Breakbulk Magazine Issue 4 / 2018

ISSUE 4 / 2018

THE PUBLICATION FOR THE INDUSTRIAL PROJECT SUPPLY CHAIN INDUSTRY

ENVIRONMENTAL MATTERS Regulatory Burdens to Define Sector

Special Report: SAFETY AND EFFICIENCY

IMPROVE RESULTS WITH BETTER EARLYSTAGE PLANNING

ENERGY UPDATE: NATIONALS LOOK BEYOND OIL

CREATING NEW FIT-FOR-PURPOSE TRAINING MECHANISMS

IN THIS ISSUE Cover Story

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52

26

12

06 THOUGHT LEADER

26 ENERGY UPDATE

Identifying, not Ignoring Supply Chain Risks

Nationals Look Beyond Oil

Regulatory Burdens to Define Sector

10 THOUGHT LEADER

ENVIRONMENTAL MATTERS

KNOWING THE UNKNOWN

32 LOGISTICS

BEYOND DATA COLLECTION

PROJECT CARGO’S ACHILLES’ HEEL

20 LOGISTICS PERSPECTIVE

52 ENERGY UPDATE

Championing Efforts to Eliminate Costly Surprises

Flood of Oil Rigs Require Approval

Smart Analysis Powers Up Big Data

PLANNING TO SUCCEED

60

OUT OF THE BLACK

Challenge of Finding Logistics Training

ASIA’S DECOMMISSIONING TSUNAMI

04 E DITORIAL

39

56 A FRICA’S POWER TRIP 60 MAKING SENSE OF STATISTICS 64 T RUCKING LABOR CRUNCH 72 AVOIDING DISPUTES IN CHINA 76 BREAKBULK EUROPE EVENT RECAP

SPECIAL REPORT

SAFETY & EFFICIENCY

COVER IMAGE VIA SHUTTERSTOCK; ILLUSTRATION BY CATHERINE DORROUGH

www.breakbulk.com BREAKBULK MAGAZINE 3

EDITORIAL

GOOD NEIGHBORS As a global neighbor, Donald Trump has ordered everyone off his lawn.

As Breakbulk went to press, the aftershocks were already rumbling from Trump making good on his threat to impose tariffs on US$34 billion worth of Chinese goods. As China declared that the U.S. “has launched the biggest trade war in economic history,” it quickly retaliated with a commensurate amount of tariffs on American goods.

Trump promised to up the ante with another US$216 billion in tariffs, and threatened to escalate tariffs on as much as US$450 billion in all, according to Gary Burrows reports.

Less than a month earlier he left in shambles U.S. relations with the world’s leading nations.

Having already imposed tariffs on foreign steel, aluminum and other manufactured goods from the European Union, China and his North American neighbors, Trump goaded his Group of Seven partners with the choice of further tariffs or to simply cease trading with them, before he boarded Air Force One to meet with North Korea’s Kim Jong Un. A picture may be worth a thousand words, but the image of Trump “negotiating” with the leaders of Canada, France, Germany, Italy, Japan and the UK leaves one speechless.

As the NATO summit in Brussels approached, who knows whatever divisiveness will rear its ugly head? There should be no surprises at the former reality show mogul’s actions, as he ran for the U.S. presidency promising such outrage.

The problem is, Trump’s actions promise to unravel world trade just as the project cargo industry seems to be finally righting itself after its historic downturn over the last several years.

While he attempts to apply punitive 4 BREAKBULK MAGAZINE www.breakbulk.com

pressure on its trade competitors, U.S. companies are feeling the sting as manufacturers step forward to show how US$75 billion in tariffs imposed on the U.S. are putting them at a disadvantage as increasing costs of parts and materials make their finished products uncompetitive in the global market.

Trump’s beef with China has a legitimate basis: the World Trade Organization partner has long demonstrated a pattern of unfair trade practices and pilfering U.S. intellectual property.

But as China continues to shift its role as a leading economic power, progress has been made through conventional trade forums, while the opposite is already true of Trump’s get-tough policy. As China progresses with global partners in its Belt and Road Initiative, and it grows its own market as a source for manufactured goods, its stature grows unabated.

Everything about Trump’s presidential tenure has been unprecedented. From his reality TV days, Trump hit upon the conclusion that “dividing people is more profitable than uniting them,” as one writer posited.

The thing about precedent, though, is that it is tethered to history and to familiar processes and protocols that provide the means to productively discuss and reach compromise. It’s also a fragile environment where a bullish, winner-take-all approach leaves everything in shards.

Trump tweets with hyperbole that the system is already broken and he alone knows the way to save the day. He defiantly stares down his global partners and expects them to blink. But at the same time, his bullying in global channels throws up barriers to negotiation while those within his own administration squabble about how to proceed.

All of this picks at the last thread of optimism the project industry has clung to that a turnaround is at hand.

But then any hand-wringing may be wasted worry and, like his TV show, Trump may have the showstopper to pull out the perfect ending just before the credits roll.

Stay tuned.

EDITORIAL DIRECTOR

Gary G. Burrows / +1 904 535 5460 gburrows@breakbulk.com

NEWS EDITOR

Carly Fields cfields@breakbulk.com

HEAD DESIGNER Catherine Dorrough

DESIGNER Mark Clubb

REPORTERS

Paul Scott Abbott Mike King Amy McLellan

Lori Musser Stephen Spark Andrew Willis

BREAKBULK EDITORIAL BOARD John Amos Amos Logistics

Ed Bastian BBC Chartering Murray Cooper McDermott International Inc. Dennis Devlin Geodis John Hark Bertling Project Logistics Dennis Mottola Bechtel Corp.

William Moyersoen ArcelorMittal Antwerp Logistics Albert Pegg Atlas Breakbulk Alliance Dirk Visser Dynamar D.V. Grant Wattman Agility Project Logistics

PORTFOLIO DIRECTOR

Nick Davison Nick.Davison@ite-exhibitions.com

ACCOUNT MANAGER

Robert Janusauskas / +353 21 477 3808 rjanusauskas@breakbulk.com

SUBSCRIPTIONS

To subscribe, email gburrows@breakbulk.com, or call from inside the U.S. +1 904 535 5460 between 8:00 am and 5:00 pm EST. You can also subscribe at www.breakbulk.com/subscribe.

A publication of ITE Group plc Transport & Logistics business 105 Salisbury Road London NW6 6RG, UK.

ISSUE 4 / 2018

THOUGHT LEADERS

KNOWING THE UNKNOWN IDENTIFYING, NOT IGNORING SUPPLY CHAIN RISKS

E

BY DENNIS DEVLIN GEODIS

IF YOU WAIT FOR PEOPLE TO COME TO YOU, YOU’LL ONLY GET SMALL PROBLEMS. YOU MUST GO AND FIND THEM. THE BIG PROBLEMS ARE WHERE PEOPLE DON’T REALIZE THEY HAVE ONE IN THE FIRST PLACE.” – W. Edwards Deming

veryone involved in large industrial projects wants to avoid and prevent problems associated with Health, Safety, Security and Environment, or HSSE, issues, cargo damage, financial loss, schedule, regulatory and trade compliance, and the reputational issues such problems could pose. Avoiding those problems is vital and recognizing them is the first step.

And as Donald Rumsfeld famously said: “There are also unknown unknowns – the ones we don’t know we don’t know … it is the latter category that tend to be the difficult ones.” We can try, but we cannot necessarily list all the risks which we cannot foresee; those “unknown unknowns.”

Let’s focus instead on understanding and mitigating risks we can foresee, but which we might not consider. Sometimes, the risks inherent in project logistics can be understood and mitigated, but they are not recognized, or they are ignored. Slavoj Žižek, the Slovenian philosopher (far less famously than Donald Rumsfeld) calls these the “unknown knowns,” things that we know, but which we ignore. Many risks in project logistics fall into this category: things people should consider – risks people understand – but risks which they ignore.

POTENTIAL PITFALLS IN PROJECT LOGISTICS

The list of things that can go wrong in project logistics is long. One must consider many potential risks in planning and executing project logistics, from the obvious technical aspects of lifting, lashing and transporting large and heavy cargo, to weather, route feasibility, pier, road and bridge strength, traffic and transport permits, the impact on the public, as well as financial risks, including the financial strength of subcontractors. Regulatory compliance risks must be considered too.

And one must not ignore the reputational risk associated with potential safety concerns or (avoidable) accidents, technical failures or other problems. And there are many other risks not mentioned here. The list is very long.

Consider the famous case of large modules

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being transported on small roads from the U.S. Pacific Northwest to Alberta, Canada, for an oil sands project for one of the oil majors. The public opposition to that module transport program through which the cargo was to pass in the U.S. northwestern states was, arguably, very predictable: People don’t like their only road home to be blocked for hours, even at night. John Q. Public is concerned when emergency services such as fire trucks and ambulances are blocked from passing on the small, two-lane roads because of large cargo transports. Public concern to that module transport program had a major impact on the project. The cost of the delays associated with reducing the size of the modules is said to have been about US$2 billion.

Why would anyone ignore those type of risks? There are many possible reasons.

Organizational dysfunction and the lack of collaboration between engineering and logistics may sometimes be responsible.

IDENTIFYING ‘UNKNOWN KNOWNS’

Consider some of the obvious “unknown knowns” that can cause major problems and costs for project logistics. There is the classic case of designing and fabricating cargo that is too large to physically move to its destination due to physical route constraints such as low overhead bridges and/or other obstructions; building a “boat in the basement.”

In many cases, the route constraints were there when the cargo was designed, and were known, if anyone bothered to do a route study before designing the cargo. Many of us have horror stories of this, but it continues to occur.

People need to consider route surveys. LIDAR technology has significantly reduced this risk.

Another “unknown known” is when lifting fixtures on large, heavy equipment like tanks and vessels are designed, but the need for lashing fixtures is ignored. This can result in lifting fixtures, flanges, valves and other projections being used (sometimes unsafely) to lash cargo on board barges or ships, putting stress on these fixtures for which they were not designed.

ISSUE 4 / 2018

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THOUGHT LEADERS And how often are cargoes unlashed and stowage plans revised during a voyage?

And what about the risk of financial insolvency? In the not-so-distant past when some major ocean carriers went bankrupt, ships were arrested, and shippers had problems getting their cargo, or cargo was discharged in the first available port. The fact that these carriers were in financial dire straits was public CREDIT: GEODIS information, and well known. Yet many people kept booking cargo with them.

Also, consider the smaller but still important issue of saddle placement on large tanks and vessels. Often, saddles are placed with a view to the trailer configuration at origin, but not the trailer configuration at destination.

The same applies for lashing plans.

There is a strong focus on developing detailed method statements for lifting cargo, and for detailed packing specifications. But even when detailed stowage plans are developed, how often is cargo lashing done on an ad hoc basis without regard for the plans?

This can cause delays and extra, unnecessary lifts to adjust saddle positions at destination. Yet it’s likely that the trailer configuration at destination was already known.

What can be done to avoid these problems? The cliché that communication is the key is a cliché because it’s true. Close coordination between those involved in engineering and design, fabrication, and logistics functions can help to identify hazards and avoid some of the potential problems which are known.

Having detailed procedures and then following those procedures is another important tool, as is understanding Incoterms thoroughly, and using them correctly. But it all starts with understanding that there are “unknown knowns” right in front of us and trying hard to recognize them. BB Dennis Devlin is director – IP business development, capital projects North America for GEODIS, based in Houston.

Devlin is also a member of Breakbulk’s editorial board.

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www.wigginslift.com 04/12/2017 ISSUE 4 /13:53 2018

IN MEMORIAM

GOWANS KNOWN FOR SKILL, EXPERTISE G

regory “Greg” Gowans, an industrial project logistics expert whose career spanned several decades, and a highly respected member of the project cargo industry, passed away June 2, in his home in Harwich Port, Massachusetts.

The Breakbulk Events & Media advisor, speaker, instructor and moderator inspired many in the field for his knowledge, attention-to-detail and professionalism. Described as “the expert’s expert” on project logistics, Gowans combined his passion for his work with an altruistic and public-spirited demeanor, supporting those in the project cargo sector as well as the industry itself.

Gowans, who turned 60 on May 31, grew up in Sault Ste. Marie, in the Canadian province of Ontario. After working in various logistics positions at primary steel producer Algoma in the city, he got his first taste of the project market at power business Babcock & Wilcox’s, or B&W, facility in the province’s city of Cambridge.

Gowans worked in logistics coordination and instruction as the export boom of the late 1980s-early 1990s fueled global growth.

Ten years after starting at B&W, he moved to ASEA Brown Boveri, or ABB, where he was responsible for all international transport for U.S. operations.

Rail company Alstom acquired ABB’s industrial and boiler business in 2000 and Gowans moved with the sale, with his career at Alstom encompassing work on expediting procurement and quality assurance and control.

Gowans’ last three years at Alstom saw him lead global quality, reporting directly to his division’s president. In 2008, he moved to Houston, becoming director for global logistics at engineering, procurement and construction firm Chicago Bridge & Iron Co. In 2012, he

joined engineering business CH2M Hill, serving as director of logistics and expediting through 2016.

Gowans held a bachelor’s degree in Commerce and International Business from Queen’s University, Kingston, Ontario, and was also accredited by the Canadian Institute of Traffic and Transportation. Aside from his work with Breakbulk, he was a member of the Exporters Competitive Maritime Council, at one point serving as chairman. Gowans was a supporter of a number of charities, including Star of Hope Mission, which supports homeless adults and children in Houston. In 2009-2012 he was involved in beneficiary charity review and vetting for an organization that became part of the United Way of Greater Houston.

He is survived by wife Phyllis and daughter Hannah.

www.breakbulk.com BREAKBULK MAGAZINE 9

THOUGHT LEADERS

BEYOND DATA COLLECTION SMART ANALYSIS POWERS UP BIG DATA

BY ALEX BORDEI BIGSTEP

estimated 28 percent digitization in the commercial transportation industry.

Project cargo companies collect a lot of data, but most make little use of it.

Restructuring businesses to make use of the data, improve routes and making personnel more efficient is a must.

IMPROVING PORT TIMES

For a more applied approach I’d like to look at port call optimization, one area where big data can turn data to cost reduction.

Breakbulk and project cargo-carrying ship operators already monitor their ships to get data on how long their ships remain in ports. There are usually significant differences between port times depending on the type of vessel and cargo, the captain, and so on.

By monitoring ships and their length of stay in ports, an operator can estimate whether a particular captain takes too long in some ports and then investigate why. Based on the investigation, they can take action and improve average times of staying in port.

The more accurate and diverse the data sets, the better the analysis that can be run. The data can also be set against data from ships of other operators as well for better personnel management insights.

Big data can be a powerful tool for the project cargo and breakbulk industry. I have focused here on just one small use case but uses are virtually endless as long as there is data. BB Alex Bordei is director of product and development at Bigstep, which focuses on helping organizations make sense of their data by providing a full-stack big data ecosystem running in a high-performance bare metal cloud. Bordei has more than 10 years of experience in architecting and developing high performance distributed services for the cloud market.

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ISSUE 4 / 2018

CREDIT: SHUTTERSTOCK

T

ransportation is one field where big data is not used nearly enough.

From route optimization to personnel optimization, big data paves one direction project cargo and breakbulk companies must take.

Crude oil prices have more than doubled in the past two years, and as a result, costs have increased for more transportation companies. Pollution is another issue that project cargo movers did not have to address decades back. Yet with globalization, the transportation industry is growing, and efficiency is needed more than ever.

Many reports for 2017 show that transportation is lagging in digitization and technological improvements. One report, citing a PricewaterhouseCoopers global industry survey, finds only an

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COVER STORY

ENVIRONMENTAL MATTERS Regulatory Burdens to Define Sector

P

rotection of the environment has fast become the overarching aim of commercial business today, swayed, as it is, by ever-rigorous public opinion.

Witness the breakneck public backlash against plastic, resulting in the rapid disappearance of single-use plastic products: no more straws for your smoothies; home Tupperware needed for deli fill-ups; and the swansong for disposable cutlery at the weekend barbeque.

In the transportation and logistics industry, sustainability and, by extension protection, of the environment is primarily driven by regulation and is not optional. That regulatory focus has only intensified over the past few years, as green movements have captured the public’s imagination and pushed them to demand more of this industry.

Robust clean air legislation in U.S. states, most famously California, and European emission standards for trucks have already influenced the profile of the land-based, out-of-gauge moving equipment fleet in the developed world. But most recently the environmental focus has shifted to the seaborne fleet, a sector that was famously left out of the Paris Agreement on Climate Change, but has fought back to ensure that it does its bit for the environment. In April this year, the International Maritime Organisation’s Marine Environment Protection Committee, or MEPC, adopted an Initial Strategy for reducing greenhouse gas emissions from international shipping. While shipping is still far and away the most economical way to transport breakbulk and project cargoes worldwide, there is still a material cost to the environment that this new legislation hopes to address.

Speaking at Posidonia shipping week in Athens, Greece, in June, IMO Secretary General Kitack Lim said that he could not stress strongly enough how significant this agreement is. “For the first time, there is a clear policy commitment to a complete phaseout of greenhouse gas emissions from ships, a specific linkage to the Paris Agreement and a series of clear levels of ambition – including at least a 50 percent cut in emissions from the sector by 2050.”

He described it as a “landmark decision for both the environment and for human health,” demonstrating a clear commitment by the IMO to ensuring shipping meets its environmental obligations.

12 BREAKBULK MAGAZINE www.breakbulk.com

COSTLY CHALLENGES AHEAD

Roger Strevens, global head of sustainability at Wallenius Wilhelmsen, has watched the green drive escalate and noted to Breakbulk that shippers and ship operators can no longer cruise through “greening” operations.

“The low-hanging fruit of sustainability improvement have almost all been picked. What’s left are the thorny, difficult and costly challenges. These are becoming ever more impactful,” Strevens said. For example, ballast water regulation will be a driver of early recycling of some tonnage due to the high capital expenditure costs, while the global sulfur cap change marks the first time an environmental regulatory development becomes a commercial issue between shippers and carriers.

The issue for shipowners and managers is that the big game-changers on the near horizon for environmental planning and compliance represent expensive technologies and/ or resource-heavy solutions.

“In such a challenging market where carriers and shipowners are under so much pressure, it’s hard for them to consider such costs without immediate financial return,” said Ruben Oggel, managing director of Columbia Shipmanagement (Singapore).

CSM manages a large and diversified fleet, including multipurpose vessels, and bears what it describes as a “tremendous” weight of responsibility to meet high standards of regulation and compliance across the board. Last year it appointed an in-house project team to formally research the operational and financial impacts of compliance with the Ballast Water Management Convention through the analysis of the many technological systems on offer promising compliance.

Lim acknowledges that in many cases, shipowners will find they have more than one way to meet new regulations.

They might, for example, have to choose between retrofitting onboard systems or equipment, or radically changing operational procedures. And in some cases, even ending a ship’s economic lifetime early and investing in new ones.

There are also fuel quantity and quality issues to consider: how can multipurpose tramp operators ensure they can get sufficient compliant and quality fuel when and where needed?

“It’s tough enough for big liner operators who at least know where their vessels will be months in advance and can plan bunkering with dependable suppliers accordingly,” Strevens said.

ISSUE 4 / 2018

IMAGES VIA SHUTTERSTOCK; PHOTO ILLUSTRATION BY CATHERINE DORROUGH

BY CARLY FIELDS

THE LOW-HANGING FRUIT OF SUSTAINABILITY IMPROVEMENT HAVE ALMOST ALL BEEN PICKED. WHAT’S LEFT ARE THE THORNY, DIFFICULT AND COSTLY CHALLENGES. THESE ARE BECOMING EVER MORE IMPACTFUL.” – Roger Strevens, Wallenius Wilhelmsen

www.breakbulk.com BREAKBULK MAGAZINE 13

COVER STORY

YOU NEED LOOK NO FURTHER THAN THE GROWING VOLUME OF RENEWABLE ENERGY CARGO BEING TRANSPORTED GLOBALLY. THE BALANCE OF POWER SEEMS TO HAVE MOVED SIGNIFICANTLY.” – Nicola Pacifico, AAL

CREDIT: AAL

DEEP-ROOTED SUSTAINABILITY

For shippers, protection of the environment goes beyond a simple box-checking exercise for public shareholders or for financials.

Group SCM starts its environmental compliance journey at the request for qualification process in its transport and logistics division. Matthieu Jeannin, category manager for logistics and warehousing activities at the group, includes environmental obligations in his qualification process for all vendors.

As a group, ABB has a baseline commitment to the environment, building greener ship propulsion units and investigating the feasibility of hybrid marine electric propulsion systems for semi-submersible heavy-lift vessels. On land, it has made a sizable sponsorship to the FIA Formula E Championship, a class of auto racing that uses only electricpowered cars.

Thomas Skellingsted, ABB vice president, global head heavy-lift and project operations, added that the manufacturer is also developing better battery capacity and storage for electric units, plus it is looking into solar panels and how it can better optimize the sun’s power.

Multipurpose vessel operator AAL notes the increased “green” cargo being carried on its ships.

Nicola Pacifico, head of transport engineering at AAL, said: “You need look no further than the growing volume of renewable energy cargo being transported globally and the multiplication of manufacturing hubs for giant wind energy components – literally on every continent. Even taking into 14 BREAKBULK MAGAZINE www.breakbulk.com

account the slowdown in oil and gas sector projects due to global price instability, the balance of power seems to have moved significantly.”

ABB also measures carbon dioxide and emissions and requires green key performance indicators from its suppliers on a quarterly basis as part of its supplier qualification. Skellingsted said that the output ABB receives varies greatly: “It’s a rain forest; sometimes they don’t even know what the KPIs [key performance indicators] are. But we are getting there.”

Skellingsted adds that ABB wants to make the world a better and greener place to live in and is content to take on a mentoring role in that respect.

AAL, too, takes its environmental responsibilities seriously and couples education with technology to optimize ocean transportation to ensure the longevity of the sector and the wider environment.

“We believe that investing in education of our excellent sea and land-based personnel together with continuous research and development will provide AAL with many more environmental engineering solutions for a better future,” Pacifico said.

ONLY THE BRAVE

Pacifico also sees a silver lining in the demands of environmental shipping legislation: “The compliance with cost-heavy and upcoming IMO environment protection regulations, like ballast water management and the 2020 sulfur emissions cap, could, most likely, be a reason for the global ISSUE 4 / 2018

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COVER STORY

HIGH-PROFILE INVASIVE SPECIES

Pictured clockwise from top left: ASIAN GREEN MUSSEL Native to: Asia Introduced to: Caribbean, South Atlantic, South Pacific Fouls hydrotechnical constructions, ships and aquaculture infrastructure.

EUROPEAN FAN WORM Native to: Northeast Atlantic, Mediterranean Introduced to: Southwest Atlantic, Southern Australia, New Zealand, Northwest Pacific Forms dense, mat-like populations on the sea floor. Competes with native filter feeders and fouls artificial structures.

NORTH PACIFIC SEA STAR Native to: Northwest Pacific Introduced to: Northeast Pacific, Southern Australia Voracious carnivorous feeders and prolific breeders, they impact mollusc aquaculture and wild fisheries.

EUROPEAN GREEN CRAB Native to: Northeast Atlantic and Baltic Sea Introduced to: North America, Australia Preys on molluscs and gastropods, and out-competes native species for food.

Other high-profile invasive species include – but are not limited to – Asian paddle crabs, colonial tunicates, blackstriped mussels, bay barnacles, wakame seaweed, and European shore crab. Pathogens, including cholera, can also be transported by ships.

MPV fleet to shrink, as scrapping will have to take place probably sooner than planned for many of the very old vessels, as it just won’t make economic sense to bring them up to scratch.”

Newbuilds – many on hold due to the uncertainty of the regulations and questions on fuel availability – will replace the old fleet, but this will likely take many years and will require a global market recovery to be sustainable.

“We at AAL, can foresee a period in between where all the major players in the world industry will opt for a natural selection of ships to comply with their environmental commitments and responsibilities similar to what was done before for the offshore [sector] with the Offshore Vessel Inspection Database, for example. AAL is ready for that moment to come.”

However, with each shipowner setting its own investment horizon, this ultimately dictates the potential uptake and investment in these expensive greener technologies.

“A shipowner with a short-term view is chasing immediate and higher profits – so will naturally be reticent to invest in the future,” Oggel said. “On the other hand, someone with a 20-year outlook is far more willing to make investments that will benefit them and the market longer-term.”

But environmental considerations do not need to be diametrically opposed to economic interests, Strevens notes.

“We’d maintain that if you’re doing it right, they’re one and the same thing.” Take, for example, in-water hull cleaning systems, he explained. A clean hull reduces all emissions to air, mitigates an invasive species risk – if the cleaning system captures what it removes – and avoids fuel over-consumption. “It’s surprising that these systems aren’t better known given the benefits they offer.”

MORE SURPRISES TO COME

There may also be more environment-related surprises on the horizon. On top of its ambitious GHG emission targets, the IMO has specified 13 candidate measures that its MEPC Committee will consider for implementation in the short term. On that list, Strevens points to three that focus on the vessel owner/operator: tweaking the Energy Efficiency Design Index – which will likely only affect new vessels; operational efficiency levels; and speed-related measures.

“Speed may seem like a deceptively straightforward regulatory tool, but in reality it’s anything but,” he said.

“To begin with, what do we actually mean when we talk about reduced speed: speed on the water or over land. Then there are the policy issues. For example, in the interests of fairness it might seem that percentage speed reduction should be applied across a given segment, however that would affect inefficient and efficient vessels in the same way – hardly a desirable outcome.

“Whatever measures are adopted, it can be safely concluded that they will be impactful. If they include speedrelated measures, there is the very real prospect of changing the service the industry offers its customers. That’d be another big first for environmental regulation,” Strevens said. “In the face of such tumult, we believe the best and only approach is to engage in both innovation and the regulatory process. Nothing else can better help with anticipating what’s coming.”

Source: International Maritime Organization, IMO.com IMAGES VIA SHUTTERSTOCK

16 BREAKBULK MAGAZINE www.breakbulk.com

Carly Fields has reported on the shipping industry for the past 18 years, covering bunkers and broking and much in between.

ISSUE 4 / 2018

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COVER STORY

ANSWERING SHIP RECYCLING QUESTIONS It is no longer acceptable to hide behind corporate veils or plead ignorance when it comes to meeting environmental responsibilities – in fact, it hasn’t been acceptable for quite some time. Yet, there are still industry practices that have avoided undue scrutiny.

Multipurpose vessel, auto carrier and heavy-lift ship recycling is one such area.

At the time of chartering an MPV fresh out of the shipyard, blue-chip shippers might be forgiven for not considering the end-of-life choices for that particular ship. After all, that could take place another 15-20 years after the move has finished. But investors, lenders and some shippers are starting to pay more attention to practices where regulation is weak, including ship recycling.

“Some kinds of recycling have horrifying social and environmental consequences,” explained Roger Strevens, global head of sustainability at Wallenius Wilhelmsen. “A small, but growing, number of stakeholders do not want to be associated with carriers that engage

in ‘bad beaching.’ ” The trend towards greater transparency is partially driving this effect.

In the breakbulk sector, blue-chip shippers will likely soon start asking to evaluate a carrier’s policy for ship recycling – even if they are chartering a brand new ship. Recycling of a vessel can be done in a responsible way or it can be done in a truly irresponsible way with levels in between.

“Our world is changing very fast,” Strevens said. “Customers want low price and transparency on performance and very clear, strong lines of dialogue on what you are doing to look out for our interests on the environment.”

He points to the newly launched Ship Recycling Transparency Initiative as a case in point. In March 2018, a group of shipowners, investors and non-governmental organizations launched the initiative to help stakeholders take informed decisions in relation to carriers’ recycling policies, practices and performance. The initiative is backed by Forum for the Future, the Sustainable Shipping Initiative, and a number of leading shipping firms, including Wallenius

Wilhelmsen. The program encourages the voluntary disclosure of detailed ship recycling data by shipowners to ensure financial stakeholders, shipping operators, and cargo owners are better informed about how ships are processed at the end of their working life.

“We have been recycling our vessels in a environmentally and socially responsible way for many years, so we are pleased to raise the matter with customers. After all, transparency in recycling is strongly in their interests.” Strevens said.

As more breakbulk shippers get on board, recycling transparency will become an industry de-facto requirement. Multipurpose vessel operators will then need to ensure that they have a responsible recycling policy in place, or risk losing the business. BB

TOP: Shipbreakers in Mumbai, India, make breaking points on the hull of a vessel. ABOVE: Workers carry an iron plate that weighs several hundred pounds. / CREDIT: PICTURE ALLIANCE / MARCO BECHER / NEWSCOM 18 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 4 / 2018

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LOGISTICS PERSPECTIVES

Bechtel’s successful shipment of a 700-ton cold box module from Spain to Australia relied on several months of planning. / CREDIT: BECHTEL

20 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 4 / 2018

PLANNING TO SUCCEED Championing Efforts to Eliminate Costly Surprises

BY PAUL SCOTT ABBOTT

W

hen industry expert Margaret Vaughan extols the virtues of advance planning in project cargo logistics success, she’s prone to quote Benjamin Franklin and engage in a bit of cleverly demonstrative hand play.

First, the hand play: Vaughan, who has more than three decades of experience in project cargo logistics, including 12 years with Wood Group, begins by holding up one hand.

Then Houston-based Vaughan, who chairs the Exporters Competitive Maritime Council, lifts up one finger as she ticks off what she proclaims are “the five Ps” of project cargo management: “Always remember your five Ps: Proper project planning prevents poor performance. Oh wait, that’s six.

Wait a minute. I didn’t plan this out properly.”

Beneath such humor lies a vital reality also embodied in the Franklin quote: “If you fail to plan, you plan to fail.” It’s a truth that, if ignored, can often result in costly surprises.

While Vaughan is viewing the essentialness of planning from the standpoint of her most recent role with an engineering, procurement and construction company employer, it’s a tenet ascribed to by leaders of other EPCs, as well as the third-party logistics sphere.

Speaking to Breakbulk, project logistics veterans at EPCs Fluor and

Bechtel and third-party logistics firm C.H. Robinson each homed in on the necessity of planning.

Cyril Joseph Varghese, Fluor’s United Arab Emirates-based global logistics director for strategy and commercial, said the EPC’s information management process, including its service-marked Zero-Base Execution approach, helps ensure clients delivery certainty and capital efficiency, with safety and operability at its foundation.

“By engaging in advanced work packaging, we develop the path of construction in the design phase, with a focus on safety, quality and productivity,” Varghese said, having worked in project logistics for 15 years.

freight rates and various specific data analyses are all applied to Fluor’s estimating and planning capabilities, inclusive of detailed work packaging, Varghese said. “Our shipping processes also stem from the advance work packaging philosophies. Shipments to site are defined by the way and sequence in which the site wants the materials to be received.

“This type of early planning helps provide delivery certainty for a project, creating confidence that projects can achieve their planned schedule and cost goals,” he said.

“This is accomplished through greater construction predictability, enhanced safety and improved productivity.”

SUCCESSFUL CONSTRUCTION DEPENDS ON HOW EFFECTIVELY WE PLAN AND FLOW INFORMATION BETWEEN THE DIFFERENT DISCIPLINES – ENGINEERING, PROCUREMENT AND CONSTRUCTION.” – Andrew Young, Bechtel Oil, Gas & Chemicals

“We generate details on the materials, equipment, tools and schedule needed for work to take place at site, creating a seamless construction path for craft teams. Once at site, work takes place in that planned, orderly sequence and follows that path of construction.”

Experiences on previous projects, market intelligence, ability to predict

FLEXIBILITY STILL KEY

Andrew Young, a 23-year industry veteran who serves as functional logistics manager and critical equipment transport subject matter expert for Bechtel Oil, Gas & Chemicals, said it is imperative for each of the three EPC arenas to engage in ongoing communications while www.breakbulk.com BREAKBULK MAGAZINE 21

clause, and, as dates of cargo readiness and site need shifted, benefited from flexibility to slow down delivery and commensurately reduce costs.

EARLY ROLE DEBATED

THIS PAGE: Shah Gas Development in the United Arab Emirates. Fluor led conceptual

development and front-end design and is program management consultant for engineering, procurement, and construction. / CREDIT: FLUOR

being able to adapt to on-site changes.

“Construction is where we physically deliver a project to a client,” said Houston-based Young. “But successful construction depends on how effectively we plan and flow information between the different disciplines – engineering, procurement and construction.

“For sure, the quality and timing of planning is important, but it is continuous planning and communication that ensures results,” Young said. “EPC projects are dynamic, and we need to be flexible in planning 22 BREAKBULK MAGAZINE

to ensure we maintain an efficient and effective supply chain. Early planning may help set logistics strategy, but that can soon be changed by environmental conditions on site. Being able to identify and track potential future changes and being flexible enough to manage change when it comes is the key to success.”

Young gave an example of a 700-ton cold box module being shipped from Spain to Australia for a liquefied natural gas project. Bechtel booked an appropriately equipped vessel eight months in advance of shipment, with a narrowing

Whereas Vaughan said she believes it is “absolutely” essential that all parties – from EPCs and their clients to forwarders and 3PLs – have a seat at the project planning table from the outset, Bechtel’s Young said he believes such joint early involvement isn’t always merited. It depends, he said, upon the EPC. “My concerns are that, by involving logistics service providers from the outset when there is only preliminary data available, EPCs could be unnecessarily exercising the market or could be partnering too early,” Young said.

However, Fluor’s Varghese sided with Vaughan, commenting: “Early involvement of all parties, including forwarders, creates value for projects.

We engage with vendors and contractors early in the project planning to develop solutions that provide the greatest capital efficiency and schedule certainty to a project.”

Not surprisingly, Frank Guzman, Texas-based director of project logistics for Fortune 500 third-party logistics provider C.H. Robinson, is a proponent of broad-ranging early engagement as well.

“Yes, it absolutely makes sense for ISSUE 4 / 2018

LOGISTICS PERSPECTIVES

missing things are surprises, and surprises always cost money.”

Taking a holistic view in advance is imperative, according to Vaughan, so that potential challenges and obstacles are taken into consideration. Whereas Vaughan prefers to use a focused risk assessment rather than a traditional – and, in Vaughan’s eyes, “kind of cutesy” – SWOT analysis that charts strengths, weaknesses, opportunities and threats, she believes a thorough advance evaluation is indispensable.

“It’s Murphy’s law – if something can go wrong, it will,” Vaughan said.

“Well, if you know it can go wrong, you can actually put in place mitigations.

At least you’re aware of it, and your client is aware of it.”

PREPARE FOR THE UNEXPECTED 3PLs to have a seat at the table from the beginning,” Guzman said. “At C.H. Robinson, CREDIT: C.H. ROBINSON we can help project owners make informed decisions about their vendor and fabrication selection with our comparative cost analysis and mode evaluation services. And, as long as the project owner clearly defines roles and the scope of work between all parties involved, the EPC is, in our experience, collaborative and transparent. Problems tend to occur when there is ambiguity.”

An electrostatic treater and rundown cooler moving from Alberta to Iraq.

VISIBILITY HELD VITAL

Guzman, who has been engaged in project management for more than two decades, said such transparency can be fostered by early involvement of the full spectrum of parties.

“As you plan for transportation and logistics for capital projects, information management and advance planning are equal in importance to the actual construction,” Guzman said.

“They are dependent on each other.

“Information that flows to and from the construction site is critical to managing change and risk,” he said.

“You are dealing with global sourcing from numerous suppliers, vendors and manufacturers. There are also numerous parties involved, including, 24 BREAKBULK MAGAZINE www.breakbulk.com

but not limited to, the project owner; the EPC; the original equipment manufacturers, or OEMs; asset-based carriers; and regulatory agencies. The control, management and visibility of information to and from these parties are all vital to the success and overall safety and timely delivery of the project.”

Early planning yields more time for designing and building the structure for work breakdowns while supporting development of contingency and emergency plans, Guzman said.

“You can also better align all of the stakeholders and build ironclad procedures and communication channels between parties,” he said, concluding, “There is no downside to early planning.”

HOLISTIC VIEW CRUCIAL

Vaughan would seem to be on the same figurative page as Guzman.

“I’ve always said the two most critical aspects of any project are documentation and communication,” Vaughan said. “They come into play when you’re planning the project, looking at everything that can go wrong, everything that’s going to happen, everything that has to happen. You’re looking at it from a 50,000-foot perspective, and then you start drilling down.

“If you don’t properly plan, then you miss things,” Vaughan said. “And

Vaughan gave the example of a ship’s captain, with a booking note for full liner terms of hooked-on/hookedoff, who allowed use of the ship’s lifting gear for cargo discharge at Corpus Christi but would not permit use of his crew because he was annoyed night discharge would not be undertaken due to a lack of lighting plans.

She said that in all her 30-plus years in the business, she had never encountered such a circumstance, but, while having to bring a crew 200 miles from Houston to address the immediate concern, she now always plans for the remote possibility a similar situation should arise in the future.

“You plan for a worst-case scenario, and you hope for the best,” Vaughan said. “Planning is more than planning particular shipments. You have to look at everything in the whole schedule.”

That includes planning around critical path elements, with the understanding path elements may shift, thus requiring nimbleness, she said.

“Planning prevents things slipping through the cracks,” Vaughan said. “If you actually list out everything that can happen and walk it step by step by step, you can monitor and oversee and cover things so stuff doesn’t slip through the cracks.” BB A professional journalist for nearly 50 years, U.S.-based Paul Scott Abbott has focused on transportation topics since the late 1980s.

ISSUE 4 / 2018

HEAVY LIFT LEADERS.

ENERGY UPDATE

OUT OF THE BLACK Nationals Look Beyond Oil

26 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 4 / 2018

BY AMY MCLELLAN

N

ational oil companies used to be easy to understand. They controlled the subsurface riches while international oil companies held the technology, staff expertise and capital to exploit those riches.

Recent decades have seen those distinctions blur. National oil companies deployed their wealth to build in-house expertise that now rivals the best of the oil majors: Brazil’s Petrobras delivers bestin-class deepwater results; Equinor (the new name for Statoil, 67 percent owned by the Norwegian state) is a leader in Arctic technology; while Qatar Petroleum is the world’s biggest liquefied natural gas producer.

Nor are national oil companies confined to their home territories. Many have spread their wings to find additional reserves to power fast-growing economies. The Chinese state oil companies are perhaps the best example of this, with interests that span the globe, from Angola to Sudan, Canada’s oil sands to the UK North Sea. Whereas once this incursion was feared – in 2005, for example, the U.S. Congress blocked CNOOC’s plans to buy Unocal – there are today few countries that resist their buying power.

Equally, the reserves advantage enjoyed by national oil companies has been eroded over the last decade, as new drilling and production technologies have unlocked huge volumes of oil and gas held in once-inaccessible shale rocks. The rapid deployment of horizontal drilling and hydraulic fracking has propelled the

Equinor, formerly known as Statoil, is keen to shed its oil-based image with investments in renewables. Shown here is Hywind Scotland, the world’s first commercial wind farm using floating turbines, a joint venture between Equinor and Masdar. / CREDIT: JAN ARNE WOLD / WOLDCAM / STATOIL

www.breakbulk.com BREAKBULK MAGAZINE 27

ENERGY UPDATE

U.S. into a top-10 oil power in terms of reserves – although it is still dwarfed by the likes of Venezuela, Saudi Arabia and Canada – and it is poised to overtake Russia and Saudi Arabia as the world’s biggest producer.

TOWARDS PEAK OIL DEMAND

So far, so much oil. Yet the world is changing. Global oil demand continues to rise – the Paris-based International Energy Agency forecasts oil demand this year of 99.2 million barrels per day, rising to 104.7 million barrels per day in 2023.

But a convergence of climate regulation, technology and consumer appetite signals that the coming decades will see demand growth start to slow, and even reverse.

There’s no consensus about when the world will hit peak oil demand – the IEA’s own modeling ranges from 2025 to beyond 2040 – and even when demand does peak, the drop-off will not be sharp. According to Spencer Dale, chief

economist of BP: “The world is likely to demand large quantities of oil for many decades to come.”

Yet an economy or balance sheet built solely on the fossil fuels that powered the 20th century may find itself increasingly obsolete in the second half of the 21st.

As Sheikh Yamani, the former Saudi oil minister who helped weaponize oil in the power plays of the early 1970s, famously observed almost two decades ago, “the Stone Age came to an end, not because we had a lack of stones, and the oil age will come to an end not because we have a lack of oil.”

International oil companies, particularly in Europe, have spent the last two decades talking a good game on renewable energy. BP reimagined itself as Beyond Petroleum back in 2000, a huge rebranding exercise that within just a few years was rightly called out as window dressing. Even today, the five biggest oil firms spend just 3 percent of their US$100 billion combined annual spend on renewable power projects.

According to figures from Wood Mackenzie, achieving the same 12 percent market share the majors have in upstream oil and gas would require US$350 billion in wind and solar investment out to 2035, something the energy consultancy admits looks an unlikely scenario. Tom Ellacott, senior vice president, research, corporate analysis at WoodMac, noted in a report last year that “even this bull scenario would lift renewables to just 6.5 percent of the majors’ production in 20 years’ time.”

This investment is a hedge that Big Oil cannot afford to ignore, argued Ellacott, warning of the future erosion of the upstream value proposition and anticipated hardening of investor sentiment towards carbon in the coming decades.

Indeed, that hardening is already well underway. One recent study from Cambridge University warned that oil companies’ vast oil reserves will become “stranded assets” before 2035, as fasterthan-expected technological change in the global power generation and transport industries leads to a collapse in fossil fuel prices.

LOOMING LEGISLATION CONCERNS

Legislators and big investment houses are also worried. In June 2018, the UK House of Commons’ Environmental Audit Committee called on the government to force listed companies and big investors, such as pension funds, to report on climate risk and how it will affect their business.

BlackRock, the world’s largest investment firm, and other big investors – including Aviva and Legal & General—have signaled they want more transparency on climate change risk. A number of U.S. oil giants, including the usually defiant ExxonMobil, have recently been forced by shareholders to report on the climate risks to their business.

Furthermore, lawyers in the U.S. are limbering up for what they

Oil companies are still heavily reliant on oil and gas, despite moves to diversify. Shown here is Troll, one of the largest oil fields on the Norwegian continental shelf, where Statoil is one of the operators.

CREDIT: OLE JØRGEN BRATLAND, STATOIL

28 BREAKBULK MAGAZINE

ISSUE 4 / 2018

Visit: deugro.com

/deugro

The sun sets behind a gas flare of the Shaybah Gas Oil Separation Plant (GOSP), a major gas and oil production facility located in the desert of Saudi Arabia near the border with the UAE. / CREDIT: BARRY IVERSON PHOTOGRAPHY/BARRY IVERSON/NEWSCOM

think could be tobacco industry-scale damages. Lawyers are pushing for an investigation into whether Exxon misled shareholders about what it knew of climate change risks, while a slate of towns and cities in the U.S. are suing Chevron, ConocoPhillips, Exxon, BP and Shell for “knowingly and recklessly created an ongoing public nuisance that is causing harm now and in the future risks catastrophic harm to human life and property.”

Under this kind of scrutiny, it’s no

wonder industry is now taking the “decarbonization” of its portfolios seriously. Shell, for example, is readying for peak oil demand by making heavy bets on natural gas to ride out the transition, as well as buying assets across the energy chain, including a Dutch car-charging network and UK energy supplier First Utility. It has pledged to invest US$1 billion to US$2 billion a year by 2020 in its “New Energies” business to help halve the net carbon footprint of its

energy products by 2050, an amount CEO Ben Van Beurden earlier this year defended as being “pretty modest” but “not a pittance.”

French oil giant Total has been busy buying up solar assets, while in December 2017 BP agreed to pay US$200 million for a 43 percent stake in Europe’s biggest solar developer, London-based Lightsource, marking its return to a sector from which it withdrew six years ago. It remains to be seen whether this portfolio rebalancing is happening fast enough to keep pace with technological change and the legislative mood.

NEW NAME, NEW TARGETS

State-owned companies face their own unique pressures in this changing world. They must walk a careful balancing act between ensuring their oil is produced and consumed for the benefit of the state, while also diversifying their economies to prepare for a low-carbon future.

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Earlier this year Statoil rebranded itself as Equinor to reflect what Chairman Jon Erik Reinhardsen says is the “biggest transition our modern-day energy systems have ever seen.” In practice the Norwegian continental shelf will remain the backbone of the company, but by 2020 it will be spending 25 percent of its research budget on energy solutions and energy efficiency, and by 2030 it wants 15 percent to 20 percent of its annual investment to target new energy solutions.

Meanwhile, bankers around the world are licking their lips at the planned initial public offering of Saudi Aramco, now expected in 2019, and which is the centerpiece of Saudi Arabia’s Vision 2030 strategy to diversify its economy beyond oil. Crown Prince Mohammed has said he expects the IPO to value Aramco at a minimum of US$2 trillion, meaning a sale of 5 percent could raise US$100 billion to help fund Vision 2030 projects.

These include huge investments in solar power for, as analysts at Arthur D Little point out: “The Kingdom of Saudi Arabia’s location and climate make the country perfect for solar energy, due to levels of solar irradiation higher than that of all of Europe, with far cheaper and less populated land.” The kingdom recently announced a venture with Japanese investment giant SoftBank to build the world’s largest solar power generation project with a series of solar parks designed to add a massive 200 gigawatt of capacity by 2030.

Throughout all of this, logistics and project cargo specialists will need to keep watch on developments. Of course, the age of renewable energy still requires the construction of new infrastructure and connected networks. Be it shipping a vast offshore wind turbine, decommissioning obsolete oil and gas infrastructure or getting lithium-ion battery farms in place to ensure the reli-

ability of green energy grids, the project cargo industry will need to ensure it has the hardware and people to deliver solutions to match every client’s needs. BB Freelance journalist Amy McLellan has been reporting on the highs and lows of the upstream oil and gas and maritime industries for 20 years.

DIVERSIFYING IF POSSIBLE

Other state-owned companies are tentatively diversifying. Kuwait Petroleum Corp.’s KPC Energy Ventures has been exploring lowcarbon fuels while Petrobras, back from the brink of a debt crisis, is onceagain investigating offshore wind in Brazilian waters.

Clearly, not all state-owned oil companies are in a position to take this long-term view. Venezuela’s PDVSA is in meltdown while others are too beholden to other competing objectives, such as keeping domestic oil affordable and job creation, to risk investing in unproven renewable energy projects. But it seems clear the clock is ticking towards a lower carbon future from which no oil company, investor- or state-owned, can escape. www.breakbulk.com BREAKBULK MAGAZINE 31

LOGISTICS

BY LORI MUSSER

PROJECT CARGO’S ACHILLES’ HEEL Challenge of Finding Sound Logistics Training

I

t is the Achilles’ heel of the project cargo industry. Tracking down, developing and maintaining strong project logistics talent is hard to do when there is a tremendous personnel shortage in project logistics, and in supply chain management in general.

Educational institutions offering supply chain management programs hardly touch on project cargo management; classes increasingly prep students for jobs in the high-volume e-commerce sector.

Industry coursework and on-thejob training, including internships, apprenticeships and career pathing comes to the rescue. If they can’t hire the right talent, engineering, procurement

and construction companies and forwarders say they create it in-house.

“The task of finding people with the right skill sets required to run these highly complex operations is increasingly difficult – especially at the middle and upper-management levels,” summarizes Lisa Harrington, principal of the lharrington group LLC and author of the DHL research brief, The Supply Chain Talent Shortage: From Gap to Crisis. “Unless companies solve this problem, it could threaten their very ability to compete on the global stage,” she warned.

Released in July 2017, the global survey of more than 350 professionals concluded that digitalization, and a perceived lack of status in the supply

chain profession, are top factors contributing to the global talent shortage. More than one-third of companies surveyed admitted to not adequately grooming future talent pipelines. Compounding the problem is that one-third of the workforce is at or beyond retirement age.

SKILL SETS CHANGING

According to the DHL study, the ideal supply chain employee has both operational expertise and professional competencies such as analytical skills.

More than half of the companies surveyed said this combination is hard to find.

While post-secondary institutions say they are trying to address these

CREDIT: SHUTTERSTOCK

32 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 4 / 2018

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LOGISTICS

DHL research brief ‘The Supply Chain Talent Shortage: From Gap to Crisis’ is available to the public online. / CREDIT: DHL

MARRYING INDUSTRY EVENTS AND EDUCATION As education manager with Breakbulk Events and Media, Elizabeth Wetzel leads the charge on training and educational opportunities delivered in association with the company’s industryleading annual events.

Its Heavylift Technical Workshops for ocean transport or land and barge are wellattended by Elizabeth Wetzel intermediate to advanced Breakbulk Education level talent.

Manager For VIP shippers, Breakbulk offers Project Freight Management – A Shipper’s Perspective, and, for a non-maritime component, it offers Managing Trade Compliance in a Complex Global Environment. There is also a Certificate of Achievement in Project Cargo Forwarding.

Wetzel said: “These programs are specialized and evolve to address the current educational needs of shippers, forwarders and

others. The compliance workshop, for example, is in high demand as we are seeing forwarders increasingly taking on compliance and liability responsibilities.”

In a unique outreach initiative that introduces post-secondary students and other newcomers to its niche, Breakbulk sponsors an Education Day “two or more times per year at various locations,” Wetzel said.

“We marry up young people and breakbulk. The information and networking opportunities are unparalleled. The students will never see that many companies interested in speaking with them anywhere else. Over the years we’ve included 5,000 students,” Wetzel said, who is working toward certification for some programs.

Wetzel said the breakbulk industry itself is helping fill the talent gap. While tailored educational and training opportunities are limited, because of the relative size of the project cargo niche vis-à-vis the predominance of containerized trades, Wetzel said knowing that fact provides direction for the industry. “We need to focus on online education, and delivering courses around the world. The project industry needs to learn from successful industry and in-house programs. And it needs to continue its outreach to universities,” to beef up programs that don’t often include project logistics, she added.

34 BREAKBULK MAGAZINE www.breakbulk.com

needs, the tremendous demand of e-commerce candidates may push training for niches like project cargo logistics to the back burner. Still, “the content of the programs and the profile of the graduate [now] more accurately reflect what’s required by the companies.

The students have more applied experience,” according to Dana Stiffler, vice president for Connecticut-based Gartner Research, which has been ranking U.S. supply chain educational programs for a decade.

In addition to more “real-world experience” gained through internships or co-op experiences, university programs are seeing greater emphasis on technology and software in the top supply chain programs.

Cape Breton University’s Shannon School of Business offers a Bachelor of Business Administration and a post-graduate diploma program in supply chain management. Sahand Ashtab, assistant professor of supply chain management, said: “Supply chain management is the inevitable!

Companies have come to realize the benefits they can gain through accurate demand planning and forecast, designing optimal distribution networks, inventory management, procurement and supply management, logistics and route optimization, among others.”

Ashtab added that the school provides an excellent foundation in freight management and documentation, rate determination, international ISSUE 4 / 2018

HOW EASY OR DIFFICULT IS IT TO ACQUIRE TALENT WITH THESE SKILLSETS? 60% 50%

Talent with both sets of competencies

40%

Professional competencies (leadership skills, analytical thinking, innovation)

30%

Technical/operational competencies

20% 10% 0%

1 – Easy

2

3

4

5 – Difficult

N/A

Source: DHL Research Brief, The Supply Chain Talent Shortage: From Gap to Crisis

aspects, modal attributes and idiosyncrasies. Although it doesn’t offer a specific program on project logistics, he said that as universities move more towards case-based lecture sessions, students have the opportunity to link textbook concepts to real cases.

The study of real-life project cargo movements provides learning opportunities related to operational best practices, pitfalls, safety, crossfunctional collaboration, and gives a glimpse of life as a team member in a complex cargo movement.

RANGE OF TRAINING OPTIONS

Chen Zhou is associate professor and associate chair of undergraduate programs at the H. Milton Stewart School of Industrial and Systems Engineering, Georgia Institute of Technology. One of the largest U.S. industrial engineering schools, Georgia Tech graduates roughly 150 students with supply chain studies annually.

Zhou said the school has focused on supply chain for many years. Its Gartner ranking has improved along with its increasing emphasis on computing and analytics. It offers studies in forecasting, regression and even machine-learning. He said that much supply chain learning has come from the business schools, because of their dominance in the universities, but, “the engineering perspective is very important.” That may be

particularly true of project cargo logistics where over-dimensional, oversize freight is the norm.

Within Georgia Tech supply chain engineering, electives now delve into traditional business school subjects such as transportation and logistics, manufacturing, and supply chain economics. While most of the school’s students come in as freshman, they undertake internships and have a placement rate upon graduation of 97 percent to 98 percent, according to Zhou.

A number of industry training programs have also sprung up that help project cargo movers mid-career.

Some programs are offered by industry associations, media or consultants, and some by EPCs or forwarders themselves via apprenticeships, internships and on-the-job training.

ADDRESSING THE ESSENTIALS

Singapore-based VCS-Trinity Consultants started its Project Cargo Logistics Management courses a decade ago to address the essentials of project cargo movement and management.

“In particular, we wanted to address the planning, execution and pitfalls of a typical move,” said the company’s VCS Varden. The coursework embeds contract and legal aspects of liability, risk covers, caps, “time is of the essence” clauses, tools such as Gantt charts, voyage planning, payment schedules

and performance, use of charter parties, and other elements.

“Project supply chain providers/ executives are notoriously busy people, but we recognized they needed some quick capsule skills essential for a project movement and management,” Varden said.

VCS-Trinity offers an à la carte menu to assist in long-term career development. The Project Cargo Logistics Management course, offered two or three times per year, “is designed to be sharp and specific, so time is a constraint, but we do also include project case studies and supplementary training material. The program is popular … [and] largely supported by freight forwarders, shipping companies, charterers, commodity traders, insurers, and we are reaching out to engineering companies,” Varden said.

The company’s supplementary programs cover shipping law, chartering, contract preparation/ negotiation, insurance, oil and gas, procurement, turnkey project management, and more.

APPRENTICESHIPS

Companies that invest in apprenticeships can build bench strength from within.

Apprenticeships, according to Janina Reinig, general manager of F.H. Bertling Logistics Germany, help motivate staff, increase job satisfaction, strengthen skill sets, generate higher overall productivity in the long term, and make the company more competitive. Its apprentices tend to be more loyal and remain in the company longer than non-apprentices.

“A company like Bertling, being privately owned and more than 150 years old, needs to ensure that its knowledge and expertise is passed on from one generation to the next,” Reinig said, to safeguard values, ethics and code of conduct. Senior generations are challenged through young, inexperienced and fresh minds. “Young can learn from old and vice versa, which is from time to time very refreshing and fruitful.”

Because the skills shortage is still CONTINUED ON PAGE 38

www.breakbulk.com BREAKBULK MAGAZINE 35

ADVERTORIAL

Port of Zeebrugge: Hub of Excellence for Breakbulk Cargoes Port of Zeebrugge lays claim to a strong reputation for the handling of breakbulk cargoes.

The port constitutes an authoritative port for roll-on/roll-off traffic, new cars and project cargo.

Handling almost 3 million new cars annually, the port ranks at the top of the world’s leading automotive ports. These cars are shipped within Europe and worldwide. The port accommodates several automotive centres for vehicle modifications and other value added logistics. Zeebrugge is also highly specialized in the handling of high & heavy loads such as agricultural and industrial machineries.

Almost 3 million tonnes of forest products pass through the Port of Zeebrugge. Paper products are distributed in Europe by train and by lorry and are shipped overseas by container or specialised roro vessels.

Port of Zeebrugge, being a clean or pollution free port, has evolved into a major distribution hub for food and perishables such as fresh fruit, fruit juices, vegetables, coffee, meat, fish and dairy products.

The coastal port also offers large expertise in the handling of project & heavy-lift cargoes, the Yamal LNG modules project being the latest succesful test piece. All terminals are equipped to load and unload project cargo such as offshore wind industry components, boats, towers, military equipment, etc..

Zeebrugge is also known as a London Metal Exchange/LME recognized zone for steel and non-ferrous metals.

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Hinterland and maritime accessibility

The substantial water depth and the easy maritime accessibility of the coastal port allows it to receive any type of ship 24 hours a day.

The extensive range of intra-European and intercontinental services, combined with an inland waterway, estuary barge, railway and road network, and the immediate connection to the new highway A11, safeguards your links to the markets in continental Europe and the UK, or overseas markets.

Skilled labour force and specialized terminals Lashing and securing is performed by more than 250 highly skilled, experienced and trained dockers for breakbulk.

Solid support from the port authority contributes to the success of your logistic project. Your logistics can also be streamlined via partnerships with terminals, and shipping lines such as Wallenius Wilhelmsen Logistics, ICO, Verbrugge, PSA Zeebrugge, C.Ro Ports, PortConnect, EML, Flamar, Sea-Invest, CSP Zeebrugge, UECC, Minne Port Services and many other companies that offer specialized handling of breakbulk cargoes.

Port of Zeebrugge will point you towards the best possible transport solutions for your breakbulk volumes or challenging projects.

ISSUE 4 / 2018

DEDICATED BREAKBULK PORT

commercial.department@mbz.be

LOGISTICS

THE TASK OF FINDING PEOPLE WITH THE RIGHT SKILL SETS REQUIRED TO RUN THESE HIGHLY COMPLEX OPERATIONS IS INCREASINGLY DIFFICULT – ESPECIALLY AT THE MIDDLE AND UPPER-MANAGEMENT LEVELS.” – Lisa Harrington, lharrington group

a big threat to the industry, apprenticeships help to reduce that shortage, while minimizing staff turnover and workplace accidents and increasing productivity, John Hark according to Bertling Reinig.

She described the apprenticeship programs as providing critically important time-management skills, practical skills, and communication and interpersonal skills.

“Interacting on a daily basis with colleagues, clients and business partners will teach the apprentice the art of negotiation,” as well as how to delicately word communications, work as part of a team, interact, and the general culture of the workplace, Reinig said.

38 BREAKBULK MAGAZINE www.breakbulk.com

INDUSTRY GUIDES EDUCATORS

John Hark, chartering directorNorth America for Bertling Logistics, said training has been almost completely on-the-job for many of today’s project logistics managers, who started in general forwarding roles and later moved to projects, or started as an entry-level coordinator in project logistics and worked their way up to manager. Occasional internal or external training courses have helped fill knowledge gaps.

A lack of degree or formal training has led many forwarders, EPCs and project owners to take it upon themselves to provide guidance to universities to ensure basic project logistics concepts are covered.

“Many of us are teaching as adjuncts, guest speaking at the schools, serving as corporate fellows … and sitting on various advisory councils with universities and junior colleges. In the Houston market, we are starting to see progress,” Hark said.

Skills that typify successful project logistics manager (strong organizational, communication, technical and time management skills, along with a solid work ethic and ability to work under pressure) are not necessarily taught in schools, he said.

“The successful project manager at a forwarder will have the trust of the clients and service providers. All of this comes with years of on-the-job training and experience.”

Nevertheless, he said, future project managers would certainly benefit from university and college-level classes with at least some emphasis on capital project logistics execution to give them a basis for starting their career.

“I am cautiously optimistic that our efforts with the universities as an industry are putting us on this path. We just need to be patient and be in it for the long haul,” Hark said. BB Based in the U.S., Lori Musser is a veteran shipping industry writer.

ISSUE 4 / 2018

SPECIAL REPORT

SAFETY & EFFICIENCY

Industries often equate “efficiency” with cost savings, and “safety” with risk saving. However, investing time, energy and resources to safety and efficiency in a structured and consistent fashion leads to productivity, risk avoidance and a solid return on investment. Breakbulk introduces an ongoing dialog on applying those efforts to the project cargo industry.

CREDIT: ENERPAC

SPECIAL SECTION: SAFETY AND EFFICIENCY

Competition Drives Transport Efficiencies

TARGETED COST

BY ANDREW WILLIS

I

f there’s a silver lining to the relentless pressure from competitors and ever-evolving regulations, it’s the greater business efficiencies that can result from these two forces.

Project cargo transportation by sea and air is no exception, with competition both within and between these two sectors forcing ship and aircraft charterers to seek new ways to cuts costs.

German multipurpose vessel owner Briese Schiffahrt and its partners have responded to this pressure by developing a next-generation vessel, as they seek to gain an edge in a 40 BREAKBULK MAGAZINE www.breakbulk.com

tough market that has suffered from overcapacities in the past. Based in Leer, Briese manages a fleet of about 150 ships, with most of them operated

by Briese’s subsidiary, BBC Chartering.

Recently things have started to look up.

“We certainly see increased activity worldwide,” said Raymond Fisch, senior vice president of strategic projects at BBC Chartering, pointing to an uptick in wind energy and oil and gas investments. “All of these are driving demand for project shipping capacity.”

Despite these improved conditions, shipowners still need to invest in innovative technologies if they are to meet changing client demands, cost pressures and new environmental regulations.

Being both “economical” and “flexible” are crucial to ensuring operational success, Fisch said. To achieve this, determining the correct size of the ship, optimizing its hull for the intended cargoes and operating modes and selecting the most suitable propulsion system and cranes are key.

After a statistical analysis of the speed, draft and trimming records from the roughly two-dozen ships in the Briese fleet, the company and partners developed the future operating profile and optimization targets for its next generation vessel, the 12,500-deadweight-ton Eco Trader.

Based on market observations and statistical evaluations of the company’s fleet and its operating profiles, the Briese newbuilding team identified seven areas ISSUE 4 / 2018

BBC Chartering’s next generation vessel promises greater efficiencies.

CREDIT: BBC CHARTERING

CUTTING where the new ship could perform better than its predecessors. These were fuel consumption, loading and unloading times, ability to circumvent certain shipping route restrictions, optimization for project cargo, flexibility, operating costs and emissions.

Several ships have already been built at the Chinese shipyards Jiangsu Hongqiang Marine Heavy Industry and Jiangxi Jiangzhou Union Shipbuilding. The improvements have enabled the Eco Trader to cut fuel consumption and CO2 emissions by roughly 30 percent compared with existing tonnage.

“We are very satisfied with the results we have seen so far in terms of savings and efficiency gains,” Fisch said. “We have helped four vessels

come on the market with our tonnage partners. The next delivery will be the BBC Russia which we expect to be delivered this summer. Two more will follow then early next year.”

TAKING TO THE AIR

The air freight industry has also had to deal with similar pressures.

Antonov Airlines is a project cargo specialist airline that offers a charter service. Clients come from the aerospace, oil and gas, mining, defense, and humanitarian relief sectors, among others. The company is headquartered in Ukraine.

“For us it’s all about ad hoc charter flying. Calling a taxi, rather than going to a bus service,” said the company’s Michael Goodisman.

SHIPOWNERS STILL NEED TO INVEST IN INNOVATIVE TECHNOLOGIES IF THEY ARE TO MEET CHANGING CLIENT DEMANDS, COST PRESSURES AND NEW ENVIRONMENTAL REGULATIONS.

www.breakbulk.com BREAKBULK MAGAZINE 41

SPECIAL SECTION: SAFETY AND EFFICIENCY

The company owns and operates one Antonov An-225, the world’s largest aircraft with a payload of 250 tons. It also has seven Antonov An-124s that typically have a 120-ton payload, although the payload on two of them has been increased to 150 tons.

“People are always trying to push the limits of the Antonov An-124,” Goodisman said. “We will be slowly adding that capability to additional airplanes. And the idea is to have them all up to a 150-ton payload.”

Several design improvements have made the heavier payload feasible.

One is an increased maximum takeoff weight of the aircraft. The plane can now leave the runway weighing 402 tons compared with 392 tons previously, meaning an additional 10 tons of fuel if needed. This enables the plane to travel longer distances in zones where there are no airports for refueling, especially useful for Atlantic or Pacific Ocean crossings.

The modified Antonov An-124s also has a strengthened floor and undercarriage to transport the higher payloads that result in a heavier landing. Related to this, the company decided to change the aircraft’s tires and now uses Dunlop. As well as supporting the higher payload, the new tires can withstand more landings than the previous brand, enabling Antonov to reduce their tire cost per landing.

The drive to increase payloads was driven by client requests and now means Antonov can provide a transport option that is cheaper than chartering the larger Antonov An-225 aircraft. This has helped the company win additional jobs, including the transportation of a single piece of oil and gas heavy machinery from Johor Bahru in Malaysia to the Port of Spain on the island of Trinidad.

“If we can offer wider solutions, hopefully we will catch more project cargo that may have gone by sea by offering a payload capability at an acceptable price to the customer,” Goodisman said. “Of course, there are limits to what you can achieve. Now that we’ve got to 150 tons they’ll say, ‘how about 170 tons?’ But if it doesn’t work on paper then we can’t do it.”

Transportation of the dense pieces of cargo requires the design 42 BREAKBULK MAGAZINE www.breakbulk.com

of skids to spread the load. Software will help load planners in the future, predicted Goodisman, adding that three-dimensional analysis and stress analysis are other areas that are becoming faster with the aid of computer programs.

EFFICIENCY INITIATIVES

As well as the drive to increase payloads, Antonov engineers are striving to meet tougher engine noise requirements and regulations for operating in congested airports.

“The authorities will take their experts and say, ‘where are we today

Michael Goodisman

Dan Morgan-Evans

Antonov Airlines

Air Charter Service

in terms of noise, and what do our experts say is achievable in five or 10 years’ time,’ ” Goodisman said.

“And they will set targets that they believe are achievable. It’s then for the manufacturers to do that work.”

Other initiatives include a push to modernize cockpits and reduce the flight crew down to four people.

The company is also gradually increasing the time between maintenance schedules so that planes can stay safely in the air for longer, and there’s a life extension program that has successfully extended the life of their entire fleet – meaning an additional 20 years for the Antonov An-124 and the Antonov An-225.

“It’s to do with keeping the aircraft flying more and getting a larger market share,” Goodisman said.

That’s a goal that’s shared by Air Charter Service. The company sources aircraft on behalf of its customers that want to move cargo throughout the world. Jobs come from the relief,

automotive and oil and gas sectors, among others.

Air Charter Service uses very small to very large aircraft, going to the market to find a suitable solution for a customer’s project. But the fleet of planes transporting project cargo around the globe is aging, according to Dan Morgan-Evans, global cargo director at the company.

One reason for this is the high cost of designing and building new aircraft, meaning airlines then need them to be constantly airborne to turn a profit, something that’s extremely difficult to do in the air project cargo market.

WIDE NETWORK PAYS OFF Given the aging fleet, companies like Air Charter Service, which has 21 offices worldwide, are more likely

ISSUE 4 / 2018

Several design improvements have made a heavier payload feasible on Antonov’s AN-124s.

CREDIT: ANTONOV AIRLINES

to find efficiencies through internal operational improvements, MorganEvans said.

“We’re always trying to find an edge to reduce prices to our customers,” he said. “We have a huge number of brokers around the world, and we’ve developed an internal system where we can see where planes are and who’s doing what.”

Operators let the company know on a weekly, daily or even hourly schedule where their planes are, with the information passing to Air Charter Service’s brokers around the world. If the company’s New York office decides to charter a plane to go from the U.S. to Europe, for example, it will then strive to link it to a project cargo job departing from Europe,

bringing down the cost for both customers.

This process has become easier to do, thanks to the greater visibility of plane locations provided by Air Charter Service’s internal computer system, plus the geographic spread of the company’s offices.

“When we were a much smaller company that was much harder to do,” Morgan-Evans said. “Now that we’re a global company it becomes much easier to put these flights together.

There are much more efficiencies in terms of what we can provide to our customers.”

The project cargo air freight industry has faced a tough time since the financial crisis and subsequent fall in oil prices in 2014. The double

whammy caused severe investment cutbacks in many of the sectors that traditionally created business for project cargo transporters.

“This year things are picking up,” Morgan-Evans said, noting that oil companies that were forced to streamline their operations are not necessarily enjoying the rebound in crude prices.

“It’s a combination of factors. Obviously, we’re trying to create greater efficiencies in order to reduce prices, and at the same time they’re beginning to have money again to invest in projects.” BB Andrew Willis has worked as a journalist for more than a decade in countries including Argentina, Belgium and Colombia.

www.breakbulk.com BREAKBULK MAGAZINE 43

ADVERTORIAL

Fiber Chain: Minimize Rigging Cuts & Bad Backs When it comes to lashing and lifting, industries across the globe have always used steel chains to get the job done. These chains are strong, but they are also heavy, awkward to use, and can damage the very products they are trying to serve. Now, Green Pin Tycan® – the leading manufacturer of rope and chain fittings – is transforming the way companies lift and lash with ultra-lightweight fiber chains.

Mammoet was the first large company to use Green Pin Tycan®

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Green Pin Tycan® is up to eight times lighter than a steel chain while providing the same tough and resilient strength. Its soft touch and light weight reduce the risk of bad backs, cuts, bruises and hearing damage. It also increases efficiency – one person can work with long lengths of chain all day long. Just as importantly, the chain introduces business benefits as well, by significantly reducing the risk of damage (and claims) when it comes to vulnerable and valuable cargo.

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Green Pin Tycan® has been thoroughly tested in production facilities and in real-life circumstances, and is qualified for both lashing and lifting operations by DNV-GL.

44 BREAKBULK MAGAZINE www.breakbulk.com

“We are very excited about bringing our innovative Green Pin Tycan® chain to market and delighted that world leading companies like Mammoet see the benefits of using it for both lashing and lifting,” says Anton van der Zalm, Vice President Research and Development at Green Pin®.

Indeed, it is the respect that the chain garners from respected industry players in terms of quality and performance that really makes people sit up and take notice.

“Green Pin Tycan® chain is so light and easy to use that our team loves to work with it,” says Brian Steentjes, Manager Planning AE & EMD at Mammoet. “Combined with its soft touch, we believe Green Pin Tycan® can reduce damage and injuries to cargo and crew alike.”

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Green Pin Tycan® is greener than the steel alternative because it uses an environmentallyfriendlier production process. It is resistant to chemicals, grease, dirt, salt and low temperatures, and it is so innovative it has created a new standard for lashing and lifting quality assurance and risk management, and it was recently awarded the LEEA Innovation of the Year at its annual UK Exhibition and conference. Green Pin Tycan® continues to change the game when it comes to lashing and lifting technology, helping industries across the globe increase the safety of their employees while simultaneously introducing efficiencies that impact companies’ bottom line.

ISSUE 4 / 2018

A VAN BEEST BRAND

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CREDIT: ASSOCIATED BRITISH PORTS

SPECIAL SECTION: SAFETY AND EFFICIENCY

CERTIFY AND COMPLY

BY LORI MUSSER

Challenge of Creating Universal Qualifications

W

ith certification, come benefits. While all-encompassing certification for crane operators and carriers moving out-ofgauge cargo may never arrive, there has been some headway.

Credentials can demonstrate knowledge and commitment. They can improve processes and increase efficiency, revenue and morale. They can set or clarify expectations of cargo owners and supply chain partners. And they can improve customer satisfaction by ensuring consistency.

46 BREAKBULK MAGAZINE www.breakbulk.com

About five years ago, in the European Union, the association of abnormal road transport and mobile cranes, or ESTA, noted that the plethora of rules covering professional competence and certification of crane operators negatively impact safety, prevent operators from being able to move from country to country within Europe, and create skills shortages.

ESTA’s solution is a European Crane Operators License, or ECOL. The planned license has been strongly supported by transportation and lifting companies, and a first trial was successfully completed at Mammoet’s training center in Rotterdam at the end of April.

Organizers intend to run three more pilot projects – in the Netherlands, Denmark and Italy – before the system goes fully live.

BENEFITS OF EUROPEAN LICENSE

Tom Klijn, ESTA director and chair of the ECOL Working Group, said there would be important benefits for operators, clients, contractors and rental companies. He said that the sophistication of equipment and rapid technological change needs to be reflected in training schemes across Europe.

“The issue of an aging workforce means the existing skills shortages are going to get worse, specifically in Western Europe. Under our proposed scheme, an employer will have the ability to ensure that any crane operator they take on, wherever they come from within the EU, will have an accepted level of competence,” Klijn said.

ECOL hopes to enable mediumsized companies in Europe to operate ISSUE 4 / 2018

more efficiently and better compete with global players, helping strengthen the European economy. ESTA listed the other main benefits of certification: safety, mobility of qualified personnel within Europe, quality assurance, higher safety standards in operations throughout Europe, and reduced training and education costs.

Not all European crane operators will need retraining. Qualified operators, with the necessary documentation, will find it “straightforward” to obtain an ECOL certificate, ESTA documents point out.

In the pilot project, crane operators acknowledged the value of being able to work throughout Europe without retesting in every country. Issues that came to light during the pilot were reportedly communications oriented.

As designed, the certification process allows trainers to adapt the syllabus to accommodate better training results with individual pupils, based on their background, Klijn said.

ESTA, which has applied to have the ECOL operator certificate registered and recognized at European Qualifications Framework Level 2 across Europe, expects a decision later this summer.

THE U.S. APPROACH

In the U.S., mandatory crane operator certification has been in the works for 14 years. In its most recent incarnation, it was supposed to go into effect in late 2017, but industry continues to await publishing of the rule by OSHA, the U.S. Department of Labor’s occupational safety and health wing.

The National Commission for the Certification of Crane Operators, or NCCCO, was established in 1995 to administer a U.S.-wide program and has since administered more than a million examinations and issued hundreds of thousands of certifications. It hopes to see the U.S. rule published later this year, or not long thereafter, with content that is reflective of the original draft from more than a decade ago. There has been concern that current language may not support desired safety benefits.

Once the proposed rule is completed, there will be a public comment period, possibly a fiscal impact study and/or public hearings, then publishing of the final rule.

Graham Brent, CEO of NCCCO, said that without the industry’s intervention over the last 14 years, the U.S. wouldn’t be this far along. He acknowledged the uphill battle the EU still faces.

U.S. industry has dealt with several operator certification issues, and even formed an industry coalition – the Coalition for Crane Operator Safety – to help make progress. Main issues have related to certifying by crane type and capacity or type alone, and whether certification equals qualification.

The NCCCO offers 26 different crane certifications in 12 separate categories, with another three in development, Brent said. That includes four different certifications for the mobile cranes widely used in the project cargo industry.

FINDING COMMON GROUND

Brent said that trying to get everybody on the same page is the main challenge of certification.

Self-regulation in the industry, an ongoing dialogue, and reciprocity between states have been part of NCCCO’s platform. Brent noted that employers typically don’t take issue with the cost of certification, but the time required to study and take exams can be a problem.

The NCCCO benefit list includes reduced risk of loss, fewer accidents, more consistent training, and expanded job opportunities for those who work in and around cranes.

It works with industries including automotive, construction, crane rental, oil and gas, pulp/paper, and utilities, among others.

The NCCCO does not train directly.

It sets up impartial evaluation, and leaves training to the industry. Brent confirms that certification improves safety, citing insurance underwriter support, and a foundational, but still meaningful, Californian study that determined a dramatic decline in incidents over time as an increasing number of operators became certified.

Brent said: “The industry is safer than it was. We see all kinds of reports from employers about productivity going up and reduced maintenance costs because of fewer mistakes. If, for example, operators take the jib off a

boom so the undulating motion won’t cause fatigue, there will be long-term savings. The training and certification creates more respect for the machine, and that feeds down the chain.”

A leading benefit of certification is lower insurance rates. Brent said: “Underwriters don’t make their determinations lightly.” When a project owner starts seeing their insurance costs fall, there will be greater interest in certification. He added: “The Texas petrochemical industry is a great example. They have seen the benefits themselves. If you can’t get into a refinery without a CCO certification, you’ll look at certification.”

The U.S. program is proving successful for a number of reasons, according to Brent. It incorporates the right subject matter into examinations and it works broadly with industry.

“Having the right people at the table from the start is critical for the simple reason that you want different perspectives, and industry buy-in,” he said. And, through recertification, the program helps crane operators keep up with rapidly changing technology. It also addresses a skills gap and an aging demographic, added Brent. BB Based in the U.S., Lori Musser is a veteran shipping industry writer.

CREDIT: ARRC LINE

www.breakbulk.com BREAKBULK MAGAZINE 47

SPECIAL SECTION: SAFETY AND EFFICIENCY

Avoiding Workplace Injuries

BY LORI MUSSER

OPERATION ZERO P

rotecting life and property all along a project cargo supply chain is an industry mantra, but only a few special companies live up to the promise, day in and day out.

In April 2018, the Specialized Carriers & Rigging Association announced annual safety award winners. Zero Accidents awards were given to eight member companies in transportation, and 12 in crane and rigging. Breakbulk asked some of the award winners for the secrets to their success.

Robert M. Hall, director of strategic planning for Kansas-based Wilkerson Crane Rental, identified three drivers that facilitate complex tasks in an extraordinarily safe manner: communication, equipment and people.

“The more we talk about safety, the less we talk about accidents,” Hall said.

Discussing ways to be safe, sharing near-miss learning experiences, and soliciting ideas from customers and employees is welcomed and encouraged.

Operating late-model equipment is one important strategy, allowing Wilkerson to “utilize the fleet as the manufacturer intended,” and proper maintenance is another, with “daily fleet inspections to proactively address small concerns before they cause larger issues.”

More than any other factor, Hall credits people for Wilkerson’s safety record. If you are going to be successful, consistent dedication and effort from your team is required, he said.

“Not only do our operators, mechanics, drivers and administrative staff have years of experience, most of them grew up in this industry and are 48 BREAKBULK MAGAZINE www.breakbulk.com

aware of the responsibility required to ensure everyone comes home to their families at the end of the day,” he said. “ ‘Being Raised Right’ is more than just a tag line, it’s a way of life.”

SAFETY’S REAL PRICE TAG

Logging many moves per year without accident comes at a price, however. Jim Vitez, president of Pennsylvania-based specialized carrier and rigging company KMX International, described safety as a corporate asset: “It has definable, measurable returns for KMX’s employees and customers. Safety is a mindset, a practice, an operational priority established and supported by senior management.”

THE MORE WE TALK ABOUT SAFETY, THE LESS WE TALK ABOUT ACCIDENTS.”

– Robert M. Hall, Wilkerson Crane Rental

In addition to meetings, training, audits, in-truck cameras, electronic logs, and a best practices agenda, KMX offers a quarterly safety incentive to employees. After its employees, the company said that safety is its most important asset. One of KMX’s best practices, Vitez said, is to discuss and learn from near misses.

While there will always be factors beyond control, being prepared is a given for safety-minded companies.

Gary Hewitt, group HSQE manager for UK-based heavy-lift company ALE, said: “ALE is a responsible business with the health, safety and well-being of people and their surrounding environment as our most important concern.”

Core reporting systems and robust business assurance processes help mitigate industry risks, he said. ALE works to influence clients and subcontractors in a unified approach to achieving an incident and injury-free mindset.

“In order to achieve this, we have adopted and enhanced many of the leading data systems … as well as processes and training, including ALE’s vocational Standard Scheme of Training and Supervisor Development Program, which are seen as industry best practice,” Hewitt said.

Setting standards helps set the pace at ALE. It is fully compliant with ISO 9001, 14001 and OHSAS 18001, and works closely with clients to engineer the risks out of the project in advance, Hewitt said.

ALE was recently selected as the contractor demonstrating best safety performance at the Port of Tanjung Pelepas in Johor, Malaysia. It relocated nine 1,850-tonne port cranes, using 88-axle lines of SPMT and two transport beams.

Planned meticulously over a month, each crane was transported across the wharf and lowered precisely into its new position, within a tight work schedule and without disruption to terminal operations. The project was safely completed in 10 days, four days ahead of schedule.

BEING PREPARED

At Perkins STC, Compliance Manager Melissa Hovey said safety will always be top priority. Planning and preparation are imperative.

“We are a process-driven ISSUE 4 / 2018

Enerpac’s new JS-Series Jack-Up system.

/ CREDIT: ENERPAC

organization, and have developed and implemented processes that … ensure the safety of our crews, the general public, and the cargo …” she said.

“We look at each project and every route (regardless of how many times we have used it) as a unique and new opportunity to continue to improve.”

Keeping its workforce in tip-top shape, Hovey said Perkins is committed to career-long training, in-field and in-classroom. It dedicates a field superintendent to accompany every project move, and teams carefully plan routes, permits and partnerships with state and local entities to ensure compliance while moving safely and expeditiously.

A tailgate meeting is held daily to review routes and expectations, identify potential risks and discuss preventative measures to mitigate.

While these activities may not be unique, they are powerfully effective when coupled with the company’s stop-load policy. Any employee may stop the movement of a load, at any time, if they feel the safety of the public, themselves, their fellow team members, or the cargo is being compromised, said Hovey. Empowering employees to that level has helped Perkins earn its zero-accident designation.

TECHNOLOGICAL ADVANTAGE

Netherlands-based Enerpac Heavy Lifting ALE’s Route Survey Tool. / CREDIT: ALE Technology BV offers safe operations in part through innovation. Its new JS-Series Jack-Up system – a hydraulically-raised, significantly reduced. The Jack-Up mechanically locked, multi-point lifting system also offers greater stability and system typically comprises four or tolerance to windy conditions than more jack-up towers. The lifting frame equivalent-capacity cranes. of each tower contains four hydraulic Owen said: “Safety is paramount cylinders, which lift and stack steel in the design and operation of Enerpac barrels. The load is lifted in increments heavy-lift systems,” and cited three as barrels are inserted via an automated critical safety elements: adherence to system and stacked, forming the lifting international codes and standards for towers. Managed by a single operator, construction and safe operation, the each tower’s lifting and lowering controlled operation of synchronous operations occur simultaneously, while lifting systems, and the construction of the Jack-Up’s synchronous technology lifting systems that are self-contained. maintains the balance of the load.

Avoiding workplace accidents in an David Owen, spokesperson for industry whose workplace is by definiEnerpac, said the system provides a tion constantly changing, is a challenge. high degree of operational safety, and Companies that put safety first do so increased positional accuracy and load actively, with programs, policies, innovatransfer control as compared with tions, incentives and penalties of various other techniques and technologies. sorts in place. Their success sets the It reduces the need for personnel standard for the industry. BB to work at height, enabling more advanced assembly at ground level.

The company said mobilization costs Based in the U.S., Lori Musser is a veteran and on-site footprint requirements are shipping industry writer. www.breakbulk.com BREAKBULK MAGAZINE 49

ADVERTORIAL

Safety and efficiency – the Fednav way Jeremy Daoust, Manager, Owned Fleet, Fednav Limited

Fednav strives to be an active and leading partner within our customer’s total supply chain.

Fednav is a major operator in the Atlantic bulk and breakbulk trade with an impressive safety record. Because it is at the forefront of our corporate values, we cannot and do not treat safety as a second-tier priority. All operational and commercial considerations radiate from this central principal like spokes on a wheel. Having a strong safety culture is the prerequisite for providing service at the absolute highest standard for our customers who require sensitive cargo to be shipped in some of the industry’s toughest operational regions—the North-Atlantic, the St. Lawrence Seaway system, the Great Lakes and in winter navigation, where ice, wind, and cold pushes the limits and poses severe challenges for our seafarers. In fact, our strong safety values allow us to confidently push shipping boundaries and enable us to perform consistently, thereby fulfilling our brand promise of “Delivering a Higher Standard.”

As a shipowner and operator, Fednav strives to be an active and leading partner within our customer’s total supply chain. Our goal is to manage the risk within our segment and provide cost-effective solutions that meet or exceed our customer’s needs that allow them to bring value to their respective markets.

50 BREAKBULK MAGAZINE www.breakbulk.com

The latter can only be achieved by having the right mix of experience, humility, belief, and confidence in our capabilities and by having key partners that support and understand our mission. In 2019, we will be celebrating our 75th anniversary and throughout our history, the Fednav team has gained invaluable experience that has shaped our culture and the way we do business. We have been judiciously converting these years of experience, lessons learned, successes and failures into processes, procedures, new vessel designs, and strong relationships with other leaders within the shipping industry. Safety never gets old.

By forming strong relationships with our key partners; ship managers, classification societies, flag states, and shipyards, Fednav is able to make strong efficiency gains over the years.

These have been fundamental to our ability to properly service our customers and to differentiate ourselves from the competition. Putting our heads together is vital, particularly in the complex world of shipping.

For Fednav, the math is simple—passion plus confidence in our safety culture allows us to keep growing and finding new ways of bringing value to each of our customers. As such, we will remain on course and never deviate from our path.

ISSUE 4 / 2018

Winner of the IBJ Environmental Protection Award

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PORT TO PORT www.fednav.com

ENERGY UPDATE

ASIA’S DECOMMISSIONING TSUNAMI Flood of Oil Rigs Require Removal

D

ecommissioning of oil rigs in Southeast Asian fields presents a challenge of scale, with many but small platforms calling for innovative thinking on removal operations.

“With more than 380 fields expecting to cease production in the next decade, the magnitude and cost of work can no longer be ignored,” Wood Mackenzie’s Asia upstream analyst Jean-Baptiste Berchoteau told Breakbulk.

“Through learning from global decommissioning projects, the industry can adopt and adapt practices best suited for Asia-Pacific’s own set of challenges.”

Berchoteau’s advice comes at a time when decommissioning in the Asia-Pacific region appears to be a mammoth task for which the various stakeholders are largely unprepared.

Unclear government regulations coupled with a general lack of experience in the region could mean a steep learning curve with high initial costs and potential for mistakes.

The magnitude of the challenge is better understood with the knowledge that those 380 fields involve 35,000 offshore wells, serviced by 2,600 52 BREAKBULK MAGAZINE www.breakbulk.com

BY THOMAS TIMLEN

platforms representing 7.5 million tonnes of steel and more than 55,000 kilometers of pipelines.

And there’s the cost. According to Wood Mackenzie’s latest analysis, the cost of decommissioning Asia-Pacific’s offshore assets could exceed US$100 billion.

Decommissioning works in the region are being executed by contractors such as Sapura Kencana, Boskalis and COOEC, with many more looking at Southeast Asia’s future decommissioning opportunities.

Sapura Kencana recently secured a contract from Petronas’ 40 percentowned associate PCPP Operating Co. Sdn Bhd for decommissioning of the facilities at the Dana and D30 fields off Sarawak. That contract is for a duration of about nine months.

GULF OF THAILAND OPPORTUNITIES

One specific area where major decommissioning work is required is the Gulf of Thailand. PTT Exploration and Production, or PTTEP, a subsidiary of the Thai state-owned oil company, is in discussion with Thailand’s Department of Mineral

Fuels, or DMF, the government body regulating offshore oil and gas operations, which will sanction the decommissioning work. Standards for the work have been drafted, but these are still subject to some anticipated modifications.

Longitude Engineering, a specialist engineering consultancy dedicated to providing naval architecture and structural design and analysis services to the marine, offshore, renewable energy and small craft markets, anticipates the work will commence once PTTEP has finalized the production license with the DMF. Standards and procedures for the decommissioning work in the Gulf of Thailand need to be clearly defined to ensure that the solution is not only the most innovative and cost-efficient, but also environmentally friendly.

Sector stakeholders and others stand to benefit from forthcoming decommissioning; analysts note that rig companies’ earnings on leasing out drilling rigs will not improve unless a significantly higher number of rigs are scrapped.

In Longitude Engineering’s view, the work in the Gulf of Thailand alone will ISSUE 4 / 2018

Malikai, Shell’s second deepwater project in Malaysia. Shell has shared its expertise with local energy companies as well as the Malaysian government to help it to develop its deepwater resources and service industry.

CREDIT: SHELL

be a boon to many project cargo stakeholders, including contractors, scrapping yards and recycling companies as well as the oil companies that will finance the operations. If the jackets are disposed offshore to generate new reefs, as has been done in other parts of the world, there will be gains for other sectors.

CUTTING DECOMMISSIONING COSTS

Longitude is not the only party that has identified advantages. Multiple benefits of reef expansion were also addressed in Wood Mackenzie’s report, Decommissioning Asia-Pacific on a Budget, in which innovative approaches to conventional decommissioning were seen to have potential beyond significant cost savings alone. One example cited was the Petronas rig-to-reef solution on two platforms at the Dana and D-30 fields in

Block SK-305 offshore Malaysia last year.

Rig-to-reef consists of using the decontaminated platform structures to create an artificial reef at a designated location.

Adopting innovative technologies was one of four levers that Wood Mackenzie identified to cut costs. A second looked at the transfer of knowledge between regulators, operators and service sector firms. Prasanth Kakaraparthi, Wood Mackenzie’s senior analyst, felt that while the primary focus should be on cutting costs and maintaining health and safety standards, “this is a great opportunity for countries in the region to develop service sector expertise through knowledge transfer.”

In Kakaraparthi’s view, to establish a functional regulatory framework in the region, it would be more efficient to adopt guidelines and processes already in place elsewhere, such as in the UK or the Gulf of Mexico, rather than “reinventing the wheel.”

Cargo movers, particularly those with extensive experience in offshore asset retirement, also have a key part to play in helping draft regulations. Energy majors Chevron and Shell are already collaborating with Thai and Bruneian regulators, respectively, through knowledge transfer and pilot project initiatives.

FINDING ECONOMIES OF SCALE

The third lever looks at choosing optimal commercial and contracting strategies. While the majors have the necessary skills in-house, other players are expected to use project management companies to help execute the project on a strict timeline and within budget.

The three most common contracting strategies, lump sum, unit cost and day rate, are suited to different levels of risk. The well plug and abandon, or P&A, phase is usually the riskiest, as live hydrocarbons are involved and there is often poor availability of data on well conditions. As such, unit cost contracts, where the contractor performs well P&A or facility removal at a fixed cost per unit that includes a margin, appear better suited for projects in Asia-Pacific.

The fourth and final lever identified in Wood Mackenzie’s report focused on achieving economies of scale.

On average, well P&A accounts for half of the decommissioning costs, so any cost reduction in this category will have

a significant impact. About 30 percent to 50 percent cost reductions have already been observed in the Gulf of Mexico and the UK on rig daily rate or unit rate contracts. For areas with a large number of aging wells and platforms, batch decommissioning offers huge cost-saving opportunities.

This approach could be extended further across blocks with different operators, with participants jointly contracting for a larger piece of work, thus reducing per-unit costs.

Regarding decommissioning prospects for Southeast Asia, Wood Mackenzie analyst Berchoteau is optimistic. “While the decommissioning situation in Asia-Pacific might look grim at the moment,” he said, “we note that Chevron is taking a proactive approach in the Gulf of Thailand, and we expect Chevron to set a benchmark for large-scale decommissioning costs in the region.”

Meanwhile, with decommissioning creating new opportunities, gas field development has also blossomed, opening further opportunities for project cargo movers.

In April, Sapura Energy Berhad’s wholly owned subsidiary, Sapura Exploration and Production (Sarawak) Inc., and its partners, Petronas Carigali Sdn Bhd and Sarawak Shell Berhad, took the Final Investment Decision to develop the Gorek, Larak and Bakong fields as the first phase in the SK408 Production Sharing Contract.

According to Sapura Energy Berhad President and Group CEO Tan Sri Dato’ Seri Shahril Shamsuddin, “the development of the SK408 gas fields further strengthens Sapura Energy’s position in Malaysia as a significant partner and supplier of natural gas to one of the world’s largest LNG production facilities, the Petronas MLNG complex in Bintulu.”

Such examples indicate that well decommissioning and field expansion in tandem will keep many project cargo parties busy in Southeast Asia, where innovation and knowledge transfer can optimize gains for all involved.

Thomas Timlen is a Singapore-based freelance researcher, writer and spokesperson with 28 years of experience addressing the regulatory and operational issues that impact all sectors of the maritime industry.

www.breakbulk.com BREAKBULK MAGAZINE 53

LONGITUDE BRINGS BARGING INTO PLAY Longitude Engineering, to prepare contractors for the decommissioning of smaller rigs in a cost-effective manner, has developed an innovative decommissioning barge concept to safely remove small oil and gas platforms for Thailand’s PTT Exploration and Production.

The barge concept uses reverse float-over and onboard lifting methods to remove the topside and substructure utilizing the same vessel. For the primary float-off lifting system, Longitude partnered with German-based hydrau-

lics specialist Bosch Rexroth to develop a heave compensated, hydraulic lifting and skidding system.

The resulting vessel design can accommodate the removal of different types of topsides and jackets without modifying the barge; from removal preparation stages, lifting, topside skidding and securing to underwater disposal for the substructure and load in to a disposal yard for the topside. It also has the ability to accommodate 60 operational and marine crew for a period of up to 40 days. Some project

TOP AND ABOVE: Longitude Engineering’s decommissioning barge aids removal of smaller

oil and gas platforms. /

CREDIT: LONGITUDE

54 BREAKBULK MAGAZINE www.breakbulk.com

cargo contractors have already shown interest in this concept.

“By developing this time and costsaving solution, we hope to create a wider awareness among contractors within the region in order that they may adopt similar methods in the removal of multi-platform fields,” said Jean-Baptiste Meier, Longitude’s lead engineer. “The Southeast Asian fields present many similar small platforms where innovative thinking can be used to make an economy of scale in the removal operations.”

In 2017 Boskalis decided to convert one of its semi-submersible heavy-lift vessels into a self-propelled crane vessel, including a 3,000-ton revolving crane. The available deck space of 165 meters by 43 meters is unique in its class. Among other things, the Bokalift will be used for decommissioning obsolete oil and gas platforms. Due to its DP-2 capabilities there is no loss time for anchor spread deployment. The vessel can accommodate 150 persons and will have a helicopter deck available for offshore transfers. Delivery is expected in 2018.

A firm decision on the conversion of another Boskalis heavy-lift vessel into a crane vessel is expected to take place in the course of 2018. BB ISSUE 4 / 2018

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REGIONAL REVIEW

Africa’s Power Trip Movers Needed for Clean Energy Drive

BY KERRY DIMMER

T

he potential of clean energy economies is big news in Africa because most of the continent’s nations have an almost clean slate, as well as abundant natural resources, from which to develop such strategies. Not only does booting up sustainable clean energy repower a country, it also benefits the region through significant job creation.

Such is the case in East Africa, a huge region of 20 nations comprising Burundi, Kenya, Rwanda, Tanzania, Uganda, Djibouti, Eritrea, Ethiopia, Somalia, Mozambique, Madagascar, Malawi, Zambia, Zimbabwe, Comoros, Mauritius, Seychelles, Reunion, Mayotte and South Sudan.

The World Bank’s Practice Manager

Sudeshna Ghosh Banerjee described it as “blessed with every possible natural resource from which to harness power, be that hydro, biogas, solar or thermal.”

She pointed out to Breakbulk that in unity, the region could easily reach the point of having surplus energy.

“This region could set the example for the entire continent in terms of how to get electricity to households and enterprises, particularly Kenya as it is currently keeping abreast, through its power projects, with the pace of population growth and the resulting demand for access,” Banerjee said.

Kenya is the largest geothermal producer in Africa, producing some 675 megawatts, which equates to just under a quarter of its needs, confirms Banerjee’s colleague, energy economist Mariano Salto. “East Africa is also unique in that it is one of the top 10

geothermal producers in the world in terms of installed capacity,” Salto added.

Ten years ago, Kenya was producing some 60 percent of its energy from geothermal. Current production is 45 percent, but despite the decline there has been relative stability in the supply and cost of power to consumers.

UNTAPPED POWER RESERVES

It’s said that Kenya has only tapped into some 10 percent of the geothermal energy it could produce, with the potential of 10 gigawatts from reserves of steam in the Rift Valley region. An additional 10 gigawatts would double the government’s target set in its Vision 2030 development plan.

However, it is extremely difficult and expensive to undertake such

TOP: Kenfreight was involved in the Kinangop wind farm project in Kenya, one of the biggest projects ever undertaken in East Africa. / CREDIT: KENFREIGHT 56 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 4 / 2018

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WORLD BANK INVOLVEMENT

The World Bank’s interest in the region is broad, proactively engaging with, and aiding funding of, projects and some of the technologies that embrace the capture of energy from renewable resources, like geothermal.

Salto and Banerjee said there are many ways to fund energy development, without requiring direct investment, which is what the bank did recently when it approved a US$180 million loan to Kenya Electricity Generation Co., or KEGC. “It’s a unique financial instrument,” explained Banerjee, “in that it refinances the organization’s corporate debt in terms of providing a longer repayment tenure while enjoying a lower interest rate.”

Salto confirmed that although not linked to any specific energy project, the loan will allow the KEGC to repay its loans to other financial institutions, freeing up funding for it to invest in, mainly, geothermal and wind projects.

“Essentially what this does is enhance the financial sustainability of the KEGC, an organization with which we have developed a strong and robust collaboration over the past 25 years.”

RED SEA

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projects in isolation. As Banerjee points out, no matter how impressive the end goal, you can’t look at energy resources for the sake of it. She is impressed with how Kenya, Uganda and Zambia have integrated as a community to look at potential energy resources as a “power pool” for united economic viability.

“East Africa is especially blessed with hydro potential, but there are modern renewables like solar that are also being harnessed. There is, for example, gas in Tanzania and Mozambique,” she said.

A report out of African Rift Geothermal Development Facility informs that Ethiopia, like Kenya, could generate 10 gigawatts from geothermal alone, with Djibouti, Tanzania and Uganda up to 450 gigawatts. For Tanzania this would satisfy almost half of the country’s needs, more than that for Uganda, and double that for Ethiopia.

Zanzibar

TANZANIA

COMOROS Moroni

MALAWI

(admin by France, claimed by Comoros)

Juan de Nova Island (FRANCE)

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Glorioso Islands (FRANCE)

Mayotte

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MOZAMBIQUE M OZ A M B I Q U E CHANNEL

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Tromelin Island (FRANCE)

Europa Island (FRANCE)

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Antananarivo St Denis

MAURITIUS Reunion (FRANCE)

Maputo Mbabane

SWAZILAND

Kenya is not the only country benefiting from World Bank funding in the region. “We use a number of funding instruments, be that for supporting policy reforms or individual projects like the 20 megawatt Olkaria geothermal plant, or the transformative ITP program in Ethiopia,” confirmed Banerjee.

Salto added that because funding

Source: Shutterstock

is scarce, the private sector needs to be encouraged to enter the renewable energy space. “We want to work with the private sector to bring more capital to the market so that we can maximize the impact. There is room for others to play in this space,” he said.

This is pertinent because the cost of energy is very high in Africa, which www.breakbulk.com BREAKBULK MAGAZINE 57

REGIONAL REVIEW

has serious implications for social development. “We do anticipate that as more renewable energy goes on stream, the lower the cost, and that will ultimately have a knock-on effect on the price consumers pay,” Salto said. “No matter what the source, power must be affordable and reliable for consumers.”

CARGO INDUSTRY IMPACTS

The project cargo industry is going to be a very important anchor in the region’s power development, not just because it can play an integral role in the delivery of energy projects.

Crucially, it will also be a consumer, Banerjee pointed out.

“Understanding that the level of industrial growth is not that of Asia, the region still has good financial viability, and with a reliable power supply, we can expect expansion of all industries across the board, that in turn will require cargo services.

“Low-cost energy will also benefit cargo players from the point of view

of being able to deliver a better service at a lower cost to their customers. The key here though is to work closely with government, and avail of the bidding opportunities,” Banerjee noted.

Staying close to government is something that Express Shipping and Logistics East Africa Ltd., or ESL, has been doing since its establishment in 2001. Florence Tuei, ESL’s country sales and marketing manager, said that the company has a number of active bids for various renewable energy projects.

“We recently handled geothermal out-of-gauge project cargo as ship agents at the port of Mombasa and look forward to many more such projects in the short term,” Tuei said.

“The Kenyan/African shipping environment usually involves international forwarding, so most of the suppliers quote or bid on cost and freight terms. As an international forwarder we lose out, therefore, on handling international freight forwarding work.”

Bids ESL has made relate to freight forwarding from ports in China, India and parts of Europe for project cargo, general cargo, dangerous cargo, bulk and breakbulk. “We are also bidding on customs clearance and transportation as well as warehousing and distribution,” Tuei added. “Outside of our headquarters in Mombasa we also have operations in the Tanzanian ports of Tanga, Mtwara, Dar es Salaam and Zanzibar. We are also expanding to the Port of Lamu in Kenya, Bagamoyo in Tanzania, and into Mozambique. We also have a representative office in China.”

ESL makes use of the Kenyan government’s Integrated Financial Management and Information

Olkaria 1 Power Station was the first geothermal power plant in Africa, with a 45-megawatt capacity. It was commissioned in three phases and has three units, each generating 15 megawatts of electricity. The units were commissioned in June 1981, November 1982 and March 1985. The power plant has since added additional units with a 150.5 megawatt capacity. / CREDIT: KENGEN

58 BREAKBULK MAGAZINE

System procurement portal. When a bid is successful, an online notification is posted on the site.

As the leading shipping services provider in East Africa, with operations well established at Mombasa, ESL provides integrated end-to-end logistics services that are customized to meet customer needs.

OFFERING LOGISTICS SOLUTIONS

Local project cargo logistics specialist Kenfreight is headquartered in Mombasa, with supporting offices in the region, in Uganda, Rwanda, Burundi, Tanzania and South Sudan.

It secures agency contracts for several large global freight forwarders including GEODIS Industrial Projects, Scan Global, and JAS Air & Sea. To serve those global forwarders, Kenfreight has invested heavily in certifications and equipment, confirmed Paul Bletterman, its group managing director. “We’ve ramped up with an aim to serve the current and expected oil and gas, power generation and infrastructure projects inclusive of over US$3 million into specialized heavy-lift fleet alone,” he said.

The investment has been worth it, according to Bletterman. Kenfreight recently secured what he referred to as the most challenging out-ofgauge project ever in East Africa: the Kinangop Wind Farm. “The transport of more than 120,000 cubic meters, comprising 269 extreme out-of-gauge pieces, required extensive planning from the start, with engineering drawings, detailed route survey, construction of specialized tower clamps and a fleet of highly specialized trailers.”

The Kinangop Wind Farm has 114 tower sections of up to 53 meters, with 38 nacelles of 58 meters, and 117 blades, each 40 meters long. The company was also involved in the development of six new power stations around Nairobi.

“We delivered 400 20-foot-equivalentunit containers and six 165-meter transformers on 16-line modular trailers,” Bletterman said. BB Kerry Dimmer is an award-winning freelance journalist, focused on African business affairs.

ISSUE 4 / 2018

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PROFILE

Making Sense of Statistics Sustained Growth Closer Than You Think

BY CARLY FIELDS

Lausanne, Switzerlandeducated Clerc hen the economic forehas sat on the casts you produce are board of trustees part of the backbone of for Caterpillar’s the growth strategy for pension fund for its a company with revenues in excess of Swiss employees US$45 billion, the pressure to perform since 2009, first could easily be crushing. through an employee appointment and But, if Nicolas Clerc, chief economist then by company appointment. He’s a at Caterpillar, feels that strain he man that clearly knows his numbers – does not let it show. In a meeting at his BA, M.Sc., and Ph.D. in Economics Breakbulk Europe he is calm, & Finance from The Faculty of cool and collected and ready Business and Economics of to deliver his keynote the University of Lausanne speech to the recordare simply cherries on Read more about breaking attendees at this the cake.

Clerc’s keynote year’s event.

On the sidelines speech at Breakbulk Europe 2018 For nearly four of Breakbulk Europe, on page 80. years, Clerc has headed Clerc was asked to share up the 15-strong team insights from his ecothat produces outlooks nomic modeling. He started to help the world’s leading with the positives, something manufacturer of construction the breakbulk and project cargo and mining equipment, diesel and industry has been lacking of late. natural gas engines, industrial gas Caterpillar saw higher demand turbines and diesel-electric locomotives across most of its end markets in the chart its future course, year after year. first quarter 2018, including demand

W

LOGISTICS CHAINS WILL NEED TO BE PREPARED TO HANDLE A VOLUME OF GOODS AGAIN GROWING FASTER THAN THE OVERALL ECONOMY. – Nicolas Clerc, Caterpillar

60 BREAKBULK MAGAZINE www.breakbulk.com

for construction and mining equipment and for onshore North American oil and gas applications. Economic data points to a continuation of that upswing, according to Clerc. The International Monetary Fund, or IMF, expects the recent broad and strong economic bounce back to continue, measures of business confidence are robust, and monetary and fiscal policies remain supportive.

“World trading volume is strengthening,” he said. “Looking back at the 2012-2016 period, trade growth relative to overall economic activity was the weakest since the mid-1980s. Last year was a turning point, and the IMF now forecasts the volume of goods traded around the world to grow 4.8 percent in 2018 and 4.4 percent in 2019.

That means logistics chains will need to be prepared to handle a volume of goods again growing faster than the overall economy.”

The positive state of the world economy makes it difficult to see significant imbalances, he added. Inflation is generally within central banks’ target zones and economic activity is growing in all main regions of the world.

ISSUE 4 / 2018

e h t e v a S Date! ope ulk eur BreakB ay 2019 M 3 2 1 2 En In BrEM

Breakbulk community: It was a pleasure to welcome you in Bremen!

We would like to thank all of our partners and participants for making Breakbulk Europe 2018 a successful and very special event.

See you 2019 in Bremen!

www.bremenports.de/en

Two Cat 793F CMD autonomous trucks operating at a Fortescue iron ore mine.

CREDIT: CATERPILLAR

bridge the gap between internal and external innovation,” he said.

Clerc added that he is convinced that technology and digital innovations will help the transportation industry to improve its operational efficiency significantly, while decreasing its environmental footprint. More innovation will boost productivity, effectively doing more with less.

FUTURE BLACK SWANS

INNOVATION A KEY DRIVER

Beyond economic growth, there are other factors at play that could support further opportunities for the logistics and transportation sector, Clerc said.

“Technology and digital innovations offer exciting perspectives into how the transportation industry can meet stringent emission standards, improve operational efficiency, and lower fuel and repair costs,” he said. Caterpillar plays its corporate social responsibility hand with its dual-fuel engine options, emission upgrade kits and hybrid systems, among other products.

Clerc is upbeat about prospects for all three of Caterpillar’s business segments. For example, in its Construction Industries group it has launched the next generation of 20-tonne hydraulic excavators.

“This product improvement – the first redesign of our excavator in 25 years – has increased operator

efficiency up to 45 percent, lowered fuel consumption up to 25 percent, lowered maintenance costs up to 15 percent and provides unmatched operator safety.” This, he added, is an approach that is being replicated in many areas across the company.

Indeed, being continuously challenged to innovate is crucial to medium-term success for project cargo and breakbulk companies.

“We listen to our customers in order to develop the products and services that help them succeed,” Clerc said. “Our company purpose statement is to provide the solutions that help our customers build a better world. We make it happen through innovation and collaboration.”

Caterpillar embraces the power of open innovation through ideas from external startups as well as through its own technology licensing programs.

“These types of collaborations help us

TECHNOLOGY AND DIGITAL INNOVATIONS OFFER EXCITING PERSPECTIVES INTO HOW THE TRANSPORTATION INDUSTRY CAN MEET STRINGENT EMISSION STANDARDS, IMPROVE OPERATIONAL EFFICIENCY, AND LOWER FUEL AND REPAIR COSTS. – Nicolas Clerc, Caterpillar

62 BREAKBULK MAGAZINE www.breakbulk.com

But innovation alone cannot protect the industry from Black Swan events on the horizon. While the prognosis is generally for a patient that is coming out of recovery, shocks can happen at any time and the global trade situation remains very fluid. Brexit – the ongoing process of Britain’s departure from the European Union – is one such unknown.

Clerc reserves judgment, accepting that elements from these types of events are difficult to quantify and incorporate into an economic forecast.

In a reflection of past economic trends, Clerc’s examination of the average age of capital stock around the world that took place during the “extremely severe” recession of 2008-2009, revealed that “the pace of investment was not enough to offset depreciation.”

But things have moved on and the world economy is much larger today than a decade ago. “So, it requires the infrastructure, processes and people to handle stronger global economic conditions. Stronger world growth supports better investment,” he said.

Overall, world economic growth, barring any negative shocks, should continue to drive significant activity across construction, mining, energy and transportation sectors. “In that context, as a company we’ll remain focused on continued cost discipline, executing our strategy and investing for long-term profitable growth,” Clerc concluded. BB Carly Fields has reported on the shipping industry for the past 18 years, covering bunkers and broking and much in between.

ISSUE 4 / 2018

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INLAND TRANSPORT

BY MICHAEL KING

Trucking Labor Crunch CREDIT: PERKINS STC

Perfect Storm Hits U.S. Supply

F

ears that immigrants, robots and foreigners are taking U.S. jobs have rarely been more pronounced, which is surprising given that unemployment rates hit an 18-year low at the end of May. In economic terms the U.S. is now, by most definitions, experiencing full employment, or close to it, so labor shortages in some markets, at certain times, are to be expected. Hiring warehouse workers and office staff for shippers and forwarders has become difficult, for example, and the construction and retail sectors also regularly bemoan the challenge of finding workers.

But the labor crunch is nowhere more apparent than in domestic trucking. One report from the American Trucking Associations said the industry needs to hire almost 900,000 more drivers to meet the rising demand generated by a U.S. economy which is enjoying rapid growth.

The supply-demand imbalance is 64 BREAKBULK MAGAZINE www.breakbulk.com

having a predictable impact on higher supply chain costs, as a barrage of shippers reported fast-rising trucking costs in first quarter financials.

According to DAT Solutions, flatbed spot rates were up 31 percent in May 2018 compared with a year earlier.

“The scarcity of trucks, along with rising fuel costs, led to higher spot market rates in each segment,” said the analyst. “The Brian Bourke national averages Seko Logistics for both van rates and reefer rates each increased 4 cents per mile, while the national flatbed rate continued to add to its record high, climbing another 2 cents to US$2.75 per mile.”

Brian Bourke, vice president of marketing at Seko Logistics, said shippers moving non-standard project cargo in the U.S. have been particularly affected because capacity shortages were most obvious in the

market for specialty trucks including flatbeds and for those undertaking long hauls. “Trucking rates are rising between 10 percent and 30 percent already this year, depending on mode and geography,” he added. “Make no mistake, we are absolutely entering crisis mode for U.S. domestic trucking.”

Soaring rates have prompted sales of big rigs to spike, up 110 percent yearon-year in May to 35,600, according to ACT Research. However, with the quantity of freight up 9.5 percent yearon-year in April, DAT Solutions said there were still 8.4 trailer loads for every available truck as of early June.

CHALLENGE OF FINDING DRIVERS

In terms of driver recruitment, attracting the young to trucking has proven frustratingly difficult for at least a decade. Long hours, sleep deprivation and low wage growth have been factors. Many would-be truckers also face paying US$5,000-US$10,000 for their own training, while chatter about automated vehicles diminishes the job’s attraction to those with an eye on career longevity. As a result, the average ISSUE 4 / 2018

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INLAND TRANSPORT

The Electronic Log Device mandate has taken capacity out of the U.S. market.

CREDIT: SHUTTERSTOCK

age of a commercial truck driver in the U.S. is now 55 years, according to the Bureau of Labor Statistics.

A new Electronic Log Device, or ELD, mandate, which entered into effect in December and has been enforced since April 1, has also taken capacity out of the market. The mandate states that commercial trucks must be equipped with ELDs that monitor the time drivers spend on the road, and they must not exceed the maximum number of hours they are permitted to work.

By making it harder to cheat and drive extra miles, analysts estimate the rules have reduced U.S. trucking capacity by 2 percent to 5 percent.

The new rules not only limit earnings but also require the purchase of ELDs, further discouraging selfemployed owner-operators from remaining in the industry. Early anecdotal evidence suggests that the ELD mandate has impacted the flatbed and specialist handling trucking markets more than unitized and fulltruckload sectors purely because, for safety and expertise reasons, more driver time is expended on securely loading and unloading freight, and monitoring the load in transit.

66 BREAKBULK MAGAZINE

AS LONG AS OIL STAYS ABOVE US$60 A BARREL, WE SEE NO SHORT-TERM REASON FOR INDUSTRIAL ACTIVITY, AND THE DEMAND IT CREATES, TO DO ANYTHING BUT CONTINUE TO GROW.” – David Broughton, FreightWaves

DRIVER SHORTAGE

U.S. trucking’s supply-side perfect storm is not, however, solely the result of a shortage of truck drivers. The cost of equipment leases, equipment purchases, repairs and maintenance, insurance premiums, permits and tolls have been weighing down the sector for years. Fuel costs are also now spiraling.

The flip side of the increase in energy prices for shippers, of course, is that while some face higher freight

rates/fuel costs, higher oil prices are also firing up project trucking demand.

David Broughton, chief market strategist at FreightWaves, recently said the rising global oil price was draining capacity out of trucking markets by prompting more truck moves related to energy production. Taking fracking as an example, he said as global oil prices had shot up, so had drilling and fracking activity in the Permian, Eagle Ford and Bakken production areas.

“This activity directly drives steel, refinery and manufacturing activity for the goods that support the oil and gas exploration industry, but more importantly drive wave after wave of incremental demand,” he said. “As long as oil stays above US$60 a barrel, we see no short-term reason for industrial activity, and the demand it creates, to do anything but continue to grow.”

Advances in fracking technology have further amplified the demand for trucks. A report for BP Capital Fund Advisors by Trip Rodgers noted that greater sand intensity usage per well had increased trucking requirements.

“An average well that consumes 10,000 tons of sand during the fracking period of a well – many wells use substantially ISSUE 4 / 2018

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more – equates to roughly 400 truckloads of sand to be delivered to the wellsite,” he said. “Assuming 10-15 days for the completion stage of an average well, this implies 27-40 sand truckloads per day to each individual well. For the Permian Basin, where we estimate sand consumption totals more than 4 tonnes/ month currently, this amounts to 5,000 to 6,000 trucking round trips per day in the region just for sand delivery.”

Rodgers predicted that current oilfield truck driver shortages would “likely persist and even intensify,” due to an aging workforce and recruitment headwinds. This would act as a constraint on the growth of U.S. shale production, “a primary concern regarding the future global supplydemand balance for crude oil.”

“E-COMMERCE IS IMPACTING EVERYTHING. IT’S IMPACTING DOMESTIC TRANSPORTATION MANAGERS FROM AN INBOUND TRUCKLOAD PERSPECTIVE. IT’S INCREASING RATES AND [TIGHTENING] CAPACITY.”

BIG SHIPS AND ECOMMERCE

Structural economic changes are also swelling the need for drivers. Bigger container ships, for example, tie up more drivers at port waiting in line to pick up cargoes, while the surge in demand for e-commerce also sucks capacity out of the trucking pool.

Evan Armstrong, president of Armstrong & Associates, said the latter “Amazon effect” was resulting in more truck movements because of the increasingly complex last-mile and reverse logistics requirements arising from consumers demanding ever faster service times. “We’ve gone from a B2C inbound containers to distribution

– Evan Armstrong, Armstrong & Associates

center to store type of distribution model, to a DC [distribution center] to fulfilment model now, with last-mile delivery as smaller shipments,” he said.

“E-commerce is impacting everything.

It’s impacting domestic transportation managers from an inbound truckload perspective. It’s increasing rates and [tightening] capacity.”

It’s also evident that trucking capacity shortages vary wildly by geography and lanes, according to forwarders.

“Some markets have been hit harder than others, such as the Southeast,” said Jason Parker, senior trucking manager at Flexport. “It’s one of the most affected markets due to a smaller pool of drivers, increasing volumes, and longer distance

drayage moves that are heavily impacted

by ELDs.” David Goldberg, CEO of DHL Global Forwarding USA, said a plethora of factors including fuel price rises, natural disasters in 2017 and port delays had exacerbated the issue of driver shortages. “We see a well-performing economy, so more money is being spent on recreational goods, entertainment items and such, thus driving up the freight volume and need for trucks and drivers,” he said. “With the driver capacity shortage, the markets that typically see the biggest rate volatility, now feel them much more.

“The Dallas-Houston lane is typically less expensive, but after the hurricane in August, September of last year, the market jumped and has not declined and is still on the rise.

“In addition, increased costs are also resulting from terminals known for congestion. Drivers are no longer able to waste time, waiting in congested lines without being compensated.

We’ve also seen increases in drayage where the inland delivery and loading locations are 250 miles or more away from the terminal location.”

FreightWaves noted that for flatbeds, the lack of backhauls and big rushes of front-haul demand were creating huge equipment dislocations.

“As everyone understands, equipment capacity is more than having the equipment available in the marketplace – it’s having the equipment available in the marketplace where you need it,” said the analyst. “Unfortunately, much of the current surge in flatbed demand is increasing the level of equipment dislocation, creating an even tighter capacity market than it might be otherwise.”

Addressing the supply-demand imbalance in U.S. trucking will take some time. Wage increases will improve the profession’s attractiveness, while higher freight rates are now prompting more investments in equipment. More long-term, the introduction of semi- or fullyautomated vehicles offers a fix.

Until then, fasten your seatbelts, the storm is a long way from over. BB Michael King is a multi-award winning journalist as well as a shipping and logistics consultant.

CREDIT: SUNDRY PHOTOGRAPHY / SHUTTERSTOCK.COM

68 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 4 / 2018

DSHIP CARRIERS: MORE THAN JUST SHIPPING

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20-21 March 2019 Shanghai World Expo Exhibition & Convention Center Shanghai, China

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BE A PART OF BREAKBULK ASIA Where Asian EPCs Meet Project Cargo Service Providers from Around the World

Learn more at breakbulk.com/bbasia2019 Welcoming shippers, transport, equipment, marine and logistics companies.

Breakbulk China Expands to Become Breakbulk Asia Following the success of the seventh annual Breakbulk China in March, ITE Group is pleased to announce that the event will be renamed Breakbulk Asia beginning in 2019. The change reflects the growing participation of companies based in both Asia and Southeast Asia that added to the core Chinese market.

“As China’s global influence expands through its sweeping One Belt One Road initiative, its neighbors on all sides are doing more business with China, particularly with large infrastructure and oil & gas projects,” Nick Davison, Breakbulk Portfolio Director, said.

“Breakbulk event in Shanghai has become the new business hub for the project cargo industry.”

This year’s exhibition and conference attracted more than 150 decision-makers from some of China’s largest engineering and construction firms focused on renewable energy, rail, port expansion, mining and infrastructure projects. Top world-ranked companies included China Communications Construction Co., Ltd. (CCCC), China Three Gorges Corporation (CTG), and China Railway Group Limited (CREC). Oil & gas sector representation was led by China Petroleum & Chemical Corporation (Sinopec) and Aramco.

These global leaders came to the event to source suppliers from the 154 exhibitors that filled the Shanghai World Expo Exhibition and Convention Center.

“The event was fantastic,” Sean Zhang, Purchasing and Supply Chain Manager, Solvay Asia Pacific, said. “We had a lot of discussions and negotiating there and a lot of new ideas came out of it.”

Exhibitors came from across the globe, representing a total of 46 countries. While the majority were from Mainland China, a strong contingent came from Japan, South Korea,

NICK DAVISON Portfolio Director nick.davison@ite-exhibitions.com +44 (0)20 7596 5270 +44 (0)7387 418 520

GARY TANG Event Director – Breakbulk Asia gtang@breakbulk.com +852 2 132 9698

Singapore, Indonesia and Malaysia, which prompted the market expansion and subsequent rebranding.

“We have been supporting this event since its inception,” Randy Selvaratnam, Country Manager China, The China Navigation Company, said, “as it provides us with the opportunity to showcase our products and services to our customers and partners, in one place. In 2018 we were able to introduce both Swire Bulk and Swire Shipping at

the conference, allowing us to leverage on the broad spectrum of visitors.”

Total show attendance reached 4743, with sea transport providers and freight forwarders making up about 80 percent.

Ports, terminals, equipment providers, industry-related services and specialty transport providers made up the balance.

Together, Breakbulk China hosted the end-to-end project supply chain, presenting numerous opportunities for new project business for all involved.

“Moving freight in and out of China is a bit like surfing – you never know what kind of wave you are going to get, so you’d better prepare in advance with the skills, knowledge and tools needed for any type of weather,” Mac Sullivan, Transpacific Trade Lane Manager for Toll Global Forwarding, said. “You have to understand that relationships are everything – there is absolutely nothing that can replace that initial handshake and looking someone in the eye as the foundation of a strong relationship.”

Beyond business networking, the event includes a robust conference program designed to present business intelligence that attendees need for more productive operations in Asia – a region unlike any other in the world.

Organizers tap into their extensive network to determine what issues are of most importance for project cargo specialists in the short term and also offer forward-looking analysis for informed strategic decisions.

Understanding China’s export of its project expertise to other Asian countries led to a varied program that featured China and South Korea’s partnerships around shipbuilding, car manufacturing and clean energy; and a session on China’s investment in Southeast Asian port infrastructure. And of course, a Belt and Road update was presented by a trade expert from the Ministry of Commerce – a topic that continues to be of interest to the Breakbulk audience.

Breakbulk Asia will take place in Shanghai from 20-21 March 2019. Look forward to an increasing number of participants both inside and outside of China as China accelerates its endeavors abroad.

LEGAL SPOTLIGHT

BY JIAN ZHANG, PAMIR LAW

Avoid Disputes in China

Purchase Contracts Best Practices

T

CREDIT: SHUTTERSTOCK

he most effective way to build a successful China business, protect your company’s reputation, revenues, markets and customer relationships is to avoid disputes by negotiating and signing clear and balanced purchase contracts.

Investing time and expertise up front to create a good contract is one of the most important revenue-generating tools to avoid liabilities, future trade disputes, uncollected accounts receivables, reputation-damaging publicity, and claims of breach of contract or poor quality control. Failure to invest up front in practical street-smart advice is “penny wise and pound foolish.”

Here are a few basic principles to apply to protect your business: • Ensure contracts are clear about all the major terms and conditions without any room for different interpretations.

• Ensure contracts are clear about the responsibilities and obligations of all parties without any room for different interpretations.

• Ensure contracts reflect the realities as understood by all parties without any room for different interpretations.

• Ensure that all payment, legal title transfer, and delivery terms are reasonable and stated clearly.

• Ensure that the contract is 72 BREAKBULK MAGAZINE www.breakbulk.com

enforceable against all the real parties in interest and provide for practical and efficient dispute resolution mechanisms.

• Build in practical communication mechanisms to identify and solve problems before embarking in costly litigation/arbitration.

Based on more than 50 years of cumulative China experience, we share here the best practices that should be included in the basic form contract for every company, before tailoring for specific situations.

These should be useful to help protect a business in an increasingly complicated and competitive trade, investment and business environment.

1. Sign a Non-Disclosure Agreement Before Starting Discussions A non-disclosure agreement signed at the beginning of discussions prevents unlawful use of trade secrets and/or confidential information (for example, sales, design or customer information) by other parties.

2. Sign with the Legal Representative Request that the purchase contract be signed by the authorized legal representative in the company’s current official Jian Zhang registry. If the person signing Pamir Law the contract is not the legal representative, the other party may claim to not to be bound by the contract and refuse to abide by some or all of its terms.

3. Discuss Demand Forecasts Demand forecasts should be explicitly binding. Ensure that forecasts are binding only for a short term, and retain explicit rights to modify the forecasts to allow future flexibility.

ISSUE 4 / 2018

LEGAL SPOTLIGHT

4. Determine Whether Orders Can be Canceled, Rescheduled, or Modified By default, orders are binding and cannot be modified or canceled without liability unless explicitly stated. To allow flexibility and fairness to both parties, set specific bounds (dates/volumes) for when orders can be canceled, rescheduled or modified.

5. State Explicit Payment Terms and Penalties for Delayed Payment The contract must clearly state the payment terms. For example, it is better to ask for payment “10 days after shipment,” instead of “on receipt of products.” The contract should clearly define a lump sum, a daily/weekly/monthly penalty, and/ or an interest charge in the event of delayed payment. As with other penalties, a fixed figure must be agreed on in advance.

6. Determine When to Transfer Title of the Goods As a buyer, make sure that title to the goods is transferred upon shipment.

If the seller transfers goods to you, but files for bankruptcy before you pay for them, the goods will be considered part of the seller’s assets and liquidated. As a seller, title to goods should be transferred upon payment. If you transfer title to the goods before payment and the buyer then files for bankruptcy protection, the goods will be considered part of the buyer’s assets, and will consequently be liquidated.

7. Payment After Acceptance The contract should ask for payment within a reasonable period after the products have passed acceptance tests. This ensures that defective products are not bought and safeguards against later refund disputes.

8. Have the Right to Audit As a buyer, incorporate a clause that permits audits of the seller’s financial data and visits to the seller’s factory (with prior notice) to guarantee that the seller is not unlawfully 74 BREAKBULK MAGAZINE www.breakbulk.com

AS LOUIS PASTEUR SAID: “CHANCE FAVORS THE PREPARED MIND.” THE BEST WAY TO PROTECT YOUR INTERESTS IS TO DEVELOP YOUR OWN TEMPLATE CONTRACT WITH THE ASSISTANCE OF AN EXPERIENCED COMMERCIAL LAWYER. manufacturing the same products for other uses.

9. Most Favorable Price A most favorable price term should be incorporated into the contract to ensure that other buyers will not be able to make an equivalent purchase for the same goods for a lower price in the future.

10. Define Clear Quality Control Mechanisms and Specifications Ensure the contract provides clear, detailed and previously agreed upon quality specifications, as well as a description of the inspection process (who will inspect the product, when and how). The seller should provide sample products for reference and records. Make sure an independent and local third party conducts quality control inspections during production or before shipping the goods to the buyer. State that the results of these inspections are binding. It is common practice for the buyer to select and pay for this service provider.

11. Clearly State Warranties The objective of spending time and energy drafting a contract is to minimize your liability in all transactions. Reasonably state everything you need in the warranty clause, and do not simply rely on your insurance policies.

12. Sufficient Indemnifications Claim sufficient indemnifications in order to cover your potential losses in any future disputes, including the attorney fees you may be required to spend.

13. Define Clear Mechanisms to Handle Returns Specify deadlines to report product defects and returns (e.g.

10 days after shipping). Ensure the term “defect” is clearly defined and understood by both parties. Document customer complaints and require products to be inspected by you or a mutually agreed upon third party to be deemed defective. Have clear deadlines and procedures to reduce misunderstandings and pass liability to the other party if they fail to adhere to the established system.

14. Right to Offset As a buyer, make sure you have the right to offset any amount owed by the seller against product payments.

This must be clearly stated as the right is not usually granted.

15. No Right to Outsource As a buyer, make sure the seller is forbidden from outsourcing the function of manufacturing and/or supplying to a third party to ensure the quality of the products unless prior written consent is given.

16. State Termination Rights State very clearly the circumstances under which the contract can be terminated. These usually include mutual consent and breach of specific clauses by one of the parties.

17. Select the Governing Law That Better Protects Your Rights Remember that any jurisdiction can be used if both parties agree. Even though your first impulse may be to use your own jurisdiction, you should explore other options with your lawyer on a case-by-case basis.

In some cases, choosing the other party’s jurisdiction may facilitate seizure of assets in a dispute.

ISSUE 4 / 2018

18. Prepare a Standard Contract in Advance As Louis Pasteur said: “Chance favors the prepared mind.” The best way to protect your interests is to develop your own template contract with the assistance of an experienced commercial lawyer and use it as a baseline during negotiations.

If breakbulk and project cargo handlers have failed to follow the best practices above, and face a potential dispute situation, what can be done?

A company will need to undertake a timely review of key documents, evaluate business and legal options, and then make recommendations and a pragmatic assessment of the next best steps to take. BB

Jian Zhang is a partner at Pamir Law Group. He is a UK educated, Chinalicensed lawyer based in Shanghai with more than 20 years’ experience advising diverse clients on cross-border business and dispute resolution matters. For more information contact Zhang at info@ pamirlaw.com.

19. Sign with a Real Party in Interest Ensure the other party has assets for future enforcement if a dispute arises. Remember that contracts are only binding for signing entities, regardless of who actually receives the product. “Paper companies” often have no assets, which defeats the purpose of signing a contract in the first place if there are no assets to enforce against.

Always request to sign the contract with the global or regional headquarters. Be very suspicious if one party suggests using an offshore entity. It is always advisable to conduct a background check to ensure the signing entity has a track record of successful sales and assets (real estate, production facilities, bank accounts, etc.) that can be seized in a dispute.

Never sign a contract with a representative office unless the real party in interest is legally responsible for payment of orders placed in their name by the representative office.

20. State Explicitly Any Geographic Limitations for Distribution If product distribution is to be limited to a specific geographic area, this should be negotiated beforehand and stated clearly in the contract.

Any penalties for breaching this restriction must also be stated as a fixed amount, which should also be negotiated in advance.

21. State Explicitly When Prices Can Be Negotiated This is particularly important in industries where prices for key components or commodities increase/fluctuate seasonally, or depend on global/local supplies. www.breakbulk.com BREAKBULK MAGAZINE 75

NEWS FROM BREAKBULK EUROPE

EXHIBITION SNAPSHOTS

EPCs Want Providers Proactive, Plugged-in

BY GARY BURROWS

Shippers and engineering, procurement and construction companies need their logistics partners to be more proactive, and to buy into information technology systems to improve visibility and reduce costs.

That was the conclusion of a panel of industrial project owners and EPCs speaking at Breakbulk Europe in Bremen.

“I see a trend where we have 40 percent of logistics suppliers who rely on us and what we want, instead of coming up with other solutions we may not have thought of,” said Thomas Skellingsted, vice president, global head heavy-lift and project operations for ABB, who moderated the panel.

“Maybe it’s because they don’t have the staff. Maybe it’s because it’s the cheapest and fastest way to quote us. They simply follow our lead instead of thinking outside of the box once in a while,” he said.

“Sometimes we feel we are giving the solutions to them,” agreed Cesar Martin Pereda, global logistics manager, Initec Plantas Industriales. “Sometimes we’re expecting the logistics provider, our partner, to come with answers to questions, with solutions.”

“I’d like to see more proactive acting on the (logistics) side to provide alternatives, to offer best-case. You are the experts,” said Ruediger Fromm, senior director global project logistics for Siemens AG.

WORKING TOGETHER ON I.T. SOLUTIONS

Shippers and EPCs should work with their logistics partners to be able to anticipate problems prior to execution, Skellingsted added. One way to accomplish that is through improved IT usage.

Skellingsted spoke of a global system that ABB is developing, using

76 BREAKBULK MAGAZINE www.breakbulk.com

SAP, in which they are cleaning up master data to share with the transport and logistics group.

“It’s a huge task and we expect that it will take a year, but it’s definitely something where we’re optimizing packaging, vessels, containers and trucks,” he said.

Unified systems will benefit carriers in load planning. As design changes can take place with large project cargo up to the last minute, altering dimensions and handling – and even the order in which pieces are delivered – carriers can adapt, participants said.

Use of IT and digitalization is a two-way street, Skellingsted admitted.

“We’ve made transport management centers around the world so that everything is now digitized, which is also putting huge pressure on our plants around the world because they haven’t been using the IT tools as much as they should.

“But it’s giving us huge transparency into the future,” he added.

Along with IT, key performance indicators, visibility tools and key metrics should be part of the logistics provider toolkit, the panel agreed.

“I think we should stop talking about it and do it,” Pereda said. “It has been more a sales tool than a performance tool, unfortunately.”

He added that the industry should consider standardized KPIs. “I know everyone has their own, and that’s fine, but some KPIs should be common to everyone so that we can talk about performance. I know the carriers are maybe more advanced than EPC contractors” in their use of standardized KPIs.

ALL OR NOTHING?

One place where panelists differed, however, was in whether logistics service providers should aim to be a one-stop shop, or to focus on niche markets and services to have a competitive edge.

ISSUE 4 / 2018

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Final assembly of the Siements SGT5-8000H gas turbine in Berlin. / CREDIT: SIEMENS

WHEN YOU’RE MOVING CONTAINERS, PRICING IS VERY IMPORTANT. WHEN YOU’RE MOVING A CARGO THAT COSTS US$2 BILLION AND IT TAKES 15 MONTHS TO REMANUFACTURE, PRICE COMES SECOND.” – Martin Pereda, Initec Plantas Industriales

“My advice is for logistics suppliers to specialize,” Pereda said. “At the end of the day we have a portfolio of logistics suppliers, but breaking down that portfolio, we know which ones are more specialized on one area of the world or handling one type of cargo.”

Fromm disagreed. “I think logistics suppliers need a broad base of services, not only the forwarding part or the warehousing, but transport engineering, and probably own some of their own equipment. We need that flexibility.”

While complaints rise from freight forwarders and other service providers regarding compensation, the panelists largely downplayed emphasis on price over service.

“Everyone should be allowed to make money,” Pereda said. “When we squeeze the one that’s helping us, we have the same problem with our clients.”

“The most important thing is definitely service, but the price has to fit,” Fromm said.

“It depends on the project,” Skellingsted said. “If I’m competing against Ruediger on the business for the transformer, that would be price; on the major project, it might be the whole service, the whole setup.”

“It’s the elephant in the room,” Pereda concluded. “It depends on the project and the cargo. When you’re moving containers, pricing is very important. When you’re moving a cargo that costs US$2 billion and it takes 15 months to remanufacture, price comes second.”

2020 OUTLOOK

Like most companies, the panel participants saw a sliver of optimism looking ahead, strongly tempered with the failed promises of recent years.

“The good news is there is a market,” Fromm said. “The bad news is it has dropped a little bit this year and probably next year too.” Though Fromm, whose focus is on Siemen’s power transmission, added: “There’s definitely a need to transport power here in Germany from the northern part to the southern part.”

Pereda said that, as an EPC contractor focusing on oil and gas, business has suffered the past few years due to the price of oil and lack of investment. However he sees tenders coming from the oil companies and anticipates some improvement in 2019 but mostly in 2020 for oil and gas projects.

Following some “bad experiences” with one EPC contractor, BASF’s strategy in 2016 changed “and we moved away from EPC contracting and we do our actual business ourselves,” said Dieter Busam, procurement global forwarding industrial projects. “So we split the EPC contract into parts, and then we have the engineering part, the construction part, the onsite logistics part, the worldwide forwarding part …” BB

Coverage from the conference session “Shippers Panel: Consolidation and Contracting Trends in the Project Supply Chain” 78 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 4 / 2018

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NEWS FROM BREAKBULK EUROPE 2018

Positive Trade Outlook Supports Projects

BY CARLY FIELDS

Supportive global monetary and fiscal policies are shoring up world growth – good news for trade and the supply chain industry that supports it, according to Caterpillar’s chief economist.

Delivering the keynote speech at this year’s Breakbulk Europe, Nicolas Clerc saw only partial roadblocks from ongoing trade negotiations, stating that the manufacturer’s expectation is for trade volume growth to be faster than overall economic growth.

“This has been the norm in the past, but we saw exceptions in 2012 and 2016,” Clerc said. “Now, we are back in a growing world that is going to drive a lot more volume through

transportation and logistics channels, and challenge all of us sitting in those chains to deliver those goods in an efficient, cost effective and sustainable manner,” he said.

Clerc pointed to the long and slow recovery from the Great Recession, noting that the world has adapted to shocks, both cyclical and structural, since 2016.He described 2017 as a “pivotal year” when confidence started to return to the market. Gross domestic product growth is buoyant for the world and is coming from all regions.

“It’s been eight years since we emerged from recession, but we are only now getting into the expansion phase,” he said. With the expansion phase comes many years of growth, although investment will

be needed to support that phase.

“Now is the opportunity to expand capacity, invest in innovation and in productivity. We will reap the benefits through the rest of the cycle and the next cycle,” Clerc said.

The more investment ploughed into productivity and enhancing processes, people and technology, the less constraints project cargo movers will feel during the business cycle.

Those constraints can drive prices up leading to inflation that scares central banks, prompting them to raise interest rates. “That generally hits business confidence and we will then go through a recalibration. So, productivity is key to make those cycles as long and as beneficial for the entire world economy as possible.” BB

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ISSUE 4 / 2018

Project Cargo ‘Fundamental’ to MSC

BY CARLY FIELDS

Switzerland-headquartered and family-owned carrier MSC has firmly planted its flag in the project cargo and breakbulk sector.

Speaking to Breakbulk, Ben Collins, global project cargo manager, explained that project cargo is not seen as a “filler” on MSC ships.

“It’s a fundamental part now of the service and options that we offer to our client base,” he said.

Commenting on shippers’ concerns that low freight rates might affect safety levels, Collins said: “For breakbulk cargoes, it takes a dedicated focus to make sure that the cargo is well looked after. For that we should be well rewarded. The

Breakbulk market, like no other, has a market rate level where we have to be within, but I would not agree that it’s a zero-sum game where you have to compromise safety to hit a certain rate level. We would not make that exchange.”

Collins was tentatively upbeat on prospects for the sector, confirming the carrier has seen more activity and enquiries for projects this year.

However, his caveat was that the reality remains challenging and that the “champagne corks aren’t popping” just yet.

To be ready for the upturn, MSC has focused on fostering local relationships under a centrally-controlled, non-trade specific approach that’s centered on trust. Collins describes the sector as

CREDIT: MSC

“still a people industry,” demanding a willingness and a capability to handle the cargo in a proper and professional manner. “There’s room for technology but it will never beat the local relationships and global co-operation that’s required,” he said. BB

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NEWS FROM BREAKBULK EUROPE 2018

Blockchain Needs Industry-level Support

BY CARLY FIELDS

Described as the next step of digitalizing transport and logistics, blockchain is already making waves in the logistics industry. But for its full benefits to be realized, project cargo and breakbulk companies need to dump silo thinking and work together on an industry level.

Frank Bolten, managing partner Chainstep, pictured below, told an audience at Breakbulk Europe that blockchain does not make sense for one company. “Normally, it is better for a group of companies, and is most interesting for an industry.” Setting blockchain system standards across a whole industry benefits all and “really brings a lot of efficiency gains to everybody,” he said.

Moderating a panel on the digital ledger technology, Cyril Joseph Varghese, global logistics director – strategy and commercial at

Fluor, saw blockchain as a potential differentiator for freight forwarders in the future, allowing them to eliminate the wastage and the inefficiencies of supply and value chains for engineering, procurement and construction companies.

With the problem of plenty of excellent freight forwarders vying for the same piece of cake, Varghese asked: “What is the differentiation that can be done to stand out amongst competition? How can we as EPCs and shippers be able to source better and smarter so that the landed cost remains low? How can you as freight forwarders and shipping lines increase your profitability so that you remain relevant in the industry and you continue to invest in activities which eventually we are going to use?”

BREAKBULK SUITED TO BLOCKCHAIN

The audience at Breakbulk Europe heard that the project cargo sector is well suited to blockchain technology.

In tandem with the physical asset being transported from Point A to Point B is a flow of information which is where blockchain comes in.

“If you start capturing this that information remains as a single source of truth and grows in momentum as and when it migrates through the supply chain,” Varghese said. “There is huge potential in avoiding a lot of duplication, avoiding finger pointing, making sure that the provenance angle is taken care of and that everybody knows the history of every material travelling through the supply chain.”

One approach would be to isolate a pain point in the chain and build a blockchain solution around it, however that would demonstrate limited functionality of the blockchain potential. “We need solutions which are broad-based which can be customized and can be utilized for a larger variety of industrial applications to address multiple pain points,” Varghese concluded.

He referred to the “goldmine of data” that industry stakeholders sit on, urging companies to integrate technologies onto a blockchain platform, including smart contracts, to remove the trust element that is holding back the industry from doing business with multiple entities.

“Let’s see how we can use blockchain to breathe sense, agree as an industry that there is a use case, look at the use case and then figure out how we can move forward as an industry. Having access to a single point of truth has huge application for the supply chain,” he said.

Indeed, Varghese foresees a time when blockchain is insisted upon as a source of truth for EPCs which will allow it to gain traction.

However, he warned that blockchain is not the answer for everything. “We need to make sure that we differentiate on where blockchain can help us and where it would add value.” BB

Coverage from the “Blockchain Supersession” conference sessions.

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Photo: Harry Köster

GLOBAL PROJECT LOGISTICS Two Trimodal Terminals in Wilhelmshaven: Germany´s only deep-water Port > 39 hectares in total > Inner Harbour: Own port operation (since 1979) > Container Port: Heavy lift terminal with 400 t ceiling cranes & rail sidings (from 2019) > Pre- and final assembly > Seaworthy packing incl. own manufacturing > 65,000 m² general cargo warehouse area > Seaport logistics for project cargo NORDFROST • European Headquarters • Nordfrost-Ring 1 • 26419 Schortens • Germany Phone +49 4461 8902-710 • info@nordfrost.de • www.nordfrost.de

NEWS FROM BREAKBULK EUROPE 2018

‘Flexibility’ Leads to Zeamarine

BY GARY BURROWS

Zeaborn Group credits its success to “flexibility,” but is unwavering in its goals to build “a fully integrated shipping company” with a fleet of more than 100 multipurpose vessels, said Jan-Hendrik Többe, managing partner.

Taking another major step in that direction, Zeaborn kicked off Breakbulk Europe by announcing it has entered into a joint venture agreement with Maritime Holdings-owned Intermarine, to create Zeamarine.

Speaking during a session at the Breakbulk event, Többe and Ove Meyer, Zeaborn managing partner, disclosed that, while the combination isn’t a conventional takeover, Zeaborn will act as majority shareholder with 75 percent.

The result is a fleet of 75 vessels, which the partners anticipate climbing to 100 vessels by year end, by taking advantage of the distressed vessel

market. All vessels of the combined entity will take on the “Zea” prefix.

“One thing that stays is the established services,” Meyer said. “Rickmers’ round-the-world service and the Americas service of Intermarine, they are established brands, and that is something we definitely want to keep, at least in the first instance.” The merger also does not include the U.S.-flag vessels under Intermarine.

THE FULL PACKAGE

The agreement, which is subject to antitrust clearance, includes all vessel fleets, staff and the global network of customers and offices. Zeamarine will operate from three regional hubs, in Houston, Kuala Lumpur and Hamburg.

“Each respective entity brings unique value to the joint venture …

Intermarine has a strong reputation out of the United States into South America and is a leading project cargo player out

CREDIT: ZEABORN

of Asia; Zeaborn brings a strong presence in Europe and Asia,” Meyer said in the release announcing the merger.

The Zeamarine team will include Ulrich Ulrichs and Nicki Schumacher from Zeaborn; and Andre Grikitis, Frank Fischer and Michael Dumas from Intermarine.

“We are founding a new entity and merging our structures together,” Meyer said. “We have excellent structures on both sides, from the Rickmers side and also the Intermarine side.

“Takeover is definitely a term we want to avoid. For sure there will be some synergies and some mismatches that we need to deal with in the big task ahead. But it is on an eye-to-eye.

We want to create something new that’s hopefully unique and successful.”

When asked if Zeaborn anticipates losing customers in the merger process, Többe said the Zeamarine model focuses on operation and leverage, while eliminating internal

Coverage from the conference session “Partner’s Perspective: A Conversation with Zeaborn”

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competition and improving customer focus, “so it’s a matter of 1+1=2.5 rather than 1.5.”

“We’re asking, ‘what additional services can we offer for the customer?’

And we’ve gotten quite a lot of feedback already,” Meyer said.

ZEABORN’S GROWTH April 2014: Zeaborn places an order for 10 12,500 dwt multipurpose vessels to be delivered from the fourth quarter of 2015. The deal subsequently collapsed.

‘CASH-RICH’

Zeaborn has been on a growth trend over the past five years, through organic growth and strategic acquisitions in Europe and Asia. It completed its takeover of German shipping line Rickmers-Linie, along with MCC Marine and NPC Projects in April 2017. Zeaborn also acquired ship services firm E.R. Schiffahrt, including all staff and subsidiaries, in February 2018 (see timeline).

With substantial financial backing, Zeaborn has been able to take on aggressive growth without incurring the substantial debt that plagues the multipurpose vessel industry.

“I don’t know if we are ‘cash-rich,’ but we are debt-free and that already makes very much of a difference,” Többe said.

“Originally it has been a KG-driven business,” Meyer, said referring to the German financing houses that have been attempting to scrape off vessel debt. “The equity that was in these ships does not exist anymore. It is a problem still to turn these ships over to the banks. I heard a statement a couple of months ago that 80 percent of MPVs are under distress.”

Többe said Zeaborn’s emphasis since its start nearly 10 years ago has been on cost control and efficiency. “Many shipping companies have undergone massive restructuring programs …

We’ve been very lucky that we could build everything from scratch. We didn’t make the same mistakes, we grew our structure slowly and very carefully.”

He said Zeamarine will focus now on “organic growth, so we will not look into more mergers and acquisitions. But we have a fully fledged outfit now to grow by adding vessels, and like everyone else in the market we are looking at distressed vessels – single vessels and bigger packages – with financial structure behind it.”

January 2015: Zeaborn acquires a 50 percent shareholding in EMS ConBulk, marking its first step into commercial management.

FOOLS RUSH IN

The company will be a cautious buyer, Meyer said. “The ships that are available are sometimes not in the best shape, so it will be on a charter basis, it will be on vessel transfer.”

Zeamarine also has Intermarine’s Ecolift F900 fleet, a series of new 13,300 deadweight-tonne vessels the carrier began building in 2015, to assimilate.

Többe and Meyer said Zeaborn envisions the best mix of 30 percent to 35 percent ownership, and the rest a mix of long-term charter and shortterm spot charter.

“That gives us the flexibility for short- and mid-term market requirements,” Meyer said.

Flexibility also led Zeaborn into ship management. “It was never on the agenda in the first instance,” Meyer said. “Ship management was only a function to help maintain the ships in which we had ownership, and it only came by the opportunity” of acquiring the bankrupt Rickmers Group in September 2017.

Flexibility will continue to be the approach moving forward, as it “closely monitors developments on liner services and trade lanes over the next two or three years,” Meyer said.

Concluding the Breakbulk session, a question was posed to the panel audience, using the interactive Slido. com program: “Who should Zeaborn partner with next?” The audience overwhelmingly responded, “BBC Chartering.” BB

April 2016: Zeaborn acquires the majority shareholdings in the shipping-related companies of HC Group and enters into a cooperation with Carisbrooke Shipping for the commercial management of 17 vessels.

February 2017: Zeaborn takes over the business operations of Rickmers-Linie, NPC Projects and of broker MCC Marine Consulting & Contracting in a deal which takes its combined fleet to about 50 MPVs. July 2017: Zeaborn acquires five 30,000 dwt heavy-lift vessels from the Rickmers Group.

September 2017: Zeaborn acquires the ship management operations of the bankrupt Rickmers Group.

January 2018: Zeaborn takes over E.R. Schiffahrt, including broker Harper Petersen bringing 61 containerships and 20 bulk carriers into its managed fleet. This deal expands Zeaborn’s fleet to more than 165 vessels.

May 2018: Zeaborn enters into a joint venture with Intermarine, to be known as Zeamarine with a fleet of 75 ships.

BACK PAGE TOP 40 LATIN AMERICA AND CARIBBEAN INFRASTRUCTURE PROJECTS 2018

The Strategic 100 Report focuses on projects that will go forward in the next three to 18 months. The intent is to identify important projects, that are structured correctly, and that have enough support from people, politicians and the business community to move forward. Total value of this year’s projects is more than US$120 billion.

PROJECT SPONSOR COUNTRY STATUS SECTOR

VALUE (US$M)

1.

20,000

SeaOne Fuel Supply

SeaOne Holdings LLC

Puerto Rico

Planning

Energy - Oil & Gas

Global Infrastructure Advisors

Colombia

Feasibility

Ports & Logistics

550

3. Replacement of Phase I & II of TransMilenio TransMilenio S.A.

Colombia

Design

Urban Mass Transit

600

4. Panama Metro Line 3 Expansion

Metro Panama

Panama

Procurement

Urban Mass Transit

2,600

5. Headwaters and Pipeline Works for

Lima’s Potable Water Supply

Ministerio de Vivienda, Construcción y Saneamiento

Peru

Planning

Water & Wastewater

6. South Integration Highway

Ministry of Transportation, Ports and Civil Aviation and National Land Transportation Agency (ANTT)

Brazil

Planning

Highways & Bridges

2,600

7.

2. Puerto Colombia

Sao Paulo - Intercity Trains

600

State of Sao Paulo, CPTM

Brazil

Announced

Rail

1,500

8. West-East Integration Railway – FIOL

(Ilhéus/BA to Caetité/BA Section)

Transportation Agency (ANTT)

Brazil

Feasibility

Rail

300

9.

Financiera de Desarrollo Nacional (FDN)

Colombia

Planning

Urban Mass Transit

4,700

10. Canoas Wastewater Treatment Plant

Bogotá Metro

National Planning Department

Colombia

Design

Water & Wastewater

1,426

11. Barranquilla Light Rail – Line 26

Alcaldía de Barranquilla

Colombia

Feasibility

Urban Mass Transit

307

12. Electric Metropolitan Train

Ministry of Public Works and Transport

Costa Rica

Planning

Urban Mass Transit

291

13. Panama Hydraulic Ring Extension

Government of the Republic of Panama

Panama

Procurement

Water & Wastewater

165

14. Wastewater Treatment in Lake Titicaca

Ministry of Housing, Construction and Sanitation

Peru

Feasibility

Water & Wastewater

304

15. Efficiency Increase of Los Berros Water

Treatment Plant of the Cutzamala System

Comisión Nacional del Agua (CONAGUA)

Mexico

Feasibility

Water & Wastewater

136

16. Sao Paolo Municipal Lighting PPPs

Government of the State of Sao Paulo

Brazil

Planning

Energy – Transmission

1,000

17. PPP for Public Lighting, for the city of

Serra Gaucha Municipal Cluster

State Government of Sao Paulo

Brazil

Planning

Energy – Transmission

90

18. Metro Riel LRT

Ferrocarriles Guatemala /ANADIE

Guatemala

Planning

Urban Mass Transit

19. Third Educational Infrastructure Project

Ministry of Economy and Finance

Uruguay

Feasibility

Social Infrastructure

40

20. Borinquen II Geothermal Project

Costa Rican Electricity Institute (ICE)

Costa Rica

Planning

Energy – Renewable

300

21. Agua Negra Tunnel (EBITAN)

Entidad Binacional Tunel de Agua Negra

Argentina

Procurement

Highways & Bridges

1,500

22. Highway BR-116/RJ/SP (Dutra) –

Rio de Janeiro to São Paulo

National Agency of Land Transportation (ANTT)

Brazil

Feasibility

Highways & Bridges

4,200

23. Ferrogrão Railroad (EF 170 - MT/PA)

Ministry of Transport, Ports, & Civil Aviation

Brazil

Design

Rail

3,392

24. Implementing of the Estácio/Carioca/

Praça XV Highway

RIOTRILHOS

Brazil

Planning

Urban Mass Transit

1,100

25. Port of San Antonio – Outer Port

Empresa Portuaria de San Antonio (EPSA)

Chile

Design

Ports & Logistics

3,300

26. Cautin Water Reservoir

Ministry of Public Works

Chile

Feasibility

Water & Wastewater

427

27. Santa Marta Aqueduct – Line 2

Alcaldía de Santa Marta

Colombia

Planning

Water & Wastewater

954

28. Public Schools Project - Phase 1

National Planning Department/FDN

Colombia

Planning

Social Infrastructure

29. Orotina Metropolitan International

Airport (Phase 1)

General Directorate of Civil Aviation (DGAC)

Costa Rica

Design

Airport

30. San José-Cartago Toll Road

Ministry of Public Works and Transport

Costa Rica

Planning

Highways & Bridges

290

31. Guayaquil South Viaduct Road Proj.

Ministry of Transport and Public Works

Ecuador

Design

Highways & Bridges

1,158

32. Cardenillo 588 MW Hydroelectric Plant

Corporación Eléctrica del Ecuador

Ecuador

Planning

Energy – Renewable

1,100

33. Telecomm Trunk Network

Grupo Aeroportuario Ciudad de Mexico

Mexico

Procurement

Telecommunications

379

34. Large scale Use of Natural Gas Central

and Southern Peru

Ministerio de Energia y Minas

Peru

Procurement

Energy - Oil & Gas

350

35. Optimizing PRASA’s Metering System

and Customer Experience

Puerto Rico Aqueduct and Sewer Authority (PRASA)

Puerto Rico

Planning

Water & Wastewater

200

36. Santa Fe - Parana Bridge

National Directory of Roads and Highways

Argentina

Feasibility

Highways & Bridges

37. Expansion of the Tietê River Waterway

Government of the State of Sao Paulo

Brazil

Feasibility

Ports & Logistics

1,400

38. El Dorado II International Airport in Bogata

Agencia Nacional de Infraestructura

Colombia

Procurement

Airport

1,060

39. Expansion of Route 27

National Concessions Council (CNC)

Costa Rica

Planning

Highways & Bridges

450

Dom. Republic

Planning

Energy – Renewable

110

40. Parque Fotovoltaico 50 MW Solar Park WCG WVG Energy Ltd.

770

217 1,932

650

Note: CG/LA uses five criteria to evaluate projects: competitiveness creation (30 percent), business generation (20 percent), local benefit creation and maintenance (20 percent), sustainability (20 percent), and immediate job creation (10 percent). Source: Strategic 100 Latin American & Caribbean Infrastructure Report, 16th Edition, CG/LA Infrastructure, www.cg-la.com.

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