10 0 1 0 10

0 10 0 01 0 101

0 01

1010 1010 100 010 001 010

00

001 010 101 010 01

10

01

10

01

1

01

10 1010

10 10

01

1 00

0 01

01 01

0 01

10

01 001

10 0 10

10 10

1

technology

Illustration: Mark Clubb

form or another of cyber attack,” said Christian Vakarelis, vice president of media communications at Navarino, a maritime communications and connectivity company. “Many more may not be aware of the threats posed and may only have a little awareness and even less risk management in place to mitigate losses from cyber attacks.

Historically, ships had no real need for IT networks, and there were only a few low-cost options for advanced IT networks.” However, times have changed and most ships now have an IT network of some type.

The high-profile cyber attack on the Port of Antwerp from 2011 to 2013 created a groundswell of concern around maritime-related cyber threats, leading to several maritime industry initiatives.

One such initiative saw BIMCO create guidelines for cyber security on vessels that provide guidance and best practice for its members. The International Maritime Organization also plans to create cyber secure certification for vessels. And from May 25, 2018, the EU General Data Protection Regulation will affect every organization that processes the personal data of EU residents; this includes multipurpose vessel operators which process data for crew and staff.

With international bodies ramping up cyber security awareness, a global manufacturer is also heading up a criminal reporting initiative, the CSO Alliance. “A concern is that the International Maritime Bureau states at least 30 percent of all maritime crime is still unreported, so there is work to be done,” said Director Mark Sutcliffe. He added that CSO’s database has logged 1,600 maritime crimes since 2013, but none were noted as cyber crimes. The plan is to enter all of these crimes in CSO’s new cyber solution in the future.

WARNING SIGNS ASSOCIATED WITH CYBER ATTACKS Malware: Slowdown of computer; pop-ups in windows; crashes; suspicious hard drive activity; running out of hard drive space; unusually high network activity; new browser homepage; new toolbars and/or unwanted websites accessed without your input; unusual messages or programs that start automatically; security solution is disabled; spam messages sent to your friends’ email addresses.

Phishing: Message contains a mismatched URL; URLs contain a misleading domain name; message

cyber attack at 77 percent. Phishing, the fraudulent practice of sending emails purporting to be from reputable companies to induce individuals to reveal personal information, such as passwords and credit card numbers, came in second, 57 percent. Denial of service, an interruption in an authorized user’s access to a computer network, was ranked third at 18 percent. As the

WARNING SIGNS

Warning signs of cyber attacks are now better known and can be recognized and mitigated by welltrained staff. The 2016 Maritime Survey

by IHS Fairplay, in association with BIMCO, found that malware, software that is intended to damage or disable computers and computer systems, was the most common form of maritime

contains poor spelling and grammar; the offer seems too good to be true; request to send money to cover expenses.

Denial of service: Unusually slow network performance (opening files or accessing websites); unavailability of a particular website; inability to access any website; dramatic increase in the number of spam emails received; disconnection of a wireless or wired internet connection; long-term denial of access to the web or any internet services.

motivations of attackers are translated into the real world, new forms of attacks such as ransomware – a cryptoviral attack that holds the victim’s data hostage – are also evolving.

Jordan Wylie, campaign director for Be Cyber Aware at Sea, said that a company’s biggest vulnerability is its people, and that identifying warning signs of a cyber attack is the first step in mitigating losses. False alarms can be costly in terms of time and manpower, but so can ignoring an ongoing attack and willful blindness where companies avoid action for fear of repercussions on the brand or wider liabilities.

“Ports and ships are reluctant to report cyber crime for fear of being branded whistleblowers, tarnishing reputations and insurance issues, but people will report cyber crime anonymously,” pointed out Christopher Henny, an industrial partner with the CSO Alliance.

“Anonymous reporting appears to be the only way to gather data at the moment.”

CRITICAL INFRASTRUCTURE

A “Be Cyber Aware At Sea” ad.

The motivations of cyber attackers are hidden and can vary from financial gain or international terrorism to notoriety or industrial espionage.

Equally, the antagonists are just as diverse: from pirates to criminals and from nation states to disgruntled

www.breakbulk.com BREAKBULK MAGAZINE 59

technology

employees. Breakbulk cargo specifically destined for a project could be the objective of a cyber attack for industrial espionage with the motivation attack of a vessel by a competitor or an insider.

Geopolitical conflicts are another source of threat for cyber attacks on project cargo. In 2016, South Korea reported about 280 vessels had to return to port after experiencing problems with their navigation systems, claiming North Korea was behind the disruption.

“Ships have no means of response to cyber attacks once they are more than 300 kilometers out to sea and are often helpless,” Henny explained. But it is not just vessels at sea that are vulnerable.

Henny added: “In one case on a roll-on, roll-off ship an email attachment was opened by a crewmember which enabled downloading of ransomware on to the crew list for a charter for military supplies. Consequently, the ship was stuck in port for three days causing US$30,000 of losses.”

One reason cyber crime is rising is that it is lucrative and the probability of being caught is lower than traditional piracy. Project cargo is particularly vulnerable as it involves high-value assets. Protecting critical infrastructure in ports or on vessels is a complex task, and identifying the critical infrastructure of a vessel or port that is most vulnerable, and which offers the highest probability of successful attack and therefore the highest profit to attackers, is the first step a chief security officer should take.

According to Navarino’s Vakarelis: “Communications at sea is increasing exponentially, with more and more data being transferred as vessels become extensions of the office making vessels more difficult to secure.” Increasingly, ships are using networks for everything from engine monitoring to form filing for entering new waters as well as crews’ bank accounts. Vakarelis said that one ship that was hacked saw the hackers get into the port’s infrastructure and identify valuable contents in specific locations.

Sharif Gardner, cyber unit training manager of Novae, an insurance underwriting company headquartered in London, saw the main losses from cyber attacks as cost of damage to data which meant potential loss of hire risks, causing business interruption.

60 BREAKBULK MAGAZINE www.breakbulk.com

According to the IHS Study, of those respondents who acknowledged that their systems had been compromised, 67 percent experienced IT downtime; 48 percent lost corporate data, such as email, personal data, payroll, or human resource information; and 21 percent endured some form of financial loss.

“In one case on a roll-on, roll-off ship an email attachment was opened by a crewmember which enabled downloading of ransomware on to the crew list for a charter for military supplies.

Consequently, the ship was stuck in port for three days.”

– Christopher Henny, CSO Alliance

In terms of cost, half of those attacked faced costs of less than US$5,000, but a quarter lost up to US$50,000 and in two cases costs were more than US$500,000.

FINDING A SOLUTION

Breakbulk cargo handler Virginia Port Authority, or VPA, said it had implemented several cyber security strategies to mitigate cyber threats and associated losses. These include a defense and depth strategy; defense against phishing; and the ‘principle of least privilege’. This last strategy means that individual employees are given minimal access to systems which they need to do a job and no others. “For example, if an employee is only in charge of breakbulk cargo then they are only given access to breakbulk modules,” said Darich Runyan, senior director for information security at VPA.

“We have been pretty lucky so far as the marine terminal industry is still manually driven so there is not that much incentive for cyber attacks,” he continued. “However, we face lots of reconnaissance attacks, almost everyday, and phishing, too.”

At VPA, the breakbulk operating systems are separate from VPA’s primary terminal operating system, or TOS, although, the authority is in the process of migrating off an older mainframe system to a more modern cargo module provided by its TOS vendor.

“This will give us the ability to better defend our breakbulk program since it will be integrated within the TOS,” Runyan said.

MARITIME CYBER AWARENESS

Creating awareness of cyber security threats and associated risks involves educating staff at all levels. “If you are thinking about cyber security for breakbulk and project cargo, either on vessels or in ports, then you need awareness. Knowing about threats and assessing the risks is just not enough to mitigate losses,” said CSO Alliance’s Sutcliffe.

CSO Alliance intends to mobilize a global community of 400 company security officers, or CSOs, in more than 40 countries to more effectively counter maritime crime in a secure portal accessible via tablet and mobile. This will allow CSOs to connect, inform each other of the risks they face and, through structured information exchange with key stakeholders and the military, get support for their security planning and actions.

“The key issue in cyber crime is to ensure there is a clear boardroom understanding and awareness,” said Sutcliffe. “There are at least two levels of cyber security awareness campaigns that you can implement; a global one, involving international agencies, and local one involving in-company awareness. Linking these two together will make your cargo even more resilient against losses from cyber attacks.” BB Jonathan Di Rollo is a freelance writer and cyber security awareness trainer based in Malaysia.

ISSUE 3 / 2017

thought leaders

IMAGINE, DISCOVER, INVEST Steering Towards Innovation in Breakbulk

B

reakbulk project cargo shipping is like a large ship; slow to turn. Unlike leaner, more predictable container shipping, breakbulk has plenty of valid reasons behind its limited predictability: cargo is not unitized, shipping lanes are random, fabrication schedules are dynamic, and so on.

Seizing on the opportunities offered by recent innovation, breakbulk shipping can remove or normalize some of those traditional constraints and

BY STEVE SPOLJARIC variability by embracing new concepts.

The engineering, procurement and construction industry is making significant efforts in exploring innovation and its application in breakbulk. Bechtel is accelerating Value Modeled Procurement and its trademarked Engineered Logistics to make substantial improvements in predicting outcomes, develop what-if real-time simulation models, and envision the future by replacing traditional drawings with 3D holograms.

The term “innovation” is generic and can cover a wide range of very different topics. In order to understand whether innovation is useful, we need to look at the basics of maturing an idea. After you ideate, if you can standardize, digitize and automate, then you have a chance to innovate. Racing to innovate without allowing the concept to incubate properly can result in unproven, expensive outcomes that can make implementation difficult.

Maybe innovation happens naturally with

the introduction of new technology without us even recognizing it.

Often a singular innovation cannot be identified as solely responsible for an improvement, but rather a collection of incremental advancements over a longer period. Even when there is recognized technology responsible for improved efficiency, like in container shipping, these solutions are not easily accepted in breakbulk. Alternately, some innovation can be immediately disruptive to traditional methods, but it is so obviously beneficial and easily adopted that it feels very natural. Innovation cannot just be trendy; it needs to bear real benefits otherwise breakbulk shipping will continue to be resistant.

NEW TECHNOLOGIES

At Bechtel, we imagine, discover and invest in new technologies – like augmented reality, 3D printing, digital twins, and machine learning artificial intelligence – to force paradigm shifts to achieve better and more competitive results in how we create solutions for efficient project execution. For example, Engineered Logistics is applying known industrial engineering tools to complement expert knowledge in logistics management. We partnered with academic institutions to develop what-if simulation models to create quick, real assessments of costs, schedules, design options and risks. These models are reflective of exactly what would be experienced in the real world with a high degree of outcome confidence. Just as important, the accuracy of the model is driven by solid data with corresponding visualization tools that display a difficult, complex problem in an easily understood format.

As Engineered Logistics expands into concepts such as gig economy, or

the prevalence of short-term contracts or freelance work as opposed to permanent jobs, it offers a new way to execute projects in an optimal, efficient manner.

The leading benefit of such an approach is enabling the application of more advanced planning to integrate with engineering and construction colleagues.

BETTER UTILIZATION

For Bechtel, the future is now.

Unmanned aerial vehicles will be used for more than cool videos – for example, improving safety by allowing remote inspections. LIDAR – a surveying method that measures distance to a target by illuminating that target with a pulsed laser light - will be used for more than a fancy street view of your neighborhood from an online map – for example, simulating turn-by-turn routes to verify difficult navigation. And the odd-looking goggles you see in the mall will be used for more than awesome video gaming – for example, remotely linking several people from around the world to do a cargo inspection virtually from the luxury of their home office.

Bechtel colleagues are proud of our 120-year history of innovation leadership. Yet today, we are pushing the limits further by building on the experience and knowledge of our employees, implementing a sound investment process, and partnering with leading academic and industry organizations. We are on a clear course of innovation with a very strong wind at our back. What will you do to help steer your company towards innovation in breakbulk project cargo shipping? BB Steve “Spo” Spoljaric is traffic and logistics manager, and procurement innovation lead for Bechtel’s oil, gas and chemicals global business unit.

www.breakbulk.com BREAKBULK MAGAZINE 61

thought leaders

and continue to aggressively target project and breakbulk cargoes. At our flagship Breakbulk Europe event in Antwerp in April, “traditional” container lines made their stance crystal clear with their extravagant and wellstaffed stands. The message: we are not going away.

COUNTING THE COSTS

THE LONG GAME Container Lines Ain’t Going Away

P

ure multipurpose vessel, or MPV, operators are deluding themselves if they truly believe that container-shipping companies that have strayed into “their” sector are going to exit stage right any time soon. The common belief is that these box boys won’t waste a moment in returning to their traditional business models, packing ships with only boxes once more, when the containershipping market finally recovers.

There are two flaws in this thinking. One, container shipping is a long way from any decent sort of recovery.

Big 20,000-plus 20-foot-equivalent-unit ships are still arriving, and arriving in trades already heavily oversupplied.

Freight rates may have made a slight recovery on some trades, but it’s nothing to write home about. MPV operators that have noted of late that container lines are increasingly shifting their focus back to their “own” cargoes are not looking at the bigger picture. Fundamentally, there 62 BREAKBULK MAGAZINE www.breakbulk.com

is still excess ship capacity and will be for some time yet.

Hence, project cargoes remain an attractive cargo stream to fill slots.

The second flaw, and perhaps the most

BY CARLY FIELDS important, is that the largest container lines do not view their foray into the heavy-lift business as a short-term diversion. They do not make business-critical decisions on the toss of a coin. The initial move to actively pursue and attract project cargoes was deliberate and marked a shift in strategy to diversify the cargo load to fill ever-larger ships.

They have invested in project cargo handling knowledge and marketing,

There’s no figures posted in the annual accounts of any of the container lines to reveal just how much they have committed to the heavy cargo sector, or how much they intend to inject into it going forward. However, project cargo services for many have been given their own standalone websites and glossy brochures, littered with images of moves to demonstrate their expertise in handling out-of-gauge cargoes. Whether it’s Hapag Lloyd’s “Think Big” campaign, COSCO Shipping Heavy Transports’ emphasis on its “more than 35 years’ experience” in the sector, Maersk’s special cargo “strategic investment,” or CMA CGM’s XXL ambitions, not one has taken its project cargo involvement lightly. And then of course there is MOL who only recently pulled together four group companies under the MOL Project & Heavy Cargo umbrella to present a more cohesive project cargo industry presence.

In my conversations with MPV operators, I frequently hear that the freight market will improve “as soon as the others sector return to their own cargoes.” If MPV operators are pinning all their hopes on that occurrence, I fear that they will be sorely disappointed.

There are, in my view, only two “solutions” to the bleak freight market for MPVs, and I make no excuses for their simplicity. We need less ships and more cargoes, plain and simple. Hoping that project and breakbulk cargo “poachers” will hang up their hats and ride off into the sunset when container and/or dry bulk volumes improve is fanciful. They are in for the long game. Better get used to them. BB Carly Fields has reported on the shipping industry for the past 16 years, covering bunkers and broking and much in between.

ISSUE 2 / 2017

breakbulk europe 2017

EVENT RECAP April 24-26, 2017 • Antwerp Expo • Antwerp, Belgium www.breakbulk.com BREAKBULK MAGAZINE 63

64 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 3 / 2017

conference recap

‘ROUGH RIDE’ TO RETURN TO MULTILATERALISM

BY CARLY FIELDS

Industry needs to find a way back to workable multilateralism to overcome the threat of rising populism and the impact that might have on the breakbulk sector, a prominent lawyer has advised.

Speaking at Breakbulk Europe, Ana Stanič, founder and director of UK-based E&A Law, warned of a “rough ride” ahead as industry adapts to a new way of multilateralism that addresses the loss in confidence in international institutions.

“We’re in a state of paradox of progress where we could go either way,” Stanič said. “We could go into a much

more dangerous world, or we could try to find what the opportunities are.”

She favors a move to a new rulebased system at a multilateral level to replace the system in place today, which is viewed as ineffective.

“Unless we figure out a way, particularly in the EU, to address the institutional efficiencies, there is a strong likelihood that the institution won’t survive.”

Institutions under threat in a world of rising populism and nationalism include the World Bank, the International Monetary Fund, the United Nations and the European Union.

Project cargo companies that survive will be those that “grasp the mettle,”

acknowledge that industry is moving to something new, and position themselves accordingly. “We are living in unprecedented times, and being ahead of the curve is what will make the difference,” Stanič said.

While she sees a rough ride ahead as industry and civil society come up with new solutions, companies in the breakbulk business should play an active role in redrafting and revising to contribute to what “that new thing” is going to look like.

“What is clear is that it’s not going to be what we have today,” she said. “The key is how quickly we are able to put that into place, and how much of a rough, uncertain and chaotic period we have in between.”

From Conference Session “Brexit, Trump and Trade: Fasten Your Seat Belts – Bumpy Ride Ahead”

CARRIERS TOLD TO KICK-START LOW SULFUR TALKS

BY CARLY FIELDS

Project cargo carriers need to urgently ramp up their conversations with shippers about the 2020 deadline for the switch to low-sulfur marine fuels worldwide, an audience at Breakbulk Europe heard.

From Jan. 1, 2020, International Maritime Organization regulations require that the sulfur limit in the heavy fuel oils used as bunker fuel worldwide be reduced from 3.5 percent to no more than 0.5 percent.

Wallenius Wilhelmsen Logistics’ Roger Strevens described the incoming legislation as a “brutal shock” to the industry.

“We’ve had changes before, but this is something completely different,” he said.

Shippers complain that they have been largely left in the dark on what impact this will have on project cargo moves.

Patrick Legault, president of Falcon

International, said there was “very little awareness” of a regulation that is going to have a huge impact. “Ultimately the buyer is going to have to pay for this.”

Robin Meech, Marine and Energy Consulting managing director, added that many shippers he had encountered did not believe the legislation would affect them. “But, if you are a shipper and you put your cargo on a ship that stops because of issues with burning 0.5 percent sulfur fuel that is a problem for you.”

Alex Strogen, senior global category leader at GE Energy, complained that so far only one carrier had proactively approached GE to talk about the issues.

“But it’s huge and we need to talk more,” he said. “Carriers might not have the answers right now, but that’s not an excuse to not start discussing and brainstorming.”

With shippers preparing freight quotes up to four years in advance,

Strogen added that any price spikes as a result of the legislation need to be factored in now. “We can’t have our margins being eroded like that, that is unacceptable.”

Information from carriers on the potential impacts of the regulation will make it easier for shippers to plan and prepare for any price shocks. Without that information, shippers warned that there could be a significant impact on international project cargo trade.

Strogen said: “Carriers have a perception that they will just pass costs along to shippers. But we will just start near shoring, which will cut into project volumes.”

Legault agreed, adding the costlier imports become for shippers, the less interest there will be in trade overseas.

“We need more information so we can inform shippers that they will need to pay more freight,” he said.

From Conference Session “Sulphur Shock: Countdown to 2020” www.breakbulk.com BREAKBULK MAGAZINE 65

66 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 3 / 2017

conference recap

STANDARDIZATION KEY FOR PROJECT INDUSTRY

BY GARY BURROWS

While the project industry is facing a severe downturn in available work, cargo owners and engineering, procurement and construction companies further impact their bottom line by failing to standardize their operations, according to a keynote presentation at Breakbulk Europe.

The project business has “fallen off the cliff,” not only in projects in the works, but in willingness to invest and industry demographics, said Allison J Aschman, corporate director, IPA Capital Solutions.

Beyond the continual fallout from the financial crisis, a range of political and trade issues have buffeted the project owners and EPC companies.

“Companies have cut back drastically on capital spend from 2013 onwards,” Aschman said.

Only 195 projects of more than US$10 million were completed in 2016, the lowest volume since the 1990s, according to IPA, a research and benchmarking

consultant focusing on capital project systems, with 16,000 projects in its database. This is compared to 250 in 2015.

Normally there are about 200 to 300 large projects completed in any year.

One reason for the slippage is that many large-scale projects have been delayed, and so they are excluded from IPA’s completed project database, she said.

The investment landscape has changed among petroleum projects, Aschman added. The number of multibillion-dollar megaprojects sanctioned since 2008 is a fraction of numbers from prior years. Investors are not in a risk-taking mood, so there are fewer speculative investments, and they focus on U.S. and parts of Europe and Middle East, and avoid emerging economies.

Of large-scale onshore projects authorized in 2016, the U.S. led with 44 percent of projects, worth US$18.5 billion. Europe and CIS countries housed 17 percent of projects, but only US$2.4 billion in value.

The Middle East accounted for 12 percent of projects, worth US$15.2 billion. Asia was next at 10 percent (US$6.7 billion), as

its transition from exports and through lower GDP growth. Next is Canada at 7 percent (US$14.4 billion), followed by South America at 6 percent (US$4 billion), Africa at 3 percent (US$1.2 billion), and Australia, 1 percent (US$3.9 billion).

Businesses are not gaining the value they expect from projects, due to schedule slippage, asset problems, cost overruns and because sales of product degrade from the time the projects are sanctioned through the first few years after startup, Aschman said.

With the downturn, companies have been forced to cut back. Already faced with a demographic shift, as older stalwarts are retiring, leaving a “dearth of mid-career professionals,” further staff cuts, reorganizations, less training spend and forced supply chain cost reductions have become the problem rather than a lean-and-mean solution. Worse, engineers and contractors are taking on work “below their fully burdened cost; this is obviously not sustainable,” she said.

Owners and EPCs may know the right processes and practices, but the skill and experience to make them effective is gone or marginalized, Aschman explained. To compensate, they’ve turned more to the contractors, but the long-term solution is to maintain that expertise in-house, she said.

The industry pins its hopes on firming of oil prices over the next 18 months, but it will be merely a shadow of its glory days. Still, at US$55 per gallon, oil prices will move some companies to begin investment anew.

Aschman said exploration and production has become a low-margin industry, and it’s time to start acting like it. This includes longer, steadier production with lower capital cost of production; focusing on cost of goods sold in design of facilities; and scaling projects so they are simple and effective rather than building the biggest and best possible, only to have less-than-optimal production averages due to lower demand.

“Think truly about standardization,” Aschman said. “Really think about how to plan, execute and fund projects differently than in the past. Look at those that are effective and learn from them.”

From Conference Session “Capital Projects Outlook: Project Pipeline and Trends” www.breakbulk.com BREAKBULK MAGAZINE 67

conference recap

CUSTOMERS EXPECT SMART DATA USE

BY CARLY FIELDS

Companies in the project cargo industry might admit to being scared about what digitalization means, but that doesn’t stop customers expecting them to do something useful with data, Tim Paridaens, director, Internet of Things at Deloitte Consulting in Belgium, said at Breakbulk Europe.

Indeed, data-driven intelligence “is expected” today, he said, as customer expectations change.

However, the industry faces problems on the data side, particularly with data gaps, quality and latency. “Most of the data we use today is for diagnostics, so it is focused on the past,” Dieter Degryse, general manager of Transportation Operations EAME at Caterpillar, added.

Caterpillar is exploring sensorenabled technologies for end-to-end tracking of cargo, however Degryse acknowledged that this was not a solution for all. “Sensor strategy at the current price point ($100-$200 per unit) is currently cost prohibitive to put on every machine. But we need to leverage every machine that talks – it’s about trying to strike the right balance.”

Degryse remained convinced that the breakbulk industry will see “significant and rapid change” in this space in the short term, but added that data sharing and collaboration is key.

“Talking about sharing makes people uneasy, but we need a culture shift, as there’s tremendous opportunities for all of us if we try to be open-minded on what is in the realms of possibility,” he said.

From Conference Session “The Internet of Breakbulk Things: When Cargo Talks” 68 BREAKBULK MAGAZINE www.breakbulk.com

BREAKBULK CARGO WILL SURVIVE BREXIT

BY CARLY FIELDS

UK-based forwarder Tuscor Lloyds does not believe that Brexit – Great Britain’s exit from the European Union – will have a marked impact on the breakbulk sector.

Whether the UK opts for a so-called soft or hard Brexit, the project-driven oil and gas, mining and agricultural sectors are largely immune to changing customs regimes and regulatory frameworks as their business models focus on global commodity prices.

“These industries are the largest contributors to the project cargo market, so we don’t expect to see Brexit making a huge impact on the breakbulk sector,” Neel Ratti, Tuscor Lloyds general manager, said at Breakbulk Europe.

“Actually, we think the project cargo sector is much more resilient than the general cargo sector to a market shock such as Brexit.”

That said, Ratti confirmed that the forwarder is still “hoping for the best but preparing for the worst.”

Those preparations include bringing in more skills to its business, drawing up

faster and more precise customs entries and transit documentation, and hiring more clerical staff to process entries quickly. It is also considering creating small brokerage offices at the major cargo exit points.

“Even if it’s too early to know the outcome, we can still make ourselves ready to service projects for our clients,” Ratti said. “It is better to be ready and know what to do instead of reacting to the situation when it’s finally decided. Actually, we can mobilize right now without impacting our operations or investing much money.”

He did raise the concern that without a clear strategy at government level, project cargo and related goods could be held up at crossing points, causing delays, stoppages and congestion. But, taking a macro view, Brexit should not deter project cargo movers from doing business in the region, Ratti added.

“Despite Brexit, the EU and UK will remain easy places to do business,” he said, pointing out that many energy and mining firms already operate in much more hostile and bureaucratic regions than the free markets of Europe.

From Conference Session “Practical Matters: Brexit at the Borders” ISSUE 3 / 2017

booth winners

BEST

BREAKBULK EUROPE

OF

2017

CLOCKWISE FROM TOP LEFT: “Best Design” winner NileDutch; “Most Interactive” winner Liebherr;

“Most Educational” winner Geodis; “Most Welcoming Staff” winner Nirint Shipping BV

www.breakbulk.com BREAKBULK MAGAZINE 69

THE FUTURE IS NOW

SEE TECHNOLOGY INNOVATION IN ACTION: BECHTEL OIL, GAS & CHEMICALS • MICROSOFT • SIEMENS • DHL ALLIANZ GLOBAL CORPORATE & SPECIALTY • ARC MARINE RISK

INNOVATORS WANTED Speaker slots and demo stations available.

Reserve yours today at www.breakbulk.com/bbam2017-techzone

DEMOS & PRESENTATIONS:

Microsoft Hololens, Module Transportation Simulation and Robots

Drones

Smart Solutions for Safe Transit

New Heavy-lift Fixed Boom Telehandlers

Innovative Equipment Maintenance Inspection Software

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.

EUROPEAN FREIGHT FORWARDING INDEX The index, based on European forwarders’ actual and expected freight volumes, rose to 54 in March, compared with 49 in February and 56 for March 2016. Values below 50 on the zero-to-100 scale indicate a decline.

100 90 80

Actual

Forecast

70 60 50 40 30 20 10 0

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 M A M J 2012

2013

2014

2015

2016

2017

Source: Danske Market Equities, www.danskebank.dk www.breakbulk.com BREAKBULK MAGAZINE 71

bb index

EASE OF DOING BUSINESS TOP 50 COUNTRIES RANKED

Economies are ranked on their ease of doing business. A high ease of doing business ranking means the regulatory environment is more conducive to the starting and operation of a local firm. The rankings are determined by sorting the aggregate distance to frontier scores on 10 topics, each consisting of several indicators, giving equal weight to each topic. The rankings for all economies are benchmarked to June 2016.

DEALING WITH PROTECTING TRADING STARTING CONSTRUCTION GETTING REGISTERING GETTING MINORITY PAYING ACROSS ENFORCING RESOLVING

RANK A BUSINESS PERMITS ELECTRICITY PROPERTY CREDIT INVESTORS TAXES BORDERS CONTRACTS INSOLVENCY

New Zealand 1 1 1 34 1 1 1 11 55 13 34 Singapore

2

6

10

10

19 20

Denmark

3 24

6

14

12 32

Hong Kong SAR, China 4

3

5

3

61

1 8 41 19 7

20

3

3

1 42

2 24 21

29 8 28

Korea, Rep 5 11 31 1 39 44 13 23 32 1 4 Norway

6

21

43

12

14 75

9 26

22

United Kingdom

7

16

17

17

47

20

6

10

28

31

United States

8

51

39

36

36

2

41

36

35

20

Sweden

9

15

25

18

22

6

10 75

19 28

4

6 13 5 19

Macedonia, FYR

10

4

11

29

48

16

13

9

27

36

32

Taiwan, China

11

19

3

2

17

62

22

30

68

14

22

Estonia

12

14

9

38

6 32

17

11

42

Finland

13

28

40

18

20 44

70 13 33

30

1

Latvia

14

22

23

42

23

7

42 15 25

23

44

Australia

15

7

2

41

45

5

63 25

3

21

Georgia

16 8 8 39 3 7 7 22 54 16 106

53 21

91

Germany

17 114

12

5

79 32

53 48

Ireland

18 10

38

33

41 32

13 5 47

17

3

90

17

Austria

19 111

49

20

30 62

32 42

Iceland

20

34

70

9

15 62

22 29

1

10

20

66

32

Lithuania

21

29

16

55

2 32

51 27

14

19

6

66

Canada

22

2

57

108

Malaysia

23 112

13

8

7

7 17 46

112

15

40 20

3 61 60

42

46

43

38

TIME CHARTER RATES TOEPFER TRANSPORT MULTIPURPOSE SHIPPING TIME CHARTER INDEX

The index is based on a 12,500 deadweight ton MPP/HL “F-Type” vessel for a six to 12-month time charter, and represents the monthly assessment from operators, owners and brokers. $8,000

TIME CHARTER RATE PER DAY

$7,750 $7,500 $7,250

$7,178

$7,168 $6,963 $6,902 $6,860

$7,000

$6,778

$6,750

$6,645 $6,389

$6,500

$6,280

$6,370 $6,366 $6,335

$6,260

$6,250

$6,017

$6,000

Jan ‘16

Feb ‘16

Mar ‘16

Apr ‘16

May ‘16

Jun ‘16

Jul ‘16

Aug ‘16

Sep ‘16

Oct ‘16

Nov ‘16

Dec ‘16

Jan ‘17

Feb ‘17

Source: Toepfer Transport, www.toepfer-transport.com 72 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 3 / 2017

DEALING WITH PROTECTING TRADING STARTING CONSTRUCTION GETTING REGISTERING GETTING MINORITY PAYING ACROSS ENFORCING RESOLVING

RANK A BUSINESS PERMITS ELECTRICITY PROPERTY CREDIT INVESTORS TAXES BORDERS CONTRACTS INSOLVENCY

Poland

24 107

46

46

38 20

42 47

1

55

Portugal

25

35

50

27 101

70 38

1

19

United Arab Emirates 26

32 53

4 130

4

27 7

11

101

9

1

85

25

104

32

53

53

26

Czech Republic

27

81

13

31

1

68

Netherlands

28

22

87

45

29 82

70 20

1

71

11

France

29

27

20

25

100 82

32 63

1

18

24

Slovenia

30

49

80

16

34 133

9 24

1

119

12

Switzerland

31

71

68

7

16 62

106 18

37

39

45

50 62

32 37

1

29

18

87

1

82

35

Spain

32

85

113

78

Slovak Republic

33

68

103

53

Japan

34

89

60

15

49 82

Kazakhstan

35

45

22

75

18 75

Romania

36

62

95

134

Belarus

37

31

28

24

Armenia

38

9

81

Bulgaria

39

82

48

Russian Federation

40

26

Hungary

41

75

115

7

56

53 70

49

48

2

3 60 119

9

37

7

53 50

1

26

49

5 101

42 99

30

27

69

76

13 20

53 88

48

28

78

104

60 32

13 83

21

49

48

30

57

44

9

44

53

45

140

12

69

121

28 20

81 77

1

8

51 63

Belgium

42

17

44

60

131 101

63 66

1

52

10

Croatia

43

95

128

68

62 75

27 49

1

7

54

Moldova

44

44

165

73

21 32

42 31

34

62

60

Cyprus

45

53

125

63

91 62

27 34

45

139

16

Thailand

46

78

42

37

68

82

27 109

56

51

23

Mexico

47

93

83

98

101

5

53 114

61

40

30

Serbia

47

47

36

92

56 44

70 78

23

61

47

Mauritius

49

48

33

110

98 44

32 45

74

34

39

Italy

50

63

86

51

24 101

42 126

1

108

25

Source: 2017 The World Bank, International Finance Corp., www.doingbusiness.org/rankings

www.breakbulk.com BREAKBULK MAGAZINE 73

photo contest

WONDERS OF TECHNOLOGY PHOTO CONTEST WINNER:

Fast Shipping Limited (UK)

LOCATION: Port of Goole, UK YEAR: 2015 DESCRIPTION: Fast Lines coasters Fast Sus and Fast Julia pick up Wienerberger bricks on pallets deep inland in Vilvoorde, Belgium, and deliver them close to the customer’s doorstep. The aerial show was taken

by Ben O’Leary at Bakehouse Aerial. Drones are sparking a transport revolution. Here they are used for photography, but if legislation follows drones can be used to bring spare parts or medicine to (Fast) vessels.

EDITOR’S PICK: SAL Heavy Lift LOCATION: Rostock, Germany YEAR: 2015 DESCRIPTION: We use hydrodynamic calculations to estimate vessels movements within sea and swell. This helps us to calculate the maximum of accelerations at defined wave heights. These predictions are the basis for the design of tailormade seafastening systems as used on MV Svenja for the transport of oversized monopiles. This seafastening arrangement works completely without additional lashings, leading to utmost efficient and time-saving loading procedures.

Next Issue: Water, Water Everywhere Submission Period: June 7-22 Submit entries at www.breakbulk.com.

Entries will be displayed at Breakbulk Americas and Breakbulk Southeast Asia.

74 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 3 / 2017

MINORITY MOVEMENT Gender Equality Strides Need to be Made Faster.

SUBSCRIBE » The industry’s leading source of information for cargo owners, logisticians and transport specialists.

Breakbulk Magazine is published six times per year. Each issue includes bonus content such as Buyer’s Guide, Annual Industry Directory, Winter Holiday Special, Port Profiles and more.

IRAQ’S WINDING PATH ■ LEBANON HOSTAGE TO POLITICS ■ BECHTEL’S PREDICTABLE INNOVATION

ISSUE 5 / 2016

TIPPING POINT

Domino Effect of a Colla psed Ca rr ier ■ MODERN MODULARIZATION CHALLENGES WHISPERS OF RECOVERY

■ INDIA BUILDS UP STEAM

ISSUE 6 / 2016

NEW DIMENSIONS IN PROJECT CARGO

BETTER WAY TO PAY FORWARDERS?

■

CHINA’S COST CRISIS

■

RECOVERING FROM DISASTERS

ISSUE 1 / 2017

PROJECT CARGO CASE STUDIES REGIONAL REPORTS MARKET ANALYSIS AND COMMENTARY PORTS & TERMINALS

Unique Demands Fuel Equipment Innovation

ENERGY INFRASTRUCTURE

MPVS: THE RELIABLE PERFORMER n BUILDING TOMORROWLAND n A BETTER WAY TO FIX CONTRACTS

OCEAN CARRIERS

ISSUE 2 / 2017

ROAD/RAIL/BARGE/AIR TECHNOLOGY & EQUIPMENT BREAKBULK EVENTS

POWERALIVE STAYING SOURCE OUTLOOK |

2017

Consolidation May Boost Recovery Prospects

To start your subscription, visit breakbulk.com/subscribe/

For advertising, contact Robert Janusauskas at robert@breakbulk.com or call him at +1 281 763 7231.

Oil-powered Politics Won’t Deny Renewables