Breakbulk Magazine Issue 6/2019 by Breakbulk Events & Media

The Publication for the Industrial Project Supply Chain Industry

Issue 6 / 2019

THE FINAL FRONTIER The Pioneers Taking Cargo into Space

Celebrating Tomorrowâ&#x20AC;&#x2122;s Leaders! Special Section Inside

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IN THIS ISSUE

Cover Story

12 LOGISTICS IN SPACE Supply Chain Extending to Moon, Mars, Beyond

20 FINANCING

46 SHIPPING TRENDS

Tips for U.S. Ex-Im Clients

New Frontier Boom for Project Cargoes

CARGO QUID PRO QUO

24 EXECUTIVE SUMMARY

MUTED STRENGTHENING

Pockets of Hope, But Subdued Revelry

42 LOGISTICS PERSPECTIVE

CALM AT THE COLD FRONT Working the World’s Most Remote Construction Site

THAWING POTENTIAL

50 ENERGY UPDATE

RENEWABLES POWERING MOVES

Costa Rica Steers Towards Green Future

56 PROFILE

ANTI-CORRUPTION ANGEL Putting an End to Exploitation

06 EDITORIAL

08 CONVERSATION 54 LEGAL SPOTLIGHT 60 HEARD AT BREAKBULK AMERICAS 66 BACK PAGE

4 BREAKBULK MAGAZINE www.breakbulk.com

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ISSUE 6 / 2019

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EDITORIAL

INDUSTRY’S IN GOOD HANDS Breakbulk Events & Media takes seriously its role in educating and advancing leadership for the breakbulk, heavy-lift and industrial project supply chain industry. It has been no secret that there exists a generational gap within the industry, between those who are nearing the finish line of their career arcs, and those who need to be guided along to fill the talent gap – often sooner than anticipated. Through event content on our Main Stage and Tech Hubs, workshops, Education Days and coverage of analysis, Gary Burrows best practices and innovation within each magazine’s pages, Breakbulk seeks out innovators and industry leaders, builds community, and serves a role of advocacy now and for the future. At Breakbulk Americas in Houston, we honored 11 rising executives who industry leaders targeted as the next generation. Breakbulk NextGen recipients represent all areas of the industry including beneficial cargo owners; engineering, procurement and construction; intermediaries; ocean carriers; motor carriers; and marine operations. On pages 27-41, we provide a special section commemorating those honored, and include responses from each recipient on their perceived roles in the industry. It’s a highly enlightening read, and there are some interesting insights shared. For starters, the recipients’ routes to the industry were from diverse paths, some direct and intentional, others more circuitous and indirect. But all led to a deep passion, love and enthusiasm for this highly complex, specialized industry. One key takeaway is how these successful and talented people have not only been embraced by mentors, whose impact stretches beyond the mere 6 BREAKBULK MAGAZINE www.breakbulk.com

nuts-and-bolts of their careers, but the NextGen also embrace their roles to pay it forward as mentors to those who will come after. In our Breakbulk Americas recap (pages 60-64), panelists from a session entitled “Our People, Our Future” spoke of the relationship between mentor and mentee. Bertling Logistics’ John Hark likened it to parenting or a committed relationship. It is built on honesty and trust and the effort is reciprocal, he said, a shared intellectual and emotional investment in their successes and wellbeing. More than one respondent echoed that they benefitted from leaders and mentors that recognize mistakes happen and are accepted in the face of learning – allowing people to fail so they can be smarter tomorrow. The NextGen also offer interesting insights on the future issues of our industry, and their continuing role to develop our industry leaders is an important aspect of that, along with recognizing a chronic need for proper infrastructure, and improving the industry’s stature with customers as well as potential talent. Finally, these leaders show they have developed and embraced a management style that reflects their talents, beliefs and personalities, while presenting an effective and compelling role in those they direct and nurture. This was a fulfilling project, but it is also exciting to reflect that recognizing the best and brightest is just a start. These people are already enmeshed within their companies as well as playing roles within industry organizations, and participating in Breakbulk events and content, whether speaking, serving on advisory boards, serving as sources for further coverage, or otherwise providing their insights and their talents toward to the betterment of the industry. It demonstrates that there’s a bright future ahead.

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 Greg Borossay Michael King Lori Musser Susan Oatway 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

ISSUE 6 / 2019

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.

‘SCARY’ SLIDES SHOW SHIFTING EPC LANDSCAPE During the Procurement Executives Group’s keynote presentation at Breakbulk Americas, three slides provided a stark illustration of how drastically the engineering, procurement and construction industry has changed over the past 50-plus years. PEG, a forum for the executive leadership of procurement and supply management in the engineering and construction industry, was presenting its industry forecast on the event’s opening day. During an overview, Kent Danforth, director of procurement, S&B Engineers & Constructors, highlighted a list of 400 EPCs ranked by Engineering News-Record in 1965. “In 1965, the year I was born – nobody do the math – this is how many engineering and construction firms we were working with,” Danforth said. “Your parents worked for them. Your grandparents worked for them. Maybe some of you might of worked with them.” On the next slide, the majority of the companies on the 400-strong list had been grayed out, leaving just a few dozen highlighted names. “That’s 2019. There’s 38 of them left. 38 out of 400. That’s a hell of a scary little slide there, isn’t it? That’s

1965 400 38 2019

Kent Danforth.

how the nature of the world has gone,” he said. An earlier slide listed selected EPC mergers and acquisitions since 2011. In that time, 25 companies condensed to eight remaining names, with six of the eight being PEG members.

/ CREDIT: ITE GROUP

Conversely, PEG, founded in 1994 with seven member firms, has grown to 16 members today. According to ENR’s rankings, four of the top 10 design firms and five of the top 10 contractors are PEG members. (See page 61 for our Breakbulk Americas coverage) BB

TOEPFER TRANSPORT MULTIPURPOSE SHIPPING TIME CHARTER INDEX

RATE PER DAY

The index is based on a 12,500-deadweight-ton MPP/HL “F-Type” vessel for a six-to 12-month time charter, and represents the monthly assessment from operators, owners and brokers. $7,593

$7,508 $7,385

$7,325 $7,247

May 2018 Jun

$7,216 Jul

$7,518

$7,499

$7,457

$7,610

$7,529 $7,524

$7,476

$7,490 $7,547

$7,515

$7,440

$7,294 Aug

Sep

Oct

Nov

Dec Jan 2019 Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

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

8 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 6 / 2019

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Statue of Liberty Torch We moved the Statue of Liberty’s original torch from high atop the statue to the new museum at the base of Ellis Island.

CELEBRATING 60 YEARS OF SERVICE: 1960 n 2020

CONVERSATION

Cautious Innovators

Need to Capitalize on Tech Opportunities

BY SVEN HERMANN

ogistics service providers, or LSPs, are optimistic regarding the current breakbulk market and their company prospects, although they are wary of digitization issues and of finding ways to differentiate through innovative solutions and processes. According to a market survey focused on logistics service providers conducted earlier this year by consulting company ProLog Innovation in cooperation with NBS Northern Business School Hamburg, more than 80 percent of respondents said that they believed in a positive and growing market for breakbulk. Less than 3 percent expected a negative market. The survey counted 67 replies from LSPs in the breakbulk and projects logistics sector. The regions with the greatest potential, according to the respondents, were Europe and Southeast Asia followed by Africa, Middle East and North America. Asked what their greatest challenges were, respondents named cost pressure (42 percent), digitization (14 percent), quality (13 percent), and finding employees and talent. Other challenges that did not rate so highly included managing customer expectations and time pressures. When the survey participants were asked how they planned to differentiate themselves in the future, 41 percent of respondents said with innovation. Second were quality and process and price transparency, tied at 22 percent.

What Do You Think Restricts Innovation the Most for the Logistics Service Providers? Cost 33% Misaligned incentives 5.5% Short contract durations 13.1% Infrastructure 16.5% Data quality/reliability 9.9% Lack of communication and transparency 22% Source: ProLog Innovation

10 BREAKBULK MAGAZINE www.breakbulk.com

Only one in 10 respondents saw price as the most important criteria, while only 5 percent cited differentiation through sustainability as a promising way to gain competitive advantage.

PERFORMANCE METRICS

In more general terms, the majority of respondents – 70 percent – felt LSPs were more innovative than freight owners in the breakbulk business. However, ranking their own marketing performance, LSPs were more conservative: 50 percent of respondents rated it as “good to very good” and 34 percent answered with “satisfactory.” The survey asked respondents where innovation efforts should be focused. The top three rank put digitization of processes (25 percent) at the top, and use of new technologies and development of new business models tied in second place (both at 20 percent). Surprisingly, sustainability was pegged at No. 4 at 18 percent. Regarding the use of new technologies, ongoing technology projects and prototyping, 31 percent cited Big Data as the technology with the most potential, followed by optimization algorithms at 16 percent, blockchain at 10 percent, augmented and virtual reality at 9 percent, and sensor technologies at 9 percent. Fifteen percent of respondents answered that their company is not involved in a technology innovation project. Asked to name the biggest obstacle to innovation, 33 percent of respondents listed costs, 22 percent listed lack of communication and transparency, and 17 percent listed own infrastructure. Regarding their prospects for the next five years, 74 percent of respondents anticipated that they would be high or very high, confirming the positive market sentiment evident at Breakbulk’s events this year. Yet despite that optimism, LSPs in the breakbulk business will face some major innovation and technology challenges and changes in the coming year. BB Sven Hermann is professor for logistics and supply chain management at NBS Northern Business School Hamburg, and managing director of ProLog Innovation.

ISSUE 6 / 2019

CONVERSATION

Dealing with Different

Contribute to, Don’t Resist, Change

CREDIT: SHUTTERSTOCK

t is said that there are two certainties in life: death and taxes. I disagree. I think that there are three: death, taxes and change. The first two are unpleasant. The third – change – need not be. No one likes change. People are comfortable with the rhythm of their lives: with things they know, with how they do things, with the people they know, with the places they go, and where they work. Anything that disrupts that is uncomfortable. The problem is that change is inevitable; it happens on a daily basis. You can fight against it all you want, but change will come. It is how you react to it that makes the difference in whether the change is a positive for you or a negative. When companies merge or are sold, there are going to be significant changes in leadership, staffing, departmental structure, procedures, core values, culture and benefits. It doesn’t matter which side you’re on – whether the owner or the owned – things are going to change for you. You might be demoted, reassigned or even released altogether depending on the degree of your redundancy. Work procedures will be different, key performance indicators will be measured in unforeseen ways, performance evaluations will not conform to the way you have historically been performing. The phrase I’ve heard most often when a procedure or routine is changed is, “but that’s the way we’ve always done it.” Well, horses were used as transportation for thousands of years but that changed with the advent of the automobile. And communications were always done by written or verbal messaging, but that changed with the invention of the telephone and then the computer. Embracing change is a challenge. It’s hard to embrace what you don’t know and what, in the short term, may not appear to be to your advantage. However, if you don’t embrace it, the change will occur anyway and you will have had no opportunity to add your input. You will be seen as a resistor not a contributor. And being a “team player” is a desired skill set.

But what if you are suddenly let go from your job? Being released without warning is a serious gut-punch. And it’s especially frightening if you have a family, don’t have an emergency fund or you’re being let go during an economic downturn where your future job prospects are lower. It’s hard to accept or embrace such a change. And, yet, where the door has closed, a window will open. That’s when you reassess your options and really think about what it is you want to do. We spend so much of our time blinkered at our jobs, focused on the now. We rarely look at the “what if?” Change has a way of messing up carefully laid plans. As they say, “life is what happens when you are making other plans.” If a change happens in your life, no matter how dreadful it may be, embrace it. By taking off your blinkers and looking around, you may be surprised and find something wonderful. BB

BY MARGARET VAUGHAN

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.

www.breakbulk.com BREAKBULK MAGAZINE 11

COVER STORY

BY PAUL SCOTT ABBOTT

LO GI ST ICS IN SPACE Supply Chain Extending to Moon, Mars, Beyond

ore than a half-century after man first walked on the lunar surface, an extraterrestrial supply chain is extending back to the moon and forging beyond, offering multibillion-dollar opportunities for putting cargo in space. Indeed, without micro-precision logistics in space, the future of travel and exploration beyond Earth would, simply put, be lost in space. Amid all of the U.S. National Aeronautics and Space Administra12 BREAKBULK MAGAZINE www.breakbulk.com

tion’s rocket scientists, a dedicated cadre of three-dozen experts assigned to Kennedy Space Center’s Gateway Logistics Element team is focused on building upon two decades of experience in supplying the Earth-orbiting International Space Station to bring humans and cargo to outer space destinations. “What Gateway represents is us having that next stepping-stone to open up the doors for us to explore further and beyond,” Mark D. Wiese, logistics element manager

for NASA’s Gateway program, told Breakbulk. “We’ve been moving at a tremendously rapid speed all across the agency for about the last year. “Once we get up there,” Wiese said, “going to the moon kind of opens the door for us to be able to start to look at tapping resources outside of Earth’s gravity. If we can do that, if we can find a way to open up a new node on the logistics chain, we are accelerating beyond like we’ve never been able to do before.” ISSUE 6 / 2019

A rendering shows a cargo-carrying logistics module docked in lunar orbit to the Gateway spacecraft, which is to enable astronauts to land on the lunar surface by 2024 and, by the 2030s, walk on Mars. / CREDIT: NASA.

ON TO MARS

NASA’s phased approach calls for putting the first woman and next man on the moon by 2024, establishing a sustained human presence on and around the moon by 2028, and commencing human exploration of Mars in the 2030s. The scope of NASA’s undertakings isn’t waiting to expand, with a pair of U.S. astronauts – Christina Koch and Jessica Meir – in October 2019 becoming the first women to participate in an all-female spacewalk.

In December 2017, on the 45-year anniversary of the last crewed mission to the moon, U.S. President Donald Trump signed a directive calling for collaboration with commercial and international partners to return Americans to the moon, adding: “This time, we will not only plant our flag and leave our footprint, we will establish a foundation for an eventual mission to Mars – and perhaps, someday, to many worlds beyond.” NASA’s Artemis program, named

for the mythological twin sister of Apollo, utilizes U.S.-European Orion spacecraft and the Gateway lunar orbital platform. The program calls for an initial uncrewed flight to the moon, followed by a mission designed to deliver astronauts to the lunar surface. The Gateway craft, while orbiting the moon, is to serve as the springboard for Mars missions in addition to being the base camp for lunar exploration. In mid-2019, NASA issued solicitations not only for the Artemis lunar landing vehicle, but also for lunar cargo delivery services, including a spacecraft to dock with the Gateway outpost in lunar orbit. The maximum value of all cargo delivery awards has been set at a whopping US$7 billion, the most ever for space cargo contracts, with plans to bring multiple companies aboard at the start and over the next 12 years to provide services during a 15-year period. “This represents that next quantum leap in driving logistics off this planet and driving our economy and bringing private industry along,” said Wiese, who joined NASA in 2003 following five years working with the space program while employed by Science Applications International Corp., or SAIC, as a geographic information systems technician. NASA already has selected more than a dozen U.S. companies for technology partnerships for the Artemis program. Those companies include longstanding aerospace giants Lockheed Martin, Boeing and Northrop Grumman, plus relative newcomers PayPal founder Elon Musk’s, California-based SpaceX, Amazon.com founder Jeff Bezos’ Kent, Washington-based Blue Origin and Sparks, Nevada-headquartered Sierra Nevada Corp., as well as several much smaller firms. www.breakbulk.com BREAKBULK MAGAZINE 13

COVER STORY

For more than a half-century, the B377 SG Super Guppy aircraft has been the workhorse for NASA’s shipment of oversized modules. Inset image: An Orion stage adapter weighing 2 tonnes is offloaded onto a transporter at Kennedy Space Center from the B377 SG Super Guppy aircraft. / CREDIT: NASA.

WHALE-LIKE AIRCRAFT WORKHORSE FOR BIG CARGOES Since its introduction in the 1960s, even before Apollo 11 Commander Neil Armstrong made his historic first step on the moon’s surface in 1969, a whale-shaped modified Boeing turboprop aircraft known as the Super Guppy has been the backbone of NASA’s earthly transport of oversized space bound modules. Today, the latest version of the Super Guppy, modified to carry as many as 36 tonnes – the full weight of the Orion spacecraft – remains NASA’s workhouse aircraft. The B377 SG Super Guppy boasts a cargo compartment 25 feet tall, 25 feet wide and 111 feet long, with loading and unloading through a hinged foldaway nose. While the Super Guppy in use is the fifth of the modified B377s to be used by NASA, it is remarkably similar to the first Super Guppy aircraft, which took its initial flight in 1965 and over the course of 32 years flew more than 3 million miles in support of NASA’s Apollo, Gemini, Skylab and International Space Station programs. All four previous Super Guppy craft, now retired, are on air museum display in Arizona, England, France and Germany. The current Super Guppy, based out of Ellington Field in Houston and managed by NASA’s Johnson Space Center, has been particularly busy transporting oversized components for Orion craft to be used in Artemis missions that are to return astronauts

14 BREAKBULK MAGAZINE www.breakbulk.com

to the lunar surface and eventually put them on Mars. Recent moves have included the transport to Kennedy Space Center, on Central Florida’s Atlantic Coast, of a 15-foot-5-inch-diameter, 1.5tonne heat shield from its point of manufacture at Lockheed Martin’s facility in Littleton, Colorado; of a 2-tonne Orion stage adapter from the Marshall Space Flight Center in Huntsville, Alabama; and various oversized components from the NASA Michoud Assembly Facility in New Orleans. The heat shield is built to withstand temperatures of 5,000 degrees Fahrenheit and velocities of up to 25,000 miles per hour. The Orion stage adapter connects the Orion spacecraft with the second stage of the launch vehicle; it also is to carry 13 CubeSats – shoebox-sized mini-satellites with deep-space science and technology investigations.

‘A REALLY BIG LEAP’

“It’s a really big leap,” Wiese said, “but we’re representative of the next phase of trying to push commercialization and privatization beyond, because low Earth orbit is finally starting to take hold. We’ve brought private industry along, and they’re starting to flourish, bringing all the cargo to enable the crew to live and work and bring science up there.” Tammy Long, a NASA public affairs officer, put it this way: “This could be the next quantum leap in logistics and freight.” The most challenging logistical aspect as it relates to payloads, though, apparently isn’t the 250,000 miles to the moon or even the farther leap to Mars, which, on average, is 140 million miles from Earth. “Getting cargo outside the pull of gravity is probably our biggest challenge,” Wiese said. “Launching things is tough. It takes a lot of fuel.” Annie Meier, a Kennedy-based NASA principal investigator leading a “logistics reduction” project, told Breakbulk that, while the figure can vary depending upon ultimate destination and other factors, the typical cost for putting one tonne of cargo into low Earth orbit is about US$10 million. “Commercial companies are trying to reduce that cost,” said Meier, a 10-year NASA veteran who holds a doctorate in chemical engineering, “but it is quite expensive to get out of Earth’s gravitational pull and put something up in space. Every pound and ounce is a lot of money to launch out of Earth’s atmosphere.” The project, led by Meier in collaboration with external partner Blue Horizon, the Orbital Syngas/ Commodity Augmentation Reactor or OSCAR for short, deploys a “trash-to-gas” converter about the size of a microwave oven designed to turn solid waste into carbon dioxide that can be converted into methane to power engines including those of lunar or planetary surface vehicles. “If we can produce the methane from trash,” she said, “that’s a little bit less methane that we have to launch from Earth.” Thus, reducing the cost of getting cargo outside the Earth’s ISSUE 6 / 2019

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COVER STORY Star Livorno shipping yachts from Port Everglades to the West Coast of North America. / CREDIT: G2 OCEAN.

In October 2019, U.S. astronauts Christina Koch and Jessica Meir took part in an historic first, becoming the first women to participate in an all-female spacewalk as they replaced a failed battery unit from outside the International Space Station. / CREDIT: NASA.

gravity and, just as importantly, finding ways to productively recycle launched cargoes are likely to be part of successful private industry space logistics programs. With the advent of additive manufacturing, potential also exists for 3-D printing in space, using launched supply materials.

MICROGRAVITY ‘WONKY’

After cargo has left the Earth’s gravitational field and entered zero gravity, sometimes more precisely called microgravity, concerns related to propulsion costs for light and 16 BREAKBULK MAGAZINE www.breakbulk.com

heavy items alike give way to uncertainties presented by weightlessness. “Once you are in microgravity,” Meier said, “things just behave a whole lot differently. They all just behave wonky in microgravity.” Wiese said items that are particularly heavy and/or odd-shaped may be challenging to safely get through launch, but those concerns wane beyond the Earth’s pull.

“It is quite expensive to get out of Earth’s gravitational pull and put something up in space. Every pound and ounce is a lot of money to launch out of Earth’s atmosphere.” – Mark Wiese, NASA

“Once we get up to space, it doesn’t take the force anymore to pull something and move something,” Wiese said. “It’s just a whole different ballgame.” So space supply chain providers also have to deal with how cargo moves in microgravity situations. Contractors must aggregate and pack cargoes so they take up minimal space – in what Wiese termed “a super-organized closet” – and are easy for astronauts to efficiently unpack in microgravity without wasting precious crew time. The seemingly conflicting dual challenges of getting cargoes beyond the Earth’s pull and of offering appropriate maneuverability in microgravity are being dealt with by multiple providers of supply services for the International Space Station. Both Northrop Grumman and Continues on page 18 >> ISSUE 6 / 2019

COVER STORY

WHEN NATURE CALLS, LOGISTICS ANSWERS Among the nearly 2.5 tonnes of breakbulk cargo recently launched to the International Space Station, one item stands out as perhaps the most practical of all: A Russian-made zerogravity space toilet. The September journey of the galactic loo typifies the transport of essential cargoes to the ISS as it maintains low Earth orbit under a joint project of space agencies of the United States, Russia, Japan, Europe and Canada. For nearly 20 years, the ISS has orbited about 250 miles above the Earth’s surface, as the base for extensive scientific research in an environment of little to no gravity. Of course, in addition to science experiments, the cargoes shipped to the ISS must include such basic supplies as food and other staples to support the half-dozen or so crewmembers aboard the craft at any given time.

“My college professor was right when he said life would take us in crazy directions,” said Randy Gordon, a NASA senior project manager at Kennedy Space Center, who heads payload ground processing for Gateway and ISS programs. “But,” continued Gordon, who has worked for NASA since his 1990 graduation from Georgia Tech with an industrial engineering degree, “if he had also predicted I would land on a team who transports Russian space toilets and supplies to the International Space Station, my reaction would have epitomized dazed, confused and amused.” Because of the high cost of launching goods skyward and the need to make the most of the 5,000-pound-capacity, bus-sized space cargo module, Gordon and his colleagues make sure to use the lightest, most-advanced foam

padding and maximum-fireproof fiber cloth to shroud space cargo. In the case of the toilets, cargo trunks carrying space commode components are shipped by air to Kennedy Space Center from their Russian point of manufacture. Then technicians from the Russian vendor prepare toilet supply canisters for launch in the cargo module with other necessary supplies. About 48 hours after launch, the module docks with the orbiting ISS and astronauts, in a tiny zero-gravity environment, unload the cargo. The space toilet, by the way, operates on a fan-driven suction system that separates solid and liquid wastes. Solid waste is vacuumsealed in bags stored on the cargo module and, according to design, burns up upon re-entry to the Earth’s atmosphere. The urine, meanwhile, is processed into crew drinking water.

www.breakbulk.com BREAKBULK MAGAZINE 17

COVERSTORY

Annie Meier, right, a principal investigator at NASA’s Kennedy Space Center, engages in testing of a logistics reduction unit designed to help cut down on needed cargo volumes heading to the moon, Mars and perhaps beyond. / CREDIT: NASA.

SpaceX have been engaged in providing supplies to the ISS since 2012, and they are to be joined in the effort by Sierra Nevada in 2021. Supply ships are now launching to the ISS on about a quarterly basis. SpaceX also avails itself of facilities at Port Canaveral, near the Kennedy Space Center on Florida’s Atlantic Coast, in recovery of reusable rocket boosters the Muskled company returns to Earth. And the new Dragon capsule of Space X is designed to return cargoes from space as well.

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ISSUE 6 / 2019

COVER STORY

SCIENCE FICTION MEETS FACT

Earthbound logistical advances have been applied to space and vice versa, according to Wiese. Extraterrestrial developments in precise GPS positioning, shipment tracking, autonomy and robotics “have really played down to Earth,” Wiese said, commenting: “It ends up spinning off and helping society back here on Earth. I think a lot of what we do ends up playing back and helping things on Earth. “We’re trying to make a lot of noise in the traditional groundbased logistics world because we know there are so many synergies there that we help leverage off one another,” he said. “If we’re pushing the economy even further, we need to really drive the innovation from all aspects of

how we move things on Earth to how we move things off-planet.” As the U.S. space program, with its partners from other nations and private industry, looks to go back to the moon and make first human forays to Mars and even farther into deep space, with hoped-for ability to mine fuel and other resources from distant orbs, Wiese is confident wide-ranging economic benefits will be derived. “Now it’s a reality that we are able to go drive the economy beyond.” Weise said. “Science fiction meeting science fact is really close.” BB A professional journalist for nearly 50 years, U.S.-based Paul Scott Abbott has focused on transportation topics since the late 1980s.

“We’re trying to make a lot of noise in the traditional ground-based logistics world because we know there are so many synergies there that we help leverage off one another. If we’re pushing the economy even further, we need to really drive the innovation from all aspects of how we move things on Earth to how we move things off-planet..” – Mark Wiese, NASA

Equipped to handle our customers’ needs Horizon Terminals is an International Marine Terminal, Processor and Logistics Operator. We provide tailor made solutions to the equipment and project cargo industry. Our solutions build on first class technology and long expertise within terminal and logistics management.

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www.breakbulk.com BREAKBULK MAGAZINE 19

FINANCING

BY LORI MUSSER

CARGO QUID PRO QUO Tips for U.S. Ex-Im Clients

20 BREAKBULK MAGAZINE www.breakbulk.com

ments of more than seven years plus (unless the export qualifies for a longer repayment term under ExIm’s Medical Equipment Initiative, Environmental Exports Program, or Transportation Security Program). Ex-Im transactions that are exempt from cargo preference include credit guarantee facilities of any amount, short-term insurance or medium-term insurance of any amount or term, and guarantees of up to US$20 million with a repayment period of seven years or less. Technically, 100 percent of Ex-Im Bank supported cargo is supposed to move on a U.S.-flag vessel. When cargo moves under foreign flags, the U.S. maritime economy and availability of a strong merchant marine to support security efforts can be jeopardized. Nevertheless, for some Ex-Im transactions, there is a compromise.

STRANGE BEDFELLOWS

The unique relationship between the Ex-Im Bank and MARAD may at times seems counter-intuitive. One agency helps build U.S. exports to global destinations, supporting U.S. manufacturing and supply chains. The other improves and strengthens the U.S. marine transportation system to meet U.S. economic, environmental and security needs. The goals can be at odds, so shippers that fully understand mandates, obligations and work-arounds are paramount to helping the U.S. truly achieve both sets of goals. ISSUE 6 / 2019

CREDIT: SHUTTERSTOCK.

t isn’t new, and it isn’t just a U.S. anomaly. Other countries like to support national fleets too, making sure certain government-agency supported cargo exports are routed on their merchant marine. Under the Export-Import Bank of the United States, or Ex-Im Bank, cargo preference shipping requirements were developed 85 years ago, per Public Resolution 17, or PR-17. What better way to help maintain a viable U.S. merchant marine than by making U.S.-flag shipping costs eligible for credit agency support as a U.S. services export? Companies that request services from Ex-Im Bank must be prepared to shop their ocean cargo carriage around the U.S. fleet, and working through U.S. cargo preference regulations requires some skill. Fortunately, for contractors responsible for ensuring that they and all subcontractors comply, there are several resources available, including a new online learning course. The Office of Cargo and Commercial Sealift at the U.S. Maritime Administration, or MARAD, enforces cargo preference statutes and regulations, and oversees compliance. They ensure shippers use U.S.-flag vessels whenever reasonable, to transport government-impelled cargo. There are two types of Ex-Im transactions which require shipping on U.S.-flag vessels: direct loans of any amount; and guarantees of more than US$20 million or repay-

Top Tips to Help Shippers Navigate the Ex-Im Bank and MARAD System

Call Carriers Early: Collect

Ex-Im Bank may provide financing for cargo carried on vessels of the cargo purchaser’s nation for up to 50 percent of the total volume of cargo financed under a specific credit, but, that nation must have a merchant navy and not engage in discriminatory treatment of U.S.-flag vessels in foreign trade.

ocean-carriage bids from U.S.-flag carriers as early as possible to obtain the most favorable rates and shipping schedule.

Use MARAD Facilitation:

MARAD offers facilitation services to help obtain suitable shipping arrangements (schedules, rates, routes and capacity) on U.S.-flag vessels. Options (such as the use of Advance Shipping Plans, Booking Subject to Completion, and Service Contracts) may prove useful, as will providing complete cargo details to the facilitation team. In cases where cargo is insufficient for optimal volume rates, where cargo may vary from a plan, or where a program of shipments may dictate better shipping rates, these options may prove particularly valuable for shippers.

Use the Cargo Purchaser’s Fleet:

Know the “Determination” Process: Ex-Im Bank has a process

– it evaluates eligibility for financing of projects involving foreign-flag shipping. MARAD has a process – it provides determinations (some of which can result in cargo preference waivers) for use in the Ex-Im Bank financing evaluation process.

Compensate for Past Transgressions:

When projects are brought to Ex-Im Bank for financing after some portion of the cargo has already been shipped on foreign-flag vessels, there may be an opportunity to consult with MARAD to commit to booking future cargo equivalents on U.S. flag vessels. That opportunity may depend on timing, past performance and good intent.

Reachback for a Portion of Past Foreign-Flag Shipped Cargo:

When compensatory bookings aren’t an option, there may still be a chance for Ex-Im Bank financing for some portion of the cargo. For example, if foreign-flag shipments occurred within a year of the Ex-Im Bank application, up to 10 percent of the value of the total cargo to be financed may be eligible for Ex-Im Bank financing – but at a lower rate (maximum 80 percent level of what Ex-Im Bank would ordinarily finance). Again, timing, fulfillment performance and good intent factor in a reachback decision. continues overleaf >>

www.breakbulk.com BREAKBULK MAGAZINE 21

FINANCING

Top Tips to Help Shippers Navigate the Ex-Im Bank and MARAD System (continued)

Pursue a ‘Waiver’: Sometimes

Ex-Im is able to approve financing of goods shipped on foreign-flag vessels if MARAD certifies that U.S.-flag carriage is not available or possible – strict MARAD procedures are in place. Shippers may request this certification based on lack of vessel availability “in sufficient number, in sufficient tonnage capacity, on necessary schedules, or at reasonable rates.” Shippers provide details to MARAD about their shipping needs and their efforts to identify a carrier. MARAD will delve a little deeper, reaching out to carriers for information, and looking at everything from the shipper’s advanced planning, letters of credit, contracts, timelines and other documentation. MARAD evaluates and may then certify vessel non-availability when there is a lack of response from U.S.-flag vessels or clearly no availability given timing, routing, special cargo considerations (such as heavy-lift), cost or probable delays. It counts heavily if the shipper has made a good faith effort. Vessel non-availability certifications related to lack of reasonable rates take into consideration guideline rates produced by MARAD’s Office of Finance and Rate Approvals, additional shipper and carrier input, vessel supply and demand, and rates (historical, U.S.-flag, and commercial rates). MARAD’s initial input to Ex-Im’s financing decision, facilitation services, or waiver determination may unearth an unconsidered and competitive U.S.-flag option.

Pursue it Again: Shippers that

are truly flummoxed after receiving assistance and a negative determination, and haven’t firmly booked their cargo, can request reconsideration through the Deputy Maritime Administrator within 10 business days following the determination. There is a process to request more time. With advice from a Reconsideration Committee, the Deputy Administrator reviews and provides a written response within 10 days.

22 BREAKBULK MAGAZINE www.breakbulk.com

9 10

Do your Research: MARAD

publishes the outcome of requests for determinations on its website at www.maritime.dot.gov/cargopreference/civilian-agencies/ ex-im-bank-determinations. Knowledge of precedents may help.

Take the Class: MARAD’s newly

accredited, free cargo preference e-training courses, developed in collaboration with Defense Acquisition University, offer background on the importance of maintaining a U.S.-flag merchant fleet, as well as useful guidance to help comply. The group of four short courses are available to the public.

Meet Deadlines: Submitting

bills of lading and forms on time is key to Ex-Im’s cargo preference process. Bills of lading are required within 20 working days of the date of loading for shipments originating in the U.S. (or within 30 working days for shipments originating elsewhere). So is the Ex-Im “Form F” monthly report of ocean shipments (except for multiple shipments – then it can be submitted at the beginning of each month, along with the preceding month’s bills of lading).

More detail can be found in various publications and guidance documents published by Ex-Im Bank and MARAD, available via their web pages: www.exim.gov; www.maritime.dot.gov/ports/cargo-preference/cargopreference. (See Keeping Ex-Im Bank Humming Along Page 63) BB Based in the U.S., Lori Musser is a veteran shipping industry writer.

ISSUE 6 / 2019

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EXECUTIVE SUMMARY

BY SUSAN OATWAY

MUTED STRENGTHENING

Pockets of Hope, But Subdued Revelry

rewry’s latest multipurpose and heavy-lift shipping forecaster for the third quarter of 2019 downgraded expectations for dry cargo demand growth over 2019 and 2020, in line with global economic expectations. Although we still expect to see strengthening rates through 2020, they will be at weaker levels than previously forecast, as slower demand growth eats into demand. To put this into more detail, let’s look at the supply of vessels carrying breakbulk and project cargo – in particular the multipurpose and project carrier fleet. Our fleet forecast remains

a composite of two very different pictures; the multipurpose (no gear and geared) fleet is expected to contract over the next two years, while the project carrier section grows. The combination of the two causes a slight contraction in total vessel supply. As of Sept. 1, the total multipurpose fleet numbered 3,188 vessels with a combined deadweight of slightly more than 29.5 million deadweight tonnes, or dwt. Within that number there were 912 vessels with heavy-lift capability of more than 100 tonnes, of which 353 had lift greater than 250 tonnes. The two sectors that make up this fleet have some significant differences about age and size. The simple multi-

purpose vessel fleet has an average dwt of around 9,000 and an average age of 20 years, while heavy-lift capable fleet (project carriers) has an average dwt of about 14,500 dwt and an average age of 12 years. The current orderbook contains just 53 vessels with a combined deadweight of just below 500,000 dwt, and represents less than 2 percent of the current operating fleet. There is slightly more non-heavy-lift capable tonnage than heavy-lift capable – a reverse of the position just six months ago. It is, however, a very small orderbook due to the lack of any real investment beyond replacement tonnage.

Chart 1: byby Vessel Type to 2021 1: Suggested SuggestedFleet FleetDevelopment Development Vessel Type to 2021 ‘000 dwt

1,000

18,000

500

16,000

14,000

-500

12,000

-1,000

2016

2017

2018

2019

2020

2021

10,000

Project carrier and heavy-lift deliveries Multipurpose (no gear & geared) deliveries Multipurpose (no gear & geared) demolitions Project carrier and heavy-lift demolitions Multipurpose (no gear & geared) fleet (right axis) Project carrier and heavy-lift fleet (right axis)

Source: Drewry Maritime Research

24 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 6 / 2019

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EXECUTIVE SUMMARY

On the other side of the supply equation, demolition levels have been on the decline for some time as 2018 hit an historic low. 2019 is going to struggle to make even those levels. Most of the candidates for demolition are from the simple sector. We do expect levels to rise over the next few years, partly due to the increased environmental regulations. However, we do not see the International Maritime Organization’s sulfur limit in marine fuels regulation having a significant impact as most of the older, smaller fleet already trades short-sea within the emission zones and therefore already burns low-sulfur gas oil. Taking both parts of the supply equation into account, we end up with a fleet development as shown in Chart 1. All the growth over the next two years is in the heavy-lift sector, while the simple fleet is expected to contract by a similar amount. A total fleet decline at a rate of -0.1 percent to 2021 is expected. But what of the cargo that these ships can carry? Drewry estimates global dry cargo demand has grown at an average rate of about 4.2 percent over the last 10 years, and specifically by about 2 percent over 2018. Over that same period, bulk cargo growth is estimated at 4.4 percent per annum and container cargo growth at 5.1 percent per annum. Although forecast growth for dry cargo as a whole and general cargo in particular is steady over our forecast period, it is not a straightforward correlation to multipurpose vessel, or MPV, share. This not only relies on demand for these cargoes, but also on the level of competition from other sectors, such as container carriers, handy bulk carriers and roll-on, roll-off vessels. Drewry expects total MPV market share to improve over 2019 – albeit slightly – as the markets for the competing sectors continue to improve. In the longer term, we are forecasting MPV demand growth at 1.1 percent on average per year to 2021. Much of this growth is simply due to the increased cargo volumes available; however, there is some movement in the absolute share as well. But there are some caveats to this forecast due to a number of pressures on the demand side. Firstly, breakbulk 26 BREAKBULK MAGAZINE www.breakbulk.com

Chart Freight Index* Chart2: 2:Multipurpose Multipurpose Freight Rate Index* *based on timecharter rates received from brokers

Index (2007 = 100)

DEMOLITION SLOWDOWN

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Source: Drewry Maritime Research

and project cargo is not exclusive to multipurpose and heavy-lift vessels, and one of the key drivers for market share is the competition from the other sectors. Our estimates of modal share for MPV vessels with respect to general and bulk cargo dipped slightly in 2018 but are expected to improve somewhat over 2019 and into 2020.

GDP STRAIN

Another pressure on demand is flagging world trade. Global gross domestic product, or GDP, is one of the major drivers for this sector, not only because of the impact it has on investment potential (and therefore project cargo), but also on the confidence levels within the market. The latest forecasts for global GDP over 2019 have been significantly reduced from 3.5 percent in January to 3.2 percent through July, and the expectation is that global output will fall further in the short term. Add into the mix continued trade tensions and policy uncertainty, and we have further weakening of expectations for growth and adversely affected confidence levels for this sector. In our latest report we forecast both supply and demand for the next five years, and we also try to frame those forecasts with a low and high case scenario. The low case scenario expects a further deterioration in trade tensions, while the high case scenario – which we think will be least probable – has improved

international relations and increasing government stimulus. The difference in effective demand in each case is between -0.5 percent and +0.5 percent on the base case. Drewry’s base case scenario for this sector suggests that there is continued disruption, as the trade war rumbles on, which will continue to weaken the global economy. However, there are some positive drivers for this sector around renewables and specific breakbulk cargoes. Including our assessment of the competing fleets and how cargo will be carried in the future, we expect demand for MPV/heavy-lift tonnage to grow by an average 2 percent per year to end 2021. Drewry produces a freight market index, as shown, based on time charter reports that we receive from brokers. It takes into account the different ages and sizes of the vessels fixed and has shown some correlation with the supply/demand balance. Out latest forecast suggests market improvement of about 2 percent per year to end 2021. (See Two Sides to Overcapacity Coin – Page 61). BB Susan Oatway is a highly experienced consultant, who has authored Drewry’s Multipurpose and Heavy Lift publications for the past 13 years. She is also co-editor of Drewry’s Reefer Shipping report. ISSUE 6 / 2019

In this special section, we recognize a group of professionals selected as Breakbulk’s NextGen – the next generation of leaders for the breakbulk, over-dimensional and industrial project supply chain industry. Initially announced from the main stage during Breakbulk Americas, these 11 individuals were nominated and selected by advisory boards for Breakbulk Events and Media, as well as members of Breakbulk Masters and Breakbulk’s exclusive global network of senior breakbulk and project cargo owning shippers. The NextGen exemplify the necessary qualities to succeed and lead, representing all areas of the industry: beneficial cargo owners; engineering, procurement and construction;

intermediaries; ocean carriers, motor carriers; and marine operations. These people already play vital roles within their company as well as serving in industry organizations, participating in Breakbulk events as speakers and presenters, serving on event advisory boards, and otherwise providing insight, energy and mentorship for the betterment of the industry. In the following pages, we publish their thoughts and comments on the industry. You will find interesting synergies in their responses on leadership and roles of responsibilities in the career arc. We proudly present Breakbulk’s NextGen.

www.breakbulk.com BREAKBULK MAGAZINE 27

I feel that shipping and logistics is an industry that truly lets young people evolve and grow.“ –T homas Bek, Blue Water Shipping

It is an industry that truly lets young people evolve and grow. My experience is that young people are quickly empowered, and given responsibility very early in their careers.

A mentor or industry leader who greatly influenced you: Thomas Bek

> Thomas Bek Global director oil, gas and industrial projects Blue Water Shipping Nominated by:

Jeannin Matthieu, group logistics and warehousing manager, SBM Offshore.

Reason for nomination:

“Ability to understand customer needs and put plans into motion. Provides solutions. Strong reactivity and entrepreneur mind-set. Positive attitude even during strong challenges.”

How you chose this industry:

I always wanted to work in an international environment and live abroad for a period. Shipping seemed like the perfect opportunity, and I was lucky that in my second year in the industry, I started to work in our oil, gas and industrial projects division.

Industry’s significance, from your perspective:

There are so many different opportunities within shipping and logistics as well as future career opportunities. 28 BREAKBULK MAGAZINE www.breakbulk.com

Kurt Skov started Blue Water Shipping back in 1972, and it has grown into an international logistics company with more than 1,700 employees globally. He has always been very hard working, humble and extremely caring about his colleagues. He talks to everyone in the company. You are allowed to make mistakes as long as you learn from them and you do not repeat them too many times. He empowers his colleagues, and young people are given a lot of opportunities if they have the right attitude.

Professional background:

I started as a trainee at Blue Water in 1996 and have held various positions. In 2003 I moved to Houston to start up the Blue Water office. Today I am the global director for our energy and projects division that includes oil, gas and industrial projects as well as wind logistics. In energy and projects, we have 16 offices and 310 colleagues.

Management style:

For me it is important that everyone knows the direction we are going and that everyone sees themselves as a part of the team. Open communication is important and I like to be challenged by my co-workers. I believe that positive criticism is needed if you want to continue to develop your business and yourself as a manager and leader. I am straight-

forward and I do not micromanage. I trust my colleagues around me as I expect them to trust me. I am very open to new ideas, and I also allow that mistakes are made as long as we learn from them and improve.

Long-term professional goals:

I want to get the most out of the opportunities that come to me, and my long-time goal is to increase the business at Blue Water and expand the business within our energy and projects division. I plan to complete my MBA within two years, and hopefully this will give me a lot of theoretical experience that I can use in my current and future positions.

Role as a developing industry leader:

I believe that my more than 23 years of experience at age 42 gives me a good foundation. I have seen good times and also experienced several crises, including the drop in oil prices in the late-1990s and again in recent years. I have played a role in developing project activities at Blue Water for more than two decades, including being part of the team that secured the US$1.3 billion project TCO FGP. This has been a real game changer for Blue Water. My operational background will always be very important for me and it will always be important for me to stay close to the operations as well as the clients.

Most important industry issue:

To some extent, the industry is still struggling with its overall reputation and how well it is doing when attracting educated young people. Also, the importance of logistics is often not valued and respected enough. Providing industry-specific education is also a challenge in some regions and countries. It is important that we invest in young people and ensure a general increase in the education level in shipping and logistics. Finally, I would also say we need visions and new ideas. Some companies are better at this than others, but in general, our industry has not been good at evolving. We must be very careful and ensure that we continue to show how we add value to our clients’ projects or supply chain. ISSUE 6 / 2019

Our industry is the key to efficient industrial progress, whether the general public knows it or not.“

– Brett Berard, Berard Transportation

> Brett Berard Vice president operations, Berard Transportation Nominated by:

An executive for a leading engineering, procurement and construction company.

Reason for nomination:

One of the most impressive individuals I have ever dealt with. A family business, but he is a professional engineer, can operate any of the equipment, deals with commercial and has outstanding customer service.

How you chose this industry:

My grandfather started a housemoving business in 1945, which transitioned to an industrial moving business by the time I was born. Ever since I can remember I have been fascinated by large equipment and engineering associated with this industry.

Industry’s significance, from your perspective: The “click and ship” mentality doesn’t only apply to Amazon, the desire to modularize entire plants relies on our solutions. Our industry is the key to efficient industrial progress, whether the general public knows it or not.

A mentor or industry leader who greatly influenced you:

My grandfather and father both had massive impacts on my success and outlook for the future. My grandfather never turned down a challenge, nothing too big or too far, he would put forth his best effort. My father approaches projects more conservatively, always calm and methodical, a perfect recipe for success. The positives from each resonate with me every day.

Professional background:

I worked in our family business starting with manual labor and equipment operations at 10 years old.

Brett Berard I graduated from Louisiana State University with a Bachelor of Science in civil engineering in 2006. Upon graduating, I returned to the family business, since serving in a managerial role. www.breakbulk.com BREAKBULK MAGAZINE 29

Management Style:

I strive to assign tasks that I would not mind doing myself. Each employee must have pride in his or her work for success, if they are unwilling or forced to do a job, the result may suffer.

Long-term professional goals:

Learn every day. It seems the more I discover about our industry, I realize how little I know. There is always someone that knows something you don’t.

Role as a developing industry leader:

Encouraging all competitors, vendors, clients and partners to provide the best level of service. When one competitor or vendor cuts corners to cut costs, eventually our industry suffers.

Most important industry issue:

The lack of personal connections seems to be more evident in the past few years. We now execute massive transportation projects with the “swoosh” of a purchase order via email, often never meeting each other.

It feels as though the legwork required to execute such projects go unnoticed, and brand loyalty is forgotten. Cargo gets larger, routes get tighter, red tape gets thicker, but the realization of a job well done does not translate to the next move.

> Noelle Burke Americas logistics leader GE Power, Gas Power Systems Nominated by:

Grant Wattman, president, CEO, Agility Project Logistics.

Reason for nomination:

Strong interpersonal skills with a range and depth of experience that establishes a strong foundation for personnel and professional growth. Proven leadership skills and a willingness to take on challenges on a shared objective or outcome. Continually seeking to learn and apply new skill sets. Proven ability to work in a complex matrix with an agile approach to management.

Successful breakbulk logisticians have this incredible ability to pivot, adapt, and be proactive.“ –N oelle Burke, GE Power

How you chose this industry:

I did not choose this industry – I like to think it chose me. When I graduated from college, I moved from my small town to Albany, New York. I applied to many jobs and a small freight forwarding company was my first job. I spent about one week as a receptionist until they moved me to operations. As they say, “it was love at first sight.” Because I knew I would need a larger company to grow and excel in my career, I targeted GE as an employer for the opportunities they could give me. This is where my “eyes were opened” to the breakbulk industry.

What is significant about this industry:

The people that have dedicated their lives to logistics. They truly have a passion for the industry. I have found that there are so many unique issues that arise in logistics. No issue or day is ever the same. Successful breakbulk logisticians have this incredible ability to pivot, adapt and be proactive. Logistics isn’t for everyone – it’s not a 9-5/Monday-to-Friday job. There are so many issues that happen outside of normal business hours that require attention immediately. While logistics is such a broad field, the breakbulk industry feels like a “small tight-knit family.”

A mentor or industry leader who greatly influenced you:

When I started at GE I had a manager, Randy Charboneau, that tremendously helped me grow in my career. I remember early in my career making so many mistakes, and always feeling like he had my back and really wanted me to succeed. He was a believer that mistakes were OK, as long as you learned from them and didn’t make them again. I always felt that he saw something special in me, which only fired my passion to do and be better. He has since left GE, but we still meet on a regular basis for our mentor sessions. He makes me a better employee, people leader and person.

Professional background:

I started at a small local freight forwarding company in 2003 and 30 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 6 / 2019

worked there for five years. I then joined a company contracted by GE called Granite International as a logistics coordinator. After two years I was hired by GE as a global logistics project manager. About 2.5 years later I applied to an internal GE leadership program called the Project Management Leadership Program, which exposes participants to different aspects of engineering, procurement and construction project management, while sharing best practices and lessons learned across GE businesses. After completing the program I took a role as fulfillment manager, where I was responsible for managing all internal functions (engineering, sourcing, logistics, manufacturing, planning) to ensure global projects were delivered on time. In February 2017 I took my current role as Americas logistics leader for Gas Power Systems. In this role I managed a portfolio of more than US$850 million in sales in 2017 and 2018, with direct reports that sit across the U.S., Latin America, and for the past six months, Asia.

Management style:

I have a collaborative management style. While ultimately decisions are mine to make, I believe it is more likely to get buy-in when the team feels like they participated in making a decision. I also think a high say/do ratio is important for the team to have unconditional trust in a manager. In other words, if I say I’m going to do something, I do it. When you have a team that has trust in you, I find they work harder to make the team a success. I always have an open door policy and take pride in mentoring my team and having regular career discussions.

Long-term professional goals:

To always stay true to myself and always understand my “why.” I’m an extremely passionate person in everything I do – which is why it is so important to work in a field and organization that sparks my passion. There is no “end goal” in my longterm plan – just to be happy and passionate about what I’m doing.

Andrew Dovie receives his award from Breakbulk magazine News Editor Carly Fields As long as my passion and tenacity are positively affecting an organization, and I’m working for a company that appreciates and respects my expertise, I am a firm believer that everything will fall into place around that.

Your role as a developing industry leader:

I’m honored to be among the new crowd of women entering the breakbulk industry, and I think this makes me an interesting leader. I hope to be looked at as a mentor for young females interested in this profession. I believe it to be extremely important to have a mentor, both inside and outside the company you work for, that you can rely on for advice and/or guidance, and I hope to bring that to the industry. If I can do it, so can you!

Most important industry issue: One important issue I believe the industry is facing is the lack of infrastructure to transport breakbulk cargo. We continue to ship

more modularized equipment, however, there is a lack in investment to improve the infrastructure to allow us to transport. Projects are requiring massive amounts of cash up front just to determine if there is even a route feasible to deliver equipment. In the U.S. Northeast, in particular, we are finding it more and more difficult to transport breakbulk cargo. In addition, the unpredictability of third-party transportation costs can wreak havoc on a project. Due to decreasing margins on projects, the importance of accurate and predictable costs is more important than ever.

> Andrew Dovie Senior project supervisor GEODIS Industrial Projects Nominated by:

Dennis Devlin, director-IP USA industrial projects, GEODIS. www.breakbulk.com BREAKBULK MAGAZINE 31

Reason for nomination:

Andrew Dovie brings a technically sound, engineering-based approach to the tasks associated with moving and lifting over-dimensional and heavy-lift cargo via whatever modes of transport might be utilized: ship, barge, rail, truck, in any combination. Safety and damage avoidance are paramount in moving project cargo. It is through this engineering-based approach that he helps GEODIS to support its clients’ projects by moving their cargo safely and without damage. Often leadership is considered to be the realm of extroverts, whereas in reality, expertise and sound decision-making on the basis of facts plays a very large role in successful leadership.

How you chose this industry?

Like most people I’ve talked to, I didn’t choose this industry. My parents were in the industry, both advised me not to get into logistics. But after dropping out of law school at the end of 2013 in the beginning of the oil recession, I couldn’t find a job anywhere. I was able to get a foot in the door at Agility and thoroughly enjoyed the project and heavy-lift side of the business.

Our industry is filled with professionals that have years of valuable experience, but we need to get more millennials interested in logistics. Their understanding of technology will be pivotal in revolutionizing our industry.“ –K ody S. Esser, Fluor

Industry’s significance, from your perspective:

Project logistics is underappreciated, even though it’s a vital part of infrastructure and manufacturing.

A mentor or industry leader who greatly influenced you:

I was lucky that Diana Davila hired me for my first position in the industry. She weathered a particularly sour point in the company’s history with a level of professionalism and agility that I doubt I’d have shown.

Professional background:

A Bachelor of Science degree in mechanical engineering from Louisiana State University, 2012. Project assistance with Agility Projects, 20152017. Transport engineer coordinator with Fracht, 2017-2018. Since 2018, senior project supervisor, Geodis.

Management style:

The qualities I respect most in a manager are having an overall knowl32 BREAKBULK MAGAZINE www.breakbulk.com

edge of the industry, and the ability to balance a hands-off approach to management while stepping in to handle minutiae when needed.

Long-term professional goals:

I would like to continue to work in project cargo for the foreseeable future, moving more towards the technical, engineering side of the business. I’ll hopefully finish a project management program at Rice in early 2020, and I plan to continue taking engineering courses related to transport and rigging immediately afterward.

Your role as a developing industry leader:

I think the cowboy days of high risk with the uncertainty of reward are coming to an end, or at least that’s

what I hope. My goal is to continue offering competitive pricing for the proper and safe execution of transport operations. Bidding and operating should not be considered separable.

Most important industry issue:

There is always uncertainty in the future. Right now, the immediate risks for long-term planning relate to the new bunker regulations. Specifically related to forwarding, smaller forwarders and even trucking companies that have broadened their scope are side-stepping the old guard, especially on the one-off shipments. I’m not sure how the larger forwarders will fare with the added competition in the long term. Equally so, I’m not sure if the smaller forwarders have the staffing and the global network to handle mega projects. ISSUE 6 / 2019

Kody S. Esser

> Kody S. Esser Logistics manager Fluor Enterprises Inc.

holding himself and his colleagues accountable, sharing his knowledge, leading innovation, and most significantly, by turning challenges into opportunities.

Nominated by:

How you chose this industry:

Kathy Canaan, global director trade compliance, Fluor.

Reason for nomination:

Kody Esser exhibits a level of professionalism that is beyond his years in the industry, and which distinguishes him as a leader now and for the future. A confident and decisive self-starter, he takes responsibility for his own learning and development, and is continuously increasing his technical expertise while also sharpening his business acumen. Esser models excellence by

I came into the industry by sheer necessity. I had recently lost my sales job in the technology sector and needed to find another job as quickly as possible. I wasn’t a fan of sales, so I decided to branch out. Through a mutual friend, I found a job working for a small company that performed vector control in Africa and Papua New Guinea. As one of five corporate office employees in a 50-person company, I took on the role of supply chain manager to source material from all over the world to ship to Africa and Papua New Guinea.

Industry’s significance, from your perspective:

There’s never a dull moment in this industry, except for maybe watching pipe load. Working on projects at a global company like Fluor has given me the opportunity to learn the ins and outs of moving project cargo all over the world.

A mentor or industry leader who greatly influenced you:

When I first started at Fluor, my mentor was Robert Hurst. He had been in the industry for more than 35 years and had worked all over the world. He taught me what it truly meant to move project cargo. He was a great man, mentor, and friend – rest in peace, my friend. Most recently, my mentor is Bill Keyes. He is teaching me about the commercial www.breakbulk.com BREAKBULK MAGAZINE 33

side of the business that is harder to learn about while working on projects.

Professional background:

Starting my professional career in technology sales was a great learning opportunity that I enjoyed, but I knew that it was not something that I wanted to do long term. Then, working in vector control, I contracted the logistics bug, pun intended. I have been with Fluor since 2012.

Management style:

Simple: I try to live my life by the golden rule, and that goes beyond just my management style.

Long-term professional goals:

To have Bill Keyes’ job (shh, don’t tell him!) I would like to be a recognized logistics professional with a successful track record of managing teams with the ability to rapidly evaluate complex problems and design dependable, riskassessed solutions for mega projects.

Role as a developing industry leader:

First, I see myself becoming further ingrained in the industry. I plan to do that by attending more conferences, panels and events that will teach me how to grow as a professional, better understand the industry, and to provide better fit-for-purpose solutions to clients.

Most important industry issue:

The next generation. Our industry is filled with professionals that have years of valuable experience, but we need to get more millennials interested in logistics. Their understanding of technology will be pivotal in revolutionizing our industry.

> Steve Frank Project sales, Ceres Barge Nominated by:

An executive for a leading engineering, procurement and construction company.

Reason for nomination:

Long-time KMX Trucking and now with Ceres, Steve Frank is solutions focused and technically sound. 34 BREAKBULK MAGAZINE www.breakbulk.com

How came to choose this industry:

I worked for CEO Jim Berlin at Logistics Plus in Erie, Pennsylvania, and instantly became intrigued by the core business. I asked him if I could join the North America division, specifically trucking, and I quickly realized that this was a career path that I wanted to pursue.

Industry significance, from your perspective:

The logistics industry, as a whole, has a wealth of creSteve Frank ativity in the people that support it. We have become experts in our ability to “think outside of the The logistics industry, as a whole, box.” We can move the biggest, heaviest, has a wealth of creativity in the and most obscure people that support it.“ cargo anywhere around the world. –S teve Frank, Ceres Barge The words “no” and “can’t” do not exist in our vocabulary. We innovate and than 15 years ago at Logistics Plus find a way to use technology, unique in domestic trucking including lessequipment, engineered solutions and than-truckload, full-truckload and extensive planning. over-dimensional truckloads. From there, I had the opportunity to work A mentor or industry leader with KMX International for nine who greatly influenced you: years. I worked in project cargo sales Three years into my logistics career and project management for heavyI moved into sales. I was fortunate to haul trucking, export packaging, and have met Rick Pagley, who represents warehousing. Currently, I work in the the Port of Baltimore. He and I spent heavy-lift division at Ceres Barge Line, quite a bit of time together, as we had moving project cargo offshore and on mutual business interests. He quickly the inland river system. and effortlessly took on the role of mentor for me as a new salesperson in the Management style: industry. He taught me the value of Our industry requires strong teambuilding relationships in business, and work, and I am only as good as the encouraged me to “stay in front of the team that surrounds me. It is important customer.” Ultimately, he implored me that we learn from and listen to each to be patient, but also persistent. other every day. By encouraging an open forum to discuss ideas within our Professional background: teams, we come up with the perfect forI started my logistics career more mula for meeting and exceeding goals. ISSUE 6 / 2019

The world-class projects we support as logistics professionals have a direct impact on society and also contribute to the growth of businesses.“ –S amuel Holmes, Wood Group

Long-term professional goals:

My long-term professional goals are to build strong relationships with others in the industry while engaging in challenging projects that push me professionally and personally. I practice integrity and honesty in the projects I oversee and with the customers I engage. I am committed to ensuring the success of Ceres Barge Line while also meeting the needs of each customer.

Your role as a developing industry leader:

I have had the privilege of being mentored by not only Rick Pagley, but others in logistics, including Jim Berlin, Jim and Jamie Vitez, Mark Fletcher, and Vince Schu. My intention would always be to influence others the way those leaders have guided, impacted and influenced me.

Most important industry issue: Infrastructure is a major issue facing the industry on a daily basis. Transporting heavy-lift cargoes rely on rigid infrastructure to ensure

safety and feasibility. There is a major cost to upgrade our infrastructure with limited funds and it has proven difficult to identify a priority list. Our industry has been creative in overcoming these challenges and finding alternate ways to move heavy-lift cargo, but it comes at an expense to the buyers.

> Samuel Holmes Logistics and export compliance coordinator, Wood Group Nominated by:

Doug Hickey, vice president, product delivery, Agility Project Logistics.

Reason for nomination:

Since Samuel Holmes’ graduation from the University of Houston, he has not hesitated in coming forward to leadership to volunteer for committees. He gives a lot of his own time back to the industry above and beyond most of the next generation. Holmes is a key listener and

pays attention to the experienced personnel on logistics panels. He has learned early to absorb lessons learned from industry leadership. I see a lot of potential in Holmes on taking the role of leadership in our industry as part of our next generation.

How came to choose this industry:

I chose logistics as a career because I wanted to be part of a profession that has a direct positive impact on society. I specifically chose the project cargo-breakbulk sector of logistics when I attended the Education Day at Breakbulk Americas Conference in Houston, Texas, almost 10 years ago. I recalled a case study presentation about a major capital project in Peru. I was intrigued with the level of detailed planning, execution and the collaborative team effort from various stakeholders that went into successfully executing the project. I decided that was exactly what I wanted to do for living. It was www.breakbulk.com BREAKBULK MAGAZINE 35

ence in logistics management, trade compliance, project management, and business administration and finance. Extensive experience in working with all levels of company members ranging from the project level to corporate management. I work for Wood, a global leader in the delivery of project, engineering and technical services to energy and industrial markets. I obtained a Master in Business Administration from West Texas A&M University and an undergraduate degree in supply chain and logistics from the University of Houston.

> Ben Miller

Management style:

After accepting my job offer from ATS, I discovered there was much more to the company and industry than just trucking. Growing up in a small town in Minnesota, I only experienced seeing an occasional f latbed truck at the one stop light in town, or in traveling out of the area. Since then, I’ve learned there is so much more out there, as in the project industry, which I’ve found to be home.

Servant leadership. I practice this both in my professional and personal life, primarily because my faith is the yardstick I use to measure my life and leadership philosophy. I strive to lead and manage people with humility. I also find great joy in serving and empowering those I lead to help them succeed.

Long-term professional goals: Samuel Holmes at this event that I met Margaret Vaughan, who later became my manager.

Industry’s significance, from your perspective:

The industry plays a pivotal role in driving the global economy. The world-class projects we support as logistics professionals have a direct impact on society and also contribute to the growth of businesses.

A mentor or industry leader who greatly influenced you:

Margaret Vaughan, my former manager, has influenced me as an industry leader. Vaughan mentored me early in my career and provided invaluable opportunities for me to develop the skills I needed to succeed.

Professional background:

Logistics professional with more than seven years of experi36 BREAKBULK MAGAZINE www.breakbulk.com

To be a logistics executive. I would also like to teach part-time in the future to pay it forward and help educate and mentor the next generation of logistics leaders.

Your role as a developing industry leader:

My passion for the industry will continue to drive my active involvement in advocating for education, innovation, and safety. This will enable me to develop into a wellrespected industry leader.

Most important industry issue:

Attracting the next generation of project logistics leaders that are passionate, teachable and innovative with a global mindset. If industry leaders do not act now, we run the risk of becoming like the truck driving sector that’s struggling to find drivers. I am hopeful because the Breakbulk organization and the Exporters Competitive Maritime Council are helping to close the gap by partnering with schools to help educate and provide opportunities for logistics students.

National accounts manager ATS Trucking Nominated by:

An executive for a leading engineering, procurement and construction company.

Reason for nomination:

Very driven and results oriented person, focusing on improving safety in the trucking industry.

How you chose this industry:

Industry’s significance, from your perspective:

The opportunity to participate in improving local and global infrastructure is pretty cool. For example, participating in a project that changes how we get power when we f lip on our lights at home, or fill up at the pump. How we as an industry participate in these projects can make a positive impact on everyday living.

A mentor or industry leader who greatly influenced you:

I have a few important people in mind, but my biggest mentor is my father. He’s one of the smartest and hardest working people I know. He has been a great resource for me personally, obviously, but also professionally. At an early age, I started working for him at the family business, farm machinery dealership, and learned so much. I saw firsthand what it took watching him put in the hours during harvest season, working with customers, all the while running a successful business. ISSUE 6 / 2019

Professional background:

Since earning my bachelor’s degree, I’ve primarily held sales positions at ATS. My current role is overall management of our national accounts within the f latbed specialized and heavy-haul divisions of ATS. This includes sales and service for some of our largest engineering, procurement and construction companies, power original equipment manufacturers, and oil and gas customers.

Management style:

I’m all about team atmosphere. No one is perfect, including myself, so I’m always asking lots of questions and exchanging strengths among the team. If I can learn something, too, in the process, that’s a win. Since our industry changes so often, I find it is important to stay engaged daily.

Long-term professional goals:

I hope to continue to grow with

the industry, and overall become a well-rounded expert in my profession. I have a lot to learn yet, so by staying engaged regularly with our senior industry professionals, I hope to achieve that goal.

Role as a developing industry leader:

I hope to stay on the leading edge of innovations that will improve our industry, and bring them directly to our customers. Bringing light to new technology in trucking that can have a positive impact in project safety is one example.

Most important industry issue:

Alarmingly, huge court settlements against the commercial trucking industry. These have even been named “nuclear lawsuits,” due to the size of the settlement to the plaintiff. This is a real concern for cargo owners, carriers and insurance companies alike. It’s not all

doom-and-gloom though, as there is an inf lux of new technologies coming, including sensors, cameras and autonomous technology. These new technologies will help protect shippers and carriers by providing a more accurate snapshot of what’s happening on the roads, which is a vital resource when it comes to settling claims.

The opportunity to participate in improving local and global infrastructure is pretty cool.“ –B en Miller, ATS Trucking

Ben Miller

www.breakbulk.com BREAKBULK MAGAZINE 37

We need to show people – at all stages of their professional life – that we offer something fulfilling, something that is skill-building and something that is impactful.“ – J ohn Rapacki, Bechtel

John Rapacki

> John Rapacki Charter manager Bechtel Global Logistics Nominated by:

An executive for a leading engineering, procurement and construction company.

Reason for nomination:

Merchant marine with experience at sea and heavy-haul on shore … leading Bechtel Global Logistics now.

How you chose this industry:

I grew up on Long Island, so being around the water was a way of life. When I was a kid, I was hooked on reruns of the documentary series Victory at Sea. World War II-era maritime history really inspires me, and this had a big impact on my interest in going to sea and working with ships. 38 BREAKBULK MAGAZINE www.breakbulk.com

After finishing graduate school, I had the opportunity to move to Houston and work with semi-submersible ships; something I had never considered until a recruiter contacted me. Once I started building a network in the project cargo and engineering, procurement and construction community, I knew I’d made the right choice.

Industry significance, from your perspective: Our work in the breakbulk sector helps shape our physical world in meaningful ways. We contribute to the projects that deliver power to households and industry, refined products to consumers and infrastructure that improves the quality of life for people around the world. We also work with some remarkable equipment that is managed by very talented people in a global breakbulk community.

A mentor or industry leader who greatly influenced you:

I have always admired Rear Adm. Mark Buzby, U.S. Maritime Administrator and a Kings Point 1979 graduate. When I was a midshipman at Kings Point, he would often visit the academy and spend time with the students. He was always very gracious, approachable, highly informative and very encouraging. His career as a military officer and maritime leader sets a very high standard; one worth learning from and following in respect to public service, commitment to a mission and advocacy for the maritime industry and its people.

Professional background:

I graduated from the U.S. Merchant Marine Academy, and started my professional career working at sea. I sailed as a third mate for two years and then completed the MBA ISSUE 6 / 2019

constant change, bring a high degree of energy and creativity to new challenges, communicate the value of what we do, and align strategies with ever-changing customer demands and market conditions. Building teams of this caliber can only be done with visionary leadership that inspires individuals to break through their perceived limits and successfully collaborate toward common goals.

Most important industry issue:

Finding, developing and keeping talent. While all industries face common economic challenges, I reflect on the relatively small scale of our industry, and the size of the individual companies that participate. Most are small businesses, and when the industry gets squeezed, the ability to compete for and retain talent is limited. Our industry is not easy. We are a service industry built around physical equipment and work. For many of us, there is no 9-5 and forget it. If given the choice between an air conditioned office and working the Houston waterfront in August, I think the disparity is obvious. We need to show people – at all stages of their professional life – that we offer something fulfilling, something that is skill-building and something that is impactful.

John Rapacki program at Fordham University. After graduation, I moved to Houston and started working with semi-submersible ships. Over the next 10 years, I held positions that enabled me to conduct business around the world and develop my commercial, technical and communication skills. I also experienced first-hand the increasing role of large-scale modularization, the maturation of the semi-submersible, heavy-lift market and the impact of market forces in reshaping that segment. I joined Bechtel in 2018 and spent my first year assigned to a largescale petrochemical project, where I managed the transport of heavy-lift cargo from the U.S. Gulf Coast to the project site by inland tug and barge. In 2019, I joined the Bechtel global logistics team.

Management style:

I think if you were to ask my cur-

rent and former colleagues, they would describe me as a missionfocused team player; someone who communicates a vision with purpose and direction, and empowers people to perform at their best.

> Luciano Vidal

Long-term professional goals:

Leandro Brusque, supply chain manager – subsea construction, Ocyan.

My goal is to positively influence change in organizations and build teams that pursue ever-increasing levels of impact on industry and society, and produce well-earned economic rewards for all involved.

Role as a developing industry leader:

One word: Leadership. As an industry, we manage our way through market cycles, risk, customer needs, and all the tasks that enable our dayto-day business activities. I think the long-term winners will be highperformance teams that can adapt to

Procurement and logistics manager, Subsea 7 Nominated by:

Reason for nomination:

Luciano Vidal is someone who has a great ability to learn, develop himself and apply his knowledge in a straightforward manner so that the results for the company are immediate. He has also proven his knowledge on leading logistics and vendors … as well as extensive chartering experience on the more diverse types of vessels. He has worked worldwide on several links of the supply chain, managing small and large teams locally and on remote locations. www.breakbulk.com BREAKBULK MAGAZINE 39

Luciano Vidal

This industry, like many global industries, must continue to evolve through ensuring diversity and a collaborative culture.“ –L uciano Vidal, Subsea 7

There, I worked in senior supply chain roles in South America and Africa. Following this I joined one of the world’s leading subsea engineering, construction and services companies serving the offshore energy industry, where I’m thrilled to have worked in South America, Europe and North America, managing a highly skilled workforce and working on fabulous projects.

Management style:

There is an old saying: “Excellence is the gradual result of always striving to do better.” Therefore I’m always setting the bar high to the team, leading by example, driving by performance and committed to the company goals and team.

Long-term professional goals:

How you chose this industry:

The dynamic work environment provided by the breakbulk, heavy-lift and project cargo industry caught my attention on my very first day at work. It demands a strategic mindset and robust planning, and by failing to prepare, you are preparing to fail.

Industry significance, from your perspective: This extraordinary industry not only moves cargo worldwide, but also moves business and peoples’ lives every single day, building local and global connections.

A mentor or industry leader who greatly influenced you:

There were several mentors that

40 BREAKBULK MAGAZINE www.breakbulk.com

helped me set my career compass in the right direction, but one really stands out. Leandro Brusque is one of those leaders with inspiring skills and knowledge. He’s a genuine mentor, who is accountable, enthusiastic and an excellent communicator with unquestionably integrity.

Professional background:

Before obtaining my bachelor’s degree in engineering, I was fortunate to have the opportunity to work at one of the world’s largest brewing companies as a logistics/warehouse supervisor, which involved leading people by motivation. After some years I moved to a global engineering and construction company, which had locations all over the world.

To keep going above and beyond in my job, leading people to make a positive difference to my company and those around us.

Role as a developing industry leader:

I work closely with a diverse range of stakeholders to deliver smarter solutions, ethical standards and better and safer results that are sustainable across the board.

Most important industry issue: The shipping industry, like many global industries, must continue to evolve through ensuring diversity and a collaborative culture where clients, partners and suppliers work openly together to innovate and perform better, bearing in mind our collective environment and social responsibilities.

ISSUE 6 / 2019

> Carsten Wendt General manager Wallenius Wilhelmsen Ocean Nominated by:

An executive for a leading engineering, procurement and construction company.

Reason for nomination:

Long-time Rickmers-Line employee, and now with WWL. Insightful, innovative and collaborative with business partners.

Breakbulk is not only “B2B,” it also still runs in large parts on an “H2H,” or human-tohuman, factor.“ –C arsten Wendt

How you chose this industry:

During my studies I volunteered at the German seaman’s mission and spent a lot of time in the port talking to seafarers from all over the world. This truly led my way into ocean transportation. My first encounter with breakbulk and heavy-lift was during my diploma thesis with ABB Transformers, where I analyzed the shipping of large power transformers from various ABB factories. After this experience, I knew this is what I wanted to do for work.

Industry significance, from your perspective:

I really enjoy that our industry is still quite individual and unique and not commoditized like container transportation yet. Breakbulk is not only B2B, it also still runs in large parts on an “H2H,” or humanto-human, factor. Which means it is so much more important in our industry to genuinely trust your business partner.

A mentor or industry leader who greatly influenced you:

I would like to mention Ulrich Ulrichs, former CEO of RickmersLine, and now CEO with BBC. He inspired me with his sharp mind and his passion for the business. He not only had trust in my abilities as a young professional, but also empowered me and gave me the opportunity to grow. Also, with Wallenius Wilhelmsen, I am surrounded by great leaders who motivate me to further develop my professional and leadership skills.

Professional background:

I am an industrial engineer specializing in international transport management. I studied at one of the oldest maritime universities, Seefahrtsschule Elsfleth in Germany. This certainly had a huge impact on my career path. After graduating in 2007, I jumped straight into the breakbulk industry with Rickmers-Line in Hamburg. After a great seven years with them I moved on to a new challenge Wallenius Wilhelmsen in 2014. As senior manager sales Germany, my team and I are responsible for one of the biggest breakbulk markets for Wallenius Wilhelmsen Ocean.

Management style:

First of all, I see myself as part of the team. Success is a team effort, and a leader is always only as good as the team. Leading by example is certainly the most important mantra for me. I would never expect something from my team members that I wouldn’t do myself.

Long-term professional goals:

Our industry is traditionally conservative when it comes to technological innovations. For me it’s one of my priorities to play an active role in leading our industry into the next century of digitalization.

Your role as a developing industry leader: I would like to continue the legacy of inspiring breakbulk personalities and create my own unique footprint.

Most important industry issue:

I see the implementation of IMO 2020 as from Jan. 1, 2020, as a huge challenge for the shipping industry in general and in particular for the breakbulk segment. This new rule increases the operational costs tremendously, and the challenge will be whether our customers are willing to fully absorb these costs. BB www.breakbulk.com BREAKBULK MAGAZINE 41

CASE STUDY

CALM AT THE COLD FRONT Working the World’s Most Remote Construction Site BY DAVID WHITEHOUSE

ot many of us would choose to live with our colleagues for six months at maximum temperatures of around zero degrees Celsius. Still fewer would be able to deliver a complex, time-sensitive project in such conditions. Martha McGowan, a project manager at UK civil engineering contractor BAM Nuttall, has done both. BAM Nuttall entered a sevenyear partnership with the British Antarctic Survey, or BAS, in January 2017 for a £300 million, seven-year Antarctic infrastructure modernization program commissioned by the Natural Environment Research Council, or NERC. McGowan was chosen as lead engineer for the removal of an old wharf and the construction of a steel-framed replacement for the Rothera research station. The new wharf will accommodate the UK’s polar research vessel RRS Sir David Attenborough. The Rothera station, which opened in 1975, is the largest British Antarctic facility. Rothera, 900 miles south of the tip of South America on Adelaide Island on the western coast of the Antarctic Peninsula, is one of the world’s most remote construction sites. The continent is the highest, driest, coldest and windiest on Earth. The island, which is 140 kilometers long, is mountainous and heavily glaciated. 42 BREAKBULK MAGAZINE www.breakbulk.com

McGowan spent six months there managing a team of 50 people before coming back to the UK in May. She learned quickly about the time sensitivity of construction dictated by the short Antarctic construction season, and had to plan for wildcard risks such as stray icebergs and predatory mammals. BAM Nuttall chose UK-based Trans Global Projects, or TGP, in a competitive tender in April 2018 for the project cargo moves. TGP was chosen as BAM was confident in its manpower, resources and attention to detail, McGowan said. Any missing equipment would have meant that the project would not work as planned.

COUNTERING BIOSECURITY THREATS Antarctica has unique ecosystems that can be threatened by the incursion of non-native species of plants and animals. Therefore, the project had to comply with the British Antarctic Survey Biosecurity Handbook. These stringent requirements were to become the project’s biggest challenge, said Matt Jackson, group commercial director at TGP. He compared the problem to that faced when shipping cargoes to Australia, which has its own complex biosecurity rules. All cleaning had to be done at origin. The entire berth area at the A.V. Dawson hub on Teesside of about 14,000 square meters had to

be deep cleaned. The area was then fenced off and there were controlled biosecurity areas where the cargo was processed and stored. “The job site was the deck and holds of the ship,” he Matt Jackson said. TGP drew on TGP its experience in Australia to deliver. Six months of work was needed before any cargo could be received in the UK, working to a comprehensive plan drawn up and approved by BAS and BAM. ISSUE 6 / 2019

Experts were flown in from Australia to the UK, where they stayed for twoand-a-half months. “Don’t enter into a biosecurity process lightly,” Jackson advised. Any infraction would have meant the vessel being rejected at its Antarctic destination and in a worst-case scenario returned to the UK for further decontamination and for reloading. All cargo had to be inspected and washed with ultra-high-pressure water jets, and insecticides, pesticides and herbicides were sprayed in and around the facility. Parts of the cargo were also treated with residual insecticides. The containers and loading equipment had to be fumigated and the timber used for packing had to be compliant with International Standards for Phytosani-

tary Measures No. 15. The vessel itself also had to be decontaminated. As far as TGP is aware, this was the first time that such stringent export biosecurity procedures had been carried out at a UK port. McGowan spent eight weeks at port at Teesside due to the sheer volume of equipment being assembled. She recalled that TGP and its experienced Australian professionals made meeting the complex biosecurity requirements “look very simple.” Due to the absence of any construction equipment in Rothera, the construction team practiced full-scale assembly of the 30-ton steel rigs that formed the skeleton of the new wharf in Southampton to identify any unexpected needs. For the two months

Every single piece of equipment for the project had to be shipped to Rothera; there was no margin for error. / CREDIT: TGP.

prior to the departure in November 2018, 40 to 50 people were working on the project at Teesport full time. The complete lack of equipment at Rothera meant that everything had to be packed on the ship, the DS Wisconsin. A total of 13,000 cubic meters had to be loaded, including two 300-tonne crawler crane cabs. In addition, 85 containers were stowed on the decontaminated F-Type multipurpose ship. This stretched the capacity of the ship to its absolute maximum. Not a single additional container could have been added, TGP’s Jackson said. www.breakbulk.com BREAKBULK MAGAZINE 43

CASE STUDY

Above: Unloading the ship took a full 11 days and nights of round-the-clock work. Top right: All cargo was sprayed with ultra-high-pressure water jets to comply with Antarctica’s complex biosecurity rules. / CREDIT: TGP.

“When you work in Antarctica, you have to account for every single nut and bolt,” said Bruce Wulff, project manager for Ramboll, who is BAS’s technical advisor in Antarctica. “There is no margin for error as the nearest supply store is a five-hour plane journey away.”

PERFECT PACKING

The gear that would be needed to discharge the ship had to be packed and positioned so that it would be first off in Rothera. The perfect discharge sequence had to be planned in advance, which was made more challenging by the ship’s capacity limits. The crew was much larger than usual, as all the stevedores had to be brought along. There was not even room for the port captain, who had to fly. “The moment the hatches were closed, that was it,” Jackson said. Everything was tagged once it had been checked. Some assembly of steel parts was done at the port: “The more that could be done in the UK, the better,” McGowan noted. It wasn’t all plain sailing. Bad weather encountered in the English Channel raised the possibility of delay and 18 months of work briefly hung in the balance. 44 BREAKBULK MAGAZINE www.breakbulk.com

A further tense moment, Jackson recalled, came when the ship had to rendezvous with the RSS Ernest Shackleton research ship in Antarctic waters. The Shackleton was needed to make a path for the ship through the ice. There was only a tight time window available for the rendezvous, without which the ship could not have reached Rothera. Once in polar waters, the project also had to comply with The Polar Code, which came into effect at the start of 2017 and is designed to protect crews and shipowners in those regions. According to the International Maritime Organization, or IMO, polar shipping is forecast to grow in volume and diversity over the coming years, driven by reduced ice cover and increased resource extraction.

EMPLOYING DIGITAL TECHNIQUES

At Rothera, BAM worked closely with TGP to lay down the order in which the equipment had to be unloaded. The mobile crane had to come out quickly to move other equipment, as well as tractors and trailers to keep the unloading area clear. The teams were working flat out on a 24-hour shift rotation, and unloading

the ship still took a full 11 days and nights of around-the-clock work – the sun never sets in Antarctica at that time of year. Pre-planning, Jackson underlined, was critical to the project. That, and a spirit of collaboration with the client. The planning, McGowan said, was the same as for any other project, with the operation being broken down into its component parts. The advance assessment was “close to what unfolded on the ground,” McGowan said. Digital techniques were used to model the operation. BAM Nuttall uses software including Navisworks, which allows 3D review of architecture, engineering and construction. The software allows the import of schedules and cost items from external project management tools. Civil 3D, Revit and ProjectWise served as document control systems. As a solution to the lack of “cloud” access in the Antarctic, BAM adopted a tool from WorkMobile to record biosecurity inspections relating to the cargo. A key challenge, McGowan said, was to strike the “balance between delivering the project and working and living together as a team.” There were some similarities, she said, between ISSUE 6 / 2019

CASE STUDY

There was only a tight time frame for the vessel to reach Rothera during the Arctic summer. CREDIT: TGP.

DEALING WITH POLAR REALITIES Poor weather and a lack of reliable charts for some areas pose challenges for mariners operating in polar waters. Further, most maritime digital communication systems are not designed to cover polar waters and the remoteness of the areas makes rescue or clean-up operations difficult and costly. Cold temperatures may reduce the effectiveness of ship components, such as deck machinery, emergency equipment and sea suctions, and ice can mean additional loads on the hull, propulsion system and appendages. The International Maritime Organization’s Polar Code covers these challenges and much more in a regulation that applies in Antarctic beyond the 60°S latitude. In the Arctic, it is modified to encompass the coast of Greenland through to the Russian Arctic coast in the Barents Sea. The code therefore does not affect Iceland, Norway and the Kola Peninsula in Northwest Russia. Ships in either region are required to have a valid polar ship certificate issued by their flag state. Under the code, a ship’s ice class is used to determine its polar ship category. The Polar Code does not associate a ship’s category with geographic operating areas. It is up to shipowners to ensure that the ship’s ice class is appropriate for the areas where it will operate.

The code includes stricter environmental protection regulations than previously existed. Still, environmental advocacy groups argue that the code does too little to prevent shipping accidents and pollution. The Arctic Institute in Washington DC has publicly pointed to the fact that measures aimed at preventing ships from transporting non-native species to polar regions are nonbinding and leave Arctic ecosystems exposed. The institute cites a 2016 study by Friends of the Earth, which claimed that eight cases of humancaused, marine “bio-invasions” have occurred in waters north of the Arctic Circle. The code also requires shipowners to determine the maximum expected times of rescue in polar waters. This determines the survival equipment that the ship must carry on board. The code lays down a minimum expected rescue time of five days, although in some areas this may be much more. The risks are far from negligible. A collision with a rogue iceberg in February forced Chinese polar scientists, who were drilling near the Chinese research station of Zhongshan in east Antarctica, to cut short their field season, with a South Korean ship having to rescue Chinese workers stranded in Terra Nova Bay.

Antarctica and north Scotland, where BAM Nuttall has long been active, in terms of remoteness and harsh weather. The experience gathered there “had its part to play” in the harsher Antarctic environment, she said. When the first construction season ended in May, David Seaton, senior infrastructure program manager at BAS, commended the work as being on time and carried out with excellent safety performance. “When construction resumes, we will be starting from a very good point,” he said. The new 74-meter wharf is due to be completed in April 2020. TGP has continued to support the project with further smaller deliveries. The firm is already working on the plans for bringing equipment back: season two for Rothera mobilizes in November. McGowan will return to Rothera in November for another six months with most of the team. The project could mark the start of a steady stream of Antarctic projects for all involved: BAS stations in Signy, South Orkney Islands, and King Edward Point, South Georgia are all due to be upgraded. BB David Whitehouse is a journalist who spent 18 years with Bloomberg, before turning to a career as a freelancer. He has written for The Financial Times, the World Economic Forum, Deutsche Bank, Germany Trade & Invest, and UBS Asset Management, among many others. www.breakbulk.com BREAKBULK MAGAZINE 45

SHIPPING TRENDS

THAWING POTENTIAL New Frontier Boom for Project Cargoes

he melting of Arctic ice and the rich untapped natural resources in the region are leading to a redefinition of shipping routes as fundamental as that heralded by the construction of the Suez Canal. The Northern Sea Route, which goes from northeastern Asia over Russia to Rotterdam, is 40 percent shorter than the traditional route 46 BREAKBULK MAGAZINE www.breakbulk.com

BY DAVID WHITEHOUSE

through the Suez Canal. This joins other Arctic trade routes including the Northwest Passage – along the northern coast of Canada – and the Transpolar Sea Route, which goes directly through the Arctic. The Arctic houses an estimated 13 percent of the world’s undiscovered oil, 30 percent of its undiscovered gas, and a potential abundance of uranium, rare earth

minerals, gold and diamonds. U.S. Secretary of State Mike Pompeo in May said that a new age of strategic engagement in the Arctic has now opened. Pompeo raised the prospect of the time it takes to transport cargoes between Asia and the West being slashed by as much as 20 days. In the short term, that means there is likely to be large demand ISSUE 6 / 2019

Oil production and mining potential makes the Arctic a region of great interest for breakbulk and project cargo movers. CREDIT: SHUTTERSTOCK.

to oil production and mining potential. But these new opportunities bring new risks. The Arctic, Brennan said, has “multiple physical, political and legal barriers to maritime traffic and security including a lack of governance, inadequate crisis response and a fragile environment.” There are no facilities to repair vessels in the Arctic and emergency work would be difficult at best, Brennan said. Planning, training and experience are essential for successful operations.

EXPERIENCE IS PRICELESS

for project cargoes to create the necessary ports and infrastructure in Arctic waters, notes Lawrence B. Brennan, a former U.S. Navy captain who is now adjunct professor in international law at Fordham Law School in the U.S. Equipment will be needed, such as piers, container cranes, submarine pipelines, submarine electrical transmission and communications cables, electrical generation systems, warehousing, oil tanks and pipes, he said. Brennan expected that while container shipping will mainly continue to use the Suez route, bulk shipping will show a more marked shift to the Arctic due

An increase in Arctic breakbulk activity is already noticeable. Jean-Philippe Paquin, general manager of the Port of Valleyfield near Montreal, has reported publicly of growing volumes of domestic Arctic cargo that were pushing port limits. A new bulk terminal was built in 2018, yet additional space is already needed. Valleyfield plans to double gate capacity to accommodate traffic, with more gates and an automated check-in process for breakbulk deliveries. Tim Keane, senior manager, Arctic operations and projects at Fednav in Quebec, was on board the Nunavik, when in 2014 it became the first cargo ship to cross the Northwest Passage unescorted, as it delivered nickel from Quebec to China. He anticipates a gradual increase in Arctic project cargoes, albeit starting from a low base. Arctic projects must be completely self-sufficient in terms of sea and land-based infrastructure, he said. The six decades during which the U.S. Navy submarine force has operated in Arctic waters prove the value of experience. “Meticulous training, planning, and material preparation are essential,” Brennan said, adding

that charterer and shippers should insist that the shipowner and crew demonstrate specific experience with polar operations and the types of cargoes to be carried. Since the start of 2017, the International Maritime Organization’s Polar Code has sought to ensure crew safety and environmental protection in the Arctic and Antarctic regions. Researchers led by Laurent Fedi at the Kedge Business School in Marseille argued in a research paper that while the code is a key step in improving ship insurability, it has only limited capacity to assist underwriters in assessing risks. Marine insurers still face a lack of data and a high level of uncertainty, which has led to “extreme caution” in Arctic risk appraisal. Helle Hammer, managing director of the Nordic Association of Marine Insurers, known as Cefor, in Olso, stressed the need to use operators who are experienced in the Arctic. There are many uncertainties including the Arctic weather, which can change very quickly, she said. Communications during the trip are crucial, and there must be a plan in case something goes wrong on board, including for vessel salvage. Engine failures can happen anywhere, but remoteness worsens their impact. In some areas there will be no possibility of nearby help. Cefor provides lists of questions that prospective shipowners should be asked to answer. One-off projects in the Arctic by operators who are not experienced in the region should be treated with caution, Hammer said. “A simple engine breakdown can escalate very quickly and become very expensive.” The Polar Code, Keane added, “puts the onus back on the shipowner to prove they have done their homework. There’s more to it than having the manual on board.”

‘POLAR SILK ROAD’

According to the CPB Netherlands Bureau for Economic Policy Analysis, full commercial viability www.breakbulk.com BREAKBULK MAGAZINE 47

SHIPPING TRENDS

There is great potential in the Arctic region for project cargo demand. CREDIT: BIGLIFT SHIPPING.

of the Northern Sea Route, or NSR, is still some way away. Issues hampering viability include slower speeds, Russian fees and Customs clearance, limited commercial weather forecasts, patchy search-and-rescue capabilities, the scarcity of relief ports and the need to use icebreakers. Those are powerful deterrents to project cargoes, which rely on predictability, punctuality and economies of scale. The bureau forecasts 2030 as its base scenario for the NSR to be fully operational. China, which needs to secure energy access, can afford to disregard short-term commercial logic. The opening of the Arctic has prompted China to seek to reposition itself as an Arctic power. Beijing in January 2018 outlined its ambitions to extend its Belt and Road Initiative to the Arctic. China, which has gained observer status on the Arctic Council, has a stake in Russia’s Yamal liquefied natural gas, or LNG, project, which is expected to supply China with 4 million tonnes of LNG a year. In September 2018, a ship belonging to Chinese shipowner COSCO Shipping, transporting wind power equipment, reached a French port via the Arctic route for the first time. The 48 BREAKBULK MAGAZINE www.breakbulk.com

project was organized by French port logistics and shipping group SeaLogis. Zhang Li, deputy general manager of COSCO Shipping Specialized Carriers, spoke of the need to create a “green Polar Silk Road” after the 33-day voyage. COSCO planned 14 transit voyages along Russia’s Northern Sea Route between July and October – nearly double the number of 2018. The CPB estimates that in the future, 15 percent of Chinese trade will use the NSR, resulting in a massive redistribution of shipping tonnage. Roughly 8 percent of world trade is transported through the Suez Canal, the CPB said, estimating that two-thirds of this volume will be rerouted via the Arctic.

POLLUTION INSURANCE

A poll carried out by Safety4Sea in January 2019 found that 74 percent of respondents did not believe that the Polar Code as it stands is sufficient to ensure crew protection and environmental safety. Brennan agreed that there is a need to strengthen the code’s safety provisions. He said that the code’s rules on ship structures, including the requirement that a ship must be able to withstand flooding resulting from hull penetration due

to ice impact, should be applied to all ships in Arctic waters, not just those built since January 2017. Redundant fire safety appliances should also be mandatory, he said, as should requirements for experience in sailing in polar waters. Polar Code requirements on the ability to receive and display current information on ice conditions should also be extended to pre-2017 ships, he said. Revisions to the Polar Code are being considered for adoption in 2022. Further, the Polar Code recommends ship operators “not to use or carry heavy fuel oil in the Arctic,” but this is not binding. Brennan argued that there is an “obvious need” to establish comprehensive rule of law governing environmental concerns in the Arctic. Safety measures taken to reduce the probability of an accident will help protect the environment, he says. One way forward, he suggests, lies in the combination of stiffer requirements for liability insurance, particularly for environmental damage claims, and jurisdiction and venue provisions for resolution of the claims against ships and their pollution and liability insurers. But despite the challenges, there is great potential in the region for project cargo demand, not only to supply infrastructure to support salvage, but also in support of improved emergency environmental responses and in the port infrastructure to service the inhospitable region. The need may not be immediate, but stakeholders should start positioning themselves soon if they don’t want to be given the cold shoulder when it comes to future polar logistics. BB David Whitehouse is a journalist who spent 18 years with Bloomberg, before turning to a career as a freelancer. He has written for The Financial Times, the World Economic Forum, Deutsche Bank, Germany Trade & Invest, and UBS Asset Management, among many others. ISSUE 6 / 2019

ENERGY UPDATE

RENEWABLES POWERING MOVES BY SIMON WEST

Costa Rica Steers Towards Green Future

uccessfully navigating the rugged terrain of Costa Rica’s sparsely populated, northernmost province of Guanacaste is no mean feat for movers of project cargo. A traditional hub for cattle ranchers, in more recent times the province has become the beating heart of Costa Rica’s renewables revolution, accounting for almost 40 percent of the country’s electricity generation over the last 30 years.

Here, wind energy is king: Guanacaste boasts 16 of Costa Rica’s 18 commercial-scale wind farms, all powered by the strong gales rolling down across the border from Lake Nicaragua. A decade ago, Costa Rica-based breakbulk specialist Dacotrans was tasked with transporting parts and equipment for the 55-turbine La Gloria, one of the nation’s largest wind farms with 49.5 megawatts, or MW, of installed capacity.

Heavy-haul trailers carried ring generators, rotor blades and 22-meter-high steel towers from Caldera – the country’s main port on the Pacific Coast – through touristy Puntarenas province up towards the volcanic Cordillera de Guanacaste. “The components were not really heavy or large, but the project was installed in a complicated zone in the high mountains in Guanacaste, where there are only poor routes and narrow infrastructure,” said Luis

Dacotrans shifts breakbulk cargo destined for Costa Rica renewables projects. CREDIT: DACOTRANS

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ISSUE 6 / 2019

Gonzalez, project logistics manager at Dacotrans. “Nonetheless, we delivered all cargo 10 days before the deadline.”

GREEN ENERGY MIX

The rapid buildout of Costa Rica’s wind industry – total installed capacity stands at 410 MW, up from 67 MW 10 years ago – has helped transform the region’s third-smallest nation into a green energy pioneer. For five years running, power generated from renewable resources has represented more than 98 percent of total energy output. So far this year, it is 98.8 percent. By contrast, renewables provided just 28 percent of the world’s electricity in 2018, according to the U.S. Energy Information Administration, or EIA, although that figure is expected to rise to 49 percent by 2050. Costa Rica’s hydroelectric stations, such as the 305 MW Reventazon in Limon province, the largest in Central America, are leading the charge, accounting this year for 67.5 percent of

power generation. Wind represents 17 percent, followed by 13.5 percent from geothermal sources and 0.8 percent from biomass and solar. When renewable energy is unavailable – during the December-to-April drought season, for example, which empties water from reservoirs used for hydroelectric power – bunker fuel and diesel are on tap for backup thermal generation. Alongside wind projects, geothermal power stations, with their bulky and awkwardly shaped components, have been a boon for breakbulk and project cargo. Inaugurated in July, the 55 MW Las Pailas II is the latest geothermal station to feed the national grid, drawing hot water and steam from 21 production wells beneath the Rincon de la Vieja volcano in Guanacaste. A modern turbine, a substation, a fiberglass cooling tower and almost 14 kilometers of pipeline were just some of the hardware required to install the US$335 million plant, which is

generating an annual average of 410 gigawatt hours, or GWh. Costa Rica now houses seven geothermal stations – all owned by state-controlled power provider Instituto Costarricense de Electricidad, or ICE – with a total installed capacity of 260 MW, the third-largest in the Americas after the U.S. and Mexico. An eighth ICE plant – the 55 MW Borinquen 1, also in Guanacaste – is expected to come online in 2026. ICE’s latest power generation expansion plan, which runs through 2034, calls for 653 MW of renewable energy to be added to the grid over the next 15 years, of which 280 MW corresponds to wind, 165 MW to geothermal, 161 MW to solar and 47 MW to hydroelectric. Most of this new capacity, however, will arrive from 2028. “Our existing plants, plus those currently under construction, are sufficient to meet demand until 2027,” Javier Orozco, planning and development director at ICE, told Breakbulk.

Navigating Costa Rica’s rugged terrain can be challenging. CREDIT: DACOTRANS

www.breakbulk.com BREAKBULK MAGAZINE 51

ENERGY UPDATE

Ports in Costa Rica have been modernized to receive oversized and overweight cargo. CREDIT: DACOTRANS

DECARBONIZING THE ECONOMY

Costa Rica’s renewable energy drive is a key component of its National Decarbonization Plan, one of the most ambitious climate initiatives in the world. Launched in February, the plan calls for an overhaul of energy, transport, waste and land use to achieve zero net greenhouse gas emissions by 2050. Proposals for the gas-guzzling transport sector, which accounts for about 40 percent of emissions, include the full electrification of buses and taxis and a countrywide network of hydrogen filling stations for cars and lorries. At least half of freight transport will be “highly efficient” by 2050, with emissions 20 percent below 2018 levels. The government’s showpiece, however, is a new electric train line for the metropolitan area of capital city San Jose, a project that is already exciting breakbulk movers. Construction is slated to begin in 2022. “The decarbonization strategy will be the best project that Costa Rica has had for many years. The implementation of different options for public transport will provide new alternatives for our business,” Gonzalez said. But Daniel Suchar Zomer, professor of international finance at Costa Rica’s 52 BREAKBULK MAGAZINE www.breakbulk.com

National and Latina Universities, said achieving the goals of decarbonization could be costly. Despite the country’s green credentials, private car ownership continues to climb, driving demand for refined products. Taxes on fuel and vehicle imports are an important source of government revenues. Furthermore, a weak economy, expected to grow just 2.2 percent this year, is straining the national budget and creating uncertainty for consumers and investors. “On the one hand, it is a source of pride for the country to be seen as a pioneer in this very important area, but on the other, the funds earmarked for the decarbonization plan have yet to be defined,” Suchar said. “Right now, when the economy is going through such a bad patch, securing capital and effort for a longterm project seems more utopic than reality. There is some progress on the integration of electric vehicles, which we welcome, but fossil fuel use still prevails, and there is no indication of any rapid shift in consumption patterns,” he said. The government also has a job to do to improve lacking logistics support – “the country’s Achilles heel,” Suchar said.

To address the deficit, the administration of leftist President Carlos Alvarado Quesada unveiled last year a US$4.6 billion spending package to rebuild the country’s creaking road network, while another US$158 million was allocated this year to revamp international and regional air terminals. Efforts to modernize the country’s commercial ports have already begun. APM Terminals inaugurated in February a new US$1 billion container terminal at the main port of Moin on the Atlantic Coast. The facility, which includes a 650-meter quay, 29 electric container cranes and six super-postPanamax gantry cranes, is expected to raise commerce in Costa Rica by 23 percent, according to a study quoted by APM. Caldera on the Pacific Coast has also been upgraded to receive larger vessels and reduce wait times, with spending on a new dock, mobile cranes and reach stackers. “The port is now better prepared to receive oversized and overweight cargo,” Gonzalez said.

REGIONAL INTEGRATION TO SPUR SPENDING Costa Rica is not the only country in Central America steering a course towards a green energy future.

ISSUE 6 / 2019

ENERGY UPDATE

Installed wind power capacity in the region has already topped 1.2 gigawatts, covering almost 10 percent of total electricity consumption. Panama’s wind capacity is close to the 300 MW mark, due largely to the start-up of the 215 MW Laudato Si wind farm, the largest in Central America. The US$430 million project, located in the city of Penonome, can supply power to 125,000 households. Honduras has also lifted its installed capacity to 300 MW, while El Salvador’s first commercial-scale wind farm, the 54 MW Ventus project in northwest Santa Ana department, is expected to come online in 2020. “Wind resources are excellent, and some of the projects already in operation are showing extraordinarily high rates of performance, which makes wind one of the most competitive sources of electricity generation in the region,” said Ramon Fiestas, president for Latin America at the Global Wind Energy Council. Potential also exists for offshore wind development, although a first wave of projects is unlikely to get off the ground until the second half of the 2020s, Fiestas said. Better integration of the region’s electricity markets could spur yet more investment. The International Renewable Energy Agency is focusing on the regional grid, known as Siepac, to promote cross-border trade of renewable power and create a clean energy corridor in Central America. Closer alignment would allow bigger producers like Costa Rica to export more surplus electricity to its neighbors. This, in turn, would generate higher profits and reduce costs for consumers. “There is a very high growth potential for investments that could be fully exploited,” Fiestas said. “Siepac should play a much larger role, seeking wider regional energy integration and boosting the Central America electricity market.” BB Colombia-based Simon West is freelance journalist specializing in energy and biofuels news and market movements in the Americas.

Top: Top: The 215 MW Laudato Si wind farm accounts for the majority of Panama’s wind capacity. Above: Wind blades arrive for the Laudato Si wind farm, the largest in Central America. CREDIT: IEH

www.breakbulk.com BREAKBULK MAGAZINE 53

LEGAL SPOTLIGHT

BY GREG BOROSSAY

LUMBERING UNDER A MISCONCEPTION

Lesson Learned on Forum Selection THE STAKEHOLDERS:

• U.S.-based global importer of wood flooring and prefabricated wood for cabinets, furniture, lamination, general woodworking and manufacturing. • Ocean Quartz, a bulk carrier manufactured in Japan in 2010 sailing under the Panama flag. • SK Shipping Co. Ltd. • Dalia Ship Holding SA. • Star Bulk Carrier SA. • U.S. District Court, New Jersey. • U.S. Ninth Circuit Court covering 11 western states.

THE SCENE:

In December 2011 Liberty Woods International, or LWI, imported various shipments of bulk lumber, finished (laminated) and unfinished, from Tanjung Manis, Malaysia, Bintulu Malaysia, and Samarinda, Indonesia, to Camden, New Jersey. The crates of plywood that discharged the Ocean Quartz Feb. 14-21, 2013 arrived in a damaged condition due to improper blocking and bracing within the vessel. There was water damage to the laminated cargo as well, due to failure to guard against weather during the vessel transit. The cargo was determined to be a total loss with damages in excess of US$375,000. 54 BREAKBULK MAGAZINE www.breakbulk.com

THE FACTS:

LWI, a manufacturer and importer of various hardwoods, ships using a mix of bulk carrier and container carrier vessels. The shipment in question was shipped breakbulk with the bill of lading issued by the vessel time charterer SK Shipping Co. Ltd. LWI filed suit against the bareboat charterer Dalia Ship Holding SA., in personam, and against the vessel Ocean Quartz in rem. An action in rem dates to the Middle Ages, and is a legal fiction that treats the vessel as a wrongdoer. Because LWI had failed to file in a timely fashion against the bareboat charterer or the time charterer, the only remaining cause of action was against the Ocean Quartz in rem. When the Ocean Quartz was

In rem: against a thing (such as a right, status, or property).

In personam: against a person for the purpose of imposing a liability or obligation. Source: Merriam-Webster

bound for Camden, New Jersey, again in April 2013, LWI attempted to arrest the vessel. However, by that time Dalia Ship Holding had chartered the vessel to Star Bulk SA, Greg Borossay not a party to Attorney At Law the action. Thus, LWI could only bring their cause of action against the Ocean Quartz in rem. The sales contract between LWI and SK Shipping Co. Ltd. contained a forum selection clause that named The District Court in Seoul Korea as only court authorized to settle any claim, suit or action under the bill of lading in question. However, the Seoul District Court does not recognize actions in rem against vessel owners. As such, the U.S. District Court in New Jersey, lacking enough case law, relied in this case on the U.S. Ninth Circuit Court decision in Fireman’s Fund Ins. Co. v. M.V. DSR Atlantic, 131 F.3d 1336 (1977). Fireman’s and its progeny found that lack of in rem jurisdiction by an international court is not necessarily a ISSUE 6 / 2019

Seoul District Court. CREDIT: SHUTTERSTOCK.

LESSONS LEARNED:

violation of the intent of the Carriage of Goods at Sea Act, or COGSA. As such, the U.S. District Court in New Jersey, finding no jurisdiction, dismissed the case leaving LWI without recourse.

THE LAW:

LWI argued that the bill of lading issued by SK Shipping, a Korean company, was a contract of adhesion with a forum selection clause that violated COGSA because it eliminated the opportunity to bring an action against the Ocean Quartz in rem because Korean courts do not recognize such actions. Following Fireman’s, the U.S. District Court in New Jersey found the following: “Forum Selection Clauses in international contracts are prima facie valid and should be enforced unless the circumstances are unreasonable. Merely being inconvenient is not unreasonable and parties engaged in international trade are expected to read and understand the implications of the contracts they sign.”

There is no strong public policy basis for finding the forum selection clause to be invalid merely because the Korean court did not recognize actions in rem. In fact, the U.S. District Court in New Jersey argued that parties contracting to bring a suit abroad must be cognizant of their status as members of a global community and respect the competence of other jurisdictions to adjudicate claims. The forum selection clause should not be invalidated even if the bill of lading was considered a contract of adhesion. Given that the clause in the contract was unambiguous, there is no reason to invalidate the clause as there did not appear to be unequal bargaining power between the parties. The forum selection clause did not violate COGSA. G iven that “carrier” under COGSA could be the owner, manager, charterer, agent, master of a vessel or the vessel itself, the court found that COGSA does not mandate how the parties choose to contract.

Liberty Wood International learned an expensive lesson through this case, and perhaps will select legal counsel willing and able to more promptly and effectively handle its claims in the future. I’d like to give a few words to the wise regarding forum selection clauses for global breakbulk parties contracting in this space: • Read the details of the bill of lading or retain competent legal counsel in advance to review the terms and conditions of the contract. Choose a venue that makes sense based upon the routing of the cargo instead of the ownership of the vessel itself. • Another approach is to choose a neutral site not involved in the transaction where the courts have considerable experience with maritime issues. The UK Courts, The Hague, and Singapore are good choices. Check with your insurance provider for suggestions. • Don’t expect U.S. courts to always step in to contravene in international maritime affairs, especially in the present tariff environment. • Consider reducing the likelihood of litigation by using a reciprocal forum selection clause that requires that the plaintiff bring suit in the court system of the defendant in all actions. This tends to discourage litigation from the get-go. BB

Greg Borossay is an attorney specializing in admiralty and transportation and is principal, marine business development, at the Port of San Diego. He can be contacted on gborossay@gmail.com, +1 949 633 9158.

www.breakbulk.com BREAKBULK MAGAZINE 55

PROFILE

Cecilia Müller Torbrand CREDIT: MACN.

ANTI-CORRUPTION ANGEL

Putting an End to Exploitation

orruption and trade are steadfast bedfellows; one smoothing passage for the other since time immemorial. Medieval history is littered with laws and initiatives designed to tackle the evils of corruption, many explicitly noting the corrosive and costly impact bribes and malfeasance have on the final cost of both necessities and luxuries. Many of the same challenges facing medieval traders are still apparent today. Transparency International defines corruption as “the abuse of entrusted power for private gain. It can be classified as grand, petty and political, depending on the amounts of money lost and the sector where it occurs.” The organization’s 56 BREAKBULK MAGAZINE www.breakbulk.com

BY MICHAEL KING

latest Corruption Perceptions Index found that no state is free of corruption, and more than half of countries are failing to fight corruption, resulting in a “crisis of democracy.” One sector where corruption has always thrived is, of course, shipping, most specifically at ports where the ship/trader/cargo owner meets the state and is reliant on state officials for safe and timely passage – almost the perfect transactional scenario for abuse. However, after sucking up or passing on the extra trading costs caused by corrupt practices for so long, shipping is now pushing back. The Maritime Anti-Corruption Network, or MACN, was set up in 2011 with a vision of creating “a maritime

industry free of corruption that enables fair trade to the benefit of society at large.” MACN is essentially a global business network which brings together shipping stakeholders to tackle corruption through collective action. “We were eight companies at our first meeting,” MACN Director Cecilia Müller Torbrand told Breakbulk. “That was January 2011. By the end of that year, we were 15 companies and today we have 115 global companies in the network. We’ve grown in size, but also in geographical representation. We represent approximately 30 percent of the world’s tonnage. “Importantly, we have everybody in the network, from big companies ISSUE 6 / 2019

like BP, Maersk and Rio Tinto, to smaller owners with 50 or so ships. We also have specific committees for containers and bulk, and we are very keen to get more people from the breakbulk and project communities onboard,” Torbrand said.

When a ship is in port there are multiple inspections before cargo can be loaded or unloaded. CREDIT: SHUTTERSTOCK.

TACKLING CORRUPTION AT SOURCE

Copenhagen-headquartered MACN has in recent years launched a series of successful programs targeting corruption among port and government officials in Argentina, Nigeria and on the Suez Canal. It most recently launched a new pilot scheme in Mumbai, India, which it plans to roll out at more ports if successful. MACN has also created a Global Port Integrity Index, designed “to provide an overview and comparison of illicit demands in ports around the world.” This is created by collecting unique first-hand data from captains calling at ports around the world via MACN’s Anonymous Incident Reporting Mechanism, which has now collected more than 30,000 individual reports. However, much work remains undone, particularly at the shippingstate interface at ports around the world, where the mismatch between regulatory requirements and the reality of successfully being able to operate are most apparent. “You have ships going in and out of ports, and when they are in port, before they’re allowed to take on or offload cargo, there are multiple government inspections,” Torbrand said. “Health inspectors come on board, Customs comes on board, immigration authorities come on board, environmental authorities come on board. These multiple interactions the shipping industry has with government puts the industry at a high risk. “In some countries it’s called ‘tea money,’ which is a small facilitation payment, but there are also more severe challenges in some locations where you have everything from extortion to captains being threatened,” she added.

In some places she related that there might be 40 officials boarding several times at night, trying to find something for which they can fine the vessel $100,000. “So, the problem for the industry is everything from low-level payments to the risk of extortion.” According to Torbrand, MACN and its members work towards the elimination of all forms of maritime corruption by implementing MACN Anti-Corruption Principles, co-developing and sharing best practices, and raising awareness of the challenges faced by vessel captains entering ports. The organization also collaborates with governments, nongovernmental organizations, and civil society to identify and mitigate the root causes of corruption and to create a culture of integrity within the maritime community. “We help companies with everything from developing templates for codes of conduct to sharing best practices from captains so those on the frontline are better prepared for tackling demands,” she added. “A core part of our job is to make these ‘industry improvements.’ While this is typically based on what is, at a

minimum, required by law, it can be difficult for companies to deal with these challenges singlehandedly,” she said.

WORKING IN PARTNERSHIP

MACN works through an inclusive model, attempting to partner with governments by demonstrating where they have problems and explaining how trade will benefit if they tackle those problems. “We don’t want to blame and shame. We want to work in collaboration with governments and local authorities like we have in India and other places,” she explained. “On July 1 we launched a pilot campaign in the Mumbai region, which is actually an integrity pact between the government and the industry saying we’re just going to take this issue seriously and get out the message: ‘Don’t ask; don’t give.’ After six months we’ll see what we’ve learned and how we can expand it in partnership with the authorities perhaps to other ports.” Earlier this year MACN’s anti-corruption agenda was also addressed by the International Maritime Organization, or IMO, www.breakbulk.com BREAKBULK MAGAZINE 57

PROFILE

BREAKBULK CALL TO ARMS There is plenty of scope for breakbulk and project shipping companies and shippers to get more involved at the Maritime Anti-Corruption Network, according to Kevin Leach-Smith, MACN steering committee member and current chief operating officer of Taylor Maritime. “We are always on the lookout for new members who share our aims from all sectors of shipping, and in terms of the breakbulk sector, they are more than welcome to join MACN and we will support them,” he said. “I think they could learn a lot from our existing members just by understanding some of the best practices we’ve developed to try and combat maritime corruption globally.” According to Leach-Smith, when it comes to corruption, the challenges faced by shipowners are often the same across all sectors, although he believes breakbulk shipping companies can often be more exposed to corrupt officials at ports. “If you’re a large oil tanker owner and you’ve got the weight of the oil majors behind you, or you are one of the top container liners, you’ve probably got more ability to resist illegal demands,” he said. “It’s possible that you will have more local contacts in the port because you’re at the same ports all the time, you’re paying significant port fees and may even have a representative office there. Whereas in the bulk and the breakbulk business where there is more tramping, ship operators have more one-off port calls and calls to places they may not be so familiar

58 BREAKBULK MAGAZINE www.breakbulk.com

with. Therefore, they don’t have any real commercial presence in the port and corrupt officials may think they are there for a one-off port call, which makes them an easier target. “But whatever sector of shipping you’re in, it’s the same people targeting you. It’s Customs and immigration officials, port authorities and port state control, among others. Basically, anybody with an official duty to perform, but also a vested interest in getting what they can out of it by creating obstacles for the master and owners.” Leach-Smith cites an unnamed West African port to illustrate his point. “At this particular port, an officer of the environmental agency regularly inspects vessels and their mode of operation is that they will claim the sewage treatment plant doesn’t operate properly,” he said. “Rather than conducting a proper investigation or tests or simply issuing a fine, the officer will try and shake down the master for, maybe €4,000 to €5,000. Refusal to pay then ends up in delays in port and very often escalation of the situation with involvement of lawyers and P&I Clubs. “It’s just a lot of aggravation and stress for the captains. As COO of a company, my job is to protect the owners and the investors and ensure compliance with our internal procedures as well as U.S., UK or other applicable anti-bribery legislation. But I used to be a seafarer as well, and I know how much pressure there is on the captains and how much stress it is to have to deal with these sorts of people making demands and threats.” This is why MACN is “so badly needed,” he said, and why the work that it does is so valuable. “MACN and its members working together gives us far more leverage than any one company can deploy on its own in combatting these corrupt demands.”

Issues such as the wide discretionary powers held by some port officials have the potential to impact all ship owners, managers, and operators. The requirements for port operations too often lack transparency, are deliberately misapplied, or widely interpreted for private gain.“ –C ecilia Müller Torbrand, MACN director

when it agreed to include maritime corruption as a regular work item on its agenda. Guidelines to assist all stakeholders in embracing and implementing anti-corruption practices and procedures will now be development with a guidance document to address maritime corruption due for completion by 2021. “It is important for the industry to have maritime corruption recognized as a problem by the IMO in its role as the international regulator for shipping,” Torbrand said. “Issues such as the wide discretionary powers held by some port officials have the potential to impact all ship owners, managers, and operators. The requirements for port operations too often lack transparency, are deliberately misapplied, or widely interpreted for private gain. “Our aim is to address these challenges.” BB Michael King is a multi-awardwinning journalist as well as a shipping and logistics consultant. ISSUE 6 / 2019

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Recipe for New Talent BY CARLY FIELDS

Bertling Logistics’ John Hark “cooked” up a storm at Breakbulk Americas, when he delivered his recipe for success in an “Our People, Our Future” panel discussion. Hark gave his ingredients for a perfect graduate or entry-level industry intake, explaining that they need to: • Be culturally aware. • Know about geopolitics. • Know the latest technology. • Have leadership experience. • Be a good team player. • Have speaking experience. • Have volunteering experience. • Have a good working knowledge of Incoterms and the international flow of business. • Have language skills. • Have secured an internship or work experience. The panel added that soft skills are often lacking in graduates looking to gain a foothold in the industry. Mentoring was a hot topic during the session, with Rick Padia, vice president commercial at Agility Project Logistics, stressing that those in senior roles have a responsibility to “pay it forward. 60 BREAKBULK MAGAZINE www.breakbulk.com

“The challenge we face is making sure that the people that have been doing this for a long time talk about it,” Padia said. However, the panel acknowledged that the mentee-mentor relationship cannot be forced and that it has to be two way. “From a mentor standpoint, being a mentor is a serious thing – it’s like being a parent. You need to be committed to the relationship and invest in their success,” Hark said. “On the other side, the mentee needs to respect the mentor’s time.” Also, mentors must give honest feedback, he said. “Don’t candy coat – we are doing mentees a disservice if we do.” Panelist Kylie Lung spoke highly of the value of internships. Lung, a senior at the University of Houston studying Supply Chain and Logistics Technology who will graduate in December, served as a supply chain intern at Agility Project Logistics in Houston in 2019. She recommended that students interested in joining the industry gain as much experience as possibly early on. “Internships can do that,” she said. Hark added that there are a number of things that industry can do to encourage the next cohort

The challenge we face is making sure that the people that have been doing this for a long time talk about it.” – Rick Padia, Agility Project Logistics

of employees, for example bringing students in for job shadowing, speaking at schools about the industry’s career potential and “stepping up and sitting on advisory boards at colleges.” “In the last two years the students are showing more enthusiasm than ever,” said Hark, who also serves as an adjunct professor in the Department of Maritime Business Administration at Texas A&M University. “So we are not going to an empty cave and looking for talent.” Padia urged breakbulk businesses to develop strategies to stay in front of the looming talent gap. “It is our responsibility to shorten that talent gap,” he said. BB ISSUE 6 / 2019

Two Sides to Overcapacity Coin BY CARLY FIELDS

As multipurpose ship operators criticize the rate ramifications of a surplus of tonnage, an engineering company executive reminded a Breakbulk Americas audience that there were two sides to the ship overcapacity coin. Speaking on a “Perspective from Carriers and Partners panel,” Bill Keyes, global logistics director of operations at Fluor, said that there are those that see the upside of too many ships. “There are people that benefit from overcapacity – and my clients enjoy that,” he said. “It’s something that makes a financial difference when these capital projects go forward.” He clarified that he was not referring to mega projects, but the US$2 million to US$3 million projects that utilize that fleet.

However, Drewry multipurpose and breakbulk shipping specialist Susan Oatway pointed out that most excess tonnage is overage and small, and probably not the sector that Fluor would be trading in. But those ships still have a “vast impact on the market because they trade at the edges.” Responding to a question on whether carriers are doubling down on safety, Michael Morland, AAL general manager for the Americas, said that safety is people related, is about experience and also the use of technology. “We all want to come home, we all want to make sure our people come home to their family.” He said that ship oversupply in the segment has made it difficult for ship operators to introduce new technology, as the capital is not there to support it. But innovation does not always have to be revolutionary. “Innovation can also be about how

Susan Oatway. CREDIT: ITE GROUP

we learn and adapt from failure,” Morland said. “Adapting and allowing for people to suggest innovation on the back end of failure is very important.” (See Susan Oatway’s article on page 24) BB

Renewables Project Potential ‘Real, Unstoppable’ The energy transition is real, unstoppable and coming fast, and project cargo movers need to be ready to capitalize on an explosion of business. Procurement Executives Group, or PEG, was effusive in its forecasts for the renewables sector in a session at Breakbulk Americas. Carl Newton, vice president of supply chain at Wood – a member of PEG – explained that the U.S. has 90 gigawatts of installed wind, and solar is catching up. The average utility scale solar project calls for 450 containers of solar modules and 125 truckloads of steel, and PEG anticipates that there will be more than 200 utility-scale projects in the U.S. over the next four years. This is supported by policy moves with seven U.S. states mandating 100

percent renewable energy by 2030 to 2050. “These projects are coming hard and fast and it’s a big market. If the company you are talking to isn’t talking about energy transition, they soon will be.” Newton said. “These plants are simple; they go up fast, but they are very supply chain dependent. The logistics side is extremely important.” Looking at the global picture, PEG has its eye on the growing middle class, which is increasing more rapidly than expected, said Randy Dentinger, senior procurement manager at Kiewit Corp., also a member of PEG. “By 2030, Asia could represent two-thirds of the global middle class,” Dentinger said. “These new consumers are buying cars, taking vacations and

Carl Newton. CREDIT: ITE GROUP

so on.” Looking at the global middle class projections gives the industry an insight of the infrastructure needs of the future. “It’s clear the demand trends we are seeing will have major demands for engineering, procurement and construction companies,” he added. Jay Pendergrass, vice president supply chain at PEG member Fluor Corp., commented that this was a buyers’ market and as a result, goods producers have little pricing leverage. BB www.breakbulk.com BREAKBULK MAGAZINE 61

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Warning on Wind Prospects As the U.S. barrels towards a wind The forecast for the number of age and a significant trailer shortage energy installation year that will blow wind energy installations in 2020 is expected for 2020,” Barr said. “What 2012’s record year out of the water, unprecedented and speaks to the scale we are seeing is that trailer demand there are two things that could derail of the problem. Aaron Barr, princifor greater than 350-meter blades is prospects: ignorance and greed. pal wind energy consultant at Wood far in excess of the available number That’s according to Steven Todd, Mackenzie, explained that the comof trailers and of the available number vice president of Specialized Carriers pany’s latest forecast shows that 2020 of drivers.” & Rigging Association. will break 2012’s record by “a pretty Thomas Sender Mehl, manager of Speaking on a Breakbulk wide margin.” transport and handling processes of Americas panel, Todd saw ignoMuch of the growth is driven by a power solutions at Vestas, noted that rance causing setbacks and delay in U.S. production tax credit, or PTC, for the fourth quarter of 2019 was as busy so-called barrier states that have pro- renewable sources, which is creating as the rest of the year, and that the cedures that are “literally still stuck a big rush on demand. Barr said that first quarter of 2020 is expected to be in Flintstone days.” some projects will roll into 2021, but as busy as the whole of 2019. Shippers moving wind cargoes once the PTC has finished by 2023, Consequently, David Ferebee, vice through these approximately 15 states Wood MacKenzie expects a much president of sales and marketing at have to pay an additional 40 percent lower market than in 2019 and 2020. Lone Star Transportation, said that to 80 percent in unnecessary costs, In his analysis, Barr said that 2020 is going to be a difficult year he said. while the total megawatts for the from a supplier perspective. “We need In terms of greed, Todd said that number of wind energy installations a team approach, working together with project delays from last year tipin 2020 is higher than in 2012, there and planning what we can do to do ping into the coming year, pressure is roughly the same number of turmore with less equipment,” he said. is mounting on original equipment bines being installed in 2020. It’s this SiemensGamesa operations manufacturers, or OEMs, and shipincrease in the size of turbines that manager Felipe Cecilio said that pers to deliver. This has already led has created problems. manufacturers were looking at differto a rise in unqualified drivers, but “We’re seeing logistics constraints ent solutions, a split blade being one is now also leading to the advent of along with crane constraints and of those, and recommended moving unqualified carriers. other issues becoming some of the towards modular units to alleviate “As these pressures mount, biggest bottlenecks for a record year. some of the wind installation capacity unqualified ‘carriers’ are stepping up, There’s a significant driver shortpressures going forward. BB approaching OEMs and shippers and Wind – New Instalations, US US (GW) saying, ‘we can get WindEnergy EnergyDemand Demand – New Installations, (GW) that load in several GW Tax credit start/stop cycle PTC Phaseout New mormal sets in days earlier’ than any other carrier 15 that they are used to 2020e: 14.1GW US Record: 14 working with,” Todd 12.9GW Onshore 13 said. “That might be 12 possible, but more Offshore 11 often than not you 10 will be dealing with 9 a carrier that is going 8 to violate safety 7 standards and run 6 without permits. 5 “We are here to 4 3 call on the shippers 2 and the OEMs to say 1 ‘yes, watch the bot0 tom line, but don’t 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 win the battle only to Source: Wood Mackenzie, 3Q 2019 Market Outlook update lose the war’.” 62 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 6 / 2019

Keeping Ex-Im Bank Humming Along BY GARY BURROWS

The U.S. Export-Import Bank is back in business, approving a US$5 billion loan guarantee to finance a liquefied natural gas project in Mozambique. It marks the first significant deal for the U.S. export credit agency in some four-and-a-half years while Ex-Im Bank was paralyzed by a lack of a quorum for its board of directors because approval for three nominees from President Trump was blocked by Sen. Pat Toomey, R-PA. While the nominees finally gained Senate approval earlier in the year, the bank’s long-awaited revival still faces an uncertain immediate future, as renewal of the agency’s charter has been delayed by further inaction within the beltway. Created in 1934, Ex-Im provides assistance in the form of export credit insurance, direct loan guarantees, working capital loans and direct loans for international projects which require the purchase of U.S. goods and services. The lack of a quorum meant that Ex-Im could only consider and approve financing packages of less than US$10 million.

‘WIND AT OUR BACKS’

Originally facing a Sept. 30 deadline, Congress failed to act on Ex-Im’s charter, which is expected to piggyback onto a delayed Senate appropriations bill. Ex-Im Bank’s fiscal year and the Senate appropriations deadline were extended to Nov. 21, with funding at fiscal year 2019 levels, said Stephen M. Renna, senior vice president and chief banking officer for Ex-Im Bank, during a panel session at Breakbulk Americas. Renna said he believes Ex-Im Bank will draw bipartisan support, as it did when the existing five-year charter was approved. However, he complained that cobbling together a reauthorization bill has been stymied by political posturing between congressional Republicans and Democrats.

“The last charter was an oversell off its African assets to Total S.A., whelming super majority in the House a multinational oil and gas company. and Senate,” said Capt. Bill Schubert, The project will develop the president, International Trade & Rovuma Basin, reportedly one of the Transportation Inc., and former U.S. world’s most extensive untapped natuMaritime Administrator, during the ral gas reserves. Ex-Im financing will Breakbulk Americas session. “I think support the Area 1 concession of the it’s going to be the same thing this project, which covers about 10,000 time around, and we’ve got the wind a square kilometers, and is expected to little bit at our backs.” supply up to 64 trillion cubic feet of Renna and Schubert said that the gas, Ex-Im said. eventual reauthorization bill will have The export credit agency anticitwo key measures that will protect pates the transaction will generate Ex-Im Bank. First, rather than the more than US$600 million for U.S. historical five-year charter, Congress taxpayers, through fees and interest is considering a term of 10 to 12 years. earned. In addition, the bill should have Stephen M. Renna, Ex-Im Bank (from left); Capt. Bill Schubert, language that proInternational Trade & Transportation; John Masterson, McDermott tects against losing International; and Rami Touma, Ceca Supply. / CREDIT: ITE GROUP a quorum, by allowing ex-officio Ex-Im board members, such as Secretary of Commerce Wilbert Ross and U.S. Trade Representative Robert Lighthizer, to fill vacant board seats until new appointments may be made, Schubert explained. The proposals being floated also raise “lending limits to a healthy amount,” he added.

MOZAMBIQUE LNG

Just prior to Breakbulk Americas in Houston, the Ex-Im Bank announced the board had unanimously authorized a direct loan of up to US$5 billion for development and construction of an LNG project on the Afungi Peninsula in northern Mozambique. The borrower, Mozambique LNG1 Financing Co. Ltd., is owned by a group of sponsors, which includes Anadarko Petroleum Co, acquired earlier this year by Occidental Petroleum Corp. Occidental is expected to

Renna estimates that Ex-Im Bank has provided about US$66 billion in project finance. Although its charter is approved by Congress, Ex-Im receives no appropriations, providing its own operating revenue through fees and interest. It has, however, provided billions of dollars in surplus revenue to the U.S. Treasury, he said. Besides loans and loan guarantees, Ex-Im also provides financing for engineering and feasibility studies, bid and performance bonds and also some currency insurance, Renna said. (See Lori Musser’s article on page 20) BB www.breakbulk.com BREAKBULK MAGAZINE 63

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“When I started networking and talking to more women that gave me courage. I could not be where I am without the support of family, customers and the women I’ve networked with.” – Catherine James, president, Dixie Cullen (pictured right of center)

Women in Breakbulk Breakfast Women and men in the project cargo and breakbulk industry packed out the main conference stage at Breakbulk Americas for the first Women in Breakbulk Breakfast.

Someone who believes in you and backs you up is so important. The right people took a chance on me. No matter where you are in your career, take that chance.” – Alicia Diaz, JD, corporate legal contracts manager, Fracht FWO INC (pictured far right in top photo)

64 BREAKBULK MAGAZINE www.breakbulk.com

Audience members at the Breakfast were encouraged to share their inspirational stories. / CREDIT: ITE GROUP

I was fortunate to be surrounded by some great women in my career. I encourage you all to share, be a mentor and support each other.” – Kelly Merath, country manager, Canada deugro (Canada) Inc. (second from left in top photo)

ISSUE 6 / 2019

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BACK PAGE LEADING NORTH AMERICAN INFRASTRUCTURE PROJECTS 2019

CG-LA Infrastructure’s Strategic100 North American Infrastructre Projects report identifies the top 100 infrastructure projects that offer business opportunities in the next three to 18 months. Listed are the leading companies from that list. Ports & Logistics

Water & Wastewater

Urban Mass Transit

Highways & Bridges

Rail

Energy

Airport

Telecommunications

PROJECT SPONSOR STATE STATUS SECTOR 1 Texas Central High Speed Rail

1 Réseau Express Métropolitain (REM) 1 SeaOne Caribbean Fuels Supply

4 Hell’s Kitchen Geothermal and Lithium Project

VALUE (US$B)

Texas Central

Texas

Procurement

Rail

CDPQ Infra

Canada

Construction

Urban Mass Transit

15.0 4.9

SeaOne Holdings LLC

Regional

Planning

Energy – Oil & Gas

20.0

Energy - Renewable

Controlled Thermal Resources

California

Design

5 5G FAST Plan

FCC

Regional

Announced Telecommunications

20.4

6 Metrolinx Regional Express Rail (RER)

Metrolinx (GO Transit)

Canada

Procurement

Rail

10.4

7 The Gateway Program – Hudson River Tunnel

Port Authority of NY & NJ

New York/New Jersey Planning

Rail

9.5

8 JFK Airport New Terminal One

Port Authority of NY & NJ

New York

Procurement

Airports

7.0

9 Quebec City Tramway

City of Quebec City

Canada

Planning

Urban Mass Transit

3.3

Colorado Department of Transportation

Colorado

Planning

Highways, Bridges & Tunnels

Government of Quebec

Canada

Planning

Energy & Mining

Chicago Department of Aviation

Illinois

10 I-70 Mountain Corridor 11 Plan Nord

12 Chicago O’Hare Airport Expansion

4.5

1.0 50.0

Design

Airports

8.7

Planning

Airports

0.5

13 Airglades International Airport Redevelopment

Florida Fresh Produce; Hilliard Bros; US Sugar Florida Corpus Christi Port Authority

Texas

Planning

Ports & Logistics

0.4

15 Calcasieu Ship Channel

Port of Lake Charles

Louisiana

Planning

Ports & Logistics

0.4

16 Kitimat LNG Project

Chevron Canada – Woodside Energy Int

Canada

Planning

Energy - OIl & Gas

40.0

17 Tellurian Driftwood LNG Production & Export Facility

Tellurian Inc

Louisiana

Procurement

Energy - OIl & Gas

15.2

The Northeast Maglev

Regional

Conceptual

Rail

12.0

CPRA

Louisiana

Planning

Water & Wastewater

10.0

Great Lakes Basin

Illinois

Announced

Rail

14 Port of Corpus Christi Channel Improvement

7 Northeast Maglev 19 Louisiana Coastal Protection and Restoration Program 7 Great Lakes Basin Transportation 21 TransWest Express Transmission Line

7.0

TransWest Express LLC (The Anschutz Corp.) Colorado, Nevada, Utah, Wyoming

Procurement

Energy - Transmission

3.0

22 1GW Nevada Solar and Battery Energy Storage Program

Procurement

Energy - Renewable

2.0 1.2

Nevada Energy

Nevada

23 Red River Valley Water Supply

Garrison Diversion Conservancy District

North Dakota

Planning

Water & Wastewater

24 New England Clean Energy Connect

Central Maine Power (CMP)

Maine

Procurement

Energy - Transmission

1.0

25 Louis-Hippolyte Lafontaine Bridge-Tunnel

Transport Quebec

Canada

Planning

Highways, Bridges & Tunnels

0.5

26 Port of Coos Bay Channel Modification Project

Port of Coos Bay

Oregon

Design

Ports & Logistics

0.4

27 The Sunshine Project (Industrial Complex)

FG LA LLC

Louisiana

Planning

Ports & Logistics

9.4

28 Maryland I-495 Capital Beltway & I-270 P3 Program MDOT SHA

Maryland

Planning

Highways, Bridges & Tunnels

7.6

29 I-5 Hood River Interstate Bridge

ODOT, WSDOT

Oregon, Washington Feasibility

Highways, Bridges & Tunnels

3.4

30 Broadway Subway Extension

Transportation Investment Corp. – Province of BC Canada

Procurement

Urban Mass Transit

2.8

31 Foothill Gold Line

Foothill Gold Line Construction Authority Board California

Awarded

Urban Mass Transit

2.1

32 Roberts Bank Terminal 2 Project

Vancouver Fraser Port Authority

Feasibility

Ports & Logistics

2.0

Canada

33 Cotton Belt “Silver Line”

DART

Texas

Design Rail

34 Pittsburgh International Airport Modernization

Allegheny County Airport Authority

Pennsylvania

Design

Airports

1.1

35 Laurentia Terminal Project (Beauport 2020)

Quebec Port Authority

Canada

Feasibility

Ports & Logistics

0.6

36 Port of Montreal Contrecoeur Container Terminal Montreal Port Authority

Canada

Design

Ports & Logistics

0.6

37 Gross Reservoir Expansion

Colorado

Procurement

Water & Wastewater

0.5

Denver Water

1.1

38 Metro Line – Northwest Extension

City of Edmonton

Canada

Design

Urban Mass Transit

0.4

39 Howard Street Tunnel

Maryland DOT & CSX

DC/Maryland

Planning

Highways, Bridges & Tunnels

0.3

40 Isthmus of Tehuantepec Corridor

Secretariat of Coms and Transportation

Mexico

Conceptual

Ports & Logistics

7.0

41 Los Angeles/Las Vegas High Speed Rail

Virgin Trains USA

California/Nevada

Conceptual

Rail

5.5

42 Chokecherry and Sierra Madre Wind Energy Project Power Co. of Wyoming (PCW)

Wyoming

Planning

Energy - Transmission

5.0

43 Grain Belt Express Clean Line

Invenergy LLC

Kansas

Feasibility

Energy - Renewable

2.3

44 State Route 400 Express Lanes

Georgia Department of Transportation

Georgia

Procurement

Highways, Bridges & Tunnels

1.5

45 Pattullo Bridge Replacement

B.C. Ministry of Trans and Infrastructure

Canada

Procurement

Highways, Bridges & Tunnels

1.4

46 Boardman to Hemingway 500kV Transmission Line Idaho Power

Idaho, Oregon

Feasibility

Energy - Transmission

1.0

47 Port of Long Beach – Pier B On-Dock Rail Support Facility Port of Long Beach

California

Design

Ports & Logistics

0.8

48 Cardinal-Hickory Creek 345 kV Transmission Line American Transmission Co. LLC, ITC Midwest LLC, Dairyland Power Cooperative Iowa, Wisconsin

Feasibility

Energy – Transmission

0.5

49 Windy Gap Firming Reservoir

Procurement

Water & Wastewater

0.5

Water & Wastewater

0.3

Energy - OIl & Gas

7.7

Northern Colorado Water Conservancy District Colorado

50 City Lake of Oswego New Wastewater Treatment Plant City of Oswego

Oregon

51 Dos Bocas Refinery Pemex

Mexico Construction

Planning

Source: Strategic100 North American Infrastructure Projects, CG-LA Infrastructure, October 2019. cg-la.com

66 BREAKBULK MAGAZINE www.breakbulk.com

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