Breakbulk Magazine Issue 5 / 2018

ISSUE 5 / 2018

THE PUBLICATION FOR THE INDUSTRIAL PROJECT SUPPLY CHAIN INDUSTRY

DIS RUP TION Creating Opportunity from Supply Chain Enigmas

PROJECT CARGO DEFENSES AGAINST CYBERTHREATS

FORWARDERS SHOW THEIR METTLE IN EVOLVING MARKET

BECHTEL CHAMPIONS THE ENGINEERINGSUPPLY CHAIN INTERFACE

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IN THIS ISSUE

20

40

Cover Story

48

20 DISRUPTION Creating Opportunity from Supply Chain Enigmas

32 TRADE NOTES

48 PROFILE

Project Cargo Defenses Against Cyberthreats

Plan, Plan, Plan, But Retain Some Flexibility

ROGUES AND RENEGADES

40 INTERMEDIARIES

SHOWING THEIR METTLE Forwarders Must Provide Value in Evolving Environment

10

08 EDITORIAL

Collaborate or Perish

FROM START TO FINNISH

54 PROFILE

STICKING TOGETHER PROJECT STRANDS Championing the Engineer Supply Chain Interface

16

10 CONVERSATION Breakbulk Forum

THOUGHT LEADERS

16 T aming Flighty Rates: Air Freight Charges Ripe for Change

18 C losing Insurance Gaps: Importance of Collaboration, Single Policy Formation

COVER IMAGE VIA SHUTTERSTOCK, WITH EDITING BY CATHERING DORROUGH

4 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 5 / 2018

IN THIS ISSUE

60

76

96

60 TRADE NOTES

76 ENERGY UPDATE

96 CASE STUDY

MPVs Rue Their Own Mischiefmakers

Offshore Wind Moves Soar with Potential

Long Beach Bridge Project Calls for Collaboration

CLOWNS VS JOKERS

FLOATING AMBITIONS

REACHING NEW HEIGHTS

68 OCEAN SERVICES

84 PORT FOCUS

104 CASE STUDY

Dynamar Ranks Breakbulk Operators

Caribbean Ports Face Infrastructure Challenge

Fighter Jet Demands Careful Handling

PLAGUE AND BLESSING

BOXES OVER BREAKBULK

UPLIFTING MOVE

90 ENERGY UPDATE

FROM CUTS TO CAPACITY Egypt’s Promised Renewables Projects Gain Momentum

112

LEGAL SPOTLIGHT

112 P ay and Play?: A Lesson in

120

Anti-bribery, Corruption Compliance

116 B uyer Beware: Avoid Bargain Rates and Clause Exploitation

120 AMERICAS IN BRIEF 124 PHOTO CONTEST 130 B ACK PAGE

Americas Economic Activity 2017-19

6 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 5 / 2018

IN THIS ISSUE Cover Story

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ISSUE 5 / 2018

EDITORIAL

COLLABORATE OR PERISH William Von Raab, the longest-tenured commissioner of the U.S. Customs Service (now known as U.S. Customs and Border Protection), likely had the most lasting impact on the agency and its role with the shipping industry.

Serving during the Reagan and George H.W. Bush administrations from 1981 to 1989, Von Raab was a colorful, confrontational Customs official. By 1988 he was spearheading an initiative to replace the mountains of paper required for processing imported goods into the U.S. with electronic filing through the Automated Commercial System.

ACS shifted Gary Burrows the filing responsibility to customs brokers and importers, and necessitated investment in computers, software and training. Faced with such a monumental shift in process and approach, the industry was naturally reluctant.

Speaking to a trade group in Chicago, Von Raab, as one broker put it, “tried to put the fear of god into all” to comply by famously insisting the industry “automate or perish.”

Obviously, the message was received and through an incredibly complex and contentious process, compliance was revolutionized, and the result is the effective system in which U.S. importers and the CBP operate through today.

THE KILLER B

Fast-forward to today, and global logistics finds itself at a similar crossroad of innovation and technological disruption.

In her deep-dive cover story (“Disruption,” page 20), Carly Fields’ centerpiece on an exploration of cutting-edge technology is an attempt to separate hype from realities of the “B” word, the digital ledger technology known as blockchain.

The story lists blockchain’s promised 8 BREAKBULK MAGAZINE www.breakbulk.com

potential to “decentralize trust, automate business processes through smart contracts, and deliver an immutable chain of records.” Deanna MacDonald, CEO and founder of Blockchain Labs for Open Collaboration, says the technology can “increase transparency, create better compliance and stronger governance,” while “establishing trust and verifiable data across complex supply chains.”

While blockchain potentially is open to all kinds of value chains and enabling players of all sizes to offer services, MacDonald says it requires potential partners to collaborate to guide the trusted networks that are going to impact the sector “very soon.”

It’s one thing to prod industry to comply with a Customs mandated initiative, in which data must be shared. For companies to share proprietary information and visibility through a system is quite another.

Changing minds to accept more transparency and openness are vital to advancement of cloud-based solutions. Of course it would be easier if the systems were truly open and operated as they were intended. But creating systems that level the playing field among partners must also recognize stakeholders are at different stages of ability and development.

Surrendering competitive nature to wait or help others catch up goes against instinct.

Still, as he is quoted in the story, Stephen “Spo” Spoljaric, Bechtel’s specialist with an eye on innovation, says: “The best of ideas will quickly dissolve without an integrated support network.”

So, collaborate or die? Unlike Von Raab, MacDonald warns that fomenting a mentality of “get involved or get left behind” is counter-productive. She says those building the systems need to mentor everyone through the process and “along for the ride.”

It’s likely that blockchain architects would reap rewards from initiating a collaborative environment. But there’s also a limit to patience in a competitive environment. And given the potential for success for early adopters, “very soon” will give way to “now” for the industry.

Anyone with a stake in the industrial project cargo supply chain should be searching for self-motivation.

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 Helen Campbell Kerry Dimmer Mike King

Lori Musser Thomas Timlen 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

TRAFFIC MANAGER

Dee Cariglino / +1 251 459 0246 dcarliglino@breakbulk.com

SUBSCRIPTIONS

To subscribe, email gburrows@breakbulk.com, or call from inside the U.S. +1 904 535 5460 between 8 am and 5 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 5 / 2018

d ou Pr LN GP M r be em e nc Si 20 13

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CONVERSATION

Conversation is a forum of thought leaders, commentaries, letters, editors’ notes and note-worthy social media from Breakbulk’s audience and staff. Join in the conversation – submit your views to gburrows@breakbulk.com, or through Breakbulk’s social media channels on LinkedIn, Facebook or Twitter.

CREDIT: SHUTTERSTOCK

‘IT’S TIME FOR AN INDUSTRY STANDARD ON SAFETY’ Thomas Skellingsted, vice president global head heavy-lift and project operations, ABB “Let me tell you a story. Once, I was watching an unloading operation in Houston. The stevedores who were changing the shackles on the crane from the barge were on the barge without safety hats. I said to one operative, ‘Stop that guy,’ but his response was: ‘I can’t, this isn’t my jurisdiction, we’re not in charge of the stevedores.’ If that worker had been injured, or worse, jurisdiction would have been the least of their problems. That kind of ‘not my jurisdiction mentality’ is wrong, that worker is first and foremost a human being.

“Health and safety and quality are important to ABB; they have to be. We walk the talk and have a campaign inter10 BREAKBULK MAGAZINE www.breakbulk.com

nally called ‘don’t look the other way,’ as well as internal guidelines for H&S that were created by myself together with the company’s H&S directors in the transport and logistics division. But as an industry we can do more.

“I strongly believe that there should be an industry safety standard. It’s important to me that we have standards, so that everybody comes home safe. If Breakbulk as an organization said, ‘let’s try and do something together,’ we could show the world a lot. We represent 80 percent of the world’s transport for heavy-lift. So, if we took the initiative we could change the breakbulk and project cargo world, improving safety and sharing best practices together.”

For more industry safety standards coverage, see Breakbulk’s special report: ‘Safety and Efficiency,’ in Issue 4, page 39, or on breakbulk.com.

‘TOO MANY FREIGHT FORWARDERS? YES AND NO!’

Matthieu Jeannin, global category manager of logistics and warehousing activities, SCM “Do we have too many freight forwarders in the industry? I think the answer is yes and no. Yes, there are many of them, but you can count the ones with real expertise or providing services in niche markets. It’s the ones in the middle that offer low added value, in my view. They will be the ones that disappear or leave for other logistics segments. Also, there are a lot of freight forwarders that say they can do project cargo, but they are not specialists.

“At SCM we have completely changed the way we qualify freight forwarders. We now also identify and qualify subcontractors, because today we cannot simply trust the main contractor; we have to also qualify their contractors just to make sure that they can also deliver as per SBM’s requirements.

“IT capabilities are also a problem.

Plenty of freight forwarders say that they have tracking systems and other advanced data systems, but there is often a challenge with compatibility. We have learnt to be very careful and to find out exactly which IT system the freight forwarder uses, how it’s integrated, how it’s going to be followed and so on.

Otherwise, there’s too much room for misunderstanding.”

For related coverage, see “Showing Their Mettle,” page 40 of this issue.

ISSUE 5 / 2018

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‘IT’S STILL ALL ABOUT RELATIONSHIPS’

Dieter Busam, procurement global forwarding industrial projects, BASF. “In my business, I have worked with my forwarders for years and I know them all personally. I have a fixed bidders’ list and all of these suppliers bring the same quality. These are relationships that have grown over the years. For me, trust is the most important thing.

“We never deal directly with

‘DO WE STILL NEED GLOBAL GO-BETWEENS?’ Jurgen Huygh, head of shipping and central purchasing, CG Global “Global freight forwarders are increasingly acting like mortgage lenders: they don’t provide a lot of service, they just give you money and at the end if you don’t pay on time they immediately come after you. But the bottom line is that they are outsourcing everything to the asset players. More and more I am convinced that we should get rid of some of the forwarders because they are just brokers, go-betweens in a lot of cases, and are not adding value.

It will be the survival of the species if forwarders don’t adapt.

“There are complications from a risk perspective as well. We focus on lean communication lines, meaning that when you have a problem, you 12 BREAKBULK MAGAZINE www.breakbulk.com

the ship operator and always use a freight forwarder for the door-to-door solution in this special business. The transport chain stops at borders if you use asset providers directly. Multiple transportation brings issues and complexity – the freight forwarder can deal with these for us.”

For related coverage, see “Showing Their Mettle,” page 40 of this issue.

discuss it directly with the asset player. From a practical perspective you may know that asset player well, even though he is acting on behalf of the freight forwarder and legally the relationship is between the forwarder and the shipper. If something then goes wrong, there is a question of liabilities because the contract is between the asset player and the freight forwarder.

“I still use forwarders in some countries where you don’t have the knowledge. Those niche forwarders still deliver a service. Here, I pay a premium for that forwarder because I don’t have the local knowledge and I want to mitigate my risks. That still gives me value and a knowledge advantage.”

For related coverage, see “Showing Their Mettle,” page 40 of this issue.

Jenny Gao, senior IT manager, AAL “According to Microsoft, the potential cost of cybercrime to the global community is a mind-boggling US$500 billion, and data breaches will cost the average company about US$3.8 million. It is so important to be in-the-know about the potential threat cybercrime poses, the impact it is having, and what can be done about it.

“We should not imagine that as a niche shipping segment, the multipurpose vessel sector is any less prone to attack. Cybersecurity is a growing threat to the maritime shipping community, as we demand greater 24/7 connectivity, speed, transparency and networking capability in our global operations and communications, especially with our customers, partners and colleagues. Cyberattacks are growing in prominence every day, from influencing major elections to crippling businesses overnight; the role cyberwarfare plays in our daily lives should not be underestimated.”

From “Rogues and Renegades – Project Cargo Defenses Against Cyberthreats,” page 32 of this issue.

CREDIT: AAL

ISSUE 5 / 2018

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‘YOU BETTER BE THINKING ABOUT 2020’ Roger Strevens, head of sustainability at Wallenius Wilhelmsen and Trident Alliance chairman “Two of the major determinants in how a vessel deals with the 2020 global sulfur cap change are whether the vessel operator pays for the fuel directly, and whether the owner and operator of the vessel are the same.

If the answer to both is yes, i.e. the operator pays for the fuel directly and

owns the vessel, then it can make a lot of sense to invest in scrubbers if the owner-operator believes that is the most cost-effective route to compliance for the vessel. However, in each of the other possible scenarios, which includes vessels that are chartered out, it’s a whole different proposition, one which is less likely to lead to scrubbers being installed.

“Companies that install exhaust

scrubbers should be prepared to deal with the ‘off button’ dilemma. That means, despite making a multimilliondollar investment for a scrubber, you may be forced to switch it off permanently before it reaches the end of its useful life due the unavailability of heavy sulfur fuel oil, or HSFO. “Yet, the availability of HSFO is neither the only nor the most urgent fuel availability question. That title goes to whether an operator can obtain sufficient quantities of very low

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ISSUE 5 / 2018

sulfur fuel oil (<0.5 percent sulfur fuel) or marine gasoil (<0.1 percent sulfur) in 16 months. On that point liner operators have an inherent advantage over their tramp operator counterparts in that their fixed schedules support bunker planning and, consequentially, consolidating of bunkering in fewer ports. That helps them be among the first in line at the fuel pump, particularly if they are also an operator of a large fleet of large vessels. It can also help when it comes to fuel quality in that it’s common knowledge that supplying a bad product to a large repeat customer is not a good idea.

“None of these points mean large liner companies can expect plain sailing in 2020, but at least compared to small tramp operators they may not be sailing into the eye of the storm.”

For recent coverage on IMO 2020 and environmental shipping issues, see Issue 4 cover story, “Environmental Matters,” page 12 or on www.breakbulk.com.

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CREDIT: WÄRTSILÄ

‘IMPROVING, BUT A WAY TO GO FOR SOME’ Oskar Granqvist, Supply chain manager, Wärtsilä Energy Solutions “As a shipper, I feel that there are still carriers, forwarders and other service providers on the market that are focusing on making money today and not focusing on building profitable long-term relationships with the shippers. Of course, some shippers are interested only in getting a low price, but I don’t see either of these

to be healthy for the industry. The aim should be for good cooperation and to create partnerships that are profitable for the shippers and the logistics providers, and I do think this is improving but there is a way to go for some.”

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THOUGHT LEADERS

TAMING FLIGHTY RATES

AIR FREIGHT CHARGES RIPE FOR CHANGE

BY NICOLA HUGHES FIS

HOW TO MANAGE VOLATILITY

FIS believes the inherent volatility of the air cargo market presents an ideal opportunity for participants to hedge their exposure, and for traders to take positions against physical market movements, so protecting profitability.

The air freight market is beginning to recognize the value of price risk management, with the increased use of index-linked block space agreements for physical cargo shipments.

The next step is to adopt purpose-designed financial risk management tools. Moving in that direction, FIS recently published an air cargo forward price curve, showing rates on an Asia-Europe basket route to August 2019. The curve illustrated the challenges that shippers and carriers face: rates are forecast to rise over the normally soft summer period to higher levels in the first quarter of 2018.

FIS spent a year working with impartial index provider TAC Index to develop a robust methodology for the air freight market. Using the forward curve for price discovery and the TAC Index for settlement, participants can use air cargo Forward Freight Agreements, or FFAs, for trading and to hedge the cost of their shipments. FFAs are a financial product which take their value from underlying freight rates and are cash-settled, with no physical delivery.

FIS is not setting out to create disruption for its own sake, but this is a market ripe for change. We believe that air cargo FFAs are an opportunity to move the industry to a position of increased freight rate transparency, bringing more actionable price points to freight users and providers.

All the components for a liquid, successful futures market exist in air freight: a huge, unhedged physical market; opaque, volatile pricing; and significant untapped value. FFAs could offer a solution to these problems. BB

Nicola Hughes is air cargo business development manager at FIS, a company focused on cargo-related derivatives.

16 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 5 / 2018

CREDIT: SHUTTERSTOCK

T

he air cargo freight market is undergoing a transformation that is more than just digital. True, new entrants are challenging established business models and promising new levels of transparency using tools that threaten longstanding relationships.

But in addition to technology threats, high levels of price volatility are causing cash management problems for buyers and sellers of air freight. With new capacity additions expected to remain low in the next few years, further volatility is likely for shippers, carriers, forwarders and end users alike.

The majority of air cargo pricing is negotiated on a 60:40 basis spot vs forward, with little guarantee on performance or delivery, locking forwarders and carriers into inflexible bilateral contracts. The process of estimating annual volumes and fixing the majority of prices without being able to factor in short-term effects has resulted in some painful results for shippers and carriers alike.

This is a market that is growing rapidly, with volume expected to more than double in the next 20 years, potentially increasing the level of price volatility. So bad is the problem that end users are beginning to directly approach carriers and cargo handlers to cover air freight requirements to work around the pricing opacity.

The size of the air cargo market – 35 percent of global trade by value, but only 1 percent of trade by volume – puts huge amounts of value at risk every day. This market is equivalent to 52 million tonnes of cargo annually with a value of US$6 trillion and US$70 billion in freight costs.

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THOUGHT LEADERS

CREDIT: SHUTTERSTOCK

CLOSING INSURANCE GAPS

IMPORTANCE OF COLLABORATION, SINGLE POLICY FORMATION

G

lobal activity for the project cargo business continues to surge across all regions and industry segments, from power generation, petrochemical and infrastructure builds to most manufacturing sectors. Project size and scope also vary enormously and may cost anywhere from several million dollars up into the billions.

This uptick has been triggered by a variety of factors, including stricter regulations governing plant efficiencies and air quality as well

BY KEVIN WOLFE as an increased ALLIANZ GLOBAL demand CORPORATE & for alternaSPECIALTY (AGCS) tive energy sources.

Additionally, an expanding need for quality-of-life enhancements in developing countries has fueled recent projects, including the building of water filtration plants, infrastructure upgrades and communication systems.

Regardless of project size, however, there are constants that remain keys to success from a project cargo insurance perspective: open communication between the client, logistics team and insurer, combined with tight, fluid 18 BREAKBULK MAGAZINE www.breakbulk.com

oversight and risk management during the life of a project. Whether it is a US$4 million or US$4 billion venture, collaboration is a must.

An effective approach is to manage each project as a partnership between the client and insurer with a common goal: the safe and timely delivery of all cargo to its final destination. This can only be achieved when all parties maintain a consistent and open dialogue prior to and during the transportation process.

It is also critical for marine surveyors to participate in logistics planning long before any cargo begins its journey; the surveyors provide valuable input regarding vessel suitability, route navigation and port considerations.

This information is needed to manage the transport from initial point of shipment – i.e. from the supplier’s doorstep through the duration of the move.

DON’T SPLIT COVER

At times and depending upon the terms of sale, clients may request coverage only for a specific leg in the transit chain – such as port-to-port, excluding land-based movements on either end. It is important to note, however, that this is not a recipe for success, as marine surveyors will lack insight into how cargo is packed and stowed prior to the start of initial transit.

To avoid such scenarios, it is best to provide project cargo coverage and handle transportation risk management from end to end under one policy. This seamless approach makes it much easier

to identify obstacles in their entirety and address issues prior to shipment, avoiding problems during the actual transit move. This will also allow for prompt handling of claims as there is only one marine cargo insurer involved.

The same principle applies when project cargo coverage is combined with engineering and construction coverage under one insurance program, with the same lead insurer. This onepolicy approach provides end-to-end coverage and a more comprehensive and smooth transaction as part of a single master contract. This is especially favorable for complex risks that require enhanced risk management and may need expedited policy issuance and claims resolution. It also eliminates any gray areas that may exist relative to whether a claim occurred during transit or construction as both coverage parts rest with the same lead insurer.

Finally, as the components for most projects are sourced from across the globe, when choosing an insurer for a project cargo program, it is important for companies to consider one that has a global footprint. This further creates an advantage and guarantees convenient support where and whenever needed. BB Kevin J. Wolfe, a 40-plus-year veteran of the commercial insurance industry, is global head-project cargo at the Chief Underwriting Office-Marine of Allianz Global Corporate & Specialty (AGCS).

ISSUE 5 / 2018

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DISRUPTIO 20 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 5 / 2018

Creating Opportunity from Supply Chain Enigmas

BY CARLY FIELDS

ON

nigma. Paradox. Opportunity.

With these three words, Big Four accounting organization Deloitte hit the blockchain nail squarely on the head in its 2018 Blockchain report. While the potential of this digital ledger technology is vast, it’s still regarded somewhat as a dark art by many breakbulk and project cargo professionals.

A draft National Institute of Standards and Technology Blockchain Technology Overview, published for comments at the start of the year, neatly vocalized the problem. “There is a high level of hype around the use of blockchains, yet the technology is not well understood. It is not magical; it will not solve all problems … It is not a silver bullet, and there are issues that must be considered such as how to deal with malicious users, how controls are applied, and the limitations of any blockchain implementation.”

But while it may not be magic, its ability to decentralize trust, automate business processes through smart contracts, and deliver an immutable chain of records can sprinkle fairy dust onto breakbulk operations.

Maersk, the infamous Danish blue shipping line, which also has a noteworthy presence in the breakbulk world with its Special Cargo arm, is making waves in the blockchain ocean. It partnered with IBM in January to establish a new blockchain platform to “provide more efficient and secure methods for conducting global trade using blockchain technology.”

Seven months later the pair launched TradeLens, “a blockchain-enabled shipping solution designed to promote more efficient and secure global trade, bringing together various parties to support information sharing and transparency, and spur industry-wide innovation.” As part of an early adopter program, 94 organizations are actively involved or have agreed to participate on the TradeLens platform, which has been built on open standards. This giant, collaborative step forward for blockchain may finally crack the enigma code for breakbulk professionals.

SIGNIFICANT MOVES

“Blockchain can play a role in all kinds of value chains throughout shipping,” Deanna MacDonald, CEO and founder of Blockchain Labs for Open Collaboration, told Breakbulk. “For example, it could enable a small player to offer services to a larger counterparty without the need for an intermediary,

There is a high level of hype around the use of blockchains, yet the technology is not well understood.”

– Draft National Institute of Standards and Technology Blockchain Technology Overview

www.breakbulk.com BREAKBULK MAGAZINE 21

DRIVING DRONE PHASE 2.0 Engineering, procurement and construction companies focus on the more-obvious fabrication and construction benefits of drone use, but their potential is much greater than that.

While drones have the power to improve the engineering information and efficiency needed in the breakbulk and project cargo sector, they can also aid with real-time decision-making.

Stephen “Spo” Spoljaric, deputy field procurement manager at Bechtel, gives the example of the farming industry, where drones are being used to make real-time decisions on how to treat crops.

“We can do something similar by using drones to look at laydown yards for steel and pipe to evaluate optimization of space and forecast material receiving constraints,” he said.

The next wave of technology is to bypass traditional radio frequency ID for identifying materials and use visual identification algorithms from 3D models of a facility to recognize the exact piece of equipment in the laydown yard by using images from the drone.

Bechtel is enhancing the roles of its supply chain professionals when it comes to drones, opting to train up and license employees as drone pilots and purchase drones outright, rather than hiring a third party to fly the drones for it.

Spoljaric’s motivation to drive innovation through drone use and other technologies comes from the opportunity to improve the breakbulk and project cargo industry, making it more appealing to people at all levels. This, in turn, benefits Bechtel.

“For example, Bechtel needs to move equipment we purchase from where it’s fabricated to where it’s constructed. If there are driver shortages, this impacts us,” Spoljaric said. “As an industry, we need to do something to address why we have the shortage to begin with – I feel innovation can help. Introduction of various technology will assist the industry overall, making it more relatable for all of us.”

increasing access to the market for a wider segment of the industry, on more equal terms. For instance, a small shipping line could liaise directly with a bigger player because they can do that quickly, rather than through the EDIFACT system. What happens when you reduce the intermediaries in just communications alone?”

Blockchain Labs for Open Collaboration, or BLOC, is supporting an industry-led consortium to demonstrate the application of blockchain as a means of facilitating an increase in transparency and traceability in the marine fuel supply chain. Seeing the potential in the wider shipping sector, it created its specific maritime-focused Maritime Blockchain Labs in March, marking the precursor to the marine fuel Deanna demonstrator.

MacDonald “Maritime Blockchain Labs exists to foster collaboration between Blockchain Labs for Open Collaboration blockchain practitioners and industry actors to share knowledge and best practices, to collectively define problems and ensure these solutions are interoperable,” MacDonald said. Rather than a top-down process of society and industry adapting to technology and not participating in its creation, BLOC facilitates a process whereby industry identifies, designs and refines its own solutions. “We’re unique in focusing on industry-led solutions. BLOC always conducts feasibility research in blockchain solutions before creating them, and takes a healthily skeptical approach to blockchain/ distributed ledger technology solutions before it can be proved that they add value.”

What happens when you reduce the intermediaries in just communications alone?”

–D eanna MacDonald, CEO and founder of Blockchain Labs for Open Collaboration

TAKING AN ACTIVE ROLE

MacDonald said that while BLOC has not done anything specific for the breakbulk and project cargo sector as yet, it is continuously sourcing and assessing the feasibility of several use cases throughout the shipping sector, including in those sectors, to be a part of its “rapid demonstrator prototyping.”

“Our industry sourcing for the first demonstrator project identified the bunker industry, with its multiple, complex transactions, as an ideal use case where blockchain technology can increase transparency, create 22 BREAKBULK MAGAZINE www.breakbulk.com

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Thomas Skellingsted, ABB’s vice president global head heavy-lift and project operations, acknowledged that while the sector is not yet capitalizing on blockchain potential, it is at least prepared for it, using data and embracing digitalization. However, not all parts of the supply chain are progressing at the same speed. “I don’t see the freight forwarders following at the speed that we are. For example, they are not investing money in their IT warehousing solutions and are way behind,” he said.

Also, he noted that the use of cloud-based solutions is limited, which is further hampering progression. “If we look at route surveys, how many better compliance and stronger governance,” she said. people have done the same route surveys in the past?

“Blockchain is great at establishing trust and verifiable data Why is that information not shared; why is it not common across complex supply chains – and that’s why we’re starting knowledge? The streets are still there! It’s like a big secret, here, looking at what will make the most difference for all which it shouldn’t be,” Skellingsted said. That mentality in sectors first.” the industry needs to change, he added, to encourage more MacDonald urged breakbulk stakeholders to get involved transparency and openness. in blockchain now to build the trusted networks needed to France-based aircraft and service maker Daher has tackle problems that are going to affect the sector “very soon.” made a point of being ahead of the digital wave. Chairman “Currently we are testing and iterating the solution with our Patrick Daher told employees in a seminal speech that lean consortia of bunker supply chain participants, but then the digital wave would submerge the company if they did will open it up for the industry to test at nothing. Instead, he implemented a large as well. This will be the process “technological watch” for the business, that we use to build the technology Armstrong by Daher, parachuting an that comes out of Maritime Blockchain innovation director and an IT director Labs for each of the demonstrators, and from the business into Silicon Valley thus, we are encouraging the industry at the beginning of the year to try to not only come forward and submit to detect and identify which digital Blockchain ... collaboration requests, but also to join solutions would be most useful to us in developing, testing and iterating on Daher. does have great these solutions, and allowing for more “They are there for the whole inclusive development of enterprise group, but they have already identified potential, but you solutions to become available for the interesting ideas for us,” said entire industry, not just the few.”

Bertrand Nobilliaux, vice president need to make sure Adopting a mentality of “get involved of the industrial project department. now or get left behind” is not helpful, she that you’re building “The idea is to be able to interface added. Those building the solutions need the customers and the providers, to to make sure they can bring everyone implement AI [artificial intelligence] something that through the process and along for the ride. and to simulate flows. With blockchain “Our advice would be to make sure people want, need, the idea is to contract with partners that you’re building collaboratively and and digitize documentation.” Daher is addressing the most pressing problems identifying companies that can help it and can afford.” for your sector first. Blockchain is an develop these technologies. inherently collaborative technology, “Technology can be a threat if you –D eanna MacDonald, CEO and and it does have great potential, but you are not in a good position, if you are founder of Blockchain Labs for need to make sure that you’re building under the wave,” Nobilliaux said. “We Open Collaboration something that people want, need, and have to be the best at what we do and can afford.” be ahead of the digital wave.”

The other risk is building systems that aren’t actually open, Daher is taking particular interest in new propulsion defeating the point of blockchain technology, which is to share for ships and truck innovation and was part of Airbus’ first trusted data and level the playing field on that basis. “If you’re electric plane initiative. The project department is also building something which is only going to benefit one or two big supporting Hybrid Air Freighters in its goal to implement players and excludes others, it won’t do that,” MacDonald said. a 20-tonne model hybrid blimp being manufactured by 24 BREAKBULK MAGAZINE www.breakbulk.com

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The first unit is expected to be operational by 2021.

“We are interested in every innovation that could help our business,” Nobilliaux said.

INSPIRATION FROM OTHER INDUSTRIES

Those innovations can come from the most unexpected places. Stephen “Spo” Spoljaric, deputy field procurement manager at Bechtel, explained how a mentoring project with supply chain students from Penn State University in the U.S. got him thinking about how everyday life could offer inspiration for project cargo innovation.

“We were focused on ways to be more efficient, using the real-life example of the process associated with getting your boarding pass when you fly: printing a boarding pass or using a smartphone. This digital innovation in the airline industry has transformed Bertrand the experience for many of us – now we Nobilliaux can immediately learn about delays or Daher gate changes.

“When we compared it to what many truck drivers experience, metaphorically they are still using the printed paper boarding pass. This got the students thinking.” Spoljaric pointed out that with the current truck

driver shortage, delivering a better experience – using tools and technology that they already use in their daily life – could help attract new recruits.

Drawing parallels with another vertical, Spoljaric pointed to how hotels are employing robotics. “If you haven’t experienced it, you can find some great videos showing robots bringing luggage to a person’s room. From my perspective, I assumed this would eliminate the bellhop position. However, the role of the bellhop did not disappear, it changed.

The robot did the hard work and the bellhop focused on the quality experience of the hotel guest.”

Bechtel has been testing smart robots that will allow its labor force to limit the physical stresses put on the human body. For example, wheeled platforms that automatically follow a person, intelligent enough to stop when an obstacle is in the way and that can handle a couple Stephen hundred pounds of equipment.

“Spo” Spoljaric “This will change how the work gets Bechtel done. Although there will be more testing required – and commercial evaluations – the concept opens the door to imagine what else can be done to keep the human more focused on quality,” Spoljaric said.

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FINDING THE ‘AMAZON EXPERIENCE’

Penn State University Beaver students have collaborated with Bechtel on innovation. L-R: student Nicki Vargo; student Niko Rakic; Stephen “Spo” Spoljaric, Bechtel; Andrea Patrucco, assistant professor and program campus coordinator, project and supply chain management; student Dominic Masciantonio. / CREDIT: PSU

Breakbulk cargo isn’t typical, and neither is the Port of San Diego.

Bechtel also makes use of its Engineered Logistics philosophy to optimize through innovation. “For an EPC, information is key and the better we can integrate the engineering, procurement and construction teams through good, real-time data, the better we will be,” Spoljaric said.

Through the program, Bechtel has automated daily position reports from carriers and blended that with information from simulation models using digital twin technology, all of which can be shared live via the Web so that anyone working on the project can pull off the details in real time.

“In my humble opinion, what we are doing is as close to the ‘Amazon experience’ as a client can have in the breakbulk/project cargo industry,” Spoljaric said. “ ‘Confidence through consistency’ is a term I like to use – the more we can make the complicated logistics stuff seem easy for others to understand – as well as development of repetitive methodology across projects – the more we can encourage integration instead of an adversarial relationship.” (For more about Bechtel’s “Engineered Logistics” philosophy, see “Predictably Innovative,” Breakbulk magazine Issue 5 / 2016, page 26.)

Digital innovation can bring operational efficiencies for asset players as well. A recent ABB launch offers up one example of how digitally enhanced functionality can make the seaborne voyages of project cargo more fuel-efficient and safer. Its portfolio for its Ability Marine Advisory System, known as OCTOPUS, now includes a module to help project cargo shipowners estimate the expected forces that the cargo will encounter in

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transit, offering optimization potential for carriers with limited in-house engineering capabilities. This function, ABB said, not only increases the safety for crew and cargo, but also allows for fuel savings and more reliable estimated times of arrival.

The OCTOPUS software takes into account the vessel responses expected under the weather routing of the vessel, rather than the wave height and period as would be done in a traditional weather forecast. “Since every vessel responds differently to waves, this gives you a far better insight in the actual risks of transporting cargo at sea, and therefore we can help to minimize the risk for damage to cargo,” Tim Ellis, marketing manager digital services at ABB Marine & Ports, told Breakbulk.

A vessel-specific hydrodynamic model is made for each vessel that is entered into the onboard software and connected to the Global Positioning System, gyro, weather forecast and loading condition. This allows a weather forecast to be converted into a motion forecast.

The master can then use this motion Tim Ellis forecast in order to route the vessel in a way that prevents damage to the project ABB Marine & Ports cargo.

“This means that a master has a far more accurate insight of the impact of the weather on the vessel and cargo, and therefore has the possibility to make decisions at an earlier stage,” Ellis said. A motion sensor installed on the bridge

28 BREAKBULK MAGAZINE www.breakbulk.com

ABB’s OCTOPUS software now includes a module to help project cargo shipowners estimate the expected forces that cargo will encounter in transit. / CREDIT: ABB

allows for accurate insight into the pitch and roll motions of the vessel, as well as into its velocities and accelerations.

All the key parameters are available in real time on a single screen, giving the crew access to the information needed to operate the vessel in the most optimal way.

Ellis noted that ABB is working on more solutions tailored to project cargo/breakbulk operators to “increase the safety of cargo transportations even further,” but could not give any further details at this stage.

ISSUE 5 / 2018

REALITY CHECK

Bechtel’s Spoljaric sees value in mixed reality solutions – for example Microsoft’s HoloLens – to put together technical logistics plans for large pieces of equipment before the engineering design is complete or the fabrication started. Acceptance hinges largely on the uptake of such technology from the insurance sector: when insurers determine that the review of drawings and plans in holographic format is acceptable and indeed required, the entire industry will be forced to adopt it whether they like it or not, Spoljaric said. “Bechtel prefers to be collaborative in advance to influence what technology is driven. This is going to mean a lot more sharing of information, some considered confidential, which will be the challenge.”

And innovation only works if there are projects willing to implement the idea. “Without this, the effort is fruitless,” he said. “Projects have a focus to deliver safely, on time, and under budget. So, generally, if a new technology will assist in doing that, they will support it. However, due to the life cycle of many projects, there is usually not enough time to see a new idea go all the way from concept to implementation on the same project – so dealing with transition between projects can be a bit tricky.”

Changes with management, sponsors of the idea, champions driving it and even the client, as well as different suppliers engaged in testing mean that there must be alignment from a higher authority to bridge the effort and bring an idea to maturation. “The best of ideas will quickly dissolve without an integrated support network,” Spoljaric said. “Statistically, new

The best of ideas will quickly dissolve without an integrated support network.”

– Stephen “Spo” Spoljaric, deputy field procurement manager at Bechtel

technology or products often have a success rate of less than 20 percent, meaning four out of five ideas fail.”

Here, hindsight truly is a wonderful thing and identifying why an innovation failed can benefit from a bit of retrospection. But sometimes the best ideas just don’t gather the momentum they deserve because there isn’t enough buy-in to give ideas wings. To be able to wear the crown of innovator, the breakbulk and project cargo industry needs to put its money and, perhaps more importantly, its time into trialing innovative technologies, or those truly groundbreaking ideas will remain just that, ideas.

Carly Fields is an award-winning editor and journalist who has reported on the shipping industry for the past 18 years, covering bunkers and broking and much in between.

bnsflogistics.com

1 (855) 481-9685

www.breakbulk.com BREAKBULK MAGAZINE 29

CREDIT: BRIESE SCHIFFAHRT

CLOSING UP CYBER GAPS Cyber infiltration of ships moved a step closer to reality in June when consultant Pen Test Partners’ Ken Munro published a video blog detailing just how easily it can be done. In the vlog he explained how to take the GPS data stream from a ship and modify it once it’s on the serial network.

If the electronic chart display on board is in “track control” mode – where it directs the autopilot – then the hacker can fool it and cause the ship to change direction. To mitigate such an attack, vessel networks need to be segregated, passwords for serial devices must be changed from default, and serial device software must be kept up to date and patched against security flaws, Munro advised.

Germany’s Briese Schiffahrt manages a 130-plus fleet of multipurpose heavy-lift vessels and is wise to the threat that lax cyber security poses. Day-to-day it faces the task of balancing crew access to Internet with operational digital needs – both without compromising cybersecurity.

Holger Börchers, IT manager at the ship operator, told Breakbulk that keeping protection up to date is vital.

“We protect the vessels with antivirus systems and upgrade patches which are updated frequently; all vessels equipped with VSAT can do 30 BREAKBULK MAGAZINE www.breakbulk.com

the updates online. We pay special attention to securing the vessels which have voyage data recorders, ECDIS and other systems connected to the Internet including special firewall rules for the ‘always online’ systems.”

Briese recently rolled out the Globecomm Nimbus smartbox to act as its mail server, crew account voucher system, firewall and more, which can be maintained remotely from its landside office.

“So far, we have been able to control everything,” Börchers said.

For additional security, shore-to-ship connections are encrypted and end-toend connectivity is via a private IP space with no exposure to the public Internet.

Nimbus also ensures the separation of crew and business networks so a malware infection cannot spread from one to the other. As a secondary layer, Nimbus integrates the Port-IT anti-virus service, which adds a further protection layer to shipboard devices. Optimized to use minimal system and satellite resources, Port-IT provides compressed, automatic updates to a central point on the vessel.

In a recent case study, Börchers said that Briese’s target was to be “truly online in real time” with its assets.

“To achieve that goal we need a higher bandwidth broadband system for every single vessel in our fleet,” he said. “We’re starting the installation of Iridium Certus on the first vessel soon and we will install it on all non-VSAT equipped vessels. It will be a retrofit on vessels with Iridium Pilot and Inmarsat Fleet Broadband. I think we will get closer to our aim with every installation we make and I hope we will be there in about two to three years from now on.”

CYBERATTACK SUSCEPTIBILITY

Globecomm Maritime President Malcolm McMaster said that it’s not just multipurpose ships that are more susceptible to cyberattacks than in the past. “With so many sectors of shipping becoming increasingly connected for crew calling or enterprise applications, the level of risk is rising. There are always implications when connectivity

spreads, but we are past the point where anyone really believes that ships should be remote, with contact limited and data updated rarely and inconveniently,” he said.

Multipurpose ship operators looking to take advantage of smarter applications such as engine monitoring, bridge and navigation data, and for crews to enjoy the benefits of connectivity need to embrace change, yet still manage the risks.

“Addressing cyber risk is a shared challenge and is not just the IT department’s problem,” McMaster pointed out. “Neither is it just a hardware or software issue. Owners and operators need to share responsibility for cyber safety, building awareness among all their staff and establishing procedures that keep them safe online as well as protecting their assets.”

In his experience, ships where crew are given free rein with connectivity usually end up with a collection of viruses and malware, which inevitably degrades the system’s capability.

“At a time when shipboard networks are becoming more complex and new satellite services are being introduced, the key issue is for operators to manage crew communications with a combination of control and flexibility,” McMaster said.

Some ship operators still need to address the vulnerability of their onboard IT hardware and software, especially if these are no longer Malcolm supported by the McMaster vendor. Updating Globecomm Maritime these systems to remove potential vulnerabilities can be a cybersecurity fix that requires relatively little outlay.

Operators also need to be vigilant about how vendors are managing machinery and software onboard ship.

“This is not just a case of scanning USB sticks or external drives brought onboard, but what impact changes on one piece of equipment might have on another,” McMaster said. “Cyber, it should be remembered, is not just about IT; the risks from failures and interruptions of operational technology can be just as important.” BB ISSUE 5 / 2018

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TRADE NOTES

BY THOMAS TIMLEN

ROGUES AND RENEGADES Project Cargo Defenses Against Cyberthreats

32 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 5 / 2018

T

hreats posed by cyberattacks have received a lot of attention of late.

The recent breaches of systems owned by highprofile transport companies such as COSCO and Maersk bring the issue close to home for all practitioners in the cargo transport sector. Those hacks not only resulted in significant financial losses, but also caused damage to corporate reputations.

Like the majority of cyberattacks involving freight transport, the COSCO and Maersk hacks targeted land-based servers, internal networks and commercial databases. As far as the public knows, systems linked to the operation of the companies’ assets were not affected.

Indeed, the vulnerability of land-based servers has been seen as the primary risk for some time.

While there are countless Luzius Haffter examples GPLN of hackers penetrating commercial servers and networks, the few cases of systems associated with equipment operations being compromised have most often involved controlled tests rather than actual malicious attacks.

For example, vessels at sea have had their GPS systems “spoofed,” a manipulation causing the GPS to indicate the wrong position. This GPS spoofing has been done in controlledtest scenarios as well as by unknown actors. Meanwhile, automobiles have similarly been hacked in controlled tests, but so far, not in real attacks.

The potential consequences of the navigational and other onboard systems of aircraft and locomotives being hacked require no explanation.

In response to concerns regarding cyberattacks, most, but not all, transport sectors have

KEY FIGURES

US$98 million: Predicted worldwide enterprise security spending in 2018.

8 percent: Predicted increase in worldwide enterprise security spending in 2018 over 2017.

By 2020, more than

60 percent of organizations will invest in multiple data security tools such as data loss prevention, encryption and data-centric audit and protections tools, up from about 35 percent today.

US$18.5 billion: Anticipated spend on security outsourcing services in 2018, up 11 percent from 2017 By 2019, total enterprise spending on security outsourcing services will be

75 percent of the spending on security software and hardware products, up from 63 percent in 2016.

SOURCE: GARTNER, WWW.GARTNER.COM/ NEWSROOM/ID/3836563

developed sector-specific generic guidelines aimed at protecting their respective assets from cyberattack vulnerabilities. But can transporters of heavy-lift and project cargo rely solely on such generic guidelines to prevent cyberattacks?

BEYOND GENERIC GUIDELINES

Regarding the available generic industry guidance, Luzius Haffter, executive director of GPLN, explained

that in practice, there are pressures from clients and contractual partners that go beyond the scope of currently available guidelines.

“Any specific guidance aimed at the heavy-lift/project transport sector is usually provided or requested by some bigger companies who are offering a tender to our members for some projects, but this is different case-by-case and is also dependent on their customers.” As a result, Haffter said that some GPLN members resort to developing their own procedures to meet clients’ demands.

The information provided by GPLN’s members points to more concern regarding systems and networks as compared with transport operations. Haffter noted that guidelines alone do not provide adequate protection from these specific cyberthreats.

“We don’t think that existing cybersecurity guidelines are adequate, especially when it comes to payment issues,” he said. “During the past year we have received information from several GPLN members about ongoing scams where people hijack email accounts of our members. They then send emails under the official email account to our members and tell them that their company has opened a new bank account and to transfer the amount due to this new bank account. This fraudulence has already cost some of our members a lot of money and created distrust between them.”

Haffter warns that these cases continue despite GPLN’s ongoing efforts to alert its members.

The focus of GPLN’s members on cybercrimes targeting servers and networks is not surprising. This is where the majority of activity is taking place, while it is a challenge to identify more than a handful of cyberattacks aimed at assets moving cargo by air, sea, rail or road. With that in mind, system integrity receives the most attention when setting up defenses, as this is where serious financial losses have already arisen, as COSCO and Maersk can attest. www.breakbulk.com BREAKBULK MAGAZINE 33

GOING AFTER THE MONEY

CREDIT: SHUTTERSTOCK

HIGH-VALUE GOODS MAIN ATTRACTION Lately, the road industry’s attention has turned to cybercrime whereby data is hacked and drivers of HVV, or high-value theft transport, in particular are singled out.

Here, the industry’s answer has been to help transport operators in the transition to the digital future by explaining the challenges and risks, and by providing them with general guidelines to minimize the risk of security breaches throughout transport operations through training courses.

These general guidelines are not tailored to specific transport operations such as heavy-lift, but as Jens Hugel, a senior advisor at the International Road Transport Union, noted, “the modus operandi of cyberattacks are very similar across all modes of transport operations.”

Like other sectors, actual cases of hacks that have impacted road transport remain elusive.

However, the U.S. National Highway Traffic Safety Administration, or NHTSA, points out that there are vulnerabilities, reminding the public that 1.4 million vehicles were impacted by the first and, so far, only cybersecurity-related vehicle recall in 2015.

In response, the NHTSA produced guidelines to protect vehicles of the future

from cyberattacks, the 2016 Cybersecurity Best Practices for Modern Vehicles. The NHTSA approach is to address the vulnerabilities at the manufacturing stage. The non-binding guidance is intended to cover cybersecurity issues for all motor vehicles and therefore it applies to all individuals

1.4 MILLION VEHICLES WERE IMPACTED BY THE FIRST AND, SO FAR, ONLY CYBERSECURITYRELATED VEHICLE RECALL IN 2015. and organizations manufacturing and designing vehicle systems and software. These entities include, but are not limited to, motor vehicle and motor vehicle equipment designers, suppliers, manufacturers, alterers, and modifiers.

The NHTSA is also looking at the vulnerabilities of transport infrastructure, recognizing that dangerous cyberattacks are possible and these could cause significant impacts on the whole transportation system. As such, measures aimed at preventing them are being explored.

34 BREAKBULK MAGAZINE www.breakbulk.com

“Today, the most dangerous cyberthreats are driven by financial gain, with the groups involved far more organized, well-funded and resourced,” Jenny Gao, AAL’s senior IT manager, noted. “To put things into some perspective, in 2016, the U.S. government spent US$28 billion on cybersecurity and this increased in 2018 – more than the entire budget of many countries. The speed with which online communication technology is developing and new media is available for such is incredible, and it sometimes comes at the cost of proper cyberprotection, which seems to be playing catch-up.”

Gao noted that the risks stemming from virus, Jenny Gao ransomware AAL and fraud emails make cybersecurity the No. 1 threat to organizational processes and integrity, and the No. 1 headache for IT teams like AAL’s.

“According to Microsoft, the potential cost of cybercrime to the global community is a mind-boggling US$500 billion, and data breaches will cost the average company about US$3.8 million.

It is so important to be in-the-know about the potential threat cybercrime poses, the impact it is having, and what can be done about it,” she said.

Bringing this home for the project and heavy-lift sector, Gao pointed out: “We should not imagine that as a niche shipping segment, the multipurpose vessel sector is any less prone to attack.

Cybersecurity is a growing threat to the maritime shipping community, as we demand greater 24/7 connectivity, speed, transparency and networking capability in our global operations and communications, especially with our customers, partners and colleagues. Cyberattacks are growing in prominence every day, from influencing major elections to crippling businesses overnight; the role cyberwarfare plays in our daily lives should not be underestimated.”

The concerns of GPLN’s members make perfect sense to Gao. “Worrying ISSUE 5 / 2018

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statistics for businesses like ours is that 5 percent of all emails contain malware, 63 percent of all network intrusions and data breaches are due to compromised user credentials and an estimated 4,000 ransomware attacks occur daily, and growing.”

For a global organization such as AAL, not only is the nature of these breaches constantly evolving, but the responses to them differ across the globe. Making sure that everyone is up to date and taking precautions within their related work functions is today one of the most crucial roles its IT helpdesk plays. “At AAL, we have a mandate from the management to invest the time and money needed to ensure our systems are professionally monitored and secured around the clock, at every point in the network operation and to the highest standards,” Gao said.

This is no small task. AAL runs a global network with multiple online platforms, each one facilitating a critical stage in the daily shipping operations. Although these highly sophisticated platforms provide cross-platform networking, they are developed and managed by different 36 BREAKBULK MAGAZINE www.breakbulk.com

WE HAVE A MANDATE FROM THE MANAGEMENT TO INVEST THE TIME AND MONEY NEEDED TO ENSURE OUR SYSTEMS ARE PROFESSIONALLY MONITORED AND SECURED AROUND THE CLOCK.” – Jenny Gao, AAL

vendors and harness different technologies and architecture. Each requires its own set of security and protection protocols and standards. As such, Gao said this means that one size does not fit all, and AAL constantly needs to be engaging with multiple sources of protection software and spam filters to ensure its end-to-end system is monitored and updated with the latest software.

TACKLING IN-TRANSIT THREATS

While industry scrambles to protect systems and networks, efforts have also been underway to protect the conveyance of project cargo.

In 2014 the International Air Transport Association, or IATA, issued its Aviation Cyber Security Toolkit. Subsequently IATA partnered with the International Civil Aviation Organization, Airports Council International, the Civil Air Navigation Services Organization, and the International Coordinating Council of Aerospace Industry Associations to develop a roadmap to unify cybersecurity preventative measures for aviation.

Addressing ocean transport, in 2017 the International Maritime Organization, or IMO, issued its Guidelines On Maritime Cyber Risk Management. Like IATA, the IMO has also welcomed the complementary efforts of related stakeholders such as the International Organization for Standardization, the International Electrotechnical Commission, the U.S. National Institute of Standards ISSUE 5 / 2018

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and Technology, as well as industry groups such as BIMCO, CLIA, ICS, INTERCARGO, INTERTANKO, OCIMF and IUMI, to produce guidance aimed at protecting vessels and maritime cargo movements from cybercriminals. But are such guidelines adequate on their own, or does more need to be done?

For one cargo sector, the absence of such guidelines does not mean an absence of related

initiatives or measures. “There are no guidelines addressing the cybersecurity in the rail sector for the time being,” according to Libor Lochman, executive director of the Community of European Railway and Infrastructure Companies, or CER. “However, the European Union Agency for Railways intends to foster close cooperation with the European Union Agency for Network and Information Security and the

European Commission in order to support railway stakeholders on cybersecurity strategy development. In this respect a cooperation with other EU agencies in the transport sector such as the European Aviation Safety Agency and European Maritime Safety Agency is envisaged.” The establishment of an Information Sharing and Analysis Center, or ISAC, is being considered.

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But questions remain on whether such initiatives are sufficient enough to address the unique needs of project and heavy-lift transport. Existing requirements do, in principle,

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touch on cyberthreats. “Each railway undertaking has to possess a safety certificate authorizing its safety management system, or SMS,” Lochman said. “The SMS should also cover all activities related to cybersecurity in the railway context, especially with regards to the assessment of safety consequences originated by security threats.” In the absence of specific preventive guidance, the cyberthreat is addressed by virtue of the SMS requirements, taking into account the specific nature of the consignment.

The situation is similar for road haulage. “The industry needs to prepare for the transition to a digital future, which includes digital ISSUE 5 / 2018

transport documents such as e-CMR and digital customs documents such as digital TIR,” said Jens Hugel, a senior advisor at the International Road Transport Union, or IRU. “Protecting assets proactively is good. However, understanding the issues properly by asking politicians and legislators the right questions – such as who owns the data of the future; who defines and ultimately controls the operating procedures; who is liable in cases of cyberattacks – and then jointly addressing the issue, for example by implementing tried and tested UN Conventions in coordinated ways, is even better.”

Road freight transport security has long been a major concern for transport operators and drivers, according to Hugel. “Since the attacks of 9/11, the road transport industry has put an even greater focus on this subject. Today major security concerns in Europe are related to cargo crime, irregular migration and border controls, and secure parking.”

Transport operators turn to IRU for answers, and it duly provides practical tools such as the IRU Road Transport Security Guidelines, which is a set of detailed recommendations for managers of road transport companies, drivers, shippers/consignors and companies on improving security in day-to-day operations. “They contain a wealth of practical tips to strengthen security against terrorism and other criminal threats,” Hugel said.

While the present risks are unquestionably the vulnerability of servers and networks, followed closely by ransomware attacks that could compromise asset operations, among future risks is the vulnerability of autonomous conveyance assets to cyberthreats. Until there is significant confidence in the resilience of protective measures to protect autonomous modes of cargo transport from cyberthreats, the likelihood of pursuing autonomy for the movements of often high-value and high-spec project and heavy-lift cargoes borders on the improbable.

Meanwhile, charterers do not see a high risk of cyber vulnerability with respect to project and heavylift cargo operations. An industry source said that presently there is a very limited degree of digitization onboard heavy-lift vessels, in

contrast with the large container or bulk carrier segment. The source also felt that demand-wise, the project business is characterized by high cargo versatility and routing flexibility, and supply-wise by a very heterogeneous ownership structure.

In other words, vessel-wise there is a lot more uncertainty for multipurpose and heavy-lift ships on their use, ownership and trading/chartering employment. As such, through the

nature of the business, its flexibility and short-term orientation, cyber risks to cargo operations are not yet seen as a real threat for the sector. BB Thomas Timlen is a Singapore-based freelance researcher, writer and spokesperson with 28 years of experience addressing regulatory and operational issues impacting all sectors of the maritime industry.

www.breakbulk.com BREAKBULK MAGAZINE 39

INTERMEDIARIES

SHOWING THEIR METTLE Forwarders Must Prove Value in Evolving Environment

BY PAUL SCOTT ABBOTT

40 BREAKBULK MAGAZINE www.breakbulk.com

A

s the role of project freight forwarder advances to include more risk assumption and greater technological implementation, some shippers remain wary of the third party’s value. Thus, forwarders today need to work that much harder to prove their worth.

Prominent project forwarder executives point to proactive innovation and even asset investments in a lowmargin environment. But Belgian project shipper Jurgen Huygh is among those who remain skeptically critical.

Certain big shippers, such as steel and mining giant ArcelorMittel, are going so far as to resist the temptation to bring forwarders into the project shipping picture.

Jurgen Huygh CG Global

ISSUE 5 / 2018

CREDIT: GEODIS

“Forwarders are more and more evolving to transport brokers with focus on the financial role, moving them away from the entrepreneurial perspective,” said Huygh, who serves as vice president of the Belgian Shippers’ Council, in addition to his job as head of shipping and central purchasing for transformer and power distribution systems conglomerate CG Global. “If this move continues, the question can be raised as to what will be the added value of 90 percent of the forwarders.”

Huygh believed that forwarders

are placing too much emphasis on counting dollars and not enough on bestowing value-adds. The tendency of forwarders, he contended, is to avoid any risks unless they can be passed on to the shipper.

“More and more, we have to provide forwarders, even the top players, with the solutions for problems and, bottom line, we pay them the bill for our own solutions,” Huygh said, noting that this translates to “extra reason” to do business directly with asset-based service

providers executing the job with “no go-betweens anymore,” relying instead upon straight and immediate lines of communication.

Furthermore, Huygh said, it becomes difficult to properly evaluate the quotes of forwarders, as some are based squarely upon an optimistic scenario while others encompass all potential risks, incorporating same in their quoted cost.

“Indeed,” he said, “forwarders are trying to facilitate the sales, but often with a lot of hidden costs.” www.breakbulk.com BREAKBULK MAGAZINE 41

that has traditionally been asset light, with this being a direct method of adding value to project execution,” Hark said.

“All of this requires investment by the project forwarders, which of course needs to be paid back. There needs to be close collaboration between all parties to be sure that these are sound investments that will be utilized fully in the years to come.”

Citing Bertling’s decades of developing a wealth of experience, systems and specially trained workforce, Hark concluded, “I think anyone who really looks into what it takes to reach and maintain the critical mass necessary to execute logistics for large capital projects would have a hard time coming to the conclusion that logistics providers are too focused on counting dollars and not furnishing value.”

ASSUMING MORE RISK

ABOVE: In a move that did not involve a

forwarder, CG Global engages in transport of a 160-ton power transformer from its production facility in Mechelen, Belgium, to a substation of Ireland’s state-owned Electric Supply Board. / CREDIT: CG GLOBAL

FORWARDERS RESPOND

While the industry environment may be shifting, responding to criticisms is nothing new for project forwarders.

John Hark, chartering director for North America in the Humble, Texas, office of Hamburg, Germany-based global project forwarder Bertling Logistics, said firms such as his are adapting to a “new normal” in which they must consistently demonstrate ability to offer added value.

“I do not think the role has evolved, but rather that capital project forwarders are being pressured to show where they add value,” said Hark, who has worked in the project logistics industry for more than 20 years. “Costcutting and market pressures have forced everyone to justify their roles more than ever before, and we are all competing for a piece of the same pie.

“To make matters worse,” he said, “the pie is still smaller in this continued 42 BREAKBULK MAGAZINE www.breakbulk.com

market stagnation. Also, the continued self-performance model by project owners and/or EPCs exasperates project forwarders with their scope being carved away.”

Capital project forwarders are pressured now more than ever to provide added value and to be able to objectively quantify the resultant benefits, Hark said, adding, “subjective anecdotal examples will not cut it.”

Hark, who is in his 17th year as an adjunct professor John Hark of maritime Bertling Logistics administration at Texas A&M University at Galveston, said project forwarders also need to be proactively innovating, bringing along the latest concepts in such areas as data analytics and aggregation, robotic process automation and predictive (as opposed to reactive) mitigation.

“Some project forwarders have also started to take on assets in an industry

Another project forwarding veteran, Dennis Devlin, said the business has assumed added risks in an industry with slim profit margins and yet still manages to play a vital role.

“In project forwarding, a lot has changed over the years,” said Devlin, who began his career in 1988 as a project manager with DB Schenker and in early 2018 became director – industrial projects USA and Houston branch at Geodis USA. Some engineering, procurement and construction firms and international oil companies, or IOCs, have pushed significant risk to the project forwarders in terms of much higher – or even seeking unlimited – limits of liability, Devlin said, while also taking functions such as ocean chartering Dennis Devlin in-house.

Geodis “Project forwarders have taken on an increasing share of the risk in capital projects, while profit margins have not equally reflected – or have not been fully compensated for – such an increase in risk,” Devlin said, adding that even the most profitable publicly traded forwarding companies are operating at relatively low margins. Also, according to ISSUE 5 / 2018

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Devlin, forwarders are being asked to hold rates for very long periods, which can add to the risk given the volatility of container and airfreight rates, trucking costs, fuel rates and currency conversions. Clearly, project forwarding does not lend itself to monthly rate adjustments, but holding rates fixed over several years is risky. “Fortunately, breakbulk ocean transportation rates are more predictable than other parts of the market,” he noted.

One area that the project forwarder can be perceived as dragging its feet is in supply chain visibility and electronic data interchange. Here, the project forwarding industry lags far behind

other international logistics fields, and the role of the project forwarder has not evolved anywhere near as much as in general forwarding, Devlin said.

Whereas Geodis is among those forwarding firms that has established electronic data interchange connectivity with clients in a way that reduces respective costs and adds value to the overall process, the client base of EPCs, IOCs and project owners has been slow to embrace change.

“The process of providing the data – tracking purchase order line items and sub-items in packages and shipments globally – is, in many cases, still very manual,” he said.

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FORWARDERS STILL ‘ESSENTIAL’

That said, Devlin argued the case for the “essential” role of freight forwarders in the optimization of the physical side of the supply chain.

“Our role is to excel at delivering the detailed scope of work in full, on time, safely and within the economic boundaries of the commercial agreement signed, while providing complete visibility on the order status to enable the site to organize its work as best as possible.

“At Geodis, we truly believe that our job is crucial to help our client grow. Focusing on project forwarding, this means that we are an essential part of a project delivery and a key component to its success.”

While realizing that margins are slim, Devlin said he and Geodis colleagues are very cognizant of the fact that forwarders have an obligation to provide sustainable value to clients, through process improvements, cost savings and other means, as well as a commitment to shareholders to operate profitably.

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“We are better able to achieve both these goals when we work collaboratively with our clients,” he said.

Perhaps needless to say, many companies with oversized and/or overweight cargoes to ship do remain sold on the benefits of those collaborative relationships with forwarders.

Forwarders have truly assumed increasing Matthieu Jeannin significance in the project SBM Offshore supply chain, according to Matthieu Jeannin, category manager for logistics and warehousing at SBM Offshore, a Netherlands-based seller of floating production systems to the offshore energy industry, with annual revenue in the US$2 billion range.

“The role of the freight forwarder is more and more important,” Jeannin

said. “They are more and more part of the supply chain. We try to outsource as much as possible.”

Jeannin said that, over the 12 years he has worked for SBM Offshore, the company has benefited from bringing forwarders into endeavors at an early stage, with the forwarder furnishing added value in such functions as reviewing harmonized commodity description codes to identify potential export control concerns, examining drawings in quoting transport of modules and even pinpointing opportunities for containerized shipping of cargoes initially earmarked for breakbulk transport.

“With the right attitude, trust, experience and knowledge,” Jeannin said, “the freight forwarder will do well in all aspects of his role. At least that is what I am expecting and looking for.”

STEEL GIANT NOT SOLD

That said, not all big project shippers are sold on using forwarders on a regular basis.

Susan Bray, director of logistics for

ArcelorMittal International America, the U.S. arm of the world’s leading integrated steel and mining company, characteristically refrains from engaging forwarders.

“Within the U.S., ArcelorMittal carefully and strategically outsources and prefers to work directly with the actual service providers whenever possible,” Bray said. “ArcelorMittal is a large and global company with a lot of buying power, so, for us, it makes sense to resist adding layers.

“Decisions to work with freight forwarders would always be made on the basis of identified value, such as cost reduction, convenience and/or resource conservation,” she said. Quite simply, it comes down to which service provider is best suited for a particular challenge and making sure the cost and process works to allow ArcelorMittal’s business to flourish.

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STRATEGY OF ACQUIRING ASSETS Reinder Schilsky, Houston-based vice president of project development for Fracht FWO Inc., part of Basel, Switzerland-headquartered Fracht Group, is among those whose freight forwarding firm has featured asset acquisition in its approach to offering added value.

“In a competitive environment, you have to have some Reinder Schilsky strategy that works for you,” Fracht Schilsky said.

“In the case of Fracht, management saw the need for us to step up to design and build highly engineered railcars that simply

were not supplied for the market at the time.”

Regarding Fracht’s multimilliondollar investment in a right-sized fleet of 16-, 12- and 8-axle railcars, Schilsky said: “There is value in being able to say to a client you will get your car where and when needed.”

Fracht leverages those assets by investing in experienced people capable of putting together custom transportation solutions and making creative use of single or combined transport modes to safely and costeffectively get the cargo to destination in a timely manner, he said.

“Our in-house engineering support adds value with quicker turnaround in proposals,” Schilsky said. “In one recent case, we had the best combination of rail route and port of discharge selected, but there was an issue with combined weight of the cargo and railcar at the quay.

We quickly developed, fabricated the equipment for and made the case for approval of an engineered solution that overcame the restriction at the port.”

Early forwarder collaboration, well prior to a client’s final design stage, frequently affords opportunities for Fracht’s in-house engineering team to provide valuable solutions.

“Freight forwarders are having to do more things nowadays,” Schilsky said. “These activities range from keeping clients informed about regulatory changes, coping with the tightening truck freight market, compliance issues, presenting choices for transport options with risk assessments, providing detailed transport drawings and lift plans, all of this with the idea to provide a competitive proposal for the client.

Some of these activities used to be within the scope of vendors, but they are now done in-house.” BB

THIS PAGE: Fracht, which is investing in assets to provide added value, deploys its railcars to facilitate a project cargo move in Cleveland.

CREDIT: FRACHT FWO

46 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 5 / 2018

HEAVY LIFT LEADERS.

PROFILE

FROM START TO FINNISH Plan, Plan, Plan, But Retain Some Flexibility

BY HELEN CAMPBELL

T

eenage years spent working part-time for the family trucking business gave Oskar Granqvist his first taste for the haulage trade, before a stint of national service in the Finnish army honed his skills in planning and logistics.

Seemingly destined for a career planning, engineering, fine-tuning and troubleshooting breakbulk transportation, Granqvist was snapped up by Wärtsilä Energy Solutions before 48 BREAKBULK MAGAZINE www.breakbulk.com

he even graduated from university with a degree in international business.

“I had been studying full-time for half a year, before I got a job with Wärtsilä and was doing both things at the same time,” Granqvist said in an interview with Breakbulk. “I was working in domestic logistics here in Finland and, officially, I was studying full-time and working part-time … I had a really flexible contract. It worked out well.”

That ability to juggle obviously set Granqvist in good stead. Now, after 12 years with the Finnish company, Granqvist works as a supply chain manager responsible for its Americas business and is well versed in designing delivery plans to move combustion engines weighing up

CREDIT: WÄRTSILÄ

to 300,000 kilograms, usually from Wärtsilä’s European manufacturing sites in Finland and Italy, to locations as diverse as Alaska and the Caribbean.

Based in Vaasa, Finland, he has been involved in projects throughout the Americas.

PLAN FOR THE UNEXPECTED?

Four-week sailings from Europe to the Americas are usual for cargo under Granqvist’s remit, but it’s not the seaborne stage that brings the biggest challenge, rather it’s the inland side. Having to temporarily import all transport equipment or needing to come up with on-the-spot solutions to unexpected challenges in exotic destinations are the norm. Every ISSUE 5 / 2018

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Weather conditions were a decisive factor in the planning for a project in Iqaluit, north Canada. / CREDIT: WÄRTSILÄ

project follows a rigorous planning process and has the same aim: to move equipment safely from A to B, on time and on budget – but surprises always pop up and some jobs are more memorable than others.

“I have been involved in so many great projects during the years that it’s difficult to choose,” Granqvist said.

“A project in Iqaluit, north Canada, was an extension of a power plant that, volume-wise, wasn’t that big, but the location of the project meant the challenges were major. You get a good picture of this location just by looking at Google maps – it’s right in the northern part of Canada, at about the same level as Greenland, and it’s only accessible in the summer months.

“We were bringing in two new engines and started planning for this project in the December when the temperature was about -26 or -27 degrees Celsius (-14 or -17 Fahrenheit), with a windspeed of 25 meters per second and daylight for more or less one and a half hours per day. We were delivering our project in August and that was first time in 40 years when the 50 BREAKBULK MAGAZINE www.breakbulk.com

field sea had ice in August; we had the vessel stuck in ice and had to bring in an ice-breaker to get things delivered.

At the same time, I was working on a delivery in Brazil where it was 45 degrees C (113 degrees F), so a bit of change of climate.”

Granqvist also cited a project in the Dominican Republic, but for entirely different reasons.

“This was a major project when it comes to volumes – a complete new power plant requiring 24 of our engines. There were about 1,600 containers involved in the plant in all and a need for huge intermediate storage. Logistics sits right down at one end of the chain, generally away from the construction site, but we always need to be able to feed the site at the right time. Having that buffer of intermediate storage was crucial,” he said.

IF IT’S NOT THERE, BUILD IT

Sometimes, the circumstances of a location mean it’s not the existence of the right equipment that is lacking, but it’s the actual raw infrastructure.

“We arrive at a destination port and there might be a 1,000 or 2,000 kilometers inland transport stage ahead,” Granqvist said. “In some areas, it’s quite usual that we’ll need to build some roads or other infrastructure, such as a jetty for a project in Venezuela, for example. For that project, we transferred the engines from an oceangoing vessel to a smaller vessel to take the cargo up the Orinoco River for a couple of days and built our own jetty so we could roll them off at a location close to the project site.”

Extremes of temperature like this mean planning for the right protection for certain items of kit, especially electrical components. Whatever the particular circumstances at an arrival port, desktop studies are helpful at the initial sales stage to check feasibility, but the Internet can only tell a researcher so much about port facilities, precise jetty details, draft and so on.

“You can do a certain amount with phone calls, but contracting local parties who are able to visit and verify the facilities and actual conditions ISSUE 5 / 2018

CREDIT: WÄRTSILÄ

of the port and, in some cases, talk face-to-face with the port authority, is crucial to a smooth operation,” Granqvist told Breakbulk. “This ensures we determine, before execution, whether advertised ‘world-class logistics facilities’ are in fact nothing more than a small trucking company in a shed!”

About a month or two, on top of initial feasibility studies, is the usual length of time Granqvist and his team spend planning for the execution of the average transportation, involving the input of the transport providers as well as the customer. The level of communication between all the parties involved is much higher during the actual execution, particularly during intense periods such as the inland haul and installation, with calls several times daily and emails bouncing back and forth between personnel at site and the transport providers.

FLEXIBILITY AVOIDS FAILURE

While factors can cause a project to fail, “poor planning and choosing the wrong players for the execution are a recipe for disaster,” Granqvist said.

“QHSES plans need to be well made, but even a perfect plan is no good if it’s not followed, or well-supervised.

“At the same time, the nature of the project business means changes are going to happen. All plans and schedules need to be updated according to changing variables during the project so, no matter how good a plan you have, the project will fail if you are not able to make the right adjustments to it in time. Lack of flexibility is a killer.”

In many ways, the sector is improving, becoming more efficient and getting safer, but, despite the fact that operators are in it to turn a profit, one of the big frustrations for Granqvist is that too many players in parts of the supply chain remain steadfastly focused on their monetary aims at the expense of everything else.

“As a shipper, I feel that there are still carriers, forwarders and other service providers on the market that are focusing on making money today and not focusing on building profitable long-term relationships with the shippers,” Granqvist said. “Of course, some shippers are interested only in getting a low price, but I don’t see either of these to be healthy for the

THE DEVIL IN THE DETAIL “The saying “planning is the key to success” is old, but valid for us and all others involved in project logistics and transport,” Wärtsilä Energy Solutions’ Oskar Granqvist said. “To succeed with these rather complex projects of ours, internally within Wärtsilä we involve several different functions and plan the project transports together. Transport providers are also important parties during the planning and, as all planning is based on our customer’s needs, the customer is, of course, an important party in the planning phase.”

The level of involvement of a customer tends to be dictated by the customer itself, with some content to leave it all to Wärtsilä and others wanting a full breakdown of every detail of each stage.

“We find that some customers just want to buy the planning and the service, they just want it moved from A to B and they also

leave the risk to us,” Granqvist said. “With those customers, we don’t need to communicate with them very often during the planning or the execution. With other customers, we find they are very keen on knowing what we are going to do and how we are going to do it, and we keep them informed and we work together.

“One thing we see more and more now is the degree of social awareness of our clients. Projects often mean we need to go through dense areas and there is a greater recognition these days to work cooperatively with communities that might be affected by the transport and so on.

“Customers are beginning to think more about social impacts and we always need to discuss together with the customer how we minimize any social impact; I think it’s a really good thing.

Depending on the nature of the project, it’s our name as well as theirs.”

www.breakbulk.com BREAKBULK MAGAZINE 51

CREDIT: WÄRTSILÄ

industry. The aim should be for good cooperation and to create partnerships that are profitable for the shippers and the logistics providers, and I do think this is improving but there is a way to go for some.”

Delivery times are getting increasingly shorter cross the breakbulk sector, Granqvist said, with the drive for swiftness coming predominantly from the customer who, understandably, would like to complete a power plant and start collecting revenue from it as soon as possible.

Asked what the future might hold for the sector, Granqvist laughed, saying it would be nice to be the owner of “the famous crystal ball”. A few changes are likely though, he felt.

CREDIT: WÄRTSILÄ

52 BREAKBULK MAGAZINE www.breakbulk.com

TRANSPARENCY, BUT NO CRYSTAL BALL

“I think we will continue to see carriers merge and create partnership models, and it might be that we start to see similar actions also on the forwarders’ side,” he said. “Whether bigger entities offering a wider range of service is a positive or negative thing, time will tell. Digitalization will, for sure, continue to increase its role in the industry and will hopefully also increase the transparency in the business.

“It’s already usual to be able to track a vessel online, and we take it for granted that we can see exactly where it is anywhere in the world. I think it won’t be too long until technology allows the sector to monitor online almost all the movements involved in the whole process and to give the whole picture. It’s already possible to see the conditions, such as the temperature for example, of cargoes, but I think we will see this further developed and available to, and utilized by, a wider audience.”

As with so many things, success is about communication and building relationships. Back, perhaps, to that military stint; armies succeed, of course, on meticulous planning, having the right

logistics and the right equipment in the right place at the right time. Granqvist served with peacekeeping forces in Kosovo in the Balkans, as a sergeant in the logistics department, selected especially for that role owing to his previous experience finding solutions quickly and smoothing over any obstacles in the way of the objective.

The military world and the commercial logistics business have a lot in common, apart from one key omission in the army: “There is no client or, at least, the army is its own client,” Granqvist said. “The army is known for just getting things from A to B and just getting it done.”

Granqvist remained tight-lipped and tactfully non-committal on whether the absence of a demanding third-party customer who requires the documentation of every minute, precise detail in advance of and during project execution is a help or a hindrance. BB Helen Campbell is a freelance journalist based near London. A languages graduate and a serving councillor, she has specialized in energy, environment, sustainability and technology for more than 20 years.

ISSUE 5 / 2018

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PROFILE

STICKING TOGETHER PROJECT STRANDS Championing the EngineeringSupply Chain Interface

BY LORI MUSSER

M

eet Jeremy Kalmus, a structural engineer who works for Bechtel in Houston as a civil, structural and architectural, or CSA, engineering group supervisor. For more than 15 years he has carried out design, engineering supervision, front-end estimating and construction for oil, gas and chemical projects. His portfolio includes liquefied natural gas, coker, pipeline and refinery projects.

Kalmus married his high school sweetheart and settled in Texas, where his children are on the cheerleader and football teams. A dedicated supervising engineer with a solid work ethic, he remains a staunchly determined family man who devotes any free hours he can find to spending time with his family.

But, Kalmus has been known to burn the candle at both ends. He has worked on projects from Australia to Abu Dhabi to Algeria during his time with Bechtel Oil, Gas & Chemicals. He even spent a year at Bechtel’s Shanghai office, training the CSA team on steel design and automation software for a Gulf Coast modular project.

A Texas A&M University hire, Kalmus has worked his way up through the ranks at Bechtel. In the early years he designed steel structures and foundations.

“Over time, my interest leaned more toward steel design, which led me to focus more on structural steel,” he said.

“Once the Shanghai assignment was 54 BREAKBULK MAGAZINE www.breakbulk.com

Jeremy Kalmus Bechtel

complete, I followed the project to the jobsite for three years, where I worked as the resident engineer. In this role, I supported the construction team for all aspects of the project.”

That included the supply chain interface.

ENGINEERING, SUPPLY CHAIN INTERSECT

Successful project engineers quickly develop cross-functional leadership skills. In addition to the distinct technical skill sets of their chosen field, engineers collaboratively work to solve problems from a project’s very beginnings, often through component transport to final installation, and sometimes to operation, maintenance and even project disposition. As lifecycle project management gains devotees, an engineer’s role gains complexity.

During his three-year stint as CSA resident engineer for a project in Port Arthur, Texas, Kalmus recognized that

“some of the more complex challenges were related to the module load-in and the setting of these modules.”

As the vital role of supply chain elements became readily apparent, Kalmus continued to hone his project management expertise while working with broad-based teams that exposed him to freight handling skill sets and technology, from cranes and selfpropelled modular transporters to tugs and barges.

“Once I returned to the Houston office, I took a lead role for an Australian LNG project. This was a modular project so engineering was required to engage with all parties that served a key role in delivering the structures,” Kalmus said. It was on this project that he learned to embrace all functions of engineering, procurement and construction , or EPC, to successfully execute certain aspects of the project.

For him, the importance of the supply chain interface has been a recurring theme. “After the Australian project, I found that my next few assignments were similar in a way where I could use the knowledge I gained from past assignments and apply to current situations,” he said.

THE BECHTEL WAY

Houston-based engineering giant Bechtel aims to be the world’s premier EPC management organization by achieving extraordinary results for customers, building satisfying careers for its people, and earning a fair return on the value it delivers. It certainly has the resources and knowledge to undertake just about any project, and, in fact, has projects, people and offices in more than 40 countries.

It takes world-class expertise to achieve that sort of reach. Global EPC projects are nothing if not complex ISSUE 5 / 2018

“SUCCESSFUL PROJECT ENGINEERS QUICKLY DEVELOP CROSS-FUNCTIONAL LEADERSHIP SKILLS. IN ADDITION TO THE DISTINCT TECHNICAL SKILL SETS OF THEIR CHOSEN FIELD, ENGINEERS COLLABORATIVELY WORK TO SOLVE PROBLEMS FROM A PROJECT’S VERY BEGINNINGS.” CREDIT: BECHTEL

www.breakbulk.com BREAKBULK MAGAZINE 55

CREDIT: BECHTEL

undertakings, with thousands of workers, a web of suppliers and vast inputs of material, equipment and services.

There is perhaps no greater threat to a project’s success than silos of information. First-rate project management is built on a strong culture of shared learning. Part of Bechtel’s corporate culture involves identifying key lessons learned to serve as guidance for similar projects, Kalmus said.

Taking lessons learned to a higher level was a natural progression from Kalmus’ continued exposure to the significance of the engineering-supply chain interface.

“After Bechtel completed three world-class modular LNG projects in

Australia, we wanted to capture all the valuable lessons-learned data from these projects. Bechtel Engineering was challenged with producing a document where we identified all the critical steps starting with conceptual design decisions (what to modularize), and ending with setting the [structural project] modules in their final positions,” said Kalmus, who took the lead role in developing this roadmap.

“For more than 12 months, our engineering, procurement and construction team members participated in brainstorming sessions, where we eventually ended up producing the final document – a management instruction called the Cross-functional Work Process for Sea

Transportation of Structural Modules – detailing the steps required to successfully complete a project where you have modules that are transported via barges or ships on the open ocean,” Kalmus said.

“The tool we developed is innovative. It’s a game changer,” he said. The level of detail is such that each step of the project EPC process, including all aspects of the project cargo supply chain, is anticipated.

“When you move 70 to 100 or more modules for a project, each move is still unique,” Kalmus said, but there are parallels. Bechtel’s new tool is now used by its EPC teams on other projects to prevent surprises and inform their management decisions.

CROSS-FUNCTIONAL ENGAGEMENT

WE WORK IN AN ENVIRONMENT THAT IS CHANGING CONSTANTLY, AND IF WE KEEP MOVING FORWARD WITHOUT CONFIRMING THE STARTING BASIS WE COULD ENCOUNTER ISSUES AT THE END WHEN TIMING IS CRITICAL.” – Jeremy Kalmus, Bechtel 56 BREAKBULK MAGAZINE www.breakbulk.com

Large, perhaps US$5 billion to US$15 billion projects require cross-functional engagement, of which Kalmus has become a steadfast advocate. “I like to encourage my team to engage with all functions – rigging engineering, logistics, naval architecture, construction, etc. – that have a role in the successful delivery of oil and gas modules.”

ISSUE 5 / 2018

MUCH MORE THAN FREIGHT FORWARDING

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LEAN METHODS, CONSTANT PROCESS IMPROVEMENT Bechtel’s Jeremy Kalmus is a supervising engineer that goes out of his way to improve project processes to better meet customer expectations and bottom-line corporate objectives.

His management style echoes a lean Six-Sigma approach. His CV takes the reader on a world tour of Bechtel oil, gas and chemical projects, with a host of supervisory experiences, varied technical specialties, and underlying it all, a penchant for challenging, unique situations.

The fact that engineers like Kalmus are championing a smooth and successful engineeringproject cargo supply chain interface is very good news for

participants in global logistics and transportation.

Engineering solutions to smooth the lifts, moves and transport of project cargo are a best practice and a vital step in keeping projects on schedule and on budget. For EPCs attuned to relying on collaboration and advanced technology to deliver engineering and construction projects to customers, the introduction of collaboration and technology to expedite transportation and delivery, lower costs and ensure quality is all in a day’s work.

Engineers who help project cargo move expeditiously, help advance global project logistics.

One of his mantras is working together instead of alone, and another emphasizes the importance of communication and collaboration.

“We work in an environment that is changing constantly, and if we keep moving forward without confirming the starting basis we could encounter issues at the end when timing is critical,” he said, noting that engineers need to remain flexible at all times to help achieve project goals related to schedule, cost and other imperatives.

He described the engineer’s role in a typical move of oil and gas industry modules. After receiving a set of design parameters, the engineer seeks clarification as needed, and confirms the starting basis is still valid before finalizing the designs.

“Large-scale and/or geographically diverse projects provide challenges that you will find impact the design parameters greatly. The design engineer must think out of the box,” he said. For example, depending on the mode of transport, the structural framing of the module may be

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ISSUE 5 / 2018

impacted. It is important to understand and communicate how the modules will interact with transportation systems.

“On one of my last projects, we were about to complete the construction of our module and start preparing for loadout when we found that we needed to change the barge type. I had to quickly assemble a team so that they could assess the new design parameters and input these into analysis and simulation files to run comparisons, so we could verify the modules could be shipped on the new barge,” Kalmus said. Once the team verified the module was safe for shipping, engineering then had to prepare updated design documents.

VALUE OF COMMUNICATION

Managing shipments of multimillion-dollar, high-and-heavy modules is a highly integrated, interactive process. At Bechtel, the process is facilitated by in-house procurement and contract specialists

providing end-to-end supply chain management. Bechtel’s supply chain organization provides global procurement and contracts services supporting large, complex projects located almost anywhere. Their goal is “the responsible purchase and safe delivery of quality goods and services, from reliable and diverse suppliers and subcontractors, where they are needed, on time, and at the lowest total cost of ownership.”

“Engineering typically engages with our in-house logistics team, not outside service providers. The logistics team determines when and if it is appropriate to engage outside logistics service providers for input. Since we can handle this in-house we are able to limit the challenges,” Kalmus said.

He noted that there is always a need for continual attention and improvement to communication and collaboration through a shared work-process where all disciplines understand the entire process and their individual contribution to successful delivery outcomes.

Project component design and engineering influences supply chain choice, and vice versa. Large-scale modular projects that involve long ocean voyages present special design challenges because of the potential to encounter numerous forces during transit that, for example, produce accelerations and induce bending, Kalmus said.

With time, there has been a trend toward larger modules, and as individual modules have become larger, the challenge increases. “When we encounter challenges like this, the design team will need to consult with our in-house experts, including logistics, rigging engineers, and naval architects, so that we can achieve the project goals. The only way we can overcome these challenges is to continually communicate and collaborate with all the functions involved,” he concluded. BB Based in the U.S., Lori Musser is a veteran shipping industry writer.

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TRADE NOTES

Clowns vs Jokers MPVs Rue Their Own Mischief-makers

S

tuck In the Middle With You by Stealers Wheel is best known as the soundtrack to a gruesome torture scene in Quentin Tarantino’s 1992 debut film Reservoir Dogs. It might also have served as suitable musical epithet for the multipurpose vessel fleet this past decade, as operators endured a painful cargo squeeze. Instead of Clowns to the left and Jokers to the right, MPV owners had Container ships to port and Bulk carriers to starboard.

As both the container-shipping and bulk sectors struggled with excess capacity and bottom-hugging 60 BREAKBULK MAGAZINE www.breakbulk.com

BY MIKE KING

freight and charter rates in the aftermath of the 2008-2009 global financial crisis, operators targeted whatever cargoes they could find.

Frequently offering under-cost rates to fill ships on backhaul trades, they quickly gobbled up large chunks of mainstay MPV cargoes such as steel and forestry products.

“It has been a matter of overcapacity and bad freight rates that has induced bulk carriers, container ships and vehicle carriers to look for non-traditional – for their respective segments – cargoes; project cargoes in particular, which can relatively simply be accommodated,” said Dirk

Visser, senior shipping consultant at Dynamar. Their task of securing cargo was aided, he added, by the willingness of terminal operators to invest in mobile harbor cranes able to handle larger and heavier items of cargo.

MPV owners and operators faced a perfect storm: an increase in competition and a decline in global demand as economies went into recession and oil prices fell, and reducing investments in major oil and gas projects. And it was a storm that raged for much of the last decade.

But, and whisper it tentatively, there are signs that the supply-demand ISSUE 5 / 2018

BULK BOOM HERE TO STAY

PHOTO ILLUSTRATION BY CATHERINE DORROUGH / IMAGES VIA SHUTTERSTOCK

Dirk Visser

Peter Sand

Dynamar

BIMCO

balance for MPVs has turned a corner.

For starters, bulk carrier rates have finally recovered to profitable levels. The Baltic Dry Index reached 1,773 points in early August which, although far below the 2008 record reading of 11,793, represents a huge improvement on the 290 points recorded as recently as February 2016.

Demand for commodities is strong, albeit with the caveat that looming trade wars could affect all shipping trades in myriad unknown ways in the near and long-term. Owners have also held off from plunging the sector into another recession by ordering huge numbers of newbuildings.

Unless ship managers drastically speed up bulk carriers – an unlikely scenario given the current spike in oil and therefore ship fuel prices– higher bulk carrier freight rates could be here for the medium term, as confirmed by BIMCO Chief Shipping Analyst Peter Sand. He told Breakbulk that new bulk vessel orders were at historically low levels and net fleet growth was not expected to rise above 2 percent before 2021.

“As BIMCO sees 2 percent demand growth as the long run average, a fleet growth of 2 percent or less is required to avoid a worsening of the fundamental freight market conditions,” he said. “Considering the current orderbook and our assumptions for actual delivery dates, the dry bulk shipping industry remains on the road to recovery, as demand continues to keep its nose just ahead of fleet growth, while scrapping and ordering remains subdued.”

As Breakbulk went to press, container freight rates and global volumes shipped were also significantly higher than a year earlier. Indeed, spot container freight rates on trades from Asia to the U.S. were up to 30 percent ahead of a year earlier by mid-August with capacity eastbound hard to secure.

The focus of bulk carrier and container ship operators on core markets that are now profitable is already proving beneficial to the MPV sector, according to Kyriacos Panayides, managing director of AAL, which operates a fleet of 20 to 30 MPV heavy-lift vessels in the 19,000 to 33,000-deadweight-ton range.

“It’s no secret bulk carriers and container lines have intruded on MPV cargo over the last years in desperation to be employed,” Panayides said.

“But with the rising bulk market, we see bulk operators diverting to traditional bulk commodities, hence driving the MPV sector to gain more market share.

“This has led, of course, to increased freight rates in certain cargo commodities – concentrates, steel, logs timber, forestry products – so this is driving optimism,” he added. www.breakbulk.com BREAKBULK MAGAZINE 61

TOEPFER TRANSPORT MULTIPURPOSE SHIPPING TIME CHARTER INDEX The index is based on a 12,500-deadweight-ton MPP/HL “F-Type” vessel for a six to 12-month time charter, and represents the monthly assessment from operators, owners and brokers.

TIME CHARTER RATE PER DAY

$7,500 $7,250 $7,000 $6,750 $6,500 $6,250 $6,000 $5,750

Jul

Aug

Sep

Oct

Nov

Dec

2017

Jan

Feb

Mar

Apr

May

Jun

Jul

2018

Source: Toepfer Transport, www.toepfer-transport.com

IMPROVED RETURNS

Indeed, improving supply-demand fundamentals are already resulting in tangible returns for many MPV owners.

“Looking at charter-rate statistics, as published by the likes of Clarksons and Toepfer, it is clear that MPV earnings have been on the up: by some 17 percent year-on-year ... for multipurpose ships of around 12,500 dwt,” Visser said.

“Multipurpose operators are profiting from the worldwide economic recovery and enjoying an uptick in volumes. Oil prices are increasing – with ups and downs, but to such an extent that investments are being made again – and maintenance of oil and gas installations can’t wait any longer,” he said.

Visser also said that renewable energy and particularly demand for wind turbines was helping bolster MPV demand.

There is growing evidence that the recovery in financial returns for beleaguered owners could further accelerate.

On the demand side, Panayides told Breakbulk that a number of major oil and gas projects came to an end in early 2017 and mining and infrastructure business slowed. But he stressed that “O&G will come back next year as evidenced by the number of projects already announced and being budgeted.”

He added: “We also see positive movements in the mining industry and the infrastructure sector will pick up in certain parts of the world, like Europe and the Americas – North and South.

Combined with ongoing wind energy 62 BREAKBULK MAGAZINE www.breakbulk.com

growth, it gives our sector the chance to follow a recovery path from next year.”

On the supply side, compliance with a raft of IMO environment regulations from 2020 – including the introduction of lower sulfur caps on marine fuel which entails installing scrubbers or using expensive low-sulfur fuel on all merchant ships – is likely to force owners to scrap vessels rather than plow more money into older ships. “We expect to see a big part of the old MPV fleet scrapped,” Panayides said.

He added that the MPV fleet was unlikely to be flooded by a mass of newbuildings. “Our sector is not facing the same threat as container ships, bulk carriers and tankers because, with only limited orders in yards and some of these replacing older vessels, we expect a very manageable fleet in the years to come.

That of course is one of the tools that drives optimism in our sector,” he added.

DRY TRADE GROWTH

Susan Oatway, senior analyst for multipurpose and breakbulk shipping at consultant Drewry, believes MPVs can hold on to an average 15 percent share of the total dry cargo market moving forward, and this could rise to 17 percent to 19 percent by 2020-2022.

“It isn’t about types of cargo but the volumes – dry cargo trade is growing and the MPV market will grow with that,” she said.

According to Oatway, MPV cargo losses to container lines willing to stuff boxes with breakbulk or load

project cargo on deck are declining.

“Both of these are slowing in that, as the container market improves for the more traditional cargoes, there is less incentive to stuff boxes with cheap bulk and there is less incentive to carry difficult, time-consuming project cargo,” she said. “There is also competition from handysize bulkers, and here the breakbulk cargoes will always move between these two sectors as they are not specifically designed for them – which is where the hybrid project carriers have a bit of an advantage.”

The MPV fleet is no level playing field when it comes to capturing cargo. It is more meritocracy than socialist republic, and the gap between the “haves” and “have nots” is decided, for the most part, by the size of crane onboard.

Analysts use different definitions of how to distinguish between the different parts of the fleet. Drewry, for example, splits the fleet between standard MPVs with lift capability of up to 100 tons; project carriers, defined as MPVs built since 1989 with a lifting capability of 100250 tons; and premium project carriers, defined as MPVs built since 1989 with lifting capability of more than 250 tons. Yet all agree that a comeback for standard MPV vessels without specialist lifting capacity is unlikely.

“I can’t see the ‘simple’ MPV fleet reversing its decline over the next five years – there is too much competition at that end of the sector,” Oatway said.

BIGGER AND HEAVIER

Indeed, Drewry’s latest market report on the MPV market, Multipurpose Shipping Forecaster & Annual Review, outlined how the overall fleet was gradually getting bigger and heavy-lift capability becoming a must-have. Newbuilding MPVs with a lifting capability of at least 100 tons totaled 25 percent of deliveries in 2000, for example. In 2007 the percentage climbed to 30 percent, by 2013 it had risen to 52 percent and by 2016 it was 93 percent.

The result, Oatway said, was that in January this year 44 percent of the total MPV fleet was classed as a project carrier or premium project carrier.

This translated into almost 900 vessels with a lifting capacity in excess of 100 tons, of which 342 had crane capacity of in excess of 250 tons, and 25 had a lift capability of more than 1000 tons.

The upshot, Drewry found, was that the simple multipurpose fleet – those ISSUE 5 / 2018

DON’T DISCOUNT COMPETING SECTORS for MPVs because container ships go only to major ports, and they will never be able to do tramp duty.”

Cearley also pointed out that the way container vessels were being deployed now was increasingly similar to MPV operations.

“In the old days one would only think of them one way: for carrying commercial containers, whether dry or reefer,” he explained. “Nowadays that has changed. You have to keep in mind that not all project cargo is breakbulk. There are now specialty lines, like Sarjak, and specialty containers, like Cakeboxx, that are helping to redefine the type of cargo going on a standard container vessel.

“In the past you didn’t necessarily think project cargo beyond flat racks.

Then gradually you would think boats, yachts, heavy equipment, etc.

Now the commercial shipping lines are getting proper breakbulk on a regular basis. And they have been hiring experienced project staff to develop and handle this business.

That is not the future. It is the present,” Cearley said.

CREDIT: SHUTTERSTOCK

There is evidently optimism that prospects are finally looking up for multipurpose vessels. But while competing sectors may have become less of a threat, experts caution against completely discounting their impact going forward.

Buyers of ship capacity will continue to take the best priced or most convenient option available, pointed out Gary Dale Cearley, managing director of XLProjects.

“From what I have seen from our XLProjects people and other projects people, container vessels are still coming on strong.

Also, from speaking to the representatives of the container lines I believe they are going to grab as much of the market as they possibly can.”

He said for shippers and forwarders, the scheduling of container liner services was often a key advantage. “They ship out of virtually all major ports and they tend to be cheaper overall than chartering a vessel,” he said.

“However, there will always be room

64 BREAKBULK MAGAZINE www.breakbulk.com

vessels with lift below 100 tons – has already started to contract at a rate that is affecting the total MPV fleet.

“Some 80 percent of all newbuildings over the last five years have heavy-lift capability, and at least 70 percent of the orderbook has this capability. The project carrier fleet is growing, but it will be some time before it reverses the decline in the overall multipurpose fleet.”

Certainly, AAL has gradually built up its fleet of heavy-lift-capable vessels over the years as the battle for general and breakbulk cargoes was joined by non-MPV operators and it sought profitable niche markets. Now, 14 vessels in AAL’s fleet offer maximum lifting capability of 700 tons. Panayides confidently predicts that standard, older MPVs without specialist lifting abilities will be scrapped in ever-larger numbers in the next few years.

“Heavy-lift capacity gives a fleet additional employment capability, so you can switch to project cargoes but also still load commodities that standard MPVs can accommodate,” he said. “Our strategy has been founded on decades of study of the market and the competition landscape. We saw there were not many bigger MPV heavy-lifters, so our second generation of newbuildings delivered 2011-14 had heavy-lift capability and were of a particular design with, for example, cargo hold segregation to allow maximum intake.”

So, where next for MPVs? Drewry is confident that the sector’s resurrection is built on firm foundations. Its most recent report concluded that the sector was now “ripe” for recovery, a recovery set to last through to 2022, the end of the forecast period.

“This year started with renewed optimism and it is Drewry’s belief that the market has finally turned that corner,” Oatway said. “Rate rises are never stratospheric in this sector, but we believe a steady growth of around 2 percent to 3 percent per year is possible over the forecast period.”

Another Stealers Wheel song, Wishbone, had the anthemic chorus “Wish for anything you want.” MPV owners fervently wish, and hope, that Drewry is right. BB Michael King is a multi-award-winning journalist as well as a shipping and logistics consultant.

ISSUE 5 / 2018

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Plague and Blessing Dynamar Ranks Top Breakbulk Operators

BY DIRK VISSER

In ranking the leading breakbulk operators, Dynamar’s biennial report, Breakbulk V – Operators, Fleets, Markets, also includes a wealth of information on each of the shipping lines. What follows is basic information on ownership, markets, trade lanes and services taken from the carriers’ section of Dynamar’s report and supplied exclusively to Breakbulk.

E

arly-year promises of an improving global economy came true. The International Monetary Fund outlook for the coming five years in terms of gross domestic product development and the growth of imports and exports is unchanged, at 5.4 percent. It was 2.7 percent over the previous 5-year period.

The industry has certainly benefitted from the global recovery this year so far, in the first quarter in particular.

However, revenues have been affected by the costs of bunkers, which have continued increasing since their lowest point in early 2016.

These increasing bunker prices are a plague for operators … but also a blessing. Indeed, maintenance to existing oil and gas installations has started again, and pipes and tubes are moving.

Investment in new installations has begun as well, with some expecting a sharp increase in oil- and gas-related projects.

Investments in shale gas, alternative energy, offshore wind turbines, and large-scale solar projects are growing as well.

Breakbulk volumes have also been supported by growth in container volumes, by 5 percent in the first quarter, therewith reducing box carriers’ interest in breakbulk/project business. The same can be said for bulk operators, which have seen minor bulk volumes, including iron and steel, growing by an estimated 3 percent.

However while breakbulk operators are happy with higher volumes, generally they have not managed to increase rates. This is disappointing, especially given that consolidation has been a feature of the breakbulk sector this year.

Substantial events such as Zeaborn acquiring Rickmers Linie, Ocean 7 Projects merging with Ikonship, Harren and Partner buying SAL Heavy Lift, MACS taking over Hugo Stinnes, and Zeaborn (again) amalgamating with Intermarine have not managed to restore pricing discipline.

While bulk, including minor bulks, remain forecast to increase by 3 percent, container volume growth fell back to less than 3 percent in the second quarter, and current prospects are generally negative. This may

renew the container sector’s interest in breakbulk. However, the slowdown is not hitting containers alone but will unavoidably affect other sectors as well, including breakbulk, especially as emerging markets are expected to be impacted most.

Nonetheless, it’s not all negative. Projects once started will be completed, and the orderbooks of the various breakbulk players are now much lower than they have been for many years: • Top 10 multipurpose: 7 percent – total fleet: 4 percent • Top 10 heavy load: 7 percent – total fleet: 6 percent • Top 10 conventional roll-on, rolloff: less than 1 percent – total fleet all types: 6 percent • Top 10 car carriers (the conventional breakbulk’s largest competitor): 3 percent – total fleet: 5 percent In summary: the breakbulk trades are on a path to further improvement.

But there are caveats: • In less than one-and-a-half years, the International Maritime Organization Sulphur regulation will come in effect.

• The U.S. president …

Dirk Visser, senior shipping consultant and managing editor of Dynamar BV – Shipping Information and Consultancy, is a 30-year veteran of the liner shipping and forwarding industry in the Netherlands.

Since 1999 he has been responsible for the publications and consultancy sections of Dynamar, including the DynaLiners portfolio of news and commentary, and Dynamar’s biennial flagship breakbulk publication.

Dynamar’s report provides an overview of important breakbulk and project shipping markets, sorted by major cargo segment, complemented by the main trade areas (destinations), with notes on developments, expectations, facts, findings, options and trends relevant to each cargo segment. The full publication, Breakbulk V – Operators, Fleets, Markets, is available from Dynamar at www.dynamar.com/publications.

68 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 5 / 2018

SEEKING REP IN USA

TOP BREAKBULK OPERATORS MULTIPURPOSE OPERATORS 1. COSCOSSC 2. BBC 3. ZEAMARINE 4. SPLIETHOFF 5. AAL

Cosco Shipping Specialized Carriers (CoscoSSC) of Guangzhou has taken over, not for the first time, from BBC Chartering as the world’s largest multipurpose operator by deadweight. The recent growth of its fleet is entirely due to the delivery of new ships. In 2013, the Chinese launched a newbuilding program comprising 12 29,500 deadweight tonne/700 tons heavy-lift units, plus 11 38,000 dwt/200 tons crane capacity.

The last 38,000 dwt ship came up for delivery in the first half of 2018.

CoscoSSC, previously named COSCO Lines, also deploys car carriers, asphalt and log carriers, as well as seven semisubmersible vessels operated under the style of COSCO Heavy Transport (CoscoHT). These ships are not part of this multipurpose ranking.

Having reduced its fleet to a still very sizeable 135 ships/1.67 million 20-foot-equivalent units, BBC Chartering of Leer has returned to the

second place in the ranking. Because of the fact that BBC, through its parent Briese, has relatively easy and quick access to tonnage, it may be the case that they may return to pole position next year. In terms of deadweight capacity of individual ships, BBC Chartering’s units are 12,400 dwt, larger only than Intermarine’s 11,300 dwt units.

New in the ranking is Zeaborn of Bremen. In early 2017, this still relatively young company acquired, against rather special conditions, Rickmers Line including NPC Projects from Bertram Rickmers. In 2016, it had already taken over the commercial management of part of the Carisbrooke (UK) fleet and the chartering activities of the HC Group of Hamburg. And as recently as June 2018, Intermarine USA (25 percent) and Zeaborn (75 percent) announced their intention to merge their businesses under the style of Zeamarine. At the time of writing, the intended merger is still subject to regulatory approval. As of July 2018, Zeamarine had a fleet of 80 ships, of which nine operate under the style of Rickmers Line, seven as HC-Chartering, 16 as Zeaborn Chartering and 48 contributed Intermarine, which has 12 units on order.

DEEPSEA RO-RO OPERATORS

1. GRIMALDI/ACL 2. WWL 3. MESSINA 4. N YK BULK AND PROJECT CARRIER 5. BAHRI The Grimaldi Group, including its subsidiary ACL (Atlantic Container Line), is the world’s largest operator of roll-on, roll-off ships. Most of its ships are conventional ro-ros. However, it is fast expanding its vehicle carrier fleet on behalf of Fiat Chrysler exports to the U.S. Main deepsea markets served by the Italians from Europe are West Africa, East Coast South America and North America East Coast. Grimaldi also services Europe and West Africa from North Europe, while ACL is a renown transatlantic carrier. The Italians are known for the innovative designs of their ships: ACL’s five new ships are the world’s largest ro-ro ships with 55,600 dwt.

WWL comes second in the deepsea ro-ro ranking, but will be discussed in the vehicle carrier section.

A second Italian company ranks third: Ignazio Messina from Genoa serves Africa/Middle East/India

MID-2018 TOP 10 MULTIPURPOSE OPERATORS BY DEADWEIGHT CAPACITY DWT MULTIPURPOSE Rank Top 10 Operators

EXISTING FLEET Ships

Total dwt

ØDwt

ON ORDER ØAge

Ships Total dwt

ØDwt

ØAge

Share

1 Cosco SSC 67 1,821,000 27,200 2009 - - - - 2 BBC 135 1,669,000 12,400 2009 - - - - 3 Zeamarine 80 1,072,000 13,400 2008 12 141,000 11,700 2018 13% 4 Spliethoff 48 776,000 16,200 2005 6 108,000 18,000 2019 14% 5 AAL 24 713,000 29,700 2011 - - - - 6 Thorco 41 653,000 15,900 2011 - - - - 7 Chipolbrok 20 622,000 31,100 2011 - - - - 8 MACS 18 526,000 29,200 2007 - - - - 9 PACC Line 17 471,000 27,700 2007 - - - - 10 Wagenborg 30 465,000 15,500 2013 - - - - 2018 Top 10 Multipurpose 480 8,788,000 18,300 2009 18 249,000 13,800 2018 3%

Total fleet by vessel type

Ships

Total dwt

ØDwt

ØAge

General Cargo Ships Share top 10 multipurpose

3,763 13%

40,747,000 22%

10,800 -

2002 -

Ships Total dwt 155 12%

1,654,000 15%

ØDwt

ØAge

SHARE

10,700 -

2019 -

4% -

Ø = average 70 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 5 / 2018

RO/RO FLEET BY PERIOD BUILT AND AVERAGE AGE

SHARES PERIOD BUILT SHIPS TOTAL DWT Ø DWT TOTAL FLEET <1980 <2000 2000-2004 2005-2009 2010-2014 2015-2018/7

13 131,000 10,100 178 1,678,000 9,400 78 928,000 11,900 64 945,000 14,800 92 1,499,000 16,300 45 875,000 19,400

Ø YEAR

2% 28% 15% 16% 25% 14%

1977 1992 2002 2007 2012 2017

GLOBAL RO/RO FLEET: – >25-YEAR-OLD – ORDERBOOK SHARES PERIOD BUILT SHIPS TOTAL DWT Ø DWT TOTAL FLEET

Ø YEAR

Existing worldfleet 470 6,056,000 12,900 100% 1996 <1993 fleet (>25 years old) 90 866,000 9,600 14% 1983 Orderbook 2018/8-2022 40 749,000 18,700 12% 2019

As matters are, the conventional ro-ro fleet of all types is to shrink by (just) 2% over the period 2018/8-2022

from the Mediterranean. It bravely embarked on an eight-unit strong 45,000 dwt/2,900 TEU container/ ro-ro ship fleet renewal program in the crisis year of 2009. However, these ships have left Messina with the heavy burden of a debt of about US$420 million, financed by troubled Banca Carige. Ultimately, MSC came to an agreement with the bank on a restructuring of Linea Messina that has seen the Swiss carrier becoming a 49 percent shareholder in the Italian operator. Two of the container/ro-ros are now operated by MSC.

NYK Bulk and Project Carrier has a diversified fleet of ro-ro ships. Its sister NYK is discussed in the vehicle carrier segment.

Bahri is a trade name of NSCSA, the National Shipping Co. Saudi Arabia.

Over 2013/2014 it took delivery of six 26,000-dwt newbuildings, replacing four quite larger (42,600 dwt) units, which by then were more than 30 years old. As the old ones did, four of the new vessels are plying the India/Middle East-U.S. East Coast ro-ro route; the two others are tramping in the EuropeMiddle East trades.

VEHICLE CARRIER OPERATORS

1. WWO 2. NYK LINE 3. MOL 4. “K” LINE 5. HÖEGH AUTOLINERS Vehicle carrier is the generic name for ships carrying cars in ro-ro mode.

The more commonly used name is car carrier or PCTC, which stands for pure car and truck carrier.

Wallenius Wilhelmsen Ocean, including its 80 percent subsidiary EUKOR of South Korea and sister American Roll-on Roll-off Carrier, is the world’s largest operator of vehicle carriers. It deploys 125 ships that have a combined deadweight of 2.4 million tons with space for 804,000 car equivalent units, or ceu. Two more ships are on order. Furthermore, the Norwegian/Swedish joint venture operates nine vehicle carrier-lookalikes that are referred to as ro-ros. Wallenius, the Norwegian partner, considers itself the inventor of the car carrier, while Wilhelmsen has been at the forefront of development of the ro-ro/container ship.

NYK’s origins date back to the 1870 establishment of Tsukumo Shokai Shipping. As Mitsubishi Shokai it started Japan’s first deep-sea shipping service between Yokohama and Shanghai in 1875. NYK started carrying cars in the early 1960s and launched its first custom-built car carrier in 1969, the Toyota Maru

TOP 10 (BY DEADWEIGHT) OPERATORS OF VEHICLE CARRIERS VEHICLE DWT CARRIERS EXISTING

Rank

(PCC/PCTC) Operators Ships

Total dwt

Total CEU Ø Age Ships

ON ORDER Total dwt

Total CEU Ø Age

Share

1 WWL 125 2,810,000 845,000 2007 3 65,000 24,000 2018 2% 2 NYK Line 119 2,016,000 655,000 2006 3 56,000 21,000 2018 3% 3 MOL 115 1,885,000 610,000 2007 3 49,000 20,000 2018 3% 4 “K” Line 96 1,543,000 512,000 2007 0 0 0 0 0% 5 Höegh Autoliners 55 1,103,000 357,000 2007 0 0 0 0 0% 6 Hyundai Glovis 44 899,000 252,000 2009 0 0 0 0 0% 7 Grimaldi Group 20 294,000 95,000 2006 12 187,000 93,000 2019 64% 8 Toyofuji Shg 31 280,000 80,000 2003 0 0 0 0 0% 9 ECL 14 187,000 50,000 2006 0 0 0 0 0% 10 Neptune Lines 15 150,000 46,000 2007 0 0 0 0 0% Total Top-10 VC operators 634 11,166,000 3,503,000 2007 21 357,000 158,000 2019 3%

Worldfleet Vehicle Carriers 801 13,290,000 4,097,000 2006 38 658,000 270,000 2019 5% Share Top 10 79% 84% 86% - 55% 54% 59% - -

72 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 5 / 2018

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No.5. Including its 50 percent-owned intra-Europe operator UECC, it is the No. 2 operator by deadweight capacity of vehicle carriers, deploying 119 ships (three on order) with space for 655,000 cars. Technically, NYK RoRo falls under the Bulk Shipping Business of the NYK group, as is NYK Bulk and Project Carrier (NYK BPC) which, among others, operates multipurpose/ ro-ro vessels. UECC recently took delivery of two dual-fuel powered 3,800 ceu vessels.

Trading as MOL Auto Carrier Express (MOL ACE), MOL is the third-largest car carrier operator with a total fleet of 115 PCTCs having capacity for 610,000 ceu. This includes subsidiaries Nissan Motor Cars (11 ships) and intra-Europe EML (12 ships), and it has four units on order. Japanese shipping companies like to be on the forefront of developing low harmful-emission vehicle carriers. In mid-2012, MOL launched a 6,300-ceu car carrier designed to generate zero emissions when in port. Then in 2016, it entered into a joint study with classification society ClassNK, two shipyards and engine manufacturer Wärtsilä into the application of exhaust scrubber systems for existing car carriers.

HEAVY LOAD OPERATORS

1. ZHEN HUA 2. BOSKALIS 3. COSCOHT 4. BIGLIFT 5. HANSA HEAVY LIFT As the in-house shipping company of Chinese crane builder ZPMC, Zhen Hua Shipping is probably the world’s best known carrier of gantry cranes and other port/terminals machinery. Container cranes are loaded or discharged to/from the vessels over the side through a Zhen Hua designed movable rail system. The carrier’s fleet of (mostly) converted oil tankers or bulk carriers consists of 19 so-called open deck carriers and eight semi-submersible vessels.

One oil tanker is being converted.

Bad results in its Offshore and Energy division recently led Dutch infrastructure major Boskalis to withdraw a large part of its semi-submersible cargo fleet. This was inherited from its US$940 million acquisition of Dockwise in 2013, and then encompassed 22 units. Included are all nine of its so-called closed-stern ships plus two open-stern units with fixed casings.

Together, these 11 vessels comprise no less than 49 percent of its current

total 19-unit semi-submersible fleet by deadweight and even 58 percent by the number of ships. All except two of the to-be-abandoned ships are converted tankers or bulk carriers. European companies have long been leading the semi-submersible category, but the number of Asian contenders is increasing. Without exception, newbuildings in this segment are all open-stern units, like the remaining eight Boskalis vessels. The company has expressed its intention to scrap its superfluous fleet rather than to sell any of them to the competition.

BigLift, a subsidiary of Dutch Spliethoff, is leading the geared heavy load category by deadweight. Two of its penultimate, 2012/2013-built, vessels have a heavy-lift capability of 1,800 tons. A third similar one is on order for delivery in 2019. Its oldest one, dating from 1984, can lift 1,400 tons and is the only one with a (short) stern ramp that can hold 2,500 tons.

BigLift’s latest fleet additions are two 21,000-dwt open-deck ships, built for the carriage of large modules for the Yamal LNG project in Siberia.

The aggregate lifting capability of BigLift’s fleet excluding the two open deck ships is 13,000 tons, 930 tons on average. BB

MID-2018 TOP 10 HEAVY LOAD OPERATORS BY DEADWEIGHT CAPACITY DWT HEAVY LOAD Rank Top 10 Operators

EXISTING FLEET Ships

Total dwt

ØDwt

ON ORDER ØAge

Ships Total dwt

ØDwt

ØAge

Share

1 Zhen Hua 27 1,225,000 45,370 2003 1 106,000 106,000 2019 9% 2 Boskalis 19 937,000 49,316 1994 - - - - 3 CoscoHT 7 322,000 46,000 2010 - - - - 4 BigLift 16 247,000 15,438 2010 1 18,000 18,000 2019 7% 5 Hansa Heavy Lift 15 245,000 16,333 2010 - - - - 6 OHT 5 207,000 41,400 2015 - - - - 7 SAL 19 200,000 10,526 2006 - - - - 8 Guangzhou Salvage 4 134,000 33,500 2014 - - - - 9 GPO Heavylift 2 127,000 63,500 2018 2 130,000 65,000 2019 100% 10 TPI Mega Line 5 113,000 22,600 2010 - - - - Top 10 Heavy Load 119 3,757,000 31,571 2006 4 254,000 63,500 2019 7%

Total fleet by vessel type Barge Carriers Heavy Load Carriers Open Deck Ships Semi-Submersibles Worldfleet Heavy Load Share Top 10

Ships

Total dwt

3 62,000 113 1,946,000 164 1,017,000 74 2,743,000 354 5,768,000 34% 65%

74 BREAKBULK MAGAZINE www.breakbulk.com

ØDwt

ØAge

20,500 17,200 6,200 37,100 16,300 -

Ships Total dwt

ØDwt

ØAge

SHARE

2014 - - - - 2004 - - - - 2012 13 97,000 7,500 2018 10% 2001 8 412,000 51,500 2019 15% 2007 13 331,000 25,500 2016 6% - 31% 77% - - -

ISSUE 5 / 2018

ENERGY UPDATE

Illustrated rendering of Equinor’s floating Hywind Wind Farm off the coast of Scotland, UK. / CREDIT: EQUINOR

76 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 5 / 2018

BY HELEN CAMPBELL

Floating Ambitions

Wind Moves Soar with Potential

T

he drive for a lower carbon future has seen the wind sector truly take off in the last few years. According to the Global Wind Energy Council, there is more than 18.8 gigawatts of wind power installed offshore in 17 markets around the world.

This boom has been ably assisted by a creaking shift in regulatory systems, and is beginning to see the first developments without subsidies, in Germany and the Netherlands, for example.

The bulk of offshore wind is fixed to the seabed by piles securing turbine towers many meters tall, but the concept of floating wind parks is emerging as a reality. Until the start-up of the 30-megawatt Hywind development off Scotland in October 2017, floating wind had been limited to demonstration and pilot projects. Operated

by Norway’s Equinor (formerly named Statoil), the world’s first floating offshore windfarm has proved that floating wind is no longer just a vision; it is quickly edging closer to full commerciality,

www.breakbulk.com BREAKBULK MAGAZINE 77

CREDIT: AEROS

AIRSHIPS UP TO WIND CHALLENGE The larger and longer blades that come with the larger and more efficient floating developments mean added challenges for land transport of components.

Aeros and Lockheed Martin are two firms that have separately come up with an innovative way to transport blades and other kit. Both have developed airships, which could make transportation of these valuable and vulnerable pieces of kit less of a headache.

Aeroscraft can transport blades from a manufacturing site directly to their next destination, eliminating the need to haul over land, rail and water, while avoiding chokepoints, dedicated road construction in remote areas and, of course, those tricky tight corners with blades projecting off a truck.

Aeros claims the solution is also more environmentally friendly than trucks, and highlights the ability to access the remote areas that so often play host to wind and other industrial developments.

“Austere terrain and isolated environments remain reachable only in the developed transportation periphery,” Aeros said. “Reaching places from western Alaska to rural India demands a vertical airlift solution with the ability to bypass infrastructure. The Aeroscraft could be the future airlift freight solution for wind turbine transportation.”

Like Lockheed’s comparable Hybrid Airship development, these aircraft claim to be able to transport large-scale wind blades and other components to any destination in the world. “(Our) internal payload compartment is capable of accommodating multiple blades over 300 feet long, and it can be customized to overcome the growing height, weight, width and length limitations in wind turbine transportation,” Aeros added.

78 BREAKBULK MAGAZINE www.breakbulk.com

and becoming a real challenger in the scramble to shape the renewable energy future.

As operational performance data for floating wind is scarce, prospective investors in renewable energy will be watching Hywind closely. Equinor rates the potential for floating offshore wind as “vast,” and says that growth is exponential. So far, Hywind is outperforming expectations and this bodes well for construction of additional floating wind parks elsewhere in the world.

According to a report from the Offshore Renewable Energy Catapult, the most likely markets for deployment of floating wind are countries with deeper water close to large cities, remote island communities with high electricity prices and, rather ironically, oil and gas platforms whose power could be provided by wind rather than gas. Analysts highlight Asia, the West Coast of North America and Europe in particular, as the hotspots for growth. France already has a number of prototypes underway, and the UK, Portugal, Spain and Norway also hold high potential.

In Asia, Japan and China are expected to deploy floating wind from about 2030, with Taiwan and South Korea to follow. In the U.S., the West Coast carries higher potential than the East, the latter presenting a higher degree of competition from bottomfixed offshore wind, at least until 2030.

Hawaii is another key market.

SPACE TO BREATHE

Building wind capacity offshore, as opposed to onshore, carries many benefits: most obviously, offshore has the space for installations, and the ability to scale up is central to the growth potential. Not only are wind developments offshore, fixed or floating, likely to be larger overall than their onshore relations, they are likely to comprise bigger turbines, to produce more energy more efficiently.

Moreover, wind conditions are significantly more abundant out at sea than on land.

All of this, combined with the drive for a lower carbon future, has helped offshore wind develop its position as a credible renewable energy source, and floating wind really builds on these benefits. Floating wind parks mean seabed contact and intrusion is limited to chains and anchors instead of piles ISSUE 5 / 2018

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THE SUPPLY CHAIN FOR THIS HAS NOT BEEN MATURED. WE BELIEVE THAT THIS WILL CHANGE AS WE SCALE UP AND SEE MORE DEPLOYMENT OF FLOATING WIND.” – Equinor spokesperson

as with fixed wind, bringing clear environmental benefits. At the same time, floating wind does not require all turbine towers in a development to be individually adjusted to fit the contours of the seabed below, so each tower can instead be mass-produced to the same dimensions. This ability to standardize, and the consequential economic and supply chain advantages, is one of the biggest drivers behind the projected growth in floating wind development.

Moreover, it follows that without the need to be built on the seabed, floating windfarms are freed from the relatively shallow waters that constrain the fixed wind sector – the Hywind concept is appropriate for water depths of up to 800 meters. This relative freedom means lower degrees of aesthetic objection to projects, as they can be located further out to sea, in addition to the technical benefits of designing projects around shipping lanes, fisheries and other fellow users of the water.

CATERING TO WIND RESOURCES

A new specialist report from Wind Intelligence estimates that up to 80 percent of all global wind resources 80 BREAKBULK MAGAZINE www.breakbulk.com

CREDIT: ØYVIND GRAVÅS, STATOIL

are located in waters deeper than 60 meters where bottom-fixed systems are not an option. So the difference that floating wind could make to the renewable energy sector’s drive to access this resource is enormous.

Bigger wind parks, larger turbines and increased wind conditions, combined with the lack of need to impact the seabed and the ability to standardize, make floating wind very attractive indeed. Wind Intelligence expects floating wind costs to follow the same downward trajectory that onshore and fixed offshore wind have followed over the last several years, putting the potential for cost decreases achievable by floating wind at 40 percent to 50 percent by 2030. Price decreases of that magnitude are expected to see floating wind become a real contender in the renewable fuels market.

Supply chain development is also a prerequisite; it’s not yet there, but confidence that it will develop is high.

“The supply chain for this has not been matured,” an Equinor spokesperson said. “The supply chain for offshore wind is starting to mature in Europe, but not other places in the world. This will change when development increases in other places.

We believe that this will change as we scale up and see more deployment of floating wind.”

According to Sweden’s Hexicon, a specialist developer of floating multiturbine wind technology, there will be 500 floating turbines “out there” by 2030. That kind of development signifies a real opportunity, and also a challenge, for project cargo movers looking to transport outsize components like turbines, towers and blades.

TYPICAL HYWIND JOURNEY A look at the origin and location of manufacture of the Hywind components and how these were moved from manufacture to quayside for assembly demonstrates the breadth of the possible opportunities all over the world. It should, however, be noted by project cargo carriers that, as regional supply chains develop, the distances between manufacturer and project site will gradually decrease, so the job of transporting wind components is likely to become much more about the equipment, the knowhow and driver skill, if on road, than it is about mammoth distances by any transportation method.

ISSUE 5 / 2018

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All five Hywind turbines assembled onshore.

CREDIT: ODD HENNING GILJE, STATOIL

Hywind’s blades, each weighing 25 tonnes and measuring 75 meters in length – a wingspan almost the same as an Airbus 380 – were moved from Denmark, as were the nacelles, which equate to the size of two double-decker buses. Hywind’s towers were made in

82 BREAKBULK MAGAZINE www.breakbulk.com

Bilbao, Spain, and, at 83 meters high and with a maximum diameter of 7.5 meters, weigh close to 670 tonnes each. These were constructed in four segments before being shipped for assembly at Stord, Norway.

The substructures that provide

the platform on which buoyant wind turbines float were made in Spain.

At 91 meters long and 14.5 meters in diameter at their widest point, they are formidable pieces of outsize kit themselves, each weighing 2,300 tonnes. The wind park’s mooring chains were also fabricated in Spain, while its suction anchors, each 16 meters tall, 5 meters in diameter and weighing about 300 tonnes each, were transported from Isleburn, Scotland.

Moving wind towers and turbines is no small feat; the job requires considerable planning, paperwork, expense and care. It also requires increased communication and cooperation between all parties involved, from client and manufacturer to carrier and logistics provider, with highway and port authorities, forwarder and customs broker in between. Options range from trucks, rail and barge, as well as some newer less conventional methods.

The major physical challenges of trucking these outsize components include driving with overhead objects; height requirements; weight

ISSUE 5 / 2018

limits; bridges and tunnels; a lack of suitable roads; and administrative and regulatory constraints. Rail options, meanwhile, are frequently non-starters in many regions, owing to limitations related to dimensions and/or, more likely, lack of access to final project sites. If the end of the line is nigh, a turbine or tower section will have to be transferred to an alternative mode to complete its journey, adding in another major operation. Wind components have certainly been moved by rail, but the ability is closely reliant on local circumstances. Vestas is a manufacturer that has been using rail in Europe for several years – with trains of railcars up to 700 meters long – and rail has also been used in the U.S., but not yet for floating in either case.

STILL RISKS TO CONSIDER

As a still-nascent technology with immense potential, the floating wind market is not without other risks.

Cargo movers wanting to prepare to move floating wind components will need to familiarize themselves with

the array of design options present in the floating market; whereas Hywind is of a spar design, others in the market are semi-submersible, barge, or tension leg platform (TLP), all presenting specific requirements and considerations.

Within the four basic designs mentioned above, there are more than 30 floating wind concepts in existence or under development globally, presenting a significant degree of variation in dimensions and a further challenge to logistics planners when taking ports, quays and drafts into consideration. For example, spar and TLP designs can cope with water depths of minimum 9 meters, but semi-submersible concepts would be more problematic in the same circumstances.

“Another important consideration is the width of the port entrance,” the Carbon Trust said in a recent report. “Most port facilities have been designed to accommodate long and slender naval vessels; however, floating wind platforms are often very wide structures with beams reaching

up to 100 meters in some concepts.”

The report also points to a possible shortage of drydock facilities should floating wind boom as predicted.

Other challenges are storage and laydown considerations for the large number of components that make up a large wind park offshore – the Catapult report noted that modular designs that can be pre-manufactured away from the assembly port will be preferable once floating wind starts approaching commerciality, to avoid dockside bottlenecks and the resultant health and safety issues. Those sections and modules will need moving.

As the energy industry continues to creak toward a more renewable future, increased innovation and creativity would serve project cargo carriers well; those wanting to take advantage of a market predicted to boom should be ready for floating wind. BB Helen Campbell is a freelance journalist based in London who has specialized in energy, environment, sustainability and technology for more than 20 years.

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www.breakbulk.com BREAKBULK MAGAZINE 83

PORT FOCUS

Boxes Over Breakbulk

Caribbean Ports Face Infrastructure Challenge

BY PAUL SCOTT ABBOTT

W

hen it comes to providing sufficient infrastructure for handling outside-thebox cargoes, ports of the Caribbean region are finding themselves boxed in – in more ways than one.

Figuratively, Caribbean ports are boxed in due to limited funding,

especially for facilities for noncontainerized activity, while they are often more literally boxed in due to lack of room for port expansion.

“The entire focus has always been containers,” consultant John C. Martin said of the emphasis of port development in the Caribbean region over the last half-century. “There is clearly opportunity for other cargo, and it has not been addressed at all,” continued Martin, who holds

his doctorate in economics and who has conducted more than 1,000 port studies throughout the world over the past 40 years. He is president of Lancaster, Pennsylvaniabased Martin Associates.

Patrick Bird, managing director and global head of advisory at the Edison, New Jerseybased Seabury Maritime unit of John C. Martin Seabury Capital, the New YorkMartin Associates headquartered specialty finance and investment firm, pointed to private financing providing a potential boost. But in light of limited non-containerized cargo

ABOVE: At the Port of Bridgetown in Barbados, a decline in intraregional breakbulk trade means transit shed facilities along shallow-draft

berthing are not as busy as they once were. /

84 BREAKBULK MAGAZINE www.breakbulk.com

CREDIT: BARBADOS PORT INC.

ISSUE 5 / 2018

A VAN BEEST BRAND

hain of evolution

A new multipurpose cargo terminal is envisioned for La Brea on the island of Trinidad, where existing port facilities have run out of room for affordable expansion. / CREDIT: MARTIN ASSOCIATES.

volumes, he cautioned, “the ability to secure capital becomes quite an issue when looking to upgrade or address these challenges.”

Glenn Roach, executive secretary of the Patrick Bird Port Management Association of the Seabury Maritime Caribbean, said lack of available acreage for expansion of existing port facilities exacerbates challenges.

“The port infrastructural challenges regarding breakbulk and project cargoes is really space,” he said.

“There is nowhere really to expand the ports, because they are kind of hemmed in by the city.”

Roach added options include reclaiming land from coastal waters, as was done in Barbados with expansions of the Port of Bridgetown in the 1960s and 1970s, or construction of a 86 BREAKBULK MAGAZINE www.breakbulk.com

new port, as is advancing on the island of St. Vincent in St. Vincent and the Grenadines.

SPACE TO EXPAND

A few Caribbean ports are blessed with Glenn Roach neighboring Port Management property Association of the available for Caribbean expansion. A notable example is in the British overseas territory of Anguilla, where 2.4 acres to the immediate south of the existing Port of Road Bay have been acquired, with a new multifunctional jetty being built with the assistance of the British government, and where plans call for future acquisition of an additional 1.4 adjoining acres.

In another British overseas territory, Turks and Caicos, where breakbulk activity continues to

constitute the majority of tonnage, storage has been moved off the port, with most cargo delivered directly to importers, Roach said.

Space constraints for storage of breakbulk and project cargoes are of particular concern in the region during peak season periods, such as around Christmas, he added.

In his home port of Barbados, Roach said the shallow-draft facility at the Port of Bridgetown, which once was dedicated to intraregional breakbulk trade, has seen the annual number of ship calls drop to about 100 from a high of 400 in the mid-1990s.

In 2005, Barbados Port stopped dedicating that facility and its on-dock transit sheds to breakbulk commerce, and the port’s master plan calls for eliminating two existing transit sheds and replacing them with a 75,239-square-foot container freight station.

“Even among the smaller ports that still handle breakbulk cargo, they are looking at development in terms of the containerized cargo,” Roach said. “Overall, the intraregional cargo, ISSUE 5 / 2018

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which is the main source of breakbulk, seems to be diminishing, so that is the challenge now.”

And that gets back to Bird’s point, as, particularly following 2016 completion of Panama Canal expansion, container-handling infrastructure gets the lion’s share of interest.

“Big container investments typically get the greater attention put on them,” Bird said. “But I think there’s still strong demand in the region for breakbulk or project cargo.

“The problem is there’s very little money that you can invest on the back of small volumes, or it makes it harder to do so, so it’s all about trying to find innovative financing solutions or technological advantages,” he said.

TECHNOLOGY CAN HELP

Ports lacking room to expand must make the most out of the acreage they do have, and modern information technology can be productively deployed in this regard, according to

Bird, who said, “Implementing clever IT programs can certainly help port authorities to better plan and utilize the infrastructure that they have.”

Often, the private sector can not only bring in dollars, but can also introduce technological and operational advances – if investments are made.

Many countries in the region have colonial ties to European nations, including as independent commonwealth countries. But, as Bird said, “Unfortunately, they don’t have access to a ton of the affiliated country funding. It would be great if they did.”

Private capital is very interested in the marine space, an example in the U.S. being investments of the Ontario Teachers’ Pension Plan in container terminal facilities at the Port of New York and New Jersey. However, Bird said, pension funds, banks and other potential investors may perceive greater risks in the Caribbean, ranging from relative economic instability to remote location.

Ironically, a factor that may boost

project and breakbulk cargo volumes relates to devastating storms, as Hurricane Irma and Hurricane Maria in 2017 combined to inflict more than US$100 billion of damage in the region, plus projections indicate further heightened severe storm activity in the region in the future thanks to global climate change.

“These ports are right in the way of some of the worst weather,” Bird said.

“On the flipside, as it relates to breakbulk or project cargoes, I think we’re going to see an increase in the demand, particularly as the rebuilding effort continues. Much of these cargoes come via relay from the other ports in the region, so, in some ways, the capacities of these ports to support the rebuilding need to grow in lockstep with one another.”

THE DARKER SIDE

However, efforts to rebuild following storm devastation have led to concerns on several islands. For example, Roach noted, once cargo was able to get into port on Tortola, the

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ISSUE 5 / 2018

largest of the British Virgin Islands, there was not enough quay-proximate space to accommodate the deluge of tonnage.

In the West Indies, Antigua and Barbuda is rebuilding following Hurricane Irma devastation with funding from China, which also, back in 2016, put a US$100 million loan toward redevelopment of the deepwater facility at Antigua’s St. John’s Harbor.

Also, some money for port infrastructure is coming from the Caribbean Development Bank, but most CDB projects deal with even more rudimentary endeavors, from street lights and roadways to solid waste management and flood mitigation.

Martin Associates’ Martin concurred that staging for cargoes involved in hurricane relief and rebuilding offers opportunities, saying, “The demand for high-and-heavy is driven by natural disasters.”

The offshore energy industry also provides opportunities, Martin added, honing in on demands for steel pipe

involved in hurricane relief, is the Port of Ponce, which has failed to meet expectations as a container hub on the south side of Puerto Rico.

Meanwhile, offshore Caribbean transshipment hubs in which global container lines have invested, such as those of Jamaica’s Kingston and the Bahamas’ Freeport, have become less relevant as 50-foot depths have become available at multiple U.S. East Coast ports.

A recent Port Management Association of the Caribbean communiqué aptly summed things up this way: “To be sure, marine port development and effective maintenance present severe challenges to the governments of the Caribbean and Central America. But, paradoxically, port development also creates oppor-tunities for growth and economic advancement of a people.” BB

and rig repair in LNG-rich Trinidad and Tobago.

The planned Brighton International Terminal at La Brea, on vast undeveloped land in southwestern Trinidad, is “clearly the most interesting possibility” for meeting multiple cargo demands that Trinidad’s longtime ports at Point Lisas and Port of Spain are unable to fulfill because of lack of channel depth and insufficient landholdings onto which to affordably expand.

At Brighton, for which an operator is being sought, Martin envisions a facility that not only handles containers, some for transshipment, but also takes advantage of vast tracts for project and breakbulk activity, including vehicle distribution. A highway is being built linking La Brea with the capital city of Port of Spain and other Trinidad population and industrial centers.

Another Caribbean property Martin sees as having potential for handling breakbulk and highand-heavy cargoes, including those

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www.breakbulk.com BREAKBULK MAGAZINE 89

ENERGY UPDATE

BY KERRY DIMMER

From Cuts to Capacity Egypt’s Promised Renewables Projects Gain Momentum

F

our years ago, Egypt experienced a dire energy collapse. With demand outstripping supply by 20 percent – more than its power stations could provide – up to six power cuts a day were common, many of those lasting up to two hours.

The ripple effect extended to the Suez Canal, its authorities declaring a state of emergency as all waterway communications were affected. Oil refineries, pumping stations, industries and retail businesses were seriously disrupted, stopped or discontinued.

The impacts on the economy meant that development plans were severely restricted. If Egypt was to endure, it was essential to prioritize power generation.

The response was, in 2015, to announce a power generation capacity increase by at least 20 percent in five years, and from renewable energy sources.

Souhir Mzali, regional editor for Africa, at Oxford Business Group, which this year produced a comprehensive country profile on Egypt, The Report: Egypt 2018, has been monitoring the situation over the past few years.

She said that the plans don’t stop with the 20 percent increase: “37 percent of renewable energy Souhir Mzali is targeted for 2035. However Oxford Business there are Group competing claims regarding the government’s goals with some media reporting that 42 percent renewable energy will be operational by 2025.”

RIPE FOR THE PICKING

Looking purely at the immediate goal of 2 gigawatts from renewables to be split between wind (12 percent), hydro (5.8 percent) and solar (2.2 percent), the region is ripe for harvest.

Wind speeds, particularly the coastal region, are recorded at 10.5 meters per second, and according to Oxford Business Group, the sites that have been selected for wind farms, covering some 7,845 kilometers, are considered very strong with averages of 6.5 meters per second in the regions of the Gulf of Suez and near the Nile.

From a solar perspective, Egypt receives some 2 gigawatts per square meter per year of direct solar radiation.

Its current solar-generating capacity, according to the World Energy Council’s 2016 World Energy Resources report, is 45 megawatts, from two current sources: a 35-megawatt solar/

ABOVE: Together with its local Egyptian partners, Siemens has erected three gas-fired combined cycle power plants, each with a capacity of

4.8 gigawatts, for a total combined capacity of 14.4 gigawatts. / 90 BREAKBULK MAGAZINE www.breakbulk.com

CREDIT: SIEMENS

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SIEMENS MEGAPROJECT: 14.4 GIGAWATTS IN 18 MONTHS

Burullus power plant Etay El-Baroud substation

First Phase:

Kafr El-Zayat substation Beni-Suef power plant

12 H-Class gas turbines connected from Beni Suef, Burullus and New Capital power plants to provide

Maghagha substation

electricity for 15 million Egyptians Etay El-Baroud, Maghagha and Kafr El-Zayat

substations energized in 10 months to distribute

The three power plants in total numbers: 1,040,000 t of materials

sustainable service and maintenance

through digital services for the three power plants

743,500 m3 concrete

48,500 t

the generated electricity Siemens to provide

New Capital power plant

20,000 workers required at the construction sites

1,802 km

of electrical cables

of steel structure

1,000 km

16,172 workers

3,695,600 man-hours

involved in the manufacturing of the main components

of I&C cables

per month

US $1.3 billion per year fuel savings compared to the installed power capacity

327 trainees out of 600 are enrolled

CREDIT: SIEMENS

thermal power plant at Kuraymat, and a 10-megawatt plant in Siwa.

Resources are not in doubt. What is, however, is the time frames for the projects to come to fruition. The international energy developer and finance community sees the goals as ambitious. But that did not deter a couple of hundred of them from responding to the call, during 2015, for partnerships on renewable projects. The extent of services they provide are varied, inclusive of upgrades to transmission and distribution centers, and new highvoltage substations, required so that the main grid can handle the expansion.

Private sector investment is in play here, and encouraged by the government, so much so that policy changes have been enacted to ensure a more welcoming business environment.

“Over the past three years the sector has undergone a period of significant 92 BREAKBULK MAGAZINE www.breakbulk.com

growth and investment as a result,” Mzali said. “There were considerable increases in investments into clean energy last year alone, driven primarily by the private sector.

“Egypt has put in place the right building blocks for industry growth.

The regulations appear to be suitable and, as prices for traditional energy rise, interest in renewables and demand is thus growing significantly.”

That said, one of the biggest challenges faced by the private sector lies in securing finance and determining a business model that allows for financial success, Mzali added. There are some huge numbers being reported.

MIGA, a member of the World Bank Group, is guaranteeing up to US$106 million for the development of six solar power plants; US$97.6 million of cover has been provided to lender Industrial and Commercial Bank of China.

One media report indicates that Egypt is now the 11th-biggest investor © Siemens Egypt in global renewable energy, with a budget of some US$2.6 billion.

SEEING PROJECTS THROUGH

There has been enough interest and investment to have already made a dent in the desired goal of 20 percent from renewables. Mzali said that in 2016 the country was sourcing 45 megawatts from solar and 550 megawatts from wind. “This has improved significantly.

As part of the Siemens Megaprojects, there will be 12 wind parks with some 600 wind turbines generating up to 2,000 megawatts in the Gulf of Suez and West Nile.

“The EIB and KfW-funded Gabal El Zayet wind farm, completed in three phases brought in 200 megawatts in 2015, 120 megawatts in 2016, and ISSUE 5 / 2018

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220 megawatts in 2017,” she said. “In addition, the 600-megawatt Gulf of Suez wind farm is scheduled to be operational by the end of this year in cooperation with KfW, Masdar and African Development Bank.”

The Siemens Megaproject is one of the largest projects in the world, let alone in Egypt. The organization has a 115-year history with the nation in support of its development, and in 2015 signed a partnership agreement to build a power system to the highest international standards of efficiency.

Siemens collaborated with local partners, El Sewedy Electric and Orascom Construction, to construct three 4.8-gigawatt combined cycle power plants, which were inaugurated in July. The three broke all records in terms of modern power plant construction delivering 14.4 gigawatt of power in just 27 months. Those plants are sited in the administrative capital east of Cairo, Kafr el-Sheikh on the Nile of Delta, and Beni Suef, south of Cairo. They meet the requirements of some 40 million people, and will

94 BREAKBULK MAGAZINE www.breakbulk.com

realize some US$1.3 billion in fuel savings annually.

The 12 Siemens wind farms will produce some 2 gigawatts of green power. The largest was recently inaugurated by Egypt’s President Abdel Fattah al-Sisi.

SOLAR PLANT PLANS

From a solar perspective, the Benban complex, covering 37 square kilometers some 650 kilometers south of Cairo, is considered key, says Mzali. “With a planned 1.8-gigawatt capacity it will be one of the world’s largest solar farms.”

Benban is separated into 30 solar plants in the eastern region of the Sahara Desert. Anticipated to be completed by the middle of 2019, 29 of the projects are believed to have reached financial closure (US$2.2 billion) through a mix of various governments and investment groups, with a total cost expected to be in the region of US$3.5 million to US$4 million.

“There’s more in the pipeline,” Mzali said. We can highlight, for

example, the announcement last November 2017 that the EBRD, or European Bank for Reconstruction and Development, is to finance 16 new solar power plants with 750 megawatt capacity. Along with Green Climate Fund funding, the EBRD will be using the Renewable Energy Financing Framework to firstly enhance policies and planning, and second to scale up investments of renewable energy projects.

Wind power projects are also being prepared in cooperation with Japan, Spain, Germany and investment/ development banks including KfW (Germany); the EBRD, the European Investment Bank, the French Development Agency, and the UAE’s Masdar.

One of the catalysts that will pull all of the renewable energy outputs together is the introduction by the Egyptian government in 2014, of the Feed-in Tariff (FiT) system. Mzali explained its importance: “The first challenge that alternative energy must overcome is the cost to consumers of

ISSUE 5 / 2018

traditional energy in Egypt, which is currently low because it is subsidized.

“As subsidies are lifted, which is ongoing, and consumer demand rationalizes, the cheaper alternative energy option becomes much more desirable. But this is only true if the use of such energy is able to be integrated with the regular utilities network.”

LOCAL OPPORTUNITIES

Opportunities are increasingly there for local businesses, such as Emco Logistics. Emco plans to expand in energy projects, with the company’s operations manager, Mohamed Hamouda, telling local press that the company is already involved in the construction of the wind power project in the Gulf of Suez.

Hamouda added that Emco has been participating in energy projects over the past two years, be that shipping, unloading, storage, transport and customs clearance, for, among others, the Gamesa KFW 120 megawatt wind farm and the Siemens Borollos power plant.

Worldwide heavy lift & project cargo logistics via

Hamouda said that along with the development of the Suez Canal Economic Zone, Emco is keen to participate in projects related to all logistics areas in the region, inclusive of storage areas, purchase of logistics equipment, display of storage areas and shipping services. This is in addition to the navigation consultancy service that Emco provides in the procedures of transiting the canal.

It’s not just local businesses that Egypt’s renewable sector is impacting on, though. In May, China’s Wuzi Suntech Power Co. Ltd. reportedly shipped solar modules to Italian Enerray SpA for a project in Aswan.

This is for three solar parks in the Benban complex, that have a combined capacity of 115 megawatts, and is in collaboration with UAE-based Desert Technologies.

While opportunities for local manufacturers may be increasing, as is the case with a range of industries in Egypt, an important share of raw materials and components will continue to be imported.

Here, Egypt has a solid port infrastructure to cater for breakbulk and project cargoes. Most imports are via Alexandria, Port Said, Burullus, Damietta and Sokhna, and there are projects underway to increase and develop road and rail infrastructure.

While those will have a significant impact on trade generally, it’s unclear how those will affect the alternative energy sector.

The General Authority for Ports & Dry Land in Egypt is pursuing an integrated plan to build several dry ports and logistics areas, injecting some US$9 million into port development at 6th of October city, the 10th of Ramadan, Sadat city, New Burj Al Arab, New Beni Suef, and New Sohag. Some of this spend will certainly aid the necessary movement of international project cargoes as Egypt continues on its energy strengthening project. BB Kerry Dimmer is an award-winning freelance journalist, focused on African business affairs.

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www.breakbulk.com BREAKBULK MAGAZINE 95

CASE STUDY

Reaching New Heights Long Beach Bridge Project Calls for Collaboration

BY LORI MUSSER

S

tand up and take a bow heavylift movers for continuing to keep North America’s container trades moving.

A multitude of project specialists including contractors, forwarders, carriers, and crane and rigging companies, came together to work on the already iconic Gerald Desmond Bridge replacement. The new bridge will carry 68,000 vehicle trips per day, including roughly 15 percent of U.S. import container cargo.

Serving Southern California ports, the revamped bridge will offer 205 feet of air draft, accommodating the world’s tallest ships. It is also wider to better accommodate future vessel traffic.

The existing bridge is being replaced because, with only 150 feet of clearance, large ships can’t underpass the existing structure on their way to inner harbor facilities. The bridge’s vehicle capacity is also inadequate, 96 BREAKBULK MAGAZINE www.breakbulk.com

and its physical condition has been deteriorating – to the point that it has infamously been equipped with netting to catch the falling chunks.

One can almost hear a collective sigh of relief from Southern California’s container operators, as the bridge – with three lanes in each direction plus safety lanes – nears completion.

LONG BEACH CHAMPIONS PROJECT

Duane L. Kenagy is interim deputy executive director at the Port of Long Beach. For him, the bridge is a project of national significance.

“It serves major employment centers, commuters, the port complex and the region, but it is nearing the end of its useful life and needed to be upgraded for seismic safety, capacity and to address safety issues for emergency access,” Kenagy said.

Like many other bridges designed in decades past, the Gerald Desmond didn’t anticipate port growth and

the advent of container cargo.

When the bridge was constructed, cargo ships were one-sixth the size they are today.

Although the Long Beach outer harbor is already handling the Duane L. Kenagy world’s largest cargo vessels, the Port of Long Beach existing bridge prevents such ships from reaching the inner harbor.

In early August, Kenagy said the new bridge project was 75 percent complete. Once it is completed – expected by the end of 2019 – the demolition of the old bridge will proceed.

The entire project has been predicated on limiting interruptions to port operations and ensuring a smooth cargo flow. Kenagy pointed out that the port has collaborated widely ISSUE 5 / 2018

CREDIT: PORT OF LONG BEACH

CREDIT: PORT OF LONG BEACH

to ensure detours and new traffic routes are managed effectively, despite having to contend with all modes of transportation, an oil field and even realignment of a rail line. Barged equipment deliveries to site, and overthe-water work carried out by a barge spudded down in the channel have necessitated close collaboration with maritime partners too.

“One of the things that we did at the port is put together an inner division team – from harbor security to traffic engineering, civil engineering, planning and construction management folks …

They came up with solutions to work with contractors to maintain access for everyone, and to keep trucks flowing,” Kenagy said.

As an example, demolition began on the last major connector ramp from the existing bridge to a main highway (the Interstate 710 freeway) over the U.S. Independence Day holiday to coincide with a break in truck and rail traffic. It will be finished on another holiday.

TRUCKING COMPONENTS AT NIGHT

Oversize/overweight routings in and out of the port complex have been maintained, for regular port cargo and bridge component cargo. “That has been one of our success stories,” Kenagy said.

As part of this effort, North Dakota-based Fisher Industries managed over-dimensional moves, using heavy-duty transporters that offer independent rear steerage for safety, for the 150-foot-long centerspan steel beams. Fisher trucked to the site at night to avoid traffic and logistical issues along Southern California’s busy freeway network.

The bridge replacement project itself is a “buy American” initiative, with components coming from U.S. companies via truck, rail and occasionally water. Coolidge, Arizonabased Stinger Bridge & Iron provided steel beams, girders and other structural steel components. The pier tables were largely constructed on site. The steel cables were fabricated

by Structural Technologies of Dallas, Texas, and major steel components were hauled by Fisher Industries.

Some of the equipment for the project was sourced outside of the U.S. For example, the two 3.1 millionpound self-launching Moveable Scaffolding Systems used for access and construction support came from China, with forwarding managed by Fracht Group. This was the first time an underlane self-launched movable scaffold system had been used in California.

Late last year, after the westbound approach of the bridge project was completed, the community was intrigued to watch Mammoet USA maneuver a 3.1 million-pound bright orange Mobile Scaffolding System, or MSS, between the westbound lanes and across the ground to the columns for the eastbound lanes using a multi-axle transporter. Later it was lifted and moved along the columns down to the “starting point” at the low-end of the approach roadway.

The assembled MSS, or span-by-span “bridge builder,” was described by the Long Beach Post as “the size of a small warship.” The move was completed in one hour.

A second MSS – this one bright blue – was moved into position by Barnhart Crane & Rigging. Barnhart rotated it 180 degrees to position it to be raised up for the eastbound section, where it would begin building the 200-foot span sections from the “high” point downward. www.breakbulk.com BREAKBULK MAGAZINE 97

CREDIT: PORT OF LONG BEACH

CREDIT: PORT OF LONG BEACH

Barnhart managed the turn using its Goldhofer hydraulic platform transporters. The modular nature of the system, which allows for unlimited configurations by adding axles (or lines) to the length and width of the trailer, made the complex rotational move look easy.

YEARS IN THE MAKING

Started in 2013, the bridge replacement project is a designbuild project, with construction managed by SFI JV, a joint venture organization comprising general engineering contractor Shimmick Construction Inc., Spain’s Fomento de Construcciones y Contratas SA (FCC), and Italy’s Impregilo S.p.A. Bob Schraeder, SFI’s project manager, said: “Every major infrastructure project has its own unique challenges, such as moving 98 BREAKBULK MAGAZINE www.breakbulk.com

large pieces of equipment or heavy materials around in tight spaces.

From a logistics standpoint, we had the benefit of long-range planning to build the new bridge in a sequence that minimized disruptions to traffic and port operations.”

The bridge project was simplified by marshaling and handling construction fabrication work on site.

The Port of Long Beach was able to provide open areas around the bridge site, including a flat expanse directly beneath the bridge approaches. The Norway Steel Group-designed MSS units were shipped from China by container, offloaded near the new bridge location, loaded onto flatbed semi-trucks and hauled just a few hundred feet to the staging area, where they were assembled.

The as-yet-unnamed replacement bridge will be the second-tallest

cable-stayed bridge in the U.S. with the highest vertical clearance of any cable-stayed bridge in the country.

It’s a joint effort of Caltrans and the Port of Long Beach, with additional funding from the U.S. Department of Transportation and the Los Angeles County Metropolitan Transportation Authority. It will be owned and maintained by Caltrans.

The new bridge’s design is based on two 515-foot steel reinforced concrete towers that transition from an octagonal base to a diamond shape at the top. Forty steel-wire cables will connect each tower to the bridge deck in a fan-like pattern. The longest cable will be 573 feet. The main span and back spans will be 2,000 feet long and 205 feet above the water. The total length of the bridge from west to east will be 8,800 feet. A total of 100 columns will support the west and east approach spans. In late 2017, the new towers were topped out.

TOPPING AND TABLES

On April 26-27, teams lifted the vital pier tables onto four falsework columns that had been constructed around the base of each tower. The pier tables were, essentially, the first sections of bridge deck. Each was raised around a column. Each table consists of four large steel beams that support the road deck and are joined together by the edge girders – two crossbeams on either side of the towers. Pre-fabricated concrete deck sections were placed on top of this steel frame.

On May 8, the first cable was laid in place. California-based Bigge Crane and Rigging was tasked with lifting the pier tables for each of the bridge’s two main towers, which form the east and west ends of the 2,000-foot main span. In preparation ISSUE 5 / 2018

If it’s big and heavy, the Port of Lake Charles makes easy work of it.

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CREDIT: PORT OF LONG BEACH

SPANNING THE DECADES The story of the bridge between Long Beach and Terminal Island goes back a long way.

It started with a ferry service, followed by a temporary pontoon bridge erected by the Navy during World War II for shipyard access.

The floating pontoon structure opened in the middle to allow ships to pass, upwards of 100 times per day according to Los Angeles Times coverage. The “temporary” fix lasted almost 22 years.

for the positioning of the pier tables, four-column falsework (temporary framework) was installed on each of the two towers.

Then, four Enerpac strand jacks were deployed. After the first pier table was installed, they were moved to the falsework on the second tower for the second pier table lift.

Each pier table was suspended by four cable strands running from the corners up to the first casing hole in the tower.

Following the positioning of

Completed in 1968, the Gerald Desmond Bridge being replaced has served for 50 years. The 1.5-mile-span, named after a Long Beach city councilman and then city attorney, is a steel arch trussstyle bridge that stretches over the entrance to the Inner Channel of the port. It connects Terminal Island, which houses a number of busy container terminals, to the Long Beach Freeway as well as downtown Long Beach.

the pier tables, four derrick cranes (two per pier table) were tasked with carrying out the balancedcantilevered construction of the main span.

“The strand jack is perfect for this kind of job,” said John Levintini, project operations manager at Bigge Crane and Rigging. “It would have been impractical to use a crane given the size and weight of the pier table.

The strand jack is the best choice in terms of both lifting capacity and cost.”

100 BREAKBULK MAGAZINE www.breakbulk.com

AVOIDING PAST MISTAKES

The MMS deployment, pier table lifts and steel cable positioning are critical aspects of the bridge construction, but there are more challenging tasks to come and bridge construction is not without risk.

Those with long memories will remember when the old Gerald Desmond bridge was under construction, the very last beam fell 100 feet to the ground, reportedly damaging two oil wells and delaying the project by several weeks.

This new bridge is an undoubtedly complex initiative that will have a monumental impact on the region.

“In Southern California we are naturally blessed with some of the deepest harbors in North America,” Kenagy said. “Our scale of business requires a project of this size. It will help complete the freeway system and improve accessibility to the port and port complex. Literally thousands of people have had to work together and while we’ve had our challenges, we’ve worked through them and had a lot of cooperation.”

Based in the U.S., Lori Musser is a veteran shipping industry writer.

ISSUE 5 / 2018

If You Think There Is No Way, We Will Find One. At deugro, we have a lot of passion for difficult and challenging projects, and we always find a way to make it work!

Our highly motivated and very experienced workforce always works towards the same goal: your success.

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CREDIT: ENERPAC

ENERPAC STRAND JACKS LIFT PIER DECKS According to Enerpac, the strand jack lifting technique originates from the concrete post tensioning principle.

A strand jack can be considered as a linear winch. A bundle of steel cables or strands are guided through a hydraulic cylinder. Above and below the cylinder are anchor systems with wedges that grip the strand bundle. By stroking the cylinder in and out while the grips are engaged in the anchors, a lifting or lowering movement is achieved.

Enerpac said its refined strand jack technique makes for easier deployment. The process is managed with an automated locking-unlocking operation, and there is precise and synchronous lifting and lowering by a single operator. Telescopic strand guide pipes, and “palm trees” prevent “bird caging,” or buckling, caused by extreme axial compression, and allow easier cable management. Heavy-lifts of thousands of tons are possible using strand jacks.

“Strand jacks pack tremendous lifting capacity into a small footprint,” said Mike Beres, sales director Americas, Enerpac Heavy lifting Technology. “Moreover, the system software can control up to 60 jack/ pump combinations, so the potential for large scale synchronous lifting is quite scalable. The flexibility of the strand jack system allows Bigge to use this equipment on many other projects across multiple industries.”

Enerpac HSL 5000 strand jacks each with 48 steel strands were used on the Gerald Desmond Bridge replacement project. Synchronized control ensured the structure remained balanced. Each incremental lift was 18 inches, with the entire lift of each pier table taking 10 hours.

Bigge synchronized the lift though a strand jack computer. “The lift was straightforward. However, maneuvering the pier table into its final resting position on the falsework was a

102 BREAKBULK MAGAZINE www.breakbulk.com

CREDIT: ENERPAC

delicate operation – the final alignment was coordinated with the strand jack and visual feedback by engineers on the piers,” said John Levintini, project operations manager at Bigge Crane and Rigging. BB ISSUE 5 / 2018

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CASE STUDY

Uplifting Move Fighter Jet Demands Careful Handling

BY ANDREW WILLIS

T

here are times when a supersonic fighter jet has to travel at a more leisurely pace.

That was the case earlier this year when an F-35 Lightening II was loaded onto a barge in the River Humber, Northeast England, to start its long journey back to Texas.

The move marked an important milestone for BAE Systems, which has been testing the fighter jet for the

past nine years at its center in Brough, UK. Other military planes that have undergone similar testing at the site include famous names such as the Buccaneer, Harrier, Hawk and the Eurofighter Typhoon.

The Humber provides a solid transportation route to bring cargo, including fighter jets, to and from the area, although it is not without its challenges.

Despite still being called a “river,” today the Humber is a tidal estuary rather than a fresh watercourse as sea levels have risen since the last Ice Age.

The estuary is navigable by large deep-sea vessels and includes a number of important ports located along its banks.

Inland connections for smaller craft are extensive, with lock gates used to deal with the different water levels caused by the tides; at 7.2 meters, the Humber has the second-highest tidal range in Britain.

In the case of F-35 Lightening II, a large crane was used to lift the fighter jet from the test center at Brough on to the barge, on which it traveled downstream to the Port of Hull where the wings passed through the lock gates with only centimeters to spare.

TESTING PHASE

Several F-35s are under development in the UK. Inside the carefully wrapped package that moved down the River Humber earlier this

ABOVE: The F-35 has spent the past nine years in a 350-ton structural testing rig that has pushed and pulled it to simulate the same stresses

and strains that it will undergo during flight. /

CREDIT: BAE

104 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 5 / 2018

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JOINT STRIKE FIGHTER PROGRAM The F-35A Lightning II is virtually undetectable, according to Lockheed Martin. The conventional takeoff and landing model is an agile, versatile, high-performance multirole fighter that provides considerable capability and unprecedented situational awareness.

Its advanced sensor package is designed to gather and distribute more information than any fighter in history. With conventional takeoff and landing, the F-35A is built to be used at traditional air force bases. The F-35A uses the boom method of aerial refueling and is the only variant to have an internal cannon.

The F-35A and other F-35 variants are part of the Joint Strike Fighter program, a developmentand-acquisition program intended to replace a wide range of existing fighter, strike and ground attack aircraft for the U.S., UK, Turkey, Italy, Canada, Australia, the Netherlands and their allies.

A month after the F-35A arrived in Texas, four new F-35B jets made the 3,000-mile journey across the Atlantic from a U.S. Marine Corps base in South Carolina to the UK. They each cost £92 million and are expected to be in operation by December.

Unlike the F-35A, the F-35Bs can land vertically, similar to the Harrier

Jump Jet. The UK’s military has committed to purchasing as many as 138 F-35s from Lockheed Martin.

News of the F-35’s combat debut became public after the Israel Defense Forces announced on its Twitter account earlier this year that the Israeli version of the aircraft, known as “Adir,” was used in operational missions.

THE USE OF THE F-35 IN COMBAT IS A MAJOR MILESTONE FOR THE AIRCRAFT THAT HAS BEEN IN DEVELOPMENT SINCE THE EARLY 1990S. “The Adir planes are already operational and flying in operational missions,” the tweet said, quoting Israel Air Force head Maj. Gen. Amikam Norkin. “We are the first in the world to use the F-35 in operational activity.”

The use of the F-35 in combat is a major milestone for the aircraft, which has been in development since the early 1990s. However, the program has been marred not only by cost overruns and delays but persistent attacks by critics who have called into question the jet’s war-fighting capabilities.

year was an airframe for an F-35A, the conventional takeoff and landing variant of the F-35 Lightning. The airframe, known as AJ-1, has spent the past nine years in a 350-ton structural testing rig that has pushed and pulled it to simulate the same stresses and strains that it will undergo during flight.

According to BAE, this F-35 has effectively “flown” for 24,000 hours while being monitored by 4,000 sensors that were bonded to the aircraft to feed back data to the company’s team of engineers. BAE leads this structural testing of the conventional takeoff and landing variant of the F-35 with Lockheed Martin, the program’s main contractor.

One of the reasons it is being tested is to ensure that it is fit for purpose for the UK military, where it is expected to replace the current fleet of Harrier Jump Jets.

“This testing has pushed the F-35A airframe to its limits to make sure it will fly safely and effectively throughout its lifetime,” said Any Prendergast, operations manager for structural and dynamic test at BAE.

ALL WEATHER TERMINAL PROTECTION

The F-35A airframe, worth £14 million, was stored in Hull’s All Weather Terminal, a fully enclosed site to keep specialist cargo dry and secure. Seaborne trade at the Port of Hull can be traced back to at least the 13th century. Today it is operated by UK multiport operator Associated British Ports and is estimated to handle one million passengers per year, as well as being the main softwood timber import port for the UK. Opened in 2009, the All Weather Terminal allows cargo to be effectively handled from ship to store, and provides an undercover rail-freight connection. The 10,000-squaremeter terminal offers customers a comprehensive range of storage solutions for dry bulk materials, forest products, paper and steel products.

After storage in the Hull terminal, a mobile quayside crane with a maximum capacity of 100 tons was used to lift the jet on to the barge, before it was sailed to the port of Immingham, closer to sea.

“We’re well rehearsed in handling delicate cargoes like this within the Humber,” said Jeno Kocsis, head of

CREDIT: BAE

106 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 5 / 2018

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The jet was lifted onto BigLift’s Happy Delta, using the ship’s 120-ton-capacity crane.

CREDIT: BIGLIFT

service delivery at Immingham & Grimsby, part of Associated British Ports.

“The first and most important thing we had was a very comprehensive lift plan, written up by an internal expert in Immingham,” Kocsis said. “The operations schedule was also down to the minute, so we knew minute to minute and hour to hour what the operations were going to look like.”

Associated British Ports has 21 ports in the UK as well as other transport-related businesses, creating a national network capable of handling a large array of cargo. The company claims to manage about 25 percent of the UK’s seaborne trade, with activities covering transport, haulage and terminal operations, ship’s agency, dredging and marine consultancy.

COORDINATING OPERATIONS

The journey from Hull to Immingham was coordinated so that the barge and jet would travel the 90 nautical miles in about six hours, arriving at the Immingham lock gate at high tide. All traffic to the inner dock

must pass through the lock gate, with deep-sea berths outside.

Once inside, another quayside crane was used to lift the jet from the barge onto a remote-controlled trailer that was specially brought in for the job. The trailer was about 15 meters long and 3 meters wide.

The advanced trailer was “capable of doing very sensitive moves,” Kocsis said. “With this kind of cargo safety has to be the priority.”

The trailer was then positioned beside the Happy Delta BigLift vessel, and the fighter jet was lifted onto the main vessel using the ship’s 120-toncapacity crane and placed in hold No. 1. The aircraft frame weighed 18.5 tonnes, with a wingspan of 10.9 meters and length of 13.8 meters.

BigLift Shipping is a member of the Spliethoff Group and specializes in worldwide ocean transportation of heavylift and project cargoes. The company has a modern fleet of 16 specialized vessels that transport a variety of heavy and oversized cargoes for clients in the oil and gas, mining and power generating industries, among others.

108 BREAKBULK MAGAZINE www.breakbulk.com

“It’s a relatively small piece of cargo for us,” said Kees Visser of BigLift’s Projects Department, discussing the jet project. Still, transporting an F-35 is not something that BigLift or other shippers do on a regular basis.

To prevent damage, the plane was wrapped in plastic and had its own specialized rigging. This was attached to a specially made base frame that was then welded to the floor of the hold.

The Happy Delta set sail in April, carrying the jet and windmill parts in the other holds. On departure, it turned south and passed through the English Channel, crossed the Atlantic Ocean and entered the Gulf of Mexico before arriving in Houston in May, roughly two weeks after leaving the UK. From Houston, the jet traveled to the headquarters of its manufacturer Lockheed Martin, where the final structural tests will take place. BB Andrew Willis has worked as a journalist for more than a decade in countries including Argentina, Belgium and Colombia.

ISSUE 5 / 2018

Houston needed a lift.

Hyundai said “How high?”

Harvey hit, and Woodlands Church ramped up for disaster relief, but they would need a little help of their own.

Thousands of volunteers mobilized. Millions of pounds of bottled water, baby supplies, blankets and other essential items to distribute. Woodlands Church had been designated a Hurricane Harvey disaster relief center, and only a few hours into their efforts to help victims, Pastor Randy needed some help, when their old forklift broke down.

The quick-thinking Pastor called his friends at LoneStar Forklift. LoneStar called Hyundai. And within hours…

Hallelujah! A new Hyundai 25L-7A forklift was donated and delivered, and the potential relief effort disaster was averted. “We simply could not have done it without the partnership of LoneStar Forklift and Hyundai,” said a very grateful Pastor Randy.

Hyundai is proud to build the world’s best forklifts and deliver the tight-knit dealer support and service to help keep businesses running, products moving, and communities working. We salute Woodland Church, its many volunteers, and LoneStar Forklift for their strength and spirit to step up for Houston one year ago, in its critical time of need.

See us at booth 1339

Partnering with our dealer:

To see the presentation of the Hyundai Forklift to Woodlands Church to aid Hurricane Harvey flood victims, go to: www.hyundaiforkliftamericas.com/houstonad

www.hyundaiforkliftamericas.com

ADVERTORIAL

Another first from Wiggins Lift Oxnard, CA - Wiggins Lift Co. is excited to unveil the first commercially available zero emission large capacity forklift

We’ve been innovators in the field of material handling for over 50 years

With capacities ranging from 30,000 to 70,000 lbs, the Wiggins Yard eBull is fully electric and completely manufactured in the United States.

Wiggins Lift is a family-owned forklift manufacturer that has been operating in Southern California since the 1950s. The world leader in marina forklifts, Wiggins will be displaying its first zero emission industrial unit at the Breakbulk Americas Show in Houston on October 2-4. Wiggins has partnered with battery supplier Thor Trucks, a fellow Southern California company, which was recently chosen by UPS to provide electric delivery trucks for field tests by the logistics giant. Thor provides batteries and electrification system integration, enabling Wiggins to reduce R&D effort and development time.

“We’ve been innovators in the field of material handling for over 50 years, so producing the first commercially available large capacity zero emission forklift in the industry was a logical next step for us,” commented Wiggins’ Director of Sales Micah McDowell. McDowell points to the company’s previous projects, including the continued evolution of the industry-leading Marina Bull and the crab-steering Marina FLX, as well as nuclear waste handling vehicles and forklifts designed and built for work in the rolling and pitching conditions on the Navy’s Littoral Combat Ships, as evidence for Wiggins’ ability to innovate and build new vehicles from the ground up. Wiggins is using high voltage lithium ion batteries, which are more resilient and

110 BREAKBULK MAGAZINE www.breakbulk.com

longer lasting than the lead acid batteries typically used on smaller warehouse forklifts.

With an estimated 6-month lead time, Wiggins will begin taking orders at the Breabulk Show. Due to the higher costs associated with battery electric power, Wiggins has been working with state authorities on available grants designed to ease the financial burden of customers who purchase the electric forklifts. Many states have put such programs in place to incentivize operators to adopt zero emission material handling solutions. Many predict that advances in battery technology will greatly reduce costs of batteries within the next few years. Wiggins is also working on designs for a forklift that runs on hydrogen fuel cells, the technology and infrastructure for which it estimates will be available in the next few years. Wiggins will build all of its battery electric Yard eBulls to be able to be converted to hydrogen power in the field when that technology is available. For now, Wiggins will offer its entire product catalog in electric, including marina and industrial forklifts, tire handlers for mining, and other all-purpose and agricultural equipment.

Wiggins Lift invites you to see this technology for yourself at the Breakbulk Americas Show in Houston on October 2-4 in Booth 1349. With the first Wiggins Yard eBull on display, Wiggins will show you the advantages of zero emission material handling and answer any questions you may have.

Wiggins looks forward to seeing you there!

Contact Micah McDowell micahm@wigginslift.com ISSUE 5 / 2018

LEGAL SPOTLIGHT

Pay and Play?

A Lesson in Anti-bribery, Corruption Compliance

BY SARAH KLEIN AND MICHAEL CASEY

• U.S.-based freight forwarder with global operations • Consignment of U.S. origin breakbulk goods • Local non-U.S. Customs official

THE FACTS

In this fictional hypothetical, “Fantastic Logistics LLC,” or FL, is a mid-sized U.S.based freight forwarder that operates globally. FL specializes in breakbulk and recently took over a lucrative multiyear contract from another forwarder for transporting specialist construction equipment.

The equipment is destined for use in the construction of a power station in “Cologo,”

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• Local non-U.S. Customs clearance broker • US$5,000

Sarah Klein Kirkland & Ellis

What could possibly go wrong?

an emerging market country with a history of political upheaval. FL understands that the project is running behind schedule due to the late delivery of equipment by the previous freight forwarder.

FL has limited experience in Cologo.

To ensure the goods arrive on time, it has engaged a local customs clearance broker, “Best Broker Ltd.,” or BBL, to assist with the process.

CREDIT: SHUTTERSTOCK

THE SCENE

Michael Casey Kirkland & Ellis

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With 140,000 square feet of warehouse and 10 acres of open laydown area, we offer the following services: general commodities warehousing, a Container Freight Station, rail transloading, bulk transfer and bagging.

Trucking Services FML is an asset-based common carrier operating and offering flatbed truck services throughout the continental United States, Canada, and Mexico. In addition to our asset based fleet, our Truck Brokerage Division has a vast network of over 200 supplier partners. FML moves freight via van, flatbed, bulk, truck-rail-truck, and container.

Multimodal Transportation Our team has an extensive background in shipping, barging, rail, trucking and is well-versed in getting your product to its destination on time and on budget. Whether you need to ship steel, nonferrous, breakbulk, project, and/or bulk cargo, FML can meet your transportation needs.

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Shortly after, FL receives a call from BBL to say that the latest consignment has been held up at Cologo customs. The local customs official is stating that the necessary paperwork has not been completed and that the goods can only be cleared upon payment of a “special processing fee” of US$5,000 in cash.

BBL is certain that the paperwork is correct and of the view that the requested fee may not be legitimate.

Do you pay?

Customs clearance, particularly in emerging market countries, tends to be an area that is susceptible to corruption. It is not uncommon for firms to face demands for illegitimate, and often illegal, payments in order to clear their goods through customs.

The customs clearance process, and in particular that in relation to breakbulk, presents a unique set of factors that can create significant risk of corruption, including the fact that many goods are involved in highvalue projects and swift clearance is required for commercial reasons.

In countries that pose a heightened corruption risk, the forwarder may also have limited knowledge of the local market and be reliant upon the

THE GOODS CAN ONLY BE CLEARED UPON PAYMENT OF A “SPECIAL PROCESSING FEE” OF US$5,000 IN CASH...

DO YOU PAY? use of a third-party broker. Taken together, these factors can elevate the corruption risk.

So, turning to the question: should FL approve the payment? Antibribery legislation around the world, including the U.S. Foreign Corrupt Practices Act, or FCPA, and the UK Bribery Act 2010, or UKBA, prohibits the giving of anything of value to foreign public officials in order to obtain or retain business or secure an unfair advantage. This is so even where the payment request takes place overseas or is made through a third party. The UKBA goes further than the FCPA by prohibiting commercial bribery (that is, corruption not involving government officials).

There are typically only limited exceptions to these prohibitions.

Under the FCPA (but not the UKBA), there is a narrow exception for facilitation payments made in furtherance of routine governmental

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action that involves nondiscretionary acts. In the present instance, while customs clearance may be a routine government action, an unsubstantiated demand for a US$5,000 cash payment certainly is not!

In summary, paying or permitting BBL to pay on FL’s behalf the “special processing fee” could constitute an offense under the FCPA or UKBA, and potentially result in FL incurring liability. FL should therefore advise BBL not to make the payment.

LESSONS LEARNED:

FL should consider taking some or all of the following steps: • Request formal documentation from the Cologese customs official detailing the “special processing fee,” as well as an explanation of why a cash payment is required.

• If these requests are not met, escalate the matter to more senior government officials in Cologo.

• Ensure that the matter is escalated to FL management and the relevant facts are memorialized in writing.

• Inform the client and potentially seek local consular assistance.

• Engage local counsel.

• Seek to refuse payment to the extent possible.

Ultimately, FL may need to accept some delay to resolve the matter in compliance with applicable antibribery laws. BB

Sarah Klein and Michael Casey are partners in the international risk team of Kirkland & Ellis. Their practices focus on clients in government (U.S. and UK) and internal investigations as well as advising in relation to all aspects of FCPA, Bribery Act, economic sanctions and anti-money laundering compliance.

ISSUE 5 / 2018

LEGAL SPOTLIGHT

BY THOMAS TIMLEN

Buyer Beware Avoid Bargain Rates and Clause Exploitation

I

CREDIT: SHUTTERSTOCK

t is a challenge to identify any human activity that is completely free of crooks and conniving characters. The project cargo transport sector is no exception. Those unsavory characters are not confined to shippers and carriers either, but can also involve the many intermediaries and public servants seeking to profit from unsuspecting or ill-prepared prey.

“There are many dodgy practices we have seen in the project cargo transportation business,” said David Zhou Yi, a senior partner at Co-Effort Law Firm LLP in Shanghai.

“In the past few years, we have been dealing with cases typically on attracting business at a low price and then requesting high amounts of additional fees/costs by holding the cargo, employees intercepting the freights/payments by hacking into the email system, misusing the company’s bill of lading for own business privately, replacing the

goods with inferior ones, and similar ploys.

“We suggest that companies in the industry should set up a regular internal audit regime, enhance staff training on compliance issues and legal liabilities in violation, check payment routes by all means once suspicion arises, and keep improving supervision and security measures to avoid those pitfalls in the business flows,” Zhou suggested. “Whenever necessary, legal advice from local counsel should be sought in a timely fashion.”

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Most stakeholders are hesitant to come forward and describe the situations in which they found themselves victimized by unprincipled business partners and other parties. The damage to corporate reputations in the age of branding is reason enough to accept defeat, take the lessons learned on board and then implement measures aimed at reducing the risk of repeating the same mistakes in David Zhou Yi future dealings, Co-Effort Law Firm while keeping a low profile to minimize drawing unwanted attention to the missteps.

The remedies Zhou lists are ample and can be found in various forms. Raising awareness among ISSUE 5 / 2018

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employees can be achieved through training and by encouraging the use of open source information.

With respect to the latter, indexes such as Transparency International’s Corruption Perceptions Index serves well as a benchmark of countries where public officials are likely to demand bribes, while it is reasonable to expect that the private sector in such countries also harbors unethical characters.

TRAINING OPTIONS AVAILABLE

Companies seeking to implement Zhou’s recommendation to arrange for training of staff have a number of options available. Training related to best practices to prevent cyberattacks is available from several providers, including the International Maritime Organization and industry bodies.

Courses and seminars that highlight contractual deceptions

are also widely available.

Intentional manipulation of standard contract text or the inclusion of rider clauses favoring the unscrupulous party are practices which K. Murali Pany those properly trained can Joseph Tan Jude Benny spot and avoid, potentially saving vast sums of money.

K. Murali Pany, managing partner at Joseph Tan Jude Benny LLP, sees vulnerabilities that duplicitous negotiators at times seek to exploit with dire consequences relating to the Notice of Readiness, or NOR, specifically in relation to the WIBON Clause and the “customary anchorage or waiting place” clause.

For background, Pany first establishes the often-unappreciated significance of the NOR. “The NOR is a key document in a voyage charter party. It is issued by the vessel and gives notice to the charterer, shipper, receiver or other person as required by the charter party that the vessel has arrived at the port or berth, as the case may be, and is ready to load or discharge.

“The NOR is important because it allows the owners to commence calculation of laytime. In turn, this allows the owner to claim for demurrage if there is delay in loading or discharging beyond the laytime.”

According to BIMCO, the organization that maintains the bulk of the world’s contracts of carriage, laytime and demurrage disputes constitute a substantial proportion of the cases that are tried by arbitrators and courts in many countries and which result in substantial legal costs to the parties concerned.

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“A fundamental requirement to the issuing of the NOR is that the vessel must have arrived at the specified destination in the charter,” Pany said. “The vessel therefore reaches its ‘specified destination’ not when it reaches the geographical area named in the charter, but when it reaches the berth, dock or port named.

“Needless to say, the NOR cannot be given before it has in fact arrived at the specified destination.”

“Both these clauses can advance the time when the NOR can be given and thereby, the commencement of laytime. As can be imagined, the impact on an unwary charterer could be considerable.”

Whether in the form of bold acts of extortion, or subtle contractual wordplay, there is no shortage of potential acts of deception posing costly consequences for project cargo carriers. Maintaining awareness

of such vulnerabilities and implementing practical countermeasures can effectively reduce exposure to these ongoing risks.

BB

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

DEVIL IN THE DETAIL

However, voyage charter parties can contain two seemingly innocuous clauses, usually buried in the standard terms, that can significantly alter that position. “The first clause is known as a WIBON Clause. In the case of a berth charter with such a clause, a charterer expecting the NOR to be issued only when the vessel reached the berth could be in for a nasty surprise, as the WIBCON Clause allows the vessel to give the NOR ‘whether in berth or not.’

“Thus, if a berth was not available when the vessel arrived at anchorage, NOR could be validly tendered and laytime would run.”

Also, if a berth was available when the vessel arrived at anchorage but could not be reached because of congestion, NOR could be validly tendered and laytime would run.

The second clause is a “customary anchorage or waiting place” clause, which allows the vessel to give the NOR upon arrival at such a location.

“A ‘customary anchorage’ is often a vague and undefined point that is not usually marked out in the charts. This is a fact-specific issue and it would differ from port to port. A waiting place may not necessarily always be within the fiscal or commercial limits of the port.”

These two terms have been given a wide interpretation in cases, according to Pany. “In an instance where the vessel was two hours away from the anchorage and outside of the legal limits of the jurisdiction of the port, it was determined that it was an ‘arrived vessel’ because it was in accordance with commercial practice and the port authorities exercised de facto control over the location.

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AMERICAS IN BRIEF

Offshore Offers US East Coast Promise New offshore wind projects could bring at least US$3.6 billion in economic benefits to U.S. eastern seaboard states, according to consultancy BW Research.

The findings were published in a new report, authored by BW Research on behalf of nonpartisan group E2, and suggest that each new offshore wind farm could bring in at least US$600 million and drive a resurgence in breakbulk activity along the coastal region.

“Through its expected growth over the next several years, offshore wind energy has the potential to significantly add to the gross regional product, or GRP, and state and federal tax revenues of South and North Carolina, Virginia, New Jersey, and New York,” the report’s authors stated.

BW Research estimated that if all five states added an average-sized offshore wind energy farm of 352 megawatts, nearly 25,000 jobs and US$3.6 billion would be added to the states’ economies.

Increased jobs and economic benefits by state would be: • South Carolina, 5,647 jobs, US$878 million.

• North Carolina, 5,522 jobs, US$710 million.

• Virginia, 4,377 jobs, US$641 million • New Jersey, 4,313 jobs, US$702 million.

• New York, 4,063 jobs, US$737 million.

“U.S. offshore wind development has notoriously lagged behind European countries … but the pipeline is finally looking full. The U.S.

offshore wind industry is poised for substantial growth, thanks to falling costs and increasing recognition by state and federal policy makers,” BW Research noted.

In line with this projected growth, European offshore firm Ørsted said it plans to bid for several U.S. offshorewind projects, marking a growing interest from European offshore specialists.

“We feel we are well-positioned … There are a lot auctions coming up in the U.S.,” said Marianne Wiinholt, Ørsted CFO. Based in Fredericia, Denmark, Ørsted is a leading offshore specialist and has installed an estimated 25 percent of the installed offshore-wind capacity in the world, according to Nordea Bank. BB

CREDIT: ØRSTED

US LNG Sector Hit By China Import Fall

CREDIT: CHENIERE

U.S. exports of liquefied natural gas to China declined sharply over the second quarter as the trade war between the two countries escalated.

The fall in deliveries is likely to cloud the outlook for breakbulk operators serving the burgeoning LNG sector in the U.S. Gulf region. In the period from February to April this year, China accounted for 14 percent of all U.S. LNG shipped while in July only one confirmed tanker left the U.S. for China.

To make matters worse, state-

120 BREAKBULK MAGAZINE www.breakbulk.com

owned importer PetroChina is reported to be considering suspending winter imports of U.S. LNG cargoes, threatening significant investments in new LNG export facilities already made by energy firms such Cheniere along the U.S. Gulf Coast.

In the longer term, U.S. operators may also face a weak outlook for China trade, as Russia plans to begin pumping gas to China through its newly built 2,500-mile Power of Siberia pipeline by the end of 2019. BB ISSUE 5 / 2018

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ExxonMobil Upgrades Guyana Oil Forecast Energy giant ExxonMobil said it has increased its estimate of the discovered recoverable resources for the Stabroek Block offshore Guyana to more than 4 billion oil-equivalent barrels, and expects it to support a third phase of development as it considers two additional phases.

The increase follows completion of testing at the Liza-5 appraisal well, a discovery at Ranger, incorporation of the eighth discovery, Longtail, into the Turbot area evaluation, and completion of the Pacora discovery evaluation, the company said. The previous recoverable resource estimate was 3.2 billion oil-equivalent barrels.

“Continued success in Guyana and progress in other upstream growth projects in the U.S. Permian Basin, Mozambique, Papua New Guinea and Brazil are giving us additional confidence in achieving our long-term earnings growth plans

that we outlined in March,” said Neil Chapman, senior vice president, ExxonMobil Corp.

Guyana’s first development, Liza Phase 1, will use a floating production, storage and offloading, or FPSO, vessel to produce 120,000 barrels of oil per day, starting by early 2020. Liza Phase 2, which is targeted for sanctioning by the end of this year, will use an FPSO vessel designed to produce up to 220,000 barrels of oil per day and is expected to be producing by mid-2022.

The Liza-5 well successfully tested the northern portion of the Liza field and, along with the giant Payara field, will support a third phase of development in Guyana. The Payara development will target sanctioning in 2019 and will use an FPSO vessel designed to produce about 180,000 barrels of oil per day, as early as 2023.

The Longtail well established the

Turbot-Longtail area as a potential development hub for recovery of more than 500 million oil-equivalent barrels.

Additional prospects to be drilled in this area could increase this estimate.

The collective discoveries on the Stabroek Block to date have established the potential for up to five FPSOs producing more than 750,000 barrels per day by 2025. There is potential for additional production from significant undrilled targets and plans for rapid exploration and appraisal drilling, including at the Ranger discovery.

The Stabroek Block is 6.6 million acres. ExxonMobil affiliate, Esso Exploration and Production Guyana Ltd., is operator and holds 45 percent interest in the Stabroek Block. Hess Guyana Exploration Ltd. holds 30 percent interest and CNOOC Nexen Petroleum Guyana Ltd. holds 25 percent interest. BB

Corpus Christi Completes Bond Sale Authorities at the Port of Corpus Christi have raised US$216.2 million in bond finance, paving the way for deepening and widening of the port’s ship channel as well as upcoming capital projects.

The port commission priced and sold the Senior Lien Revenue Bonds following strong ratings reiterations received from both Moody’s Investors Service and S&P Global Ratings.

“We are pleased with the level of interest the institutional investment community demonstrated for both series of our bonds. This round of funding will help the Port of Corpus Christi further progress our ambitious yet achievable capital investment program designed to increase exports of U.S. produced energy to our allies and trading partners around the world,” said Sean Strawbridge, CEO of the Port of Corpus Christi.

The port commission’s Channel Improvement Project, will involve

Dredging will upgrade the accessibility for the fourthlargest U.S. port by tonnage CREDIT: PORT OF CORPUS CHRISTI

dredging the ship channel from 47 feet to 54 feet and widening it to 530 feet, to accommodate larger vessels.

Located on the western Gulf of

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Mexico, Port Corpus Christi is the fourth-largest U.S. port by total tonnage and a major crude oil export gateway and breakbulk hub. BB

ISSUE 5 / 2018

BREAKBULK AND PROJECT CARGO. SAVANNAH AND BRUNSWICK. SMART MOVE. EXPERIENCE, FLEXIBILITY AND RAPID MARKET ACCESS MAKE THE GEORGIA PORTS AUTHORITY THE PERFECT HUB FOR BREAKBULK AND PROJECT CARGO. •

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Established relationship with the Georgia Department of Transportation for overweight and dimensional cargo permitting assistance For additional information contact Bobby Keel, Regional Sales Manager, Trade Development at (912) 965-6369, bkeel@gaports.com gaports.com/breakbulk

BP Acquires BHP Billiton U.S. Assets Energy major BP is to acquire BHP Billiton’s U.S. onshore unconventional assets for US$10.5 billion, marking a resurgent confidence in the sector.

The deal is the largest investment by BP since its illfated Deepwater Horizon spill in 2010, and includes tight oil acreage in the Eagle Ford and the Permian, and shale gas assets in the Haynesville.

“This deal transforms BP’s U.S. business – it will immediately raise its U.S. production by almost one-fifth, while providing competitive returns and volumes growth,” said Maxim Petrov, senior analyst at energy consultancy Wood Mackenzie. “We see BP’s combined U.S. production

hitting 1 million boe/d in 2020, with the potential to reach close to 1.4 million boe/d by 2025.”

The investment is positive

news for breakbulk operators serving the sector as BP seeks to add value in the assets which have been under-invested for the past two years. BB

CREDIT: SHUTTERSTOCK

California Blocks Offshore Drilling Plans California Gov. Jerry Brown signed legislation Sept. 9 to block White House plans to increase offshore oil drilling along the California coast.

Regulation proposed by the Trump administration in January would have opened public land for greater drilling activity via new federal leases. However, two bills signed by Brown would prohibit new construction of oil drilling-related infrastructure.

“Today, California’s message to the Trump administration is simple: Not here, not now,” Brown said in a statement. “We will not let the federal government pillage public lands and destroy our treasured coast … The bureau should abandon this effort and

not pursue opening any new areas for oil and gas leases in this state.”

Trump’s push for greater federal leases had the potential to drive renewed breakbulk demand in California’s oil sector, however the new Senate Bill 834 and Assembly Bill 1775 will now make any new projects much more difficult.

Push-back from grassroots activists, mayors, governors, heads of industry and international leaders resulted in heightened requirements for any extension amendments or modifications of oil and gas-related infrastructure projects as well as separate opposition to the Bureau of Land Management’s proposal to open new public land and mineral estates for oil and gas lease sales.

124 BREAKBULK MAGAZINE www.breakbulk.com

Despite local opposition in certain coastal states, the U.S. remains the top country globally for capital expenditure on oil and gas projects, according to consultancy GlobalData Energy.

The U.S. is expected to spend US$469.1 billion on 460 oil and gas by projects globally, leading Russia with US$338.2 billion and 174 projects, and Canada with US$281.5 billion and 112 projects.

Midstream and LNG liquefaction investment are forecast to be particularly strong areas for U.S. investment. The U.S. is expected to lead in the pipelines segment with 158 pipeline projects planned by 2025 and 31 upcoming liquefaction terminals by 2025. BB ISSUE 5 / 2018

PHOTO CONTEST

PEOPLE MAKE IT HAPPEN PHOTO CONTEST WINNER: Harbor Freight Transport Corp.

LOCATION: New York/New Jersey USA

YEAR: 2017

DESCRIPTION: Receiving and handling of helicopters for export loading. Making the impossible possible. Harbor Freight can handle any size/any weight due to our proximity to the Port of New York / New Jersey.

SECOND PLACE:

Apex Specialized Rigging and Moving LOCATION: Kemano, British Columbia, Canada

YEAR: 2018

DESCRIPTION: Apex Specialized Rigging and Moving transported one Tunnel Boring Machine from Surrey to Kemano, British Columbia. Utilizing five barges loaded with 65 trailers of equipment.

Apex transported this 1,354.5 ton machine over water and up grades as steep as 13 percent, delivering to its final destination on time and on budget.

126 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 5 / 2018

Dangerous Goods Packing, Cold Chain, and Inspections

Full Insured CFS Station-Bonded Warehouse

Vapor Barrier Packing, VCI Wrapping, and Corragated

Full Turn-Key Solutions for Re-locations & Plant Moves

Van Trailers, Reefer Trailers, Flatbeds, Step-Decks, and RGNs

Specializing in Machinery, Coils, Steel Bundles & Sheets

ISPM-15 Export Crates & Skids To Your Specifications

Container Loading, Block & Bracing, and Transloading

On-site Capabilities for Air and Ocean Freight Projects

PEOPLE MAKE IT HAPPEN: EDITOR’S PICKS

BIGLIFT SHIPPING ROTTERDAM, NETHERLANDS

FREIGHTPLUS EAST KALIMANTAN, INDONESIA

LOGISTICS PLUS IZMIR, TURKEY

HÖEGH AUTOLINERS / BRISBANE, AUSTRALIA

128 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 5 / 2018

Strategically Located Year-Round Port Richard J. Hendrick, Sr General Manager

Georgette Steffens,

A .-1.. ďż˝

Chairperson Board ofConvnissioners

PORT OF ALBANY When it comes to heavy lift, project & overdimensional cargo, However you measure

We Measure Up!

Albany Port District Commission 518/463-8763 Fax: 518/463-8767 rhendrick@portofalbany.us

Dockside Heavy Lift Rail Heavy Lift& Project Cargo Specialists Ample Open storage 300,000 Square Feet of Spriri<lered Inside storage Served By CSX & Canad an Pacific Railroads Less Than One Mile to Interstate Highways 87& 90 Reliable and Experienced Stevedoring

Stevedore and Terminal Operator Federal Marine Terminals, Inc. 518/463-0237 Fax: 518/463-0238 bring@fedmar.com

www .PortofAlbany. us

Business Development & Marketing Manager Tony Vasil 518/463-8763 Fax: 518/463-8767 tvasil@portofalbany.us

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BACK PAGE

AMERICAS ECONOMIC ACTIVITY 2017-2019

In anticipation of Breakbulk Americas, Oct. 2-4 in Houston, Breakbulk magazine looks at economic forecasts for the Americas, courtesy of Consensus Economics Inc.

GDP FORECAST

Economists anticipate a gradual rise in overall GDP growth throughout the Americas, with Venezuela improving from double-digit losses in 2017 and 2018.

6%

2017

5%

2019*

2018*

4% 3% -13.2% -11.0% -2.9%

2%

PE RU UN ITE DS TA TE S UR UG UA Y VE NE ZU EL A

PA RA GU AY

PA NA MA

NIC AR AG UA

ME XIC O

CO LO MB IA CO STA RIC DO A MI NIC AN RE P. EC UA DO R EL SA LVA DO R GU AT EM AL A HO ND UR AS

*Forecast

CH ILE

CA NA DA

BR AZ IL

BO LIV IA

AR GE NT INA

0%

INFLATION FORECAST

8%

2141% 20345% 4665%

10%

25% 25.0% 18%

Inflation rates throughout the Americas remain relatively under control, with the exception of Venezuela and to a lesser extent Argentina.

2017 2018* 2019*

6% 4%

PE RU UN ITE DS TA TE S UR UG UA Y VE NE ZU EL A

PA RA GU AY

PA NA MA

ME XIC O

CO LO MB IA CO STA RIC DO A MI NIC AN RE P. EC UA DO R EL SA LVA DO R GU AT EM AL A HO ND UR AS

*Forecast

CH ILE

CA NA DA

BR AZ IL

BO LIV IA

AR GE NT INA

0%

NIC AR AG UA

-0.2%

2%

CURRENT ACCOUNT FORECAST

Current account balances are the difference between a given nation’s imported and exported goods, services and transfers and are an indicator of foreign trade trends. $10 0 -$10 -$20 -$30

2017

130 BREAKBULK MAGAZINE www.breakbulk.com

PA RA GU AY

PA NA MA

NIC AR AG UA

ME XIC O

CO LO MB IA CO STA RIC DO A MI NIC AN RE P. EC UA DO R EL SA LVA DO R GU AT EM AL A HO ND UR AS

CH ILE

CA NA DA

BR AZ IL

BO LIV IA

AR GE NT INA

*Forecast, in US$billions

PE RU UN ITE DS TA TE S UR UG UA Y VE NE ZU EL A

2019*

-$50

-$466.2 -$558.1 -$614.4

2018*

-$40

Source: Consensus Economics, www.consensuseconomics.com

ISSUE 5 / 2018

MERITOR® P600 SERIES TRIDEM – GCW RATING OF UP TO 560,000 LBS

meritor.com

Looking for planetary axles that can haul the heaviest of cargo safely and efficiently? The Meritor® P600 series tridem offers a GCWR of up to 560,000 pounds and a proportioning inter-axle differential that sends equal torque to each axle to increase load capacity and maximize traction. Manufactured in Laurinburg, North Carolina, the P600 tridem provides reduced lead times, as well as industry-leading global customer support.

The dependability you rely on. The strength you need.

Run With The Bull.

To learn more, contact offhighway@meritor.com.

RUN WITH ©2018 Meritor, Inc.

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