Breakbulk Magazine Issue 1 2020 by Breakbulk Events & Media

Issue 1 / 2020

The Publication for the Industrial Project Supply Chain Industry

KEEPING UP WITH THE JONES ACT

Breakbulk Middle East Event Essentials Special BONUS Publication

Modern Moves Trigger Cabotage Concerns

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DATA DRIVES TRUCKING GAINS

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IN THIS ISSUE

Cover Story

8 KEEPING UP WITH THE JONES ACT Modern Moves Trigger Cabotage Concerns

14 INLAND TRANSPORTATION

36 EMERGING MARKETS

Data Drives Trucking Gains

Project Support for Cutting-edge Tech Cities

DIGITAL TRIUMPHS

18 REGIONAL SURVEY

BUZZING WITH POTENTIAL

STRONG UNDERCURRENTS OF GROWTH

40 PROFILE

33 LOGISTICS PERSPECTIVE

48 PROFILE

Watered Down Saudi IPO Merely a Distraction

SHIFT TO A SUSTAINABLE FUTURE No Escaping Ecological Juggernaut

PLANNING HEADACHES

Variables Muddy Strategic Forecasting Abilities

HEAVY AMBITIONS

Casting Off Confined Trade Shackles

50 CASE STUDY

SUM OF ITS PARTS

Sarens’ ‘Big Carl’ Makes UK Debut

23 BONUS PUBLICATION

BREAKBULK MIDDLE EAST EVENT ESSENTIALS

04 EDITORIAL 05 CONVERSATION 44 HOT SPOTS: PROJECT SECTORS

AND MARKETS

54 BACK PAGE www.breakbulk.com BREAKBULK MAGAZINE 3

EDITORIAL

PROTECTION OR PROMOTION? While the topic of protectionism has risen to the forefront in recent years, the practice of cabotage – nationalist laws to protect the domestic shipping industry from foreign competition – has existed since the 16th century. The U.S. cabotage law, the Merchant Marine Act of 1920, better known as the Jones Act, enters its 100th year in 2020. What started as a post-World War I focus on maintaining a sustainable merchant marine fleet has evolved Gary Burrows into something broader, ebbing and flowing over the past century. In our cover story (“Keeping Up with the Jones Act,” page 8), Lori Musser explores the current environment for the U.S. cabotage law, which Crowley Maritime’s Mike Roberts refers to as “the quintessential build American and hire American law.” As Musser points out, this longstanding law is poised for updates and modifications for the 21st century environment.

2020 FOCUS

With the new year, Breakbulk is gearing up for 2020 slate of industryleading global conferences, starting with Breakbulk Middle East, Feb. 25-26 at the Dubai World Trade Centre, Dubai. In this issue, we feature an Event Essentials section (pages 23-32), highlighting what’s to come for the 2020 event.

On the topic of the Middle East, Amy McLellan reports on the completion of Saudi Aramco’s record US$1.7 trillion initial public offering in December, and what it means to the world’s most profitable company (“Strong Undercurrents of Growth,” page 14). I’m particularly excited by a new feature we introduce in this issue, in cooperation with WSP and its maritime advisory team, led by Johan-Paul Verschuure, exploring hot spots among global project sectors and markets. WSP’s analysis kicks off, focusing on global wind energy and its potential for growth and the general directions of development (page 40). Joined by WSP Senior Consultant Merdan Haydarov, the report scores regional potential amidst wind energy’s expanding technological progress and the growing importance of emerging economies to the sector. Speaking of technological progress, this issue also explores how the project industry is benefitting from adopted advancements. In “Buzzing with Potential” (page 36), Helen Campbell takes a global look at the development of cuttingedge tech cities, designed to attract young talent, promising better worklife balances and improved amenities. Nurturing the talent pool draws tech start-ups, which in turn creates infrastructure and transportation-related development that benefits the project industry. Also, in “Digital Triumphs” (page 14), Felicity Landon looks at how companies such as ATS and GEODIS are implementing technology to reduce risks, reduce accident severity and frequency, and to significantly reduce cost.

EDITORIAL DIRECTOR Gary G. Burrows / +1 904 535 5460 gary.burrows@breakbulk.com NEWS EDITOR Carly Fields carly.fields@breakbulk.com DESIGNER Mark Clubb REPORTERS Helen Campbell Felicity Landon Amy McLellan Lori Musser Johan-Paul Verschuure Simon West David Whitehouse BREAKBULK EDITORIAL BOARD John Amos Amos Logistics

Ed Bastian

BBC Chartering

Murray Cooper

LV Shipping Group of Cos.

Dennis Devlin Geodis

John Hark

Bertling Project Logistics

Dennis Mottola

Global Logistics Consultant

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@hyve.group ACCOUNT MANAGER Robert Janusauskas / +66 62 804 6746 robert.janusauskas@breakbulk.com SUBSCRIPTIONS To subscribe, email gary.burrows@breakbulk.com, or call from inside the U.S. +1 904 535 5460 between 8:00 am and 5:00 pm EST. A publication of Hyve Group plc. The Studios, 2 Kingdom Street Paddington, London W2 6JG, UK

4 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 1 / 2020

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 gary.burrows@breakbulk.com, or through Breakbulk’s social media channels on LinkedIn, Facebook or Twitter.

NEW YEAR’S DISILLUSION? The close of 2019 saw reports of financial issues of two major entities in the project cargo industry, German multipurpose vessel operator Zeamarine, and McDermott International Inc., the Houston-based oil and gas engineering group. German publications reported that Bremen-based Zeamarine was in severe financial straits. Perhaps evidence of that was that Kurt Zech, entrepreneur and majority shareholder in Zeamarine, brought aboard Sven Lundehn from Bremen-based consultancy Alldatax as board chairman. Alldatax, according to its website, deals with insolvency proceedings, and crisis management. Lundehn’s track record included working in the insolvency proceedings for Beluga Shipping. He replaced managing partner and former chairman Hendrik Jan Többe, who reportedly left the company. Ove Meyer resigned as managing director back in July 2019. Meyer, Többe and Zech founded parent company Zeaborn GmbH & Co. back in April 2013. Dominik Stehle, who was appointed chief commercial officer in February 2019, has also left the company. Zeamarine posted a “clarification” on its website Dec. 18, 2019, saying it was undergoing “a continued period of re-establishment and strategic alignment with its management team,” and announced Lundehn’s appointment. “Contrary to the sentiment of the articles written, we can provide assurance that our company is performing and our shareholders are committed to their support for the continuation of our business,” the statement said. Zeamarine has burst upon the project market since its formation, starting out with second-hand available tonnage, including acquiring

McDermott’s Shares Lost 90% of Value in 2019 US$

10 8 6 4 2 0.6 0

Jan

Feb

Source: Bloomberg

Mar

Apr

May

June July 2019

Rickmers-Line’s fleet, and merging with Intermarine in September 2018, which it ultimately acquired the following spring. According to Dynamar’s latest biennial Operators, Fleets, Markets report, released in July 2019, Zeamarine ranked sixth among multipurpose vessel operators (“Period of Stability?”, Breakbulk Issue 5 / 2019, page 34). Zeamarine’s website says it currently operates a fleet of 68 MPV and heavy-lift vessels.

MCDERMOTT BANKRUPTCY IMMINENT? As for McDermott, the manufacturer for the energy industry is reportedly negotiating with lenders ahead of a bankruptcy filing, multiple sources report. Bloomberg and the Wall Street Journal reported at year’s end that McDermott was seeking a US$2 billion debtor-in-possessing loan from

Aug

Sep

Oct

Nov

Dec

lenders, including Baupost Group LLC and HPS Investment Partners LLC. McDermott’s stocks and bonds have been in a nosedive since September, when it was reported that the engineering, procurement and construction company hired advisers for turnaround advice (see chart). The company has struggled to integrate its May 2018 purchase of EPC Chicago Bridge & Iron Co., as a backlog of projects impacted earnings. McDermott was reportedly also attempting to sell off its Lummus technology business line. In October it announced a US$1.7 billion rescue finance package and forbearance agreement with some creditors, to be broken into four tranches. The agreement required McDermott to hire a chief transformation officer, John Castellano, managing director of AlixPartners. The financing package expired Jan. 15, shortly after Breakbulk’s press time. BB www.breakbulk.com BREAKBULK MAGAZINE 5

CONVERSATION

Friend or Foe?

Technological Innovation is Not Always Progressive

CREDIT: SHUTTERSTOCK

BY MARGARET VAUGHAN

y father was the smartest person I’ve ever known, and he shared with me the aphorisms that defined and guided his life: • Exercise kills. • Don’t look back, always look forward. • There are no coincidences in life. • You can find pretty much everything you need to know in life if you just read Shakespeare. • Sell the sizzle, not the steak. • Single malt Scotch every day. But the one that has guided me the most in my life is: Anticipation is 90 percent of any game and everything is a game. One of the single most important aspects of working in projects is planning: anticipating where the work is, how to access the site, what needs to be done, what could go wrong, and what remediation plans can be put into place to mitigate potential complications. Project planning requires that we look at both the big picture and the small details; and that we look at past events, current conditions, and future possibilities. We must anticipate global, regional, cultural and personal concerns and how they will affect the project in the areas of supply chain, port access, inland transportation, site access, personnel security, and so on. This is not new, it has been done since the beginning of time when the first-ever project was started, just that nowadays we have better tools. The last 40 years have seen the development and escalation in technological advancements which have had a tremendous impact on project performance. Innovations in information technology, software applications, and telecommunications have greatly improved our ability to keep up with all aspects of project planning – mapping them, as it were – which has increased our ability to anticipate problems.

6 BREAKBULK MAGAZINE www.breakbulk.com

However, everything comes with a flip side and we need to try and anticipate what that could be. The benefits of rapid exchange of information, documents and communication comes with the hazard of hacking, industrial espionage, malware, identity theft, eavesdropping, and security breaches. How much of our project planning anticipates IT difficulties beyond normal computer failures? When drone technology became widely accessible, it was exciting to think of all of the possibilities for its use in the project world and especially in transportation and logistics. It could be, in many ways, a game changer. But after the benefits come the thoughts: “How soon will they become militarized and what dangers do we need to anticipate?” The recent drone attacks on Saudi Arabian oil facilities have opened that Pandora’s Box. Will the benefits of drone technology be overshadowed by the hazards? Formation of a strategy to deal with potential sabotage by drone attack will now become something for which projects must both plan for and mitigate. There is no crystal ball to predict what will happen in the future, making it difficult, if not impossible, to anticipate potential problems. But it is critical that we try. As Benjamin Franklin said: “Failing to plan, is planning to fail.” Or in the words of James Vaughan: “Anticipation is 90 percent of any game and everything is a game.” BB Margaret J. Vaughan has more than 30 years’ experience in all facets of supply chain management, serving most recently as logistics manager for Wood PLC where she worked for 12 years.

ISSUE 1 / 2020

COVER STORY

KEEPING UP WITH THE JONES ACT Modern Moves Trigger Cabotage Concerns BY LORI MUSSER

s the centennial of America’s merchant marine matriarch arrives, modern U.S.-owned, built and crewed vessels of all types still ply coastal waters. Operators running in domestic waterborne trade lanes call that a success. Standing sentinel for the American merchant marine since 1920, the Jones Act – section 27 of the U.S. Merchant Marine Act – was introduced by Sen. Wesley Jones of Washington State. The provisions of the act supported his state’s shipyard and shipping interests, stipulating that only U.S. ships could carry cargo between U.S. ports. This intentionally made Alaska dependent on Seattle-based shipping. 8 BREAKBULK MAGAZINE www.breakbulk.com

Of course, there was a broader national security and defense rationale for the Jones Act. It targeted a resurgence of a sustainable American merchant marine fleet to help in times of military conflict; in World War I, the fleet transported vast quantities of war supplies, equipment and troops, but suffered heavy losses. “The USA is a community of people that makes collective choices, and among those has been a political decision to maintain an active maritime capacity,” said Sam Norton, president and CEO of Overseas Shipholding Group Inc. (OSG), a Florida-based energy transportation provider with a 21-vessel fleet. The military needs logistical sup-

port which can come from the merchant marine. “We don’t just have stealth bombers and super tank facilities; we also need to deliver fuel, equipment, consumables, water and other supplies,” Norton said, adding that capability as part and parcel of the Navy is very expensive. Some assets will sit doing nothing, and the development of manpower becomes challenging. He called the merchant marine a private-public partnership: “The private sector owns and operates the assets with a preferred position in ISSUE 1 / 2020

markets within which they operate which gives the public access to the maritime foundation that it needs.” Mike Roberts, senior vice president of government relations for 127-yearold Crowley Maritime, which employs 3,000 American mariners, described the Jones Act as “the quintessential build American and hire American law.” It ensures there is a critical mass of mariners and shipbuilding capacity so there is something to scale up to meet a military contingency. That scalability has been tested, Roberts said: “A few years ago there was a ban on exporting crude oil and at the same time shale oil started to really develop. The demand for Jones Act tankers went through the roof. The market responded really well – an additional 30 American tankers were built and delivered to meet the demand.” He added: “In the global security environment today, we have more serious threats and concerns than at any time since the cold war.” He said the Jones Act is the only thing that keeps commercial shipping capacity in place and prevents other countries, with perhaps heavily subsidized fleets, from taking U.S. business.

BROAD APPLICATION

“Many proponents of the Jones Act argue that in the interest of national security – the primary justification for passing the act 100 years ago – the U.S. needs, even today, to have its own ships, its own mariners, its own shipyards, and its own maritime infrastructure,” said Utsav Mathur, a shipping, offshore energy, and global disputes lawyer based in Norton Rose Fulbright’s Houston office. The act applies to almost all U.S. coastal waters, including those serving Hawaii, Alaska, Puerto Rico and Guam. There are certain exemptions for some territories, such as the U.S. Virgin Islands, and, very occasionally, waivers are granted, typically related to hurricane or disaster impacts. Interestingly, almost every type of vessel is covered by the act, from oceangoing ships, to barges and tugboats, to small service vessels including dredgers. Off-

WIND ENERGY QUESTIONS

Mike Roberts

Utsav Mathur

Crowley Maritime

Norton Rose Fulbright

shore energy production vessels and service fleets are also included. While the Jones Act has changed little in a century, shipbuilding, mariner training and qualifications, and vessel operations have transformed immeasurably. So have domestic and global commodities, trade lanes, infrastructure, and economic and political environments. It is a given that Senator Jones didn’t foresee wind farms sprouting up in U.S. Northeast waters, the obliteration of Puerto Rico’s power grid by a hurricane, or autonomous ships sailing the seas. These types of developments have given rise to numerous back-channel discussions, as well as challenges to alternatively repeal, waive provisions, grant exceptions and otherwise modernize, strengthen or scale back the Jones Act.

Offshore wind farms are a newcomer to the U.S. and are raising important Jones Act questions. “Anytime you have offshore projects you have project cargo. Many components are built in Europe and will be shipped to staging areas in the U.S. Northeast. When they are moved from the staging area to a fixed offshore construction site, there are Jones Act implications,” Mathur said. He added that while the application of the Jones Act to wind energy installations and equipment movements is still being sorted out, the sector will have to make decisions related to vessel choice for logistics and construction, including component lay-down and transfer points, based on the interpretation of the act. “For some projects, there is potential for components to be loaded on foreign-flag vessels in Europe and moved directly to the installation site,” Mathur said. There are pending requests on how the Jones Act applies to offshore wind projects. Avangrid, the winning bidder for Massachusetts’ first offshore wind project, has called the Jones Act a peculiarity of the U.S. market that will trigger innovative delivery alternatives that might set global precedent – using smaller coasting trade feeder barges to shuttle to the typically more expensive on-site jackup vessels, rather than having costly

OSG sees the U.S. merchant marine as a private-public partnership. / CREDIT: OSG.

www.breakbulk.com BREAKBULK MAGAZINE 9

COVER STORY

Crowley is a strong supporter of the Jones Act. CREDIT: CROWLEY MARITIME.

jack-up vessels go back and forth to port. With the rise of new natural gas extraction techniques, and with new high-volume liquefied natural gas, or LNG, liquefaction facilities coming on line, a shortage of foreign and domestic LNG tanker capacity is also a certainty. “The thing I get asked about most is LNG. There has been a lot of discussion about finding the right capacity to move LNG on coastal routes, and there are questions about getting limited exemptions or waivers,” Mathur said. Roberts said that Crowley is assessing Puerto Rico’s emerging market for natural gas: “There may be potential for a Jones Act tank vessel to meet demand, and Crowley is excited about that opportunity.” In 2018, despite the nation having become a net exporter of LNG, the U.S. Northeast imported Russian LNG for the first time, due in part to a lack of any Jones Act-compliant tanker tonnage to deliver U.S. LNG. In April 2019, Bloomberg reported that U.S. President Donald Trump considered a request for a 10-year Jones Act waiver 10 BREAKBULK MAGAZINE www.breakbulk.com

for certain energy shipments from mainland ports to cash-strapped and hurricane-battered Puerto Rico. No action was reported. Trump’s widely promoted energy agenda would seem to run counter to the Jones Act, in contrast to his America First agenda, which supports a home-grown merchant marine and U.S. shipyards, and their role in national defense strategy.

EVOLVING INTERPRETATION

Changes to the Jones Act have been few and far between, but its interpretation is not static. On Oct. 23, 2019, U.S. Customs and Border Protection, or CBP, published Proposed Modification and Revocation of Ruling Letters relating to CBP’s Application of the Jones Act to the Transportation of Certain Merchandise and Equipment between Coastwise Points. Comments were due Nov. 22. The proposed changes address which incidental movements constitute “transportation” with respect to offshore lifting operations and whether a non-coastwise-qualiﬁed lifting vessel would violate the Jones Act when it moves a short distance to avoid colli-

sion with a surface or subsea structure when installing an offshore platform’s topside. There also is a question of which offshore articles transported between coastwise points are “vessel equipment” and therefore not obliged to be carried on Jones Act vessels. “The Jones Act only applies to the movement of merchandise, not equipment,” Mathur said, adding, “there are rulings that certain portable items moved to an offshore site are integral to the mission of the vessel and therefore excluded.” The Jones Act fleet and offshore energy industry are watching this issue closely. A second hot topic, the incidental movements of vessels, begs the question of what qualifies as coastwise transportation. “For now, if a Jones Act barge arrives at an offshore platform with topside components and a dynamically positioned foreign-flag construction vessel lifts the topside and then has to make a lateral move of a few feet prior to placing the topside at a coastwise point on the OCS, the move is interpreted as a Jones Act violation,” Mathur said. There is a need to clarify what qualifies as a small incidental ISSUE 1 / 2020

COVER STORY

move, so that the Jones Act doesn’t get bogged down in minutiae or labeled as illogical.

Demise of the General Cargo Ship Jones Act Fleet

ENFORCEMENT AND OUTREACH

350

The National Jones Act Division of Enforcement was created in 2016 and located in New Orleans, a center for the offshore sector, reminding industry that the CBP takes its Jones Act outreach and enforcement obligations seriously. Current coasting trade operators have come of age during the Jones Act era and are typically strong Jones Act supporters. The premier industry coalition, the American Maritime Partnership, shares that “ … a strong domestic maritime industry is critical for America’s economic, national and homeland security, and is best supported by maintaining the Jones Act as the foundation of America’s domestic maritime policy.” Yet studies proving or disproving the efficacy of the act abound. The Organization for Economic Cooperation and Development, or OECD, published a policy paper in April 2019, Local Content Requirements and their Economic Effect on Shipbuilding – A Quantitative Assessment, which included a look at the Jones Act. This study used the OECD’s Trade in Value-Added database and its intercountry input-output framework to simulate the impacts of the Jones Act on the maritime sector and on the general economy. The paper concluded that significant economic gains would be had through the abolition of the act. It cited higher transportation costs between American ports primarily related to higher vessel operating and labor costs, an aging U.S. fleet, and a lack of oceangoing vessels in the U.S. merchant marine, as indicators that action is needed. The paper estimated large benefits for the broader U.S. economy, and for the U.S. shipbuilding industry, if the act went away. The paper stated: “The results refer to the economic gains [after] the shipbuilding industry will have reached international productivity levels, water transportation services will have approached the price levels of non-Jones Act conform vessels, and intra-U.S. maritime trade will have been stimulated by lower freight rates.”

Deadweight in 1,000s

300 250 200

“In its most basic and literal sense, any law that limits the number of ships available to engage in a particular trade is a law that can hinder that trade – any protectionist law does that.” – Utsav Mathur, Norton Rose Fulbright

150 100 50 0

2000 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 2019

Source: U.S. Department of Transportation, Maritime Transportation

U.S.-flag Oceangoing Privately Owned Merchant Jones Act Fleet By ship type, cargo-carrying vessels of 1,000 GT and above, as of Jan. 1, 2019

Tanker

Container Ship

General Cargo

Ro-ro

Dry Bulk

Total

Source: U.S. Department of Transportation, Maritime Transportation

The report suggested government can “help stimulate employment generation through a stable macroeconomic framework as well as certain structural policies which encourage innovation, skills and business development.” “In its most basic and literal sense, any law that limits the number of ships available to engage in a particular trade is a law that can hinder that trade – any protectionist law does that,” Mathur commented. “But despite the hindrances, proponents

argue the Jones Act has value because it helps maintain the American merchant marine, jobs, and the capability to support national defense and security initiatives.”

RESULTS AND IMPACTS

The Jones Act has been in place long enough for entire industries to develop around it. Some of those are sufficiently significant to the region that their demise would wreak havoc. For example, the Jones Act is entrenched throughout the entire U.S. www.breakbulk.com BREAKBULK MAGAZINE 11

COVER STORY

Gulf offshore service industry. “If it was repealed, proponents argue that in all likelihood most of those jobs would go away, as well as the U.S. shipyards that build the offshore service fleet,” Mathur said. The Puerto Rican trade has also grown up around the Jones Act. It is unique, having both a closed-loop routing and a short-sea voyage through sensitive coastal ecosystems, giving rise to the development of a world-leading LNG/dual-powered fleet.

Crowley’s shipping division operates about 25 crewed vessels having invested between US$2.5 billion and US$3 billion in U.S.-built ships since the turn of the century. “We are all-in on domestic shipping,” Roberts said. The fleet renewal program in Puerto Rico now includes two brand new LNG-powered vessels. While Crowley has a high-volume container trade with Puerto Rico, it moves most other cargoes, such as the project cargo slated to restore the elec-

Canadian Prime Minister Justin Trudeau. / CREDIT: SHUTTERSTOCK.

GLOBAL CABOTAGE SCENE Some 90-plus United Nations member states have cabotage laws, according to the Seafarers’ Rights Federation’s 2018 publication Cabotage Laws of the World. And although cabotage laws exist across all political, economic and legal systems, and along a majority of the world’s coastlines, they are ever evolving, loosening and tightening protections. Canada’s coasting trade, for example, just made a major turn, allowing access by European Union vessels to several hitherto protected services: dredging; provision of feeder services between Halifax and Montreal; and repositioning of empty containers on a non-revenue basis (an activity already allowed in the U.S. by the Jones Act). The Comprehensive Economic

12 BREAKBULK MAGAZINE www.breakbulk.com

Trade Agreement between Canada and the European Union, which came into effect on Sept. 21, 2017, created preferential market access for EU members, allowing EU-registered vessels to perform specified cabotage activities without a coasting trade license. According to Cabotage Laws of the World, the objectives underlying cabotage are to: “maintain national security; promote fair competition; develop human capacity; transfer maritime knowledge and technology to nationals; create jobs for nationals; increase ships on the national register; promote ship ownership, building and supply services; promote safety and security of ships in port; enhance marine environmental protection; encourage transportation by sea; and/ or provide public services.”

trical grid following Hurricane Maria – some 700 transformers and 60,00070,000 utility poles. Because higher freight rates on the coastal trades are perhaps the most belabored negative of the Jones Act, ideas are often put forward to help keep rates down. “Ideas that preserve and maintain some U.S. jobs while reducing costs are out there, and for every idea, there is support, but there is also opposition,” Mathur said. In addition to tax incentive modification suggestions, he said that some have argued for limited repeal of portions of the act for certain trade routes to lower transportation costs. However, Crowley argues that competition is the best way to keep rates in check. Roberts said Crowley’s coastwise trade faces a fundamentally different structure than that applying to foreign trades, but that competition still works to keep the markets growing and vibrant and innovative. OSG’s Norton accepts that Jones Act costs are higher, but caveats that by adding that there has to be a business case and a defined market that allows operators to make money. The U.S. merchant marine is supported by the private sector at a fraction of the cost of the government and military directly providing similar capacity, he said. “The Navy is building up to 20 tanker support vessels for its battle fleets,” said Norton. The first two are under construction in San Diego at a cost about US$600 million. “By comparison, the Maritime Security Program is a subsidy for about 60 U.S.-flag ships that trade internationally. It costs US$300 million per year with a stipend of US$5 million per year per vessel. That allows the defense department to draw on the services of 60 vessels for less than half the cost of one new tanker,” Norton said. While opponents point to cost effects and interpretation issues, proponents say that the Jones Act, while perhaps poised for updates and modifications, is buttressed by policy which is largely achieving what it set out to do almost a hundred years ago. BB Based in the U.S., Lori Musser is a veteran shipping industry writer. ISSUE 1 / 2020

INLAND TRANSPORTATION

DIGITAL TRIUMPHS Data Drives Trucking Gains

reakbulk companies implementing technology that gathers and provides data points and then digitizes that information into usable, actionable intelligence stand to benefit from a triple win: reduced risk, reduced accident severity and frequency, and significantly reduced cost. According to Nathaniel Leis, director of safety at U.S. trucking company ATS, there are cost reductions to be made through improved performance and reduced downtime across a transportation fleet. The trucking industry has the interesting dynamic of being the largest employer as a group in the U.S., while at the same time having a large number of small businesses. “And so, the industry leaders have the capacity to adopt the changes presented by digitization, while the overall industry is slow to follow,” Leis said. 14 BREAKBULK MAGAZINE www.breakbulk.com

BY FELICITY LANDON

He lists the many benefits to digitization in the breakbulk trucking industry: improved performance, reduced downtime, streamlined vehicle maintenance and trailer repair, and reduced fuel costs. “The data available to identify mechanical problems before they become major breakdowns, coupled with systems to streamline power units into our shops, has the potential to reduce driver downtime, and repair cost,” he said. “For my money, however, reducing accident frequency and severity represents the greatest opportunity.” Skyrocketing litigation costs related to accidents can be prevented by leveraging technology and digitization, he said. In the past decade alone, the average cost of litigated injury claims in the southeastern U.S. has risen by more than US$10 million, and it is becoming more and more common

to see judgments and settlements in excess of US$100 million. This, in turn, drives additional insurance and legal costs and impacts customers, drivers and the bottom line, Leis said. “The best way to prevent these losses is to not find yourself in the courtroom. And the best way to not find yourself in the courtroom is to prevent the accident in the first place.”

WIDENING DATA CAPTURE

ATS has begun to integrate its data in new ways relating to both the frontline and the operations management teams, in order to pinpoint how performance is affecting the health of the company. It has long gathered accident information and used that data to work to eliminate the occurrence of accidents of the same nature. While this has proven successful to a point, it has not eliminated those accidents overall. ISSUE 1 / 2020

Now, ATS has onboard technologies that provide it with additional performance data that can build a better picture of what are the precursors to certain accidents. These technologies are integrated into its vehicle’s systems and communicate basic performance data back to the office. “The data can be used to identify risky behavior that can be measured and linked to undesired accidents and other outcomes,” Leis said. ATS has built an in-house tool that compiles data into an individual driver risk assessment. Hence it can identify drivers with a higher risk of an accident, analyze and target the risky behavior, and take action to lower the risk. The data points range from lagging indicators such as previous accidents and moving violations, to leading indicators such as days away from home and days since last pay, in an attempt to identify real-time risk in driver behavior. As Leis pointed out: “Data is great, but it is what you do with that data that counts.” ATS is using these technologies to “manage out” risk, not its drivers, he added. “The data is used to coach our team members to change their habits over time to become a safe and productive driver for ATS.”

types of systems. “As with all change, there is resistance to some of the more intrusive elements of digitization,” Leis said. “The workforce is sensitive to truck automation and in-cab remote monitoring. Individual organizations are sensitive to the additional cost of new technology and the cost of change management, as well as the natural inclination to hold onto past practices.”

Nathaniel Leis

William Cummins

ATS

GEODIS

“Event recorders integrated into the electronic control module of our vehicles allow us to be alerted to driver habits that elevate risk … and to proactively work with our team members to reduce and eliminate these risks,” Leis said. Ultimately, this means ATS can reduce driver turnover by preventing team members from bumping up against the disciplinary policy, by using data and event recorders to improve the team’s driving skills and, more importantly, improving their skills at identifying risks and decision making. There has been some resistance, however, to the introduction of these

DIGITALIZED HURDLES

Transport company GEODIS provides its customers with a full digitalized system providing end-to-end visibility of their supply chains, including online freight management and tracking. However, frustratingly, out-ofgauge cargoes in the U.S. are required to have permits, and it is up to the governing body to select the appropriate route that the journey will travel. “So we are not able to apply technology to route planning or route optimizing,” said William Cummins, global QHSE manager, freight forwarding, GEODIS. Rather, GEODIS’ digitalization offering is geared towards allowing the customer to have real-time updates, providing the forwarder with journey

HEADING FOR IMPROVEMENT

Core challenges for the trucking industry are a lack of safety oversight and driver retention, Leis said, and technology can help overcome both of them. In years past, trucking companies built a safety culture, setting policies and expectations as a means to manage safety performance. They may have hired people within their organizations, or vendors, to follow their trucks for observations. Ultimately, they were forced to rely on the public to report poor driving habits, or negative outcomes to tell them that they have a safety performance problem. Today, event recorders have opened a door into driver performance and work habits that allows ATS to proactively manage safe performance.

Event recorders allows haulers to proactively manage safety. / CREDIT: ATS.

www.breakbulk.com BREAKBULK MAGAZINE 15

INLAND TRANSPORTATION

VIRTUAL VISIBILITY Digital solutions developed by Librestream enable teams to share live visuals – bringing together experts remotely and allowing “virtual inspections.” Jereme Pitts (pictured), chief operating officer, describes Librestream’s method as “like Facetime on steroids. There are a lot of engineering and professional shipping bodies where people have expert knowledge but can’t afford to have them all together in the same place at the same time; so we bring instant technology to allow this,” he said. “It is designed to bring in that expertise and solve a problem at the exact moment it is needed.” Librestream’s Onsight Connect remote expert assistance is used by clients in the aircraft and offshore energy sectors. In transportation it can be used to enable digital inspections, monitoring and analysis of project and out-of-gauge cargo and transportation. In an example presented at Breakbulk Americas, Librestream’s Onsight Connect was used in the transportation of Noble Energy’s Leviathan chemical injection skid from the Netherlands to Texas. The unit, built by Wood and transported by Crane Worldwide Logistics, was 130 tonnes and measured 53.8 feet by 28 feet by 35.4 feet. It had only six inches’ clearance to get out of the fabrication hall, before moving along narrow streets to the nearest barge roll-on site. Any delay would have had a major impact on the project schedule.

16 BREAKBULK MAGAZINE www.breakbulk.com

Librestream’s tech allowed for real-time visibility of the loadout, giving stakeholders peace of mind, and minimizing the need to travel in order to witness and supervise operations, saved travel costs, allowed real-time communication to resolve issues or highlight concerns, and gave the ability to immediately intervene if there was any unsafe practice, Pitts said. In the project cargo area, the system helps solve a skills issue: “The quantity of people retiring will hit an all-time high in 2022. We are talking about experts with 25 to 30 years’ experience who went out and did inspections, but you are not able to document this like you could with accounting processes. Everything is different out in the field – how do you document all that and capture it and bring to a new generation?” A “smarter” approach is needed, Pitts said, and that includes building a database of information that didn’t get tracked or collected before. This could allow a digital picture to be built up of what a similar job might involve in the future, in turn enabling companies to be more productive in less time, he said. “Right now if I have a very complex shipping task, I might need to call you with your 25 years’ experience,” Pitts said. “If that is done and the data is collected, then it will be a case of using AI to solve the issues. So no longer calling a human – but calling data.”

management and improving safety for the driver and public. “Safety managers are able to assist and engage at the moment an issue is detected or communicated via software or cameras – the units can be pulled over and a ‘stop work’ authorized until the issue is resolved and documented,” Cummins said. Digitalization is advancing to the point that items are being received in systems as they pass through the gate to the facility, so that drivers do not have to sit in a long queue waiting to exchange bill of lading paperwork, Cummins said. “This is saving time and money.” However, a challenge in the drive towards digitalization is that of unrealistic expectations. For example, customers in less-developed countries such as Papua New Guinea or Kazakhstan or, indeed, in the mountains of Norway or remote parts of Australia, frequently expect access to the same types of services when the infrastructure simply isn’t there. “This is an issue that impacts all entities that move out-of-gauge cargo; expressing these limitations and documenting mitigation techniques that will be implemented is the responsibility of the project forwarder,” Cummins said. “Educating the customer is key to setting the correct expectations in all transport environments.” GEODIS takes a variety of steps to get around any technological/infrastructural shortcomings in a specific area, he added. For example, the company uses drones with live feedback from a control room to offer the same real-time experience. “We have also used real-time videoconferencing, digital meetings and other methods to link customers and operations teams in across the world. “We see more and more advances being made in lesser-developed countries. Will this take some time to catch up? Yes, for sure. It takes global companies operating in these areas to set the standard and best industry practices to speed this change along and drive the culture,” Cummins said. BB Felicity Landon is an award-winning freelance journalist specializing in the ports, shipping, transport and logistics sectors. ISSUE 1 / 2020

d ou Pr LN GP M r be em e nc Si 20 19

Visit us at Breakbulk Middle East in Dubai, UAE February 25-26, 2020 Booth No A75

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Membership Available in Selective Markets! Application: info@gpln.net / www.gpln.net

REGIONAL SURVEY

STRONG UNDERCURRENTS OF GROWTH Watered Down Saudi IPO Merely a Distraction BY AMY MCLELLAN

t was touted as the world’s biggest IPO. A global initial public offering of shares in the world’s most profitable company that would usher in a new era of transparency and raise funds to help transition the Saudi economy from an overreliance on oil. A target price set by a powerful monarch, Crown Prince Mohammad bin Salman, often known as MBS, valued Saudi Aramco at an eye-watering US$2 trillion. Yet, as so often in life, things haven’t quite gone to plan. Already much delayed, Saudi Aramco’s much18 BREAKBULK MAGAZINE www.breakbulk.com

anticipated IPO was scaled back to a more regional affair in December 2019. The offer of 1.5 percent of the shares in the company was confined to the Tadawul (the Saudi stock exchange) and investor roadshows in the U.S., Europe and Asia were canceled as international money managers shied away from the reduced price target of US$1.6 trillion to US$1.7 trillion; many believed US$1.2 trillion was a more realistic valuation for Aramco, the cornerstone of the Kingdom’s vast wealth. But while the IPO failed to reach MBS’s US$2 trillion dream, Saudi Arabia’s giant state-owned oil monopoly

still managed to pull off the biggest IPO in history, valuing Aramco at roughly US$1.7 trillion, exceeding Alibaba’s record-breaking 2014 market debut in New York. The company is, without doubt, admired around the world. Aramco, which traces its roots back to 1933, sits atop 52 years of proven reserves, extracts oil more cheaply than any western energy major, with some fields delivering up their riches at less than US$10 per barrel, and its production capabilities are world-class. Aramco pumps 10.3 million barrels per day of oil, has some of the lowest energyintensive production in the world ISSUE 1 / 2020

Crown Prince Mohammad bin Salman, valued Saudi Aramco at an eye-watering US$2 trillion. CREDIT: SHUTTERSTOCK.

and brought assets damaged in recent drone attacks back online astonishingly quickly. For the first half of 2019, it posted a net profit of US$46.9 billion, almost all of which was paid out in dividends to the Saudi state. The profit dwarfs the US$21.6 billion net profit generated by Apple, the world’s largest company by value, and the US$5.5 billion posted by ExxonMobil, the world’s largest listed oil company. On a pure profit-and-loss basis, investing in Aramco stock looks a solid bet for investors.

INVESTMENT DOWNSIDES

But there are significant risks attached. First, the price is high given these are times of high oil supply and uncertain demand. The brazen drone attacks on Aramco’s Abqaiq and Khurais facilities showed the kingdom is vulnerable to terrorist attacks, while a surge in anti-fossil fuel sentiment could deliver policies that render some of its oil wealth null and void. There are also concerns about the kingdom’s record on human rights, with the murder of the Saudi journalist Jamal Khashoggi scaring off some potential backers – although the success of the company’s first international bond sale

in April 2019 suggests some have overcome their qualms at doing business with the kingdom. Possibly more troubling for potential international investors is the fact that the company will still be majorityowned by the state and shareholder rights could well be overridden by political considerations. Last year, for example, Aramco was forced to acquire a 70 percent stake in petrochemicals giant Saudi Basic Industries Corp., or SABIC, from the Public Investment Fund, or PIF, of Saudi Arabia for US$69 billion, a move largely seen as a way to help PIF, which is under the control of the crown prince, to replenish its coffers. Ellen Wald of Transversal Consulting and author of Saudi, Inc., points out that in Saudi Arabia the state is an “absolute monarchy, where there are no rights other than by consent of the monarch and new laws to nominally protect shareholder rights remain untested.”

IPO KEY TO PROSPERITY

It may have been a bumpy road, but the flotation still raised a significant sum. The cash will be used to further the Vision 2030 strategy, which aims to plow huge sums of oil wealth into new industries to transform the Saudi economy. “The kingdom needs US$88.60 per barrel Brent to balance its fiscal budget, a level that is not expected to return on a sustainable basis,” said Dan Klein, head of scenario planning at S&P Global Platts. “As a result, a successful IPO is essential to funding diversification of Saudi Arabia’s economy and weaning itself off oil revenues.” With oil prices stubbornly trading in the US$60-US$63 per barrel range, a cash injection from the IPO will be key to balancing the books and managing this transition to a more diversified economy. “The IPO of Aramco is the cornerstone of the Vision 2030 strategy,” said Dmitry Marinchenko, an analyst with Fitch Ratings. “Apart from being a fundraising exercise for the state, the IPO preparations have already made

Aramco a much more financially transparent company. This should ensure better governance. Finally, the IPO should familiarize investors all over the world with the kingdom, and could promote Dmitry investments into Marinchenko other sectors and companies.” Fitch Ratings This diversification push has been underway for some time. In addition to increased investment in downstream petrochemicals and renewable energy projects, the PIF has also been making big bets on tech stocks, such as Uber and augmented reality start-up Magic Leap, and investing billions in funds run by Blackstone and SoftBank, including the Vision Fund, which was recently hit by the failed public offering of officerental company WeWork. And then there’s NEOM, MBS’s big idea and a centerpiece of the 2030 Vision. NEOM – or “new future” – will be a high-tech city on the Red Sea in northwestern Saudi Arabia, an innovation and entrepreneurship hub that that will host ports, enterprise zones, research centers, sports and entertainment venues, tourist destinations and be home to more than a million citizens from around the world. About 40 percent of the world’s population will be able to reach NEOM in less than four hours and around 10 percent of the world’s trade already flows through the Red Sea. This kind of blue-sky vision costs money. A lot of money. Marinchenko of Fitch Ratings has been running his slide rule over the plans. “Listing on the local stock exchange should bring around US$25 billion to the state, assuming the targeted valuation and a 1.5 percent stake to be offered for sale. In addition, around US$70 billion will be raised through the SABIC acquisition, and tens of billions more could potentially be raised through an international listing,” he said. “These www.breakbulk.com BREAKBULK MAGAZINE 19

REGIONAL SURVEY

transactions will possibly be used to back ambitious infrastructural projects, though do not fully resolve the funding issue. The NEOM mega-project, for example, would require US$500 billion in investments, much more than the state will raise through the IPO and the SABIC deal.”

DRIVING BREAKBULK DEMAND

PROPER PLANNING TO DRIVE VOLUMES Effective logistics will continue to be a key lever for growth in the Middle East, helping to optimize costs and providing the required level of efficiency and effectiveness to encourage contractors to place their orders in the region. “The balance between imports and availability of cargo for export also plays an important role and determines what sort of pricing is available from carriers for each leg,” said Agility’s Mohammad Jaber. “Carriers generally offer better pricing when they know that they don’t have to ballast their ships empty to the next loading port because they can find cargo around their last discharging port within the same region.”

Hemisphere Freight Service’s Dan Leach echoed this. “The Middle East is a good market for us, both in terms of UK suppliers exporting to the region and on the return journey we ship back supercars to the UK,” he said. The equipment HFS ships to the region includes aircraft ground support equipment and underground storage tanks. “We ship into Dubai, Saudi Arabia, Qatar, Bahrain and Oman, although Dubai is definitely the main hub for us,” Leach said. It’s a route that’s expected to get busier as the Middle East gears up for two major events: Dubai Expo 2020, billed as a once-in-a-lifetime experience showcasing the latest tech breakthroughs from space travel to 3D printing over 173 days, and the FIFA World Cup in Qatar in 2022. “These are big events that are going to mean a serious amount of equipment coming into the region and a lot of requirements for carriers,” Leach said. “Both events are going to be pretty special, with a lot of people being welcomed to the Top: Dubai Expo 2020 is billed as a once-in-a-lifetime region and a lot of experience. Above: FIFA World Cup in Qatar. Both events will innovation being mean a lot of equipment will be brought to the region. showcased.” CREDIT: SHUTTERSTOCK.

20 BREAKBULK MAGAZINE www.breakbulk.com

For breakbulk carriers, the investment ambitions of Saudi Arabia and the other countries in the region present a huge opportunity. There are major oil and gas projects underway across the region. Upstream, there’s the huge Marjan, Berri and Zubair oilfield projects in Saudi Arabia and the Hail, Ghasha and Delma oilfields in Abu Dhabi. Move downstream, and Oman’s huge Duqm refinery project is underway, with volumes into Duqm port set to peak in 2020, not to mention a US$45 billion expansion of the vast Ruwais refinery complex in Abu Dhabi, and Qatar’s plans to build four additional “mega-trains” at Ras Laffan to increase nameplate capacity at the LNG complex by more than 40 percent by 2024. While oil and gas inevitably dominate, solar and wind energy are also experiencing rapid growth, again creating opportunities for breakbulk carriers. In Abu Dhabi, for example, the Emirates Water and Electricity Co., or EWEC, is building the world’s largest solar IPP project. The 20-square-kilometer, 2-gigawatt project in the Al Dhafra region will provide power for up to 110,000 households across the UAE, and will be almost double the size of EWEC’s about 1.2 gigawatt Noor Abu Dhabi solar plant, which came online in April 2019 and is the largest operational single-project solar PV plant in the world. When it comes to wind energy, developers are expected to add 6.2 gigawatts of new wind capacity in Saudi Arabia between 2019 and 2028, 46 percent of the region’s 13.5 gigawatts total capacity additions in this period, according to Wood Mackenzie Power & Renewables. “Customers in the Middle East are still proposing huge volumes to breakbulk carriers overall, especially in KSA, UAE, Oman, Bahrain, and Iraq,” said Mohammad Jaber, COO of Agility Abu Dhabi and regional director ISSUE 1 / 2020

REGIONAL SURVEY

Oman’s huge Duqm refinery project is underway, with volumes into Duqm port expected to peak in 2020. / CREDIT: DUQM REFINERY.

“It’s a very vibrant region and it’s a good place to do business. You have to have good agents on the ground, but overall we always find it very straightforward to work in the region...”

– Dan Leach, Hemisphere Freight Services

projects logistics, MEA. “We expect other markets such as Kuwait to experience a resurgence again soon.” He pointed out that increasingly the region is offering attractive volumes for export too, which adds a new dimension to the opportunities for breakbulk carriers. “Middle Eastern industries will remain focused on growing exports, especially on fabricated steel, modules and pressurized vessels to supply the project needs within the GCC and to other countries and projects in other areas,” he said. “The competitive cost of material for logistics and manufacturing projects in the region will continue to play a key role in driving demand for manufacturing in the Middle East.”

POSSIBLE ROAD-BUMP

There are, of course, risks, not least the usual geopolitical tensions. Jaber said these will “remain manageable and won’t lead to deferred investment for the time being.” He did, however, highlight the new IMO 2020 low-sulfur fuel regulations. “They have led to higher prices as ocean carriers have had to pay for cleaner fuel or equipment retrofits 22 BREAKBULK MAGAZINE www.breakbulk.com

Mohammad Jaber Agility

Dan Leach Hemisphere Freight Services

and might lead to a bit of uncertainty,” Jaber said. “If the availability of fuel becomes an issue, then the risks might increase the prices significantly and affect project schedules.” Making the most of the opportunities in the region, whether it’s civil infrastructure or the huge oil, gas, petrochemicals and renewable projects underway, requires carriers to have good local partners. “It’s a very vibrant region and it’s a good place to do business,” said Dan Leach, projects team manager at Hemisphere Freight Services. “You have to

have good agents on the ground, but overall we always find it very straightforward to work in the region and don’t have any problems with paperwork or red tape.” Jaber said that in addition to the hardware of warehouses, hubs, trucking, handling equipment and offshore vessels, it’s essential to invest in people, particularly given ever more stringent in-country requirements. “You have to invest in people, which includes training, development, organizational planning and other things to retain talent and ensure that you have skilled local teams and you’re continuously improving the in-country value,” he said. “Also operators cannot ignore the latest innovations in digitalization and technology, which is adding a lot of acceleration to the logistics operation and changing the traditional ways of logistics projects. The operators that adapt the fastest will be the most successful.” BB Freelance journalist Amy McLellan has been reporting on the highs and lows of the upstream oil and gas and maritime industries for 20 years. ISSUE 1 / 2020

5th EDITION

Dubai World Trade Centre | Za’abeel Hall 5 25-26 February 2020 middleeast.breakbulk.com

Event Essentials For the region’s only event for project cargo transport and logistics

Source: Al Faris Group

introductions

between the port and our numerous Parks and Zones and logistics solutions providers, DP World, UAE Region has created an experience that services customers across the supply chain, making it one of the most efficient and productive in the world while spurring economic diversification and serving as the largest conduit for foreign investment into the UAE.

Photo: DP World

To Our Distinguished Guests, On behalf of DP World, UAE Region, it gives me great pleasure to welcome you to Breakbulk Middle East 2020, which will be hosted by us.

MR. MOHAMMED AL MUALLEM Chief Executive Officer & Managing Director, DP World, UAE Region

Every year, Breakbulk Middle East brings together some of the finest minds in the breakbulk and project cargo industry to discuss challenges, develop solutions, showcase innovations, and share market knowledge and insight. Dubai is an ideal location for the trade show as the emirate is known as a hub for trade, megaprojects, and construction. With Expo 2020 Dubai around the corner, there will be an increased need for value-added solutions and services for the breakbulk industry in the run-up to the event. Dubai is home to Jebel Ali Port, the eleventh largest port globally that has one of the largest breakbulk terminals in the Middle East. Jebel Ali Port has been voted “Best Seaport – Middle East” for 24 consecutive years. Through the unique connection we have created

24 BREAKBULK MIDDLE EAST EVENT ESSENTIALS 2020

Jebel Ali Port’s strategic location has allowed it to create a trade network that reaches out to a consumer market of over 3.5 billion people across the Middle East, North and East Africa, and the Indian subcontinent while providing over 80 weekly services that connect to over 150 ports worldwide. The port’s advanced technological capabilities allow us to handle all types of bulk, breakbulk and project cargo regardless of size or weight; making Jebel Ali the gateway for New Dubai’s expansion projects. As a trade enabler, DP World, UAE Region has always valued innovation and cooperation, and we see events like Breakbulk Middle East as a vital platform for the industry to share strategies and ideas that will allow us to help make trade faster and stronger. So let us use this opportunity to chart the future of our industry and work towards a mutually beneficial future for all of us. We look forward to welcoming you at Breakbulk Middle East 2020, and we hope you will come away with the information and tools that will help your business grow. Thank you.

A Message from the Event Director Breakbulk Middle East returns to Dubai for the second year! As the Middle East’s only event dedicated to breakbulk and project cargo, ro-ro and heavy-lift transportation and logistics, we strive for a vibrant and successful Breakbulk Middle East 2020. In its fifth edition, the 2020 event will be the biggest and best yet! More than 100 exhibitors, representing the end-to-end value chain for the transport of oversize cargo, will be present. We look forward to hosting a wide array of exhibiting companies this coming February, showcasing the widest variety of project cargo specialists from ocean carriers, project forwarders, transportation specialists, ports and terminals, equipment suppliers and industryrelated services at the Dubai World Trade Centre. I would like to thank our event patron and key sponsor H.E. Dr. Abdullah Belhaif Al Nuaimi, UAE Minister of Infrastructure Development and the

Chairman of Federal Transport Authority for Land and Maritime, for his continued support for Breakbulk Middle East 2020. I am very much looking forward to all the new features that Breakbulk Middle East has to offer. A new and strategic conference program will provide a platform for the industry’s key stakeholders to give insight and guidance into the issues and opportunities in our region, including insights from shippers such as Fluor, Saudi Aramco, ExxonMobil, ADNOC, JGC, Larsen Toubro Hydrocarbon Engineering, and Alstom. We are delighted to bring Breakbulk Masters to Breakbulk Middle East. Launched at Breakbulk Europe 2019, Breakbulk Masters is our new worldwide VIP program. An exclusive global network of senior project cargo, transport, logistics and procurement

professionals from cargo owning companies, this group gives members access to learning and networking at the world’s most important breakbulk events throughout the year – including Breakbulk Middle East 2020. I’d like to take this opportunity to thank DP World, our Host Port sponsor, as well as Abu Dhabi Ports, King Abdullah Port, Agility, MICCO Logistics, Yanbu Commercial Port, Bahri and COSCO Shipping for their support as exhibitors and sponsors at Breakbulk Middle East. I’d also like to thank all our exhibitors and delegates for their continued support, whilst extending a warm welcome to our new attendees, exhibitors and sponsors who will be participating. I extend an equally warm welcome to all our Breakbulk Masters. I trust you will have an informative and productive event! With so much going on at Breakbulk Middle East, please use the Event Preview to its fullest. It will really help you make the most of your two busy days. I look forward to seeing you soon in Dubai. Best regards,

Ben Blamire Event Director – Middle East Breakbulk Events & Media Hyve Group Plc Email/Skype for Business: ben.blamire@breakbulk.com Register at middleeast.breakbulk.com

BREAKBULK MIDDLE EAST EVENT ESSENTIALS 2020 25

Host Port

Dubai World Trade Centre | 25-26 February 2020

New Project Cargo Business Ahead 8 Great Reasons to Visit Breakbulk Middle East 2020

Gain thousands of new business contacts Be among the 4,000 professionals from 75 countries around the world who meet annually at Breakbulk Middle East, the region’s only event focused on project cargo transport and logistics.

2 Meet the decision-makers responsible for issuing contracts on projects throughout the Middle East With our new Breakbulk Masters program coming to Dubai, you’ll connect with 200 or more shippers who move the region’s mega-cargoes, including manufacturers, EPCs and project owners. We know these are the most sought after and difficult to reach group in the industry, but you’ll find them here.

3 Cut through the red tape and meet the government officials who matter to your business With the patronage of the UAE’s Ministry of Infrastructure Development and The Federal Transport Authority, the participation of state-owned

entities including Abu Dhabi National Oil Company, DP World and Abu Dhabi Ports, the event offers access to official decision-makers.

4 Find new supply chain partners to fill a gap in your operations or cover a new region You’ll find them here — top-ranked ports, carriers, freight forwarders, equipment providers, air/land/sea transporters, technology specialists — on the exhibition floor, where more than 100 exhibitors are ready to provide you with the services you need.

5 Take advantage of affordable industry education for your new hires Sign up your new employees (or yourself if you’re looking to enter this exciting industry) for Breakbulk Education Day that includes sessions led by working professionals and a tour of the exhibition hall to make new connections. Available as an add-on in registration. USD300/AED1100

6 Hear it first — industry trends, new projects and forecasts to do your job better Carefully selected experts will share their strategies, information and industry-by-industry outlooks over our 2-day conference, which means you can make strategic decisions now for setting your business on the right course for the future.

7 Join an active network of professional women for new contacts and career advice New this year is the Women in Breakbulk breakfast where female leaders of the industry will share their tips for navigating your career. Extend your experience by joining Women in Breakbulk, a global networking organization hosted by Breakbulk events. Available as an add-on in registration. USD25/AED90

8 Be a part of a newsworthy event Local, regional and international reporters will be on hand to cover all of the developments at Breakbulk Middle East 2020.

Under the Patronage of

26 BREAKBULK MIDDLE EAST EVENT ESSENTIALS 2020

Major News Outlets Cover Breakbulk Middle East

Al Bayan

Al Fajr

Bloomberg

BNC Publishing

Emarat Al Your

Expat Media

France 24

Gulf News

ITP Media Group

Ittihad

Khaleej Times

Khaleej

Logistics News

The National

Reuters

The networking and new business opportunities are just getting started at Breakbulk Middle East. Join other Breakbulk events wherever you do business.

breakbulk.com for more information and ask E THE Visit WORLD OF PROJECT CARGO MEETS. about our Global Visitor Program.

BREAKBULK MIDDLE EAST EVENT ESSENTIALS 2020â&#x20AC;&#x192;27

event essentials

Agenda / TUESDAY, 25 FEBRUARY GENERAL INFORMATION 10:00 – 17:00

Registration

Dubai World Trade Centre, Za’abeel Hall 5 Entrance

10:00 – 18:00

Exhibition Hall Hours Dubai World Trade Centre, Za’abeel Hall 5

10:00 – 10:15

Patronage Ceremony & Ribbon Cutting Dubai World Trade Centre, Za’abeel Hall 5 Entrance

WELCOME

ON THE MAIN STAGE 10:15 – 10:20

Welcoming & Opening Remarks

Nick Davison, Portfolio Director - Breakbulk & CWEIME, Hyve Group plc 10:20 – 10:30

Ministerial Keynote

H.E Dr. Abdullah Belhaif Al Nuaimi, UAE Minister of Infrastructure Development and Chairman of UAE Federal Transport Authority - Land & Maritime

CONFERENCE SESSIONS ON THE MAIN STAGE 11:10 – 11:45

Governmental Panel: Regional Outlook and Growth Opportunities for the Breakbulk Industry

This panel discussion is the first of its kind, bringing together senior government officials from the Middle East to address upcoming project opportunities and the region’s capabilities to further enhance the breakbulk industry. Panellists will emphasise the impact of the Belt and Road initiative, as well as government strategy and priorities, and the effect this will have on upcoming projects that will continue to drive the breakbulk and project cargo industry forward throughout the 2020s. MODERATOR: Capt. Gamal Fekry, Managing Director and Owner, MC Ship Management PANELISTS:

H.E Eng. Hessa Bint Ahmed AlMalek, Executive Director of Maritime Transport, UAE Federal Transport Authority - Land & Maritime (FTA) H.E Khamis Bu Amim, Chairman, Dubai Council for Marine and Maritime Industries Mr. Ali Shehab Ahmad, CEO, Kuwait Oil Tanker Company Capt. Abdulkareem Al Masabi, CEO, ADNOC Logistics & Services Eng. Waleed Al Tamimi, General Manager, Tasneef Maritime

10:30 – 10:40

Ministerial Welcome

Eng. Ahmed Al Khouri, Director General of UAE Federal Transport Authority - Land & Maritime

10:40 – 10:50

DP World Host Port Welcoming Remarks Abdulla Bin Damithan, Chief Commercial Officer, DP World, UAE Region

10:50 – 11:00

Abu Dhabi Ports Welcoming Remarks 11:00 – 11:10

King Abdullah Port Welcoming Remarks Khaled Shalha, Marketing Head, King Abdullah Port

Photo: Abu Dhabi Ports

28 BREAKBULK MIDDLE EAST EVENT ESSENTIALS 2020

12:45 – 13:30

IMO 2020: What We Now Know…

Having been in place for just under two months, this session will discuss how the implementation of the IMO 2020 regulation on 1st January has impacted the breakbulk and project cargo sector so far. With marine transport contributing to the largest proportion of all breakbulk movements globally, we are now able to answer some of the most pressing questions, such as ‘what will the price of bunker be?’ and ‘what is the cost of non-compliance?’. Join this diverse panel to discover how the industry has adapted so far and what the forecasts are for the rest of 2020. MODERATOR: Cyril Varghese, Logistics Director – Strategy & Commercial, Fluor PANELISTS:

Denis Bandura, Managing Director, BBC Chartering Arne Hubregtse, Executive Board Member, Spliethoff Group Grant Wattman, President & CEO, Agility Project Logistics Ben Collins, Global Project Cargo Manager, MSC Mediterranean Shipping Register at middleeast.breakbulk.com

Agenda subject to change. Visit middleeast.breakbulk.com for updates. – Breakbulk Masters Member

13:45 – 14:30

Emerging Market Spotlight: Africa

Despite its challenging infrastructure, Africa is growing as a region of opportunity for project cargo specialists. With the largest ever LNG project currently underway in Mozambique, our panel of experts will share their thoughts on the Rovuma LNG project, as well as what’s next for the region and where to expect further opportunities to open up. Africa, with its strong trading links to the Middle East, is proving to be a hub for companies setting up offices to manage involvement in African projects, so our panel will discuss how to leverage this position and use it to their advantage. Introduction by Philippe Somers, CEO, ACE 54 MODERATOR: Lars Greiner, Senior Project Consultant, HPC Hamburg Port Consulting PANELISTS:

Kota Ueki, Logistics Manager, JGC Corporation Christodoulos Christodoulou, Logistics & Infrastructure Lead, ExxonMobil Athol Emerton, Managing Director, LBH South Africa, Mozambique & Namibia Mark Krueger, Logistics Manager – Mozambique, ExxonMobil SPONSORED BY:

15:45 – 16:30

Game Changers in the Breakbulk Supply Chain: Consequences and Implications

There is an increasing trend for EPCs/cargo owners to work with carriers and other service providers directly. This is not only affecting the different stakeholder rates, but it is increasing the project transport risk. Is the industry in a stage of maturity? How will technical discontinuity change the future? How are the current M&A/consolidation operations affecting the industry? MODERATOR: Rafael Vicens, Business Development Director – MENA, DSV Panalpina PANELISTS:

Dharmendra Gangrade, Head of Logistics, Larsen Toubro Hydrocarbon Engineering (LTHE) Finn Roden, Head of Sales Middle East, Höegh Autoliners Eliska Mundell, Cargo Sales Manager, Emirates Airlines Steffen Behrens, Country Manager, deugro Emirates

16:30 – 16:45

Closing Remarks

ACE 54 Project Management

Photo: Lars Greiner

14:45 – 15:30

Breakbulk Ports: Development, Demand and Competition As port development in the region is reaching new heights, our panel of port operators and authorities will provide insights into what is driving this development, where it is taking place and where future opportunities lie. The panel will discuss how they are managing to remain competitive in the current market and how they are prioritising improvements. MODERATOR: Cris Partridge, Regional Director (Middle East, India, Caspian), London Offshore Consultants WLL PANELISTS:

Kim Larsen, Vice President Commercial & Business Development, Abu Dhabi Ports Onur Yigiter, CEO, AMSteel Erwin Mortelmans, Commercial Director, Port of Duqm Anders Kron, Regional Commercial Manager Middle East, SOHAR Port and Freezone

Photo: LTHE

BREAKBULK MIDDLE EAST EVENT ESSENTIALS 2020 29

event essentials

Agenda / WEDNESDAY, 26 FEBRUARY GENERAL INFORMATION

CONFERENCE SESSIONS

08:00 – 15:00

ON THE MAIN STAGE

Dubai World Trade Centre, Za’abeel Hall 5 Entrance

Opening Remarks

11:00 – 11:15

Registration

Mandar Apte, Project Manager, TechnipFMC

10:00 – 16:00

11:15 – 11:45

Exhibition Hall Hours

Dubai World Trade Centre, Za’abeel Hall 5

NETWORKING SESSION ON THE MAIN STAGE 9:30 – 10:45

Women in Breakbulk Breakfast

In a predominantly male-dominated industry, women are steadily making their mark. Key female figures in leadership positions will offer insightful tips and advice for women from all corners of the industry on how they too can climb the ranks and change the narrative in an industry that is progressing in the right direction. The session will then open up to the audience, so each woman can have a voice. MODERATOR: Leslie Meredith, Marketing & Media Director, Breakbulk Events & Media FEATURING: H.E Eng. Hessa Ahmed Al Malek, Executive Director, UAE Federal Transport Authority - Land & Maritime (FTA) Dr. Aysha Al Busmait, Director of Government Communications, UAE Federal Transport Authority Land & Maritime (FTA) and IMO Goodwill Ambassador Jasamin Fichte, Managing Partner, Fichte and Co.; President, WISTA Arabia UAE Sue Donoghue, Managing Director – DHL Global Forwarding, Kingdom of Saudi Arabia; Project Director – DHL Global Forwarding – Industrial Projects June Manoharan, Director, Lukoil Marine Lubricants (MENA) Noura Alshamsi, Community Manager, The Arab Academy for Science, Technology and Maritime Transport - Sharjah Tickets for the breakfast are available as an add-on at USD25/AED90 in registration. Space is limited so buy your ticket now. SUPPORTED BY:

Photo: Saudi Aramco

30 BREAKBULK MIDDLE EAST EVENT ESSENTIALS 2020

Middle East Trade Outlook

This session will provide an overview of current project development in the Middle East and the future opportunities for the sector, with the continued drive to diversify away from such a heavy reliance on oil & gas. Updates on the macroeconomic trends impacting the breakbulk and project cargo sector will be discussed, including the impact of the US/China trade war on breakbulk volumes in the region. Richard Thompson, Editorial Director, MEED

Photo: Vestas

12:00 – 12:30

Country in the Spotlight: Saudi Arabia

With the backdrop of Vision 2030, Saudi Arabia continues to build on diversification and transformation of the Kingdom into a leading nation in all aspects. In the breakbulk and project cargo sector, there is certainly no shortage of megaprojects, ranging from amusement parks to sustainable cities, with no signs of slowing down. Join this session to further understand the Kingdom’s project outlook, priorities and key considerations when it comes to doing business in Saudi Arabia. PANELISTS:

Khaled Al-Khaldi, Project Manager, Saudi Aramco Sue Donoghue, Managing Director – DHL Global Forwarding, Kingdom of Saudi Arabia; Project Director – DHL Global Forwarding – Industrial Projects Moataz Hussein, Regional Manager - Project & Energy Services (MENA), Expeditors

Agenda subject to change. Visit middleeast.breakbulk.com for updates. – Breakbulk Masters Member

13:30 – 14:15

Expo 2020: The Logistics Behind “The World’s Greatest” Show

With Expo 2020 just around the corner, our panel will discuss how the supply chain partners have accomplished an unbelievable feat in coming together to successfully realise the vision of this globally renowned event. This session will delve deeper into how the key stakeholders have worked together to bring vast amounts of project cargo into the UAE, as well as discuss the impact of Expo 2020 on the wider logistics market. PANELISTS:

François Bellocq, Project Director, Alstom DP World Philippe Verdeure, Managing Director Projects Middle East & APAC, Sarens Group

EDUCATION DAY Tickets available in registration portal at USD300/AED1100 each. 08:30 – 09:45: Networking Coffee & Opening Remarks 09:45 – 10:15 Session 1: The World of Breakbulk Breakbulk cargoes include all of the over-size pieces used to construct infrastructure, oil & gas complexes, power plants and more. Our expert speaker will discuss the world of breakbulk and why it is so important to global development. Instructor: Patrick Richardson, Global Head of EPS Business Development - EPC, Power & Infrastructure, DSV Panalpina 10:15 – 10:35 Session 2: Raising the Expo 2020 Dome Our speaker will discuss the project management process, demonstrating how a project is accomplished, along with problems encountered along the way and the solutions required for the movement and construction of big projects. This session will look at the technical challenges in raising the Expo 2020 Dome and crowning the Al Wazl Plaza. Instructor: Philippe Verdeure, Managing Director Projects Middle East & APAC, Sarens Group

Photo: Al Faris Group

14:30 – 15:20

Breakbulk Innovation in Action

The breakbulk and project cargo industry is always being criticised for falling behind when it comes to digitisation and innovation. This session will prove that there is movement in the industry and showcase a selection of live demos and case studies of industry-changing innovation and disruption being pioneered by some of the industry’s biggest players. • Enhancing the Customer Journey and Ease of Business through Innovation with Maersk • Playing on a Global Market: How Digital Platforms Take the Risk out of International Logistics with Container Xchange

15:20 – 15:30

Closing Remarks

10:35 – 11:05: Networking Break 11:05 – 11:35 Session 3: The Exciting World of Ship Chartering This session will provide an overview of chartering principles. Attendees will leave the session with the basics of chartering, career entry points, qualifications and certification, career paths and an understanding of key industry players. Instructor: Krishnan Subramaniam, Director, Fusion Academy of Excellence 11:35 – 11:50 Session 4: Words for the Future Hear first-hand from the first Emirati female captain about working for the government, establishing a private sector business, and the major industry challenges that face any entrepreneur. Instuctor: Capt. Sahar Rasti, CEO, SJR Group 11:50 – 12:00: Closing Remarks 12:00 – 14:00: Exhibition Tours

BREAKBULK MIDDLE EAST EVENT ESSENTIALS 2020 31

event essentials

2020 Sponsors UNDER THE PATRONAGE OF

HOST PORT

PLATINUM & POCKET GUIDE

PLATINUM

GOLD & BREAKBULK STUDIOS

GOLD

SILVER

BRONZE

ATTENDEE BAG SPONSOR & THOUGHT LEADER EXPO 2020

LANYARD SPONSOR

THOUGHT LEADER AFRICA

KNOWLEDGE PARTNER

WOMEN IN BREAKBULK

32â&#x20AC;&#x192;BREAKBULK MIDDLE EAST EVENT ESSENTIALS 2020

MENA STRATEGIC MEDIA PARTNER

LOGISTICS PERSPECTIVE

SHIFT TO A SUSTAINABLE FUTURE No Escaping Ecological Juggernaut BY SIMON WEST

n the shipbreaking yards of Southeast Asia, recycling is a deadly business. Over the last decade, 390 workers, some just children, have lost their lives dismantling obsolete vessels by hand at shore-based sites in India, Bangladesh and Pakistan, according to the international non-governmental organization, Shipbreaking Platform. Crude recycling techniques to salvage steel, iron, aluminum and plastics from old ships grounded on tidal mudflats – a practice known as “beaching” – release toxic fumes and substances that are putting thousands more workers at risk of chronic disease. “Vessels are being broken up in absolutely appalling conditions,” said Roger Strevens, vice president for global sustainability at Norwegian shipping company Wallenius Wilhelmsen. “And those conditions have horrific consequences.” But not all ocean carriers are complicit.

Amid the lack of oversight – the Hong Kong International Convention on ship recycling has yet to be ratified by national governments, while progressive European Union laws only cover European shipyards – a “onestop shop” online platform set up last year by the Ship Recycling Transparency Initiative, or SRTI, aims to tackle the crisis by giving carriers a space to disclose relevant information on their post-decommissioning policies and practices. The data can be used by cargo owners, investors and even the general public to assess companies’ different approaches to recycling, allowing them to sort the wheat from the chaff when choosing a business partnership or making investment decisions.

RETIRING GRACEFULLY

Wallenius Wilhelmsen, a founding member of the SRTI, has for decades attempted to pursue a more sustainable way of getting rid of retired vessels.

The company has snubbed beaching, opting instead to sell ships through cash buyers to properly equipped dock and landing facilities that meet specific safety standards. Independent surveyors pre-vet candidate yards, while the recycling process is monitored by a qualified partner who has the right to halt work if rules are breached. “For us, this is what the minimum standard should actually look like for everybody – this should be normal. The reason there is so much bad practice out there is because the regulation is underdeveloped and because there is a lack of transparency. And where there is that combination, you have the enabler of bad things,” Strevens said. “If carriers have good practices, fine, tell the world, what have you got to lose.” The effort to clean up the often dirty business of ship recycling is one example of industry players taking a stand when regulation is found wanting; it also illustrates the evolving role

Top: The often deadly business of beaching in Chittagong, Bangladesh. / CREDIT: NGO SHIPBREAKING PLATFORM. www.breakbulk.com BREAKBULK MAGAZINE 33

LOGISTICS PERSPECTIVE

The sustainable recycling of Wallenius Wilhelmsen’s 650-foot-long Tristan vessel. CREDIT: WALLENIUS WILHELMSEN.

of sustainability in the breakbulk sector. Annual reports of carriers list dozens of ways that sustainability is being incorporated into business and culture, from fuel efficiency and biosecurity to tax compliance and employee welfare. “Every one of our corporate functions is being heavily affected by sustainability. Every one of them, so no matter which way you turn, there is something really material to be dealing with,” Strevens said.

CASE FOR ESG

Meanwhile, investors and other financial stakeholders, keen to avoid questionable business practices that could pose risks, are increasingly using environmental, social and governance, or ESG, criteria to screen potential investments. More than one in every four dollars under asset management in the U.S. – some US$12 trillion – is now invested in line with ESG strategies, according to the US SIF forum for sustainable and responsible development. So, what is driving the agenda? For 34 BREAKBULK MAGAZINE www.breakbulk.com

sure, the moral case for sustainability is hard to argue against, but adhering to certain principles can also make good business sense. Companies that promote the welfare of their workforce are likely to be more productive, while collective efforts to stamp out corruption, such as illegal facilitation payments at ports and border controls, can boost staff morale and public trust. Eco-friendly initiatives can also benefit the bottom line. The authority responsible for the Port of Vancouver, for example, the busiest gateway for project cargo bound for western Canadian resource projects, has been offering vessels docked at its terminals land-based renewable electrical power for more than a decade. Apart from reducing greenhouse gas emissions and engine noise, giving shipping companies the option of shutting down diesel powered auxiliary engines and plugging into shore power cuts fuel costs and boosts competitiveness. More often than not, the sector is responding to demands from its customers, who themselves are under

pressure from their own stakeholders to take responsibility for activities that occur throughout the supply chain. And as communications technology expands, less transparent companies are finding fewer places to hide. “We have regularly at this stage questions from our customers asking, ‘well, how do you deal with issues like vessel recycling,’ ” Strevens said. “Because the fact for them is that even though they are not responsible for how we recycle our vessels from a legal perspective, if they are found to be using a carrier that disposes of vessels in a way which has a very negative environmental or social impact, they can end up being held accountable or responsible.”

BUNKER PRICE PROTECTION

Of course, sustainability often comes at a price, which can translate into higher freight rates – a red line for many customers already exposed to a highly volatile market. “As much as some customers and other stakeholders demand ISSUE 1 / 2020

LOGISTICS PERSPECTIVE

sustainability, the irony is that many are not willing to pay for it,” said Frank Mueller, general manager for Australia and Oceania at breakbulk specialist AAL Shipping. “At present the most effective way (to promote sustainability) seems to be regulation, but as shipping is a worldwide business, agreements are not easily harmonized or in turn are not as demanding as would be necessary,” Mueller said. Certainly, on the environmental side, where shipping has a significant impact, things do happen mainly because of regulatory drivers. And new global directives are ramping up the pressure. The International Maritime Organization’s global sulfur cap of 0.5 percent on marine fuels, or IMO 2020, which came into force on Jan. 1, is set to upend the bunker supply industry, with carriers forced to deal for the first time with the commercial effects of environmental legislation. To offset the shift to more expensive low-sulfur fuel, some companies have begun to add a bunker charge, known as a Bunker Adjustment Factor, or BAF, to contracts, which will ultimately mean higher costs for customers. “It is important that shippers and customers participate in this exercise with us and do not see the BAF as arbitrarily increased freight levels, but

rather the necessary increased cost involved with shipping their cargo to destination. Often customers accept fuel surcharges for road transport, even on short notice, but this is somehow Frank Mueller not applicable for ocean transport,” AAL Mueller said. Fears of fuel shortages and the incompatibility of low-sulfur blends for certain ship engines are also causing disquiet in the sector, while questions remain on fuel availability outside the main bunkering ports. “We started bunkering low-sulfur fuels [in 2019], way before the IMO 2020 deadline, to ensure we [were] compliant come January,” Mueller said. “But the nature of breakbulk and project heavy-lift cargo means that you often send vessels to remote and smaller ports where it may be difficult to source compliant fuel.”

ON THE NEXT HORIZON

Hot on the heels of IMO 2020 are tough new measures to decarbonize the shipping industry, which are likely to be even more disruptive to the sector than cleaner fuel rules.

To offset the shift to more expensive low-sulfur fuel, some companies have begun to add a bunker charge, known as a Bunker Adjustment Factor, or BAF, to contracts. / CREDIT: SHUTTERSTOCK.

The IMO is aiming to halve greenhouse gas emissions from 2008 levels by 2050, and to achieve this goal, commercially viable vessels powered by zero emission fuels will need to start enterCostas ing the fleet by Constantinou 2030. Moore Global Among efforts to reduce the industry’s carbon footprint, Wallenius Wilhelmsen and Danish shipping line AP Moller - Maersk have joined forces with retailers and academic groups to develop an alternative low-cost marine fuel known as LEO, a blend of lignin and ethanol. Testing the new fuel on vessel engines could begin in the second quarter of 2020, according to Maersk. “The 2050 targets seem stretching, but 30 years is a long period for technology to mature, so there is a chance to meet these targets,” said Costas Constantinou, global maritime leader at accountancy and advisory group Moore Global. “There is also a sense of collective will to achieve this within the industry, alongside external pressure for change from service users and lenders, which combine to provide the correct incentives for change.” Through regulation like IMO 2020 or market-driven initiatives like the SRTI, business and sustainability have clearly become inseparable at this point. A commitment to building a greener, more efficient and more humane sector is inextricably linked to ensuring longterm growth and profitability. And companies that refuse or fail to adapt are likely to get left behind. “One thing that we do know about the future, what we can be certain of, is that there will be shipping. But very likely it is going to look quite different from what it looks like today,” Strevens said. BB Colombia-based Simon West is a freelance journalist specializing in energy and biofuels news and market movements in the Americas. www.breakbulk.com BREAKBULK MAGAZINE 35

EMERGING MARKETS

BUZZING WITH POTENTIAL By Helen Campbell

Project Support for Cutting-edge Tech Cities

lot has changed since Silicon Valley became the name instantly associated with technology hubs. Today, new tech cities attract creatives and specialists who work in a different way, and want to live in a different way. Not for them the gray slate and glass of a 1980s skyscraper with regimented desks, their manager in a glass capsule in the corner, and home a frenzied hour’s drive each way and still with crippling rent. The tech city start-ups that flock to establish themselves in these tech communities need to attract young, mobile talent. When they get to work, their employees want inspirational breakout zones, beanbags, nap pods, pool tables in reception, even slides and giant Jenga. They want to know that they can 36 BREAKBULK MAGAZINE www.breakbulk.com

take their project team to the coffee shop next door on the spur of the moment, while also able to get to the airport in 20 minutes. And they want to be able to easily walk, cycle, scooter or take the metro to work, and to be able to bring their dog to the office – even when it’s not officially “Bring your dog to work day.” Ironically, the phenomenon of tech cities is not so much about tech, as it is about people. Tech companies know and understand the wishes of their prospective recruits to have shorter work commutes and better work-life balances than their parents, plus improved access amenities, leisure facilities on the doorstep and greener lifestyles overall. This all draws heavily on the project industry, calling for infrastructure and transportation related cargoes to create the modern-

day working dream in purpose-built hubs. “The starting point for our research is people,” says Paul Tostevin, head of world research at Savills, which recently produced its third annual Tech Cities in Motion in-depth report. “When we look at cities that we see as tech cities, we see them as vibrant cities where people want to live and work and that makes them magnets for talent. They are also major recipients of venture capital investment.”

OPEN TO BUSINESS

“The main factors are, firstly, the business environment. You need to have a city that’s open to business, and that has a good research and development culture. Actual physical linkages are quite important too, then ISSUE 1 / 2020

Belarus is building on the success of its Great Stone innovation hub to create a new tech center just outside of Minsk. / CREDIT: GREAT STONE INDUSTRIAL PARK

the softer elements come in, things like ‘buzz’ and wellness, what the café and bar scene is like, and what the culture is like,” Tostevin said. “Cost of living is important, and the talent pool is critical to the tech industries, so this means good universities. Obviously, the cost of real estate is relevant, although we give that quite a low weighting in our own index as we find it’s not a huge determinant,” he said. In addition to Silicon Valley, a number of other cities around the globe have long been known for their prominence in specific sectors for some time. For example, London is a major global center for fintech, while New York’s specialism is media tech. In China, the state’s desire to keep tech close in the interests of state control has naturally led to Beijing becoming its dominant tech city. In the U.S. and for similar reasons, Washington D.C is one to watch. In Europe, Berlin has evolved substantially over the past two decades, and the recent announcement by Tesla of its move to the German capital is likely to herald a renewed evolution and moves by more tech start-ups to piggyback on Tesla’s move. The importance of lifestyle to

tech’s target talent pool means smaller, more compact locations such as Amsterdam, Dublin and Berlin are starting to supplant the “traditional” tech cities like New York and London, simply because ease of mobility is a hugely significant factor. The lures of shorter commutes, easier access to amenities and a better work/life balance are irresistible. This sort of evolution already happened to some degree with Silicon Valley and San Francisco. “Something we have seen is people actively choosing to live in San Francisco rather than Silicon Valley, where a lot of these tech companies are located,” Savill’s Tostevin said. “In Silicon Valley, it’s much more of a car-dominated environment where you have to drive to work and you don’t have that immediate live-work situation that San Francisco offers. “Mobility is such an important factor, and this includes the very traditional, such as metro infrastructure, through to things like innovative ride-sharing models, bike and scooter share schemes. What we tend to see, and certainly in a lot of the European tech cities, are cities you can walk and cycle around easily. They are not too car-dominated and that means a live-

work balance that is certainly very appealing to the younger generations, the millennials, the so-called GenZ, which are the people that will be working in these sorts of sectors.”

FINANCE BLOCKS

The high volumes of finance involved means the development of these purpose-built cosmopolitan technical hives isn’t without hurdles, however. Plans to build a manufacturing and technology complex across 2,000 hectares just outside the Moroccan city of Tangier were quietly put on ice last year amid wrangling over its size and the structure of the new city’s ownership. The project was resurrected with the announcement in summer 2019 of a new Chinese investor. As part of China’s expansive and ambitious Belt and Road Initiative, or BRI, Chinese construction giant China Communications Construction Co. (CCCC), and its subsidiary China Road and Bridge Corp. signed a memorandum of understanding with the Moroccan government on April 26 in Beijing. Tangier is perfectly located – on the Strait of Gibraltar, a mere 15-kilometer hop from Europe and supported by the modern port www.breakbulk.com BREAKBULK MAGAZINE 37

EMERGING MARKETS

Main picture and below: Kenya is developing a tech hub in Konza, backed by Chinese investment. CREDIT: KONZA TECHNOLOGY.

of a US$666 million cash injection to finance a data center as part of a major development. The tech city will be built in Konza, about an hour’s drive from Nairobi, and will be the latest in a raft of improvements to the country resulting from heavy investment by Chinese funders in recent years. While China’s BRI has its detractors – concerned about the overreliance on Chinese funds and the dominance of Beijing – there is no doubt that struggling economies such as Kenya and Morocco are keen to secure investment and kick-start their respective fortunes and the cash has to come from somewhere. of Tangier Med, a well-developed motorway network, a high-speed train line and nearby industrial and logistics areas. Underpinned by the free trade agreements Morocco holds with the EU and the U.S., and by growing markets in Africa, the newly reawakened development is designed to attract and host 200 manufacturers, many from China but also beyond, in sectors including automotive, aeronautical, textile, chemical, 38 BREAKBULK MAGAZINE www.breakbulk.com

renewable energy and food industries. The new city will be constructed in three phases, and the move is expected to generate about US$10 billion in investment and create 100,000 jobs. More than 6,000 kilometers to the southeast, the Kenyan capital of Nairobi is already on its way to having a new technology center on its doorstep, recently receiving an additional boost, also from China, with a pledge

ALTERNATIVE THINKING

For project cargo opportunities, some less-traditional thinking is required. Tech cities do not need immediate proximity to infrastructure such as ports. “We’re now seeing smaller cities competing more evenly because they are succeeding in tech – you don’t necessarily need to be by a port or major industry or a financial center,” Tostevin said, citing Tel Aviv as an ISSUE 1 / 2020

EMERGING MARKETS

example. “Tel Aviv does have a port, but is otherwise quite remote. It is doing very well in the tech world, because it has good universities, a huge talent pool and very good links with the U.S., plus a flow of venture capital and a real start-up culture. These are factors that enable cities that have not really been featured on the world stage to do pretty well.” As a university city where students have wanted to stay and build a career, Austin, Texas, provides another good example, as do a handful of Chinese cities such as Hangzhou, Shenzhen and Chengdu – less well-known in the west than Beijing and Shanghai, but which have been able to get in on the act and grow in tech. Belarus, the landlocked nation between Poland and Russia, is the subject of yet another Chinese investment in the form of a tech city under construction just outside the capital, Minsk. This latest development is on the back of the state-backed Hi-Tech Park, established as a start-up hub and which is already making waves, helped by its special economic zone status. Minsk is a pleasant city in the center of Belarus with some highperforming universities, excellent transport systems and a cost of living below the global average; an obvious tech city choice for investors.

WHERE NEXT?

So which locations will “go tech” next? Cargo movers planning their next piece of new business should keep an eye on Cape Town, and other locations in southern Africa. Also, in South America, where property remains cheap, there is ample talent and although wider infrastructure is still developing, there may well be opportunities. Tech cities need infrastructure, and project cargo carriers will find plenty of opportunities for business. To determine the source of the next opportunity, follow the tech and follow the money. The investment that financiers are plowing into bringing these tech clusters to life is large, and an inward flood of entre capital is a reliable barometer for pinpointing the next enquiry to ship a pair of specialized cranes, 30 giant generators or 300 sparkling new metro train carriages.

Edinburgh’s lack of city center real estate has previously stymied the prospect of a tech city revolution. / CREDIT: SHUTTERSTOCK.

HIGH-FLYING POTENTIAL In 2019, Edinburgh unveiled ambitious plans for a tech city to be built next to Edinburgh Airport, bringing thousands of jobs to a disused runway at the site. Billed as a “digital quarter,” the development aims to entice major technology companies from around the world as well as encourage home-grown businesses. The site, developed by Crosswind, is expected to host a cluster of technology firms, resulting in up to 3,000 direct jobs and a further 1,000 indirect positions, and will also encompass several hundred homes and leisure facilities. For Edinburgh, an already thriving and trendy city that has significant numbers of its student population remaining after graduation, the plan will ease a lack of suitable real estate opportunities in the city center which have stymied a tech city revolution. The develop-

For the breakbulk cargo sector to share in the benefits of the continued tech boom, there is a need to think as creatively as the tech companies themselves; not necessarily requiring a beanbag or a pool table, but at least the vision to look beyond the obvious big capital cities and to think more broadly and less traditionally.

ment on the airport’s doorstep will provide young ambitious high-fliers with a community in which to live and work, a stone’s throw from the planes that will enable them to take off to collaborate with others all around the world working in similar areas. “From the small start-ups to large corporations, the opportunity to be based at a highly accessible hub in a country that offers a highly educated population and a life/work balance gives Scotland the sort of potential ‘unfair advantage’ to make us far more competitive globally,” said David Farquhar, chief executive of Intelligent Growth Solutions, which creates specialized indoor environments for the agricultural sector. Construction is expected to start around 2021, and the development will be one to watch for project cargo carriers.

Technology is the very essence of innovation and, to take advantage, project cargo must be the same. BB Helen Campbell is a freelance journalist based in London who has specialized in energy, environment, sustainability and technology for over 20 years. www.breakbulk.com BREAKBULK MAGAZINE 39

PROFILE

PLANNING HEADACHES BY CARLY FIELDS

Variables Muddy Strategic Forecasting Abilities

2 Ocean’s executives had an unenviable challenge ahead of them when they met in their boardroom in the final throes of 2019. Tasked with setting a five-year strategy plan from 2020, those executives had to balance the impact of trade wars and fuel unknowns against the desire to diversify and make inroads in new markets. For Leif Arne Strømmen, one of the executives responsible for honing that strategy, many of the pinch points in forecasting the shipping sector revolve around future fuels, and more specifically, a lack of visibility on what fuel types will be in use in 2020 and beyond. In fact, he described fuel as “the biggest swing factor for any ship operator.” “When you work on a five-year

strategy you need to think ahead, because when you build a ship, you build it for the next 25 years,” Strømmen said. “There are a lot of uncertainties around future propulsion, Leif Arne future fuels and Strømmen future IMO G2 Ocean requirements – these are extra challenges.” Autonomous ships will likely play into that 25-year timeframe as well, adding another variable to forward planning, although Strømmen maintains that fuel is still the biggest topic.

The U.S.-China trade war has played havoc with export points. CREDIT: G2 OCEAN.

40 BREAKBULK MAGAZINE www.breakbulk.com

He believes that it’s just a matter of time before a carbon tax is enforced on international transportation and shipping. “That means, customers shipping cargo on our ships will have to pay for their carbon footprint. So, if you continue to use dirty fuel with a high carbon footprint, you will be less competitive than a vessel using LNG in the future.” G2 Ocean is already trialing alternative fuels for its fleet and will soon kick off a project on biofuels.

ROLLERCOASTER RIDE

The other key factor playing into G2 Ocean’s five-year plan is volatility. It was a key word for the market in 2019, and this year looks to “enjoy” more of the same, Strømmen said. “The biggest potential for disruption is the trade war and the impact that will have.” Arild Samland, G2 Ocean’s director, gives the example of wind moves from China, where production has been shuffled around and moved from China to other Asian countries over a very short time frame, as a direct impact of the US-China trade war. While capital investment so far has been largely unaffected by the trade war, consumption has been directly hit. “If consumption goes down, you start a negative spiral where the whole world economy goes Arild Samland down the drain,” Strømmen noted. G2 Ocean ISSUE 1 / 2020

Wind components will continue to be important cargoes for G2 Ocean. CREDIT: G2 OCEAN.

Goals for G2 Ocean’s plan include growing its project business through expansion of its geographical footprint. Last year it widened its geographical reach with new offices in Houston and Hamburg, and it strengthened its projects team in Asia. In Houston, Senior Project Manager Cliff Kuhfeldt acknowledges that G2 Ocean will be “fighting for the same cargoes” as its competitors. But he has a keen eye on the LNG petrochemical projects sector within the five-year strategy window. “We’ve already positioned ourselves very well, and we have a good name in the industry. With a little luck, we will be able to secure some of these projects. One of the advantages that G2 Ocean has is a diversified fleet at our disposal,

years of experience with our staff, and the commitment by the board for this strategy.” Globally, the bright spots of petrochemical, oil and gas and onshore wind will continue to be staples in G2 Ocean’s business model, as well as its long-term contracts for pulp. But the team is also readying itself for the escalation of offshore wind projects and is looking to gain a foothold in mobility projects. Geographically, Asia will continue to be a significant source of project business, with India and China both playing key roles.

INNOVATOR’S GLORY

The ship operator has already actively embraced innovation, and has more than 10 initiatives running that

will continue into 2020. The one most heavily publicized has been its blockchain project. It ran numerous pilots in 2019 to digitalize and simplify the bill of lading process, working with a startup company and customer Manuchar. The technology, Strømmen said, worked very well and the client has said it was happy with the solution. However, the challenge has been the education journey, which needs to be replicated throughout the value chain of G2 Ocean’s costumers and to its subcontractors. “It was very easy to get customers on board,” Strømmen said. “The biggest challenge was in the next step, because after we spent time educating the customer and explaining how the platform works, they then needed to www.breakbulk.com BREAKBULK MAGAZINE 41

PROFILE

G2 Ocean has more than 10 innovation initiatives currently running. CREDIT: JAMES CLOUSE.

explain it to their customers. You need to train, educate, train, educate and train a lot of people and companies.” This carries through to port agents: in some countries if an agent doesn’t have a bill of lading in three different colors with wet ink, they are not confident in its authenticity. “It takes a lot of time to train and educate people,” Strømmen said. “And that’s why it will take a long time to roll out this technology.” But when it does take off, growth will be exponential – once people’s mindsets have been changed, once laws and regulations have been changed to reflect the different way of doing business, and once policies have evolved for P&I Clubs. “There’s a lot of things you need to do in order to 42 BREAKBULK MAGAZINE www.breakbulk.com

change the working process.” Strømmen would like to tackle smart contracts for booking notes and time charters next. He is particularly excited by the potential promised by future digital cryptocurrencies issued by national banks. “In five to 10 years’ time everyone will potentially be able to sit and transfer digital money to each other’s digital wallet via blockchain and not involving any banks. We will not need letters of credits anymore and we won’t need banks. “With a digital wallet on blockchain no one can actually take any money from you; it’s much safer. And transfer of money is done in seconds instead of days or weeks.” Smart bills of lading and letters of

credit, combined with digital cryptocurrency payments, will really change the way world trade is done in the future, he added. But the promise offered by these tech revolutions need to be factored against the operational realities of the future fuel conundrum and continued trade war uncertainty when it comes to strategic direction setting. These elements combined mean that forward planning today is as complicated as it has ever been for multipurpose ship operators. BB Carly Fields has reported on the shipping industry for the past 20 years, covering bunkers and broking and much in between. ISSUE 1 / 2020

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EXECUTIVE SUMMARY

HOT SPOTS: PROJECT SECTORS AND MARKETS

WSP Provides ‘ Top-Down’ Wind Energy Analysis BY JOHAN-PAUL VERSCHUURE, MERDAN HAYDAROV

ith this issue, Breakbulk kicks off a new feature, in cooperation with the maritime advisory team of consultant WSP, providing a “top-down analysis” by project cargo sectors by region, focusing on “hot spots” for growth and general directions of development. In this inaugural feature, the focus is wind energy, which has faced a surge in development, production and technological progress. Johan-Paul Verschuure, technical director, maritime, WSP, explained the commodity-based approach to developing global trading. “Breakbulk is a

very diverse commodity group which varies greatly depending on the region. Where one region might see a strong focus and surge in offshore wind related cargo and/or oil and gas related cargo, another may benefit from infrastructure investment campaigns, particularly in struggling economies where governments may ramp up infrastructure investments.” But things can quickly change. Because breakbulk is project and investment related, “it’s much more volatile than conventional consumer goods,” he added. “Continuous monitoring of market opportunities, extended business development efforts

and a flexible approach to attract the cargo are essential.”

ASIA ‘PROMISING’ FOR WIND

In addressing WSP’s exploration of wind energy, Verschuure noted the overall outlook for Asia is more promising than in more mature markets. In general, Europe is generating limited new investment opportunities which has led to a subdued breakbulk sector. However, in terms of wind energy there is definitely more potential, he explained. Merdan Haydarov, senior consultant, WSP, elaborated: “In the last

Hotspots Summary

Region

Overal Score 1-5 Country

Hotspots

Policy

East Asia

China

Jiangsu, Fujian, Guangdong, Zhejiang

• 5 gigawatts (GW) by 2020 (10 GW construction capacity). • 100+ GW by 2040.

Southeast Asia

Taiwan

Chang-hua, Tai-Chung, Miao-li

• 5.5 GW by 2025 and 10 GW by 2030.

Southeast Asia

Vietnam

Ben Tre, Tra Vinh, Soc Trang, Bac Lieu, Ca Mau

• Expressed interest in the World Bank’s offshore wind emerging markets fund. • Promoting onshore wind power until 2030 and assess offshore wind resources potential as an electricity solution post 2030. Note: Vietnam’s Power Development Plan (Revised No. 7) aims to derive 10 percent of its electricity from renewable energy by 2030, with 6 GW from wind. Power Development Plan No. 8 is expected to increase this target, but currently offshore wind potential is not incorporated.

Southeast Asia

Philippines

N/A

Note: Electricity prices are among the highest in Southeast Asia, due in large part to dependence on expensive imported diesel, oil, and coal. The government renewable energy target is 50 percent by 2030, with the majority coming from hydro (8.7 GW) and geothermal (3.5 GW), followed by wind (2.4 GW).

Northeast Asia

South Korea

Gyeonggido, Chungcheongnamdo, Jeonrabugdo, Jeonranamdo, Gyeongsangnamdo, Busan, Ulsan, Gyeongsangbugdo

• To have 13 GW of offshore wind installed by 2030, and has set a target of at least 30 percent renewable energy by 2040. • Planned capacity reaching 25 GW by 2040.

44 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 1 / 2020

few years the offshore wind sector in particular has experienced dramatic technological progress. Compared with 2010, units with much bigger capacities are being installed, and the average size of units in offshore wind farms is increasing. These rapid developments are having a great impact on the overall cost of projects globally, which increase the sector’s competitiveness compared with other sources of power. “This is remarkable as not so long ago cost had been one of the key barriers to the sector’s development. Further technological advances are expected to grow the sector beyond the currently stated government policies,” Haydarov said. However, many energy analysts believe that wind energy has peaked and potential demand among established markets will begin to taper. “With the slowdown in economic end demand, we may very well see infrastructure spending by governments pushed up the agenda in the coming years,” Verschuure said. “So to assign an overall score is complex. For example, more investment

opportunities are available in South America, but wind energy is still underdeveloped. Over there, the risk factor of governments and the political situation must be factored into the potential of the sector. “In general, I see the developing/ emerging economies as more of a hotspot for breakbulk than the developed ones. It all depends on how much investment is being made into infrastructure and general industry relative to the current status. This is more the case in Asia than in Europe or the U.S., especially when traditional oil and gas industry related investments taper off in line with the entire energy transition,” he concluded.

BREAKING IT DOWN

In this issue’s analysis, WSP scores regions by wind-related breakbulk growth on the following parameters: • “Overall Attractiveness” represents the summary score. • The “Country” and “Hotspots” columns summarize some of the key places where projects are moving. • “LPI Score” is the average Logistic Performance Index of the countries

in the region. Improvements here are generally tied to investments in infrastructure and wider development initiatives which generate breakbulk cargo. A higher increase is typically a good proxy for what is coming up in the next couple of years. • “Decrease in Country Risk Factor” is the risk profile of the region (averages of the countries) and how that is developing. This is a forwardlooking parameter on what is expected through to 2024. An expected decline in risk factor is typically good for foreign direct investment and general investments and therefore for breakbulk moves, while an increase in risk factor typically flags that investments will be put on hold. • “Infrastructure Requirement Score” is based on an analysis of quality of and spending on infrastructure. High-quality infrastructure and high infrastructure spending as a percentage of GDP will likely not see increased breakbulk traffic in support of infrastructure activity. Low spending and low quality infrastructure, but with more requirements, however, may see a boost in construction activity.

LPI Score (1-5)

Decrease in Country Risk Factor (1-5)

Infrastructure requirement score (1=less requirement5=high requirement)

• China has seen a surge in offshore wind installations. Last year China installed more new offshore wind power than any country in the world. • The rate at which China adds new offshore capacity is planned to double from 2 to 4 gigawatts a year by 2025.

More than 10 MW of offshore wind capacity is in various stages of development/planning.

• More than 7 GW of offshore wind capacity is in various stages of development/planning.

Notes

• Potential: Excellent resource off southwest coast; existing nearshore development; strong potential for floating and fixed.

Potential: Best potential in the north and central areas; potentially synergies with regional development (Taiwan, Vietnam).

Over 12 MW of offshore wind capacity is in various stages of development/planning.

www.breakbulk.com BREAKBULK MAGAZINE 45

EXECUTIVE SUMMARY

Overal Score 1-5 Country

Hotspots

Policy

Northeast Asia

Japan

Hokkaido, Aomori, Akita, • 4 GW of installed capacity by 2040. Yamagata, Niigata, Toyama, • Groundwork is being laid for future offshore wind development. Simane, Hukuoka, Saga, Nagasaki, Kagosima, Mie, Sizuoka, Tiba, Ibaraki, Hukusima, Iwate

South Asia

India

Tamil Nadu, Gujarat

• 5 GW by 2022 and 30 GW by 2030. • 16 GW by 2040. Note: It will be challenging to meet the 2022 target given the long development cycle for offshore wind. The FOWIND studies look at project feasibility in the areas off Tamil Nadu and Gujarat.

South Asia

Sri Lanka

N/A

• Expressed interest in the World Bank’s offshore wind emerging markets fund. Note: The Sri Lankan government has a target to generate electricity with 100 percent renewable energy by 2050.

North America

USA

New York, Massachusetts, New • 22 GW by 2030. Jersey, Connecticut, Virginia, • 38 GW of offshore wind capacity by 2040. Maryland, Rhode Island, California

North America

Canada

Ontario, New Brunswick, Prince • Groundwork is being laid for future offshore wind development. Edward Island, New Foundland Island, British Columbia

East Coast South America

Brazil

Ceara, Rio Grande do Norte

• Expressed interest in the World Bank’s offshore wind emerging markets fund. • In 2018, Brazil announced it aims to source 45 percent of its energy from renewable by 2030, with 23 percent derived from wind, solar, and biomass.

Southern Africa

South Africa

N/A

• Expressed interest in the World Bank’s offshore wind emerging markets fund. Note: A draft of the Integrated Resource Plan was updated in March 2019 and shows a substantial increase in renewables with wind power rising to 15.1 percent of generation by 2030. However, there is no mention of offshore wind.

North Africa

Morocco

North Europe

Multiple

Germany, UK , France, Sweden, Country-specific offshore wind policies: Denmark, Netherlands, Ireland, • United Kingdom: Up to 30 GW by 2030. Belgium • Germany: 15-20 GW by 2030. • Netherlands: 11.5 GW by 2030. • Denmark: 5.3 GW by 2030 2019. • France: 4.7-5.2 GW by 2028. • Belgium: 4 GW by 2030. • Ireland: 3.5 GW by 2030. European Union policy: To increase offshore wind capacity to about 130 GW by 2040.

South Europe

Multiple

Spain, Italy, Portugal

Country-specific offshore wind policies: • Italy: 0.9 GW by 2030. European Union policy: To increase offshore wind capacity to about 130 GW by 2040.

East Europe

Multiple

Poland, Romania, Austria

Country-specific offshore wind policies: • Poland: Up to 5 GW by 2030. European Union policy: To increase offshore wind capacity to about 130 GW by 2040.

Note: As of 2014, Morocco imported about 90 percent of its energy needs. Morocco’s national strategic objective is to improve security of supply by reducing dependence on energy imports, including increasing use of renewable sources for electricity production.

46 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 1 / 2020

EXECUTIVE SUMMARY

LPI Score (1-5)

Decrease in Country Risk Factor (1-5)

Infrastructure requirement score (1=less requirement5=high requirement)

Over 12 MW of offshore wind capacity is in various stages of development/planning.

Over 3 MW of offshore wind capacity is in various stages of development/planning.

Potential: Strong winds and shallow waters suggest potential for fixed foundation. But limited power demand affects scalability.

Over 13 MW of offshore wind capacity is in various stages of development/planning.

Over 3 MW of offshore wind capacity is in various stages of development/planning.

• There are some dormant plans for over 10 MW capacity. No recent news. • Potential: Excellent potential with shallow waters close to demand centers and a strong supply chain potential.

Potential: High wind speeds but deep waters will favor floating foundations. Few regional development synergies likely.

Potential: Excellent wind speeds and suitable depths along the Atlantic Coast; regional synergy possible with Spain and Portugal.

Projected total wind (incl. onshore) capacity requirement: 207+ GW by 2030 and 247+ GW by 2040.

Projected total wind (incl. onshore) capacity requirement: 50+ GW by 2030 and 83+ GW by 2040.

Projected total wind (incl. onshore) capacity requirement: 27+ GW by 2030 and 37+ GW by 2040.

Notes

www.breakbulk.com BREAKBULK MAGAZINE 47

PROFILE

HEAVY AMBITIONS BY CARLY FIELDS

Casting Off Confined Trade Shackles

AL Shipping has come a long way since its Netherlands beginnings in 1995, when its sole purpose was to launch the first dedicated multipurpose liner service on the Australia-Asia trade. With a start-up fleet of just three chartered-in vessels, AAL kicked off with a service between Southeast Asia and Papua New Guinea, Queensland and the Northern Territories of Australia. This year, celebrating its 25th anniversary, its niche is considerably wider … and heavier. It has positioned itself squarely in the mega-size multipurpose vessel tonnage sector, serving long-haul trades. Cementing its broader focus, it added four Warnow-Class, or W-Class, 33,271 deadweight-tonne ships to its fleet in October, boosting its operating tonnage to just under 740,000 dwt. Speaking to Breakbulk, General Manager Felix Schoeller explains the significance of the latest additions. “Our strategy since 2014 has been to grow our global services and footprint organically, as opposed to actively courting M&A activity. In practice, this has meant expanding our infrastructure and representation in key markets – boots on the ground – and increasing our capacity and regularity on target trade lanes. Where there has been mutual benefit, we have cooperated with other carriers on Felix Schoeller specific routes.” Over the past AAL 48 BREAKBULK MAGAZINE www.breakbulk.com

three years, AAL has brought in 14 ships under commercial management, allowing its fleet to reach a critical size and make it a “force to be reckoned with in target markets,” Schoeller said. “Today, the fleet comprises 25 MPVs of multiple sizes that offer the market flexibility and choice for all cargo types.” AAL has worked hard to throw

off the shackles of its historic Austral-Asia focus. While it still has a strong foothold in Asia, it has spent the last five years building a presence in the Americas and in Europe. “We have been on the U.S. West Coast and U.S. Gulf for the last five years on pretty much a monthly basis and our Asia-Europe and Europe-Asia business has been successful and is growing.” Warnow Jupiter – one of AAL’s existing fleet of ‘W-Class’ vessels – transporting a cargo of 131-meter-long wind towers from China to Sweden. CREDIT: AAL.

ISSUE 1 / 2020

NEW LOCATIONS

Next up are the Atlantic trades and other emerging markets, seen as “steppingstones” for AAL. The important thing is that we have the right tonnage and regularity on the trade routes in which our customers are active,” Schoeller said. That said, sustainability is paramount to AAL’s growth strategy. “We are ambitious and entrepreneurial, but also realistic about today’s challenging market of global uncertainty.” Those opportunities might well improve this year, but with caveats. Schoeller sees an uplift in 2020 if investor confidence holds, if the trade war between China and the U.S. is resolved and if the bulk market remains steady and stable. “There are a lot of ifs, but we are very positive about the number of

requests for tenders and quotations that we are seeing. If investor confidence stays firm a lot of projects should go ahead in 2020.” Then, by the end of 2020 and the start of 2021, the project pipeline should come into play, Schoeller added. But that’s not to say that there isn’t any breakbulk business to be had in the meantime. “Everyone assumes that if there’s a mediocre year then ships must be empty. The reality is that ships are not empty, but the market for suitable cargo is much more competitive than ever,” he said. Schoeller reflected on the situation in 2017 when much of the MPV tonnage was out in the charter market. “That made it very competitive and put freight rates under pressure for shipowners.”

Now, most of the ships that were controlled by non-vessel-operating common carriers have found a home with operators leading to a better balance. However, his biggest fear is that operators with short memories will return to the shipyards to place speculative orders as soon as the market turns. While he accepts that there may be orders for new ships for specific trades or projects, he urges “no crazy newbuildings over the next two years.” That will be the key to stabilising the market and proving AAL’s move on mega MPVs. BB Carly Fields has reported on the shipping industry for the past 20 years, covering bunkers and broking and much in between.

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www.breakbulk.com BREAKBULK MAGAZINE 49

CASE STUDY

SUM OF ITS PARTS Sarens’ ‘Big Carl’ Makes UK Debut

ransporting the world’s largest crane is no more difficult than any other project cargo – provided meticulous preplanning is undertaken and detailed coordination strategies are in place. The crane in question, the Sarens SGC-250, is known as Big Carl after an executive at the Sarens company in Belgium that built it. It was conceived and developed to support the growing trend towards modularization in construction. Big Carl is 250 meters tall and can carry 5,000 tonnes in a single lift – the equivalent of 32 single-story houses, or 1,600 cars. At a radius of 100 meters, the crane can still lift 2,000 tonnes. It has 128 wheels for slewing and lifting and 96 wheels for traveling. In short, it is a beast.

BY DAVID WHITEHOUSE

Last year, Big Carl was divided into modules and moved from Ghent, Belgium, to Avonmouth, UK, part of Bristol Port, for temporary storage before a 45-mile trip to Hinkley Point in Somerset on the Bristol Channel. Broken down, it totaled about 300 parts. The plan is for it to be on site for the next four years for construction work at the Hinkley Point C nuclear power station. On arrival at Avonmouth, Collett & Sons worked to a discharge plan from ship operator Briese and the cargo was offloaded from Monika without disruption to the wider operations of the port. And while the components weighed more than 3,000 tonnes in total, “the project for us was no different to anything else,” said

Miles Adams, commercial manager at The Bristol Port Co. Bristol Port has invested in new cranes to meet the ongoing demands of the construction of Hinkley Point C, the largest and most complex civil engineering project in the UK. Within permitted development rights for cargo operations, Bristol can carry out development without needing to ask for planning permission. The port has also set aside land to store outsized loads that can’t be moved by road, which can be transported by barge to the site.

EARLY PLANNING

Planning for the move started in early 2019 when all of the stakeholders met at Avonmouth to discuss the

Broken down, Sarens’ Big Carl totals about 300 parts and its move required meticulous planning. CREDIT: COLLETT & SONS; PORT OF BRISTOL.

50 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 1 / 2020

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CASE STUDY Top: By getting as much information about the design of the cargo beforehand, Briese was able to plan precisely. Bottom: Sarens provided a detailed packing list containing dimensions and weights of the different parcels. CREDIT: COLLETT & SONS; PORT OF BRISTOL.

“As long as everybody is informed about major steps and special requirements, a solution can be found and a project can run well.” – Hella Bruns, Briese Chartering

52 BREAKBULK MAGAZINE www.breakbulk.com

project operations, said Liam McLoughlin, head of projects at Collett & Sons. “The key to running large-scale project operations of this kind is being afforded a suitable lead time prior to the operations in order to plan,” McLoughlin says. “If managed correctly, this lead time can be used to engage the various stakeholders and find out their requirements and expectations. Once established, a clear line of communication assists with the pre- and live operational planning.” In the initial stages, the discharge berth was selected and the access to the storage area at the port was studied and assured by the Collett project team. Subsequently, a traffic management plan was devised and agreed by all parties. Sarens provided shipping line Briese with a detailed packing list containing dimensions and weights of the different parcels, drawings and information including information on which pieces were the heaviest, and which were weather sensitive and had to be loaded under deck. This information formed the basis for ship selection and then the arrangement of a stowage plan, which Hella Bruns, quality manager at Briese Chartering, likens to playing the old video game favorite Tetris. By getting as much information about the design of the cargo beforehand, Briese was able to plan precisely, to keep all the parties informed, and to be prepared for loading, cargo securing, and discharging, Bruns said. Briese also had to allow for the fact that Avonmouth is a tidal port, meaning that the vessel was only able to enter at certain times. At Avonmouth, it took Yorkshirebased Collett two 12-hour day shifts to unload all the components from the ship, with the firm using all the port’s available crane services, including cranes, mobile cranes and specialized transport vehicles. ISSUE 1 / 2020

CASE STUDY

The long working hours needed for the discharge and for other port operations meant that additional standby operatives were required to complete the handling. There was also a requirement for vehicles with side protection as drivers and operatives associated with the crane move needed to get onto the trailer beds for lashing and slinging. Coordination of the move was managed by a Collett project manager, who liaised on a daily basis between the port and the contractor in the laydown area. A pre-program was issued, but due to the complex nature of the operation, it had to be revisited on a regular basis and revised. Each revision was sent forward for information and discussion.

OUT OF THE WAY

From the early stages and throughout operations, the team was sensitive to the welfare of other users of the port, Collett’s McLoughlin said. For

example, the plan laid out a transit route from the quay to the laydown area. The route effectively saw the vehicles double back on themselves prior to delivery to the laydown area. While this wasn’t the most direct route, it made use of open spaces at the port for the vehicles to perform necessary special maneuvers and it avoided crossing the path of other port traffic. This meant that disruption to other port users was avoided, McLoughlin said. Collett also undertook a familiarization process in advance of the deliveries to Hinkley Point C. The site, which receives hundreds of deliveries each week, had a number of protocols that needed to be followed, McLoughlin said. These included 48 hours’ notice of deliveries, which had to include the vehicle registration and full disclosure of driver details and use of the Hinkley Point delivery management system which provided dedicated routes for the deliveries, as

well as dates and timeslots. “Successfully managing and providing a program to meet the site requirements was a challenge that took the time of a dedicated Collett project manager throughout the seven months,” McLoughlin said. For Briese’s Bruns, relationships mattered. She pointed to the longestablished relationship of trust with Sarens as the foundation for the smooth running of this project. “As long as everybody is informed about major steps and special requirements, a solution can be found and a project can run well,” she said. The bottom line, as McLoughlin puts it, is “working as a collective, with engagement throughout, is a must.” BB David Whitehouse is a journalist who spent 18 years with Bloomberg, before turning to a career as a freelancer.

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BACK PAGE

EASE OF DOING BUSINESS RANKING 2020

The World Bank Group’s Doing Business 2020 rankings measure regulations across 150 economies in 12 business regulatory areas to assess the business environment in each economy. Ten of these indicators were used to estimate an ease of doing business score this year, over the 12 months ending April 30, 2019. This is the 17th edition of a study that has motivated governments worldwide to undertake business reforms with the goal of bolstering sustainable economic growth. RANK ECONOMY

EODB SCORE

RANK ECONOMY

EODB SCORE

RANK ECONOMY

EODB SCORE

New Zealand

86.8

Croatia

73.6

101 Uruguay

61.5

Singapore

86.2

Hungary

73.4

102 Fiji

61.5

Hong Kong SAR, China

85.3

Morocco

73.4

103 Tonga

61.4

Denmark

85.3

Cyprus

73.4

104 Namibia

61.4

Korea, Republic

84.0

Romania

73.3

105

61.3

United States

84.0

Kenya

73.2

106 Tajikistan

Georgia

83.7

Kosovo

73.2

107 Vanuatu

61.1

United Kingdom

83.5

Italy

72.9

108 Pakistan

61.0

Norway

82.6

Chile

72.6

109 Malawi

60.9

Sweden

82.0

Mexico

72.4

110

60.7

Lithuania

81.6

Bulgaria

72.0

111 Dominica

60.5

Malaysia

81.5

Saudi Arabia

71.6

112 Djibouti

60.5

Mauritius

81.5

India

71.0

113

Antigua & Barbuda

60.3

Australia

81.2

Ukraine

70.2

114

Egypt, Arab Rep.

60.1

Taiwan, China

80.9

Puerto Rico (U.S.)

70.1

115

Dominican Republic

60.0

United Arab Emirates

80.9

Brunei Darussalam

70.1

116 Uganda

60.0

North Macedonia

80.7

Colombia

70.1

117

60.0

Estonia

80.6

Oman

70.0

118 Ghana

Latvia

80.3

Uzbekistan

69.9

119 Bahamas

59.9

Finland

80.2

Vietnam

69.8

120

59.8

Thailand

80.1

Jamaica

69.7

121 Eswatini

Germany

79.7

Luxembourg

69.6

122 Lesotho

59.4

Canada

79.6

Indonesia

69.6

123 Senegal

59.3

Ireland

79.6

Costa Rica

69.2

124 Brazil

59.1

Kazakhstan

79.6

Jordan

69.0

125 Paraguay

59.1

Iceland

79.0

Peru

68.7

126 Argentina

59.0

Austria

78.7

Qatar

68.7

127

58.5

Russian Federation

78.2

Tunisia

68.7

128 Barbados

57.9

Japan

78.0

Greece

68.4

129 Ecuador

57.7

Spain

77.9

Kyrgyz Republic

67.8

130

China

77.9

Mongolia

67.8

131 Nigeria

France

76.8

Albania

67.7

132 Niger

56.8

Turkey

76.8

Kuwait

67.4

133 Honduras

56.3

Azerbaijan

76.7

South Africa

67.0

134 Guyana

55.5

Israel

76.7

Zambia

66.9

135 Belize

55.5

Switzerland

76.6

Panama

66.6

136

Solomon Islands

55.3

Slovenia

76.5

Botswana

66.2

137

Cabo Verde

55.0

Rwanda

76.5

Malta

66.1

138 Mozambique

55.0

Portugal

76.5

Bhutan

66.0

139

54.6

Poland

76.4

Bosnia & Herzegovina

65.4

140 Zimbabwe

54.5

Czech Republic

76.3

El Salvador

65.3

141 Tanzania

54.5

Netherlands

76.1

San Marino

64.2

142 Nicaragua

54.4

Bahrain

76.0

St. Lucia

63.7

143 Lebanon

54.3

Serbia

75.7

Nepal

63.2

144 Cambodia

53.8

Slovak Republic

75.6

Philippines

62.8

145 Palau

53.7

Belgium

75.0

Guatemala

62.6

146 Grenada

53.4

Armenia

74.5

Togo

62.3

147 Maldives

53.3

Moldova

74.4

Samoa

62.1

148 Mali

52.9

Belarus

74.3

Sri Lanka

61.8

149 Benin

52.4

Montenegro

73.8

100

Seychelles

61.7

150 Bolivia

51.7

Trinidad & Tobago

Côte d’Ivoire

West Bank & Gaza

Papua New Guinea

Iran, Islamic Republic

St. Vincent & Grenadines

St. Kitts & Nevis

61.3

60.0

59.5

57.1 56.9

Source: Doing Business database, Doing Business 2020, World Bank Group, www.worldbank.org 54 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 1 / 2020

The Publica tion for the Ind Project Sup ply Chain Ind ustrial ustry Issue 4 / 2019

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The Publica tion for the Ind Project Sup ply Chain Ind ustrial ustry Issue 5 / 2019

PROJECT CARGO CASE STUDIES REGIONAL REPORTS MARKET ANALYSIS AND COMMENTARY PORTS & TERMINALS ENERGY INFRASTRUCTURE OCEAN CARRIERS ROAD/RAIL/BARGE/AIR TECHNOLOGY & EQUIPMENT

FAIR WAGE FOCUS

Striking Gend er Pay Parity Balan ce

TENDERING

WITH A TW

IST

PERIOD OF

MPV STABIL

ITY?

US WIND CA

RGO GUSTS

BREAKBULK EVENTS

The Publica tion for the Ind Project Sup ply Chain Ind ustrial ustry Issue 6 / 2019

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THE FINAL FRONTIER The Pioneers Tak

ing Cargo int o Space

Celebrating Tomor

The Publica tion fo Project Sup ply Cha