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gary.burrows@breakbulk.com. Items we use will be edited for appropriateness, length and clarity.

IS MINING ON THE CUSP OF A ‘SUPER-CYCLE?’

New energy projects are driving demand for metals, including true energy levels – and resultant price increases.

CREDIT: SHUTTERSTOCK

Could global mined commodities sow the seeds for an overexuberant the cusp,” Kettle said. Average annual be on the cusp of a “super-cycle,” led supply response as stakeholders chase growth rates in the next decade “may by stimulus focused on new energy the market. Our view is that this nar- be significantly lower on average than transition and the metals crucial to rative regarding the start of a new the last decade.” But the compounded their development? super-cycle needs to be challenged, as effect would mean dramatic growth

Wood Mackenzie, the energy there is a risk that the markets have got for copper, nickel and zinc. True energy research consultancy, believes massive ahead of themselves.” metals, including lithium and cobalt, stimulus programs designed to pull The energy research consultancy will see incremental demand rise subeconomies out of the recession will defines a super-cycle as “a permanent stantially. sustain demand for most mined com- significant increase in commodity The question is whether prices modities. When economies recover demand and price, with the latter “have got a little ahead of themselves and grow, it could stress suppliers who driven by an inability of supply to keep given supply for many markets will be lacked investment to keep up due to up with demand and exacerbated by strong for the next few years,” he said. the pandemic. speculative activity.” “Certainly, higher prices are wel-

“Under this scenario stocks of Following the first months of the come as they should, if sustained, mined commodities will fall to critical pandemic, demand for mined com- give stakeholders the confidence to levels, sustaining modities halted and prices slumped. invest in the supply required to meet prices at a signifi- Since the Covid-19 outbreak, govern- the energy transition. But right now cant premium to ments, led by China, have undertaken it’s a mixed bag and we would argue incentive prices massive green investment stimulus those higher prices are not justified by and resulting programs to offset the economic crash medium-term fundamentals,” he conin supernormal from forced lockdowns. cluded. profits being While global economic growth was The last super-cycle ran from the achieved,” said muted into Q1 2021, most mined com- 2001 recession to 2015, when prices Julian Kettle, modity prices rebounded to above cratered for most mined commodities. senior vice pre-pandemic levels. Some, such as “The BRIC economies, led by China, president, vice iron ore, have climbed to multi-year were the drivers of high demand chair metals and highs, due to green energy demands growth rates and sharply rising prices Julian Kettle mining, WoodMackenzie. “This and recent supply constraints, pushing prices up to 10-year highs. for some commodities,” Kettle said. Only the 2008-2009 global financial Wood Mackenzie could in theory “These markets stand very much on crisis paused the proceedings.

POLAR STORM FREEZES US GULF PLANTS, REFINERIES

O&G FACES ‘GLIDE PATH’ RENEWABLES TRANSITION

Beyond frozen electricity grids and vast water shortages, the historic arctic outbreak that hobbled Houston and much of the U.S. Gulf and Midwest in February sent ripples through global markets, according to Independent Commodity Intelligence Services.

The polar storm shut down 90 percent of U.S. polypropylene capacity and 67 percent of ethylene and other important products, ICIS reported. Power and feedstock outages snarled logistics networks, and extended bad weather exacerbated the situation.

ICIS’s supply and demand database showed much of the Gulf petrochemical sector impacted, with more than 60 plant outages reported. It reported 26 million tonnes of ethylene capacity (67 percent of U.S. capacity) and 11 million tons (50 percent) of propylene capacity were offline. More than 2 million barrels

With demand for oil and gas products waning, the industry should implement a “glide path” to transition to renewables energy.

That is the realistic option, said Ian per day of U.S. refining capacity was also shut down.

The outages hit global markets, which were already facing material shortages and rising prices due to issues with global container shipping. Plant outages and healthy downstream demand also squeezed supply chains for propylene and polyethylene, among other petrochemical products.

The pandemic has cut demand for transport fuels, leading to oil refineries closing or cutting production, particularly in the U.S. and Europe.

Propylene prices are at 10-year highs and inventories halved from the year earlier. Inventories hit a seven-year low at the end of 2020.

ICIS, a subsidiary of Reed Business Information, provides market intelligence for the energy, petrochemical and fertilizer industries.

Palmer, energy consultant and former BP fracking engineer. Oil and gas industry’s glide path initiatives should include: • Shifting to green power for all oil and gas operations including drilling and frac pumping. • Reduce to near zero gas flaring and methane leaks from wells, pipelines and facilities. • Plug abandoned oil and gas wells that are leaking methane. • Develop and implement carbon capture and storage in old oil and gas fields to contribute to the net-zero goal and preserve jobs. • Redirecting investment from drilling to renewables. For example, BP expects 40 percent of its investment to be in renewables by 2030, and Total is investing US$2.5 billion in Adani Green Energy and will own half of its solar electricity. • Accept the ban on new leasing and drilling on federal lands and waters, gradually lowering O&G production. In the U.S., 22 percent of oil and 12 percent of gas is produced on federal land, but companies have stockpiled well leases that will last years, Palmer said.

More than 2 million barrels per day of U.S. refining capacity was shut down by polar storms in the Gulf. CREDIT: SHUTTERSTOCK

Upstream and downstream oil and gas companies are shifting to green power for operations.

CREDIT: SHUTTERSTOCK

Crisis: the Mother of Invention

BY MARGARET VAUGHAN

Innovation Will Surely Thrive in the Pandemic

It is said that necessity is the mother of invention, and during the Great Depression of the 1930s invention and innovation flourished – think Scotch Tape, electron microscopes and Spam.

So, during this current time of enforced isolation, I’m wondering what sorts of innovative ideas and products will emerge. Without the distraction of meetings, colleagues, office politics and general coffee room discussions, I would think that innovators will come up with some incredible stuff.

Innovation invariably creates winners and losers. The introduction of the automobile shifted consumer demand away from trains much like the railways had, in decades prior, displaced canals and waterways as major forms of transportation. The result was job offers for some workers and pink slips for others. Nicholas Carr, in his book The Glass Cage, Automation and Us, put it succinctly: “There is no economic law that says that everyone, or even most people, automatically benefit from technological progress.”

There are certainly some transportation innovations in progress. A startup company called Xwing has completed what they claim to be the “world’s first fully autonomous air cargo flight,” using a Cessna plane that will ensure more costeffective operations for logistics companies. Xwing’s Autoflight System retrofits existing aircraft by integrating onboard flight control systems that allow the aircraft to navigate, take off and land autonomously. The vehicles can also be optionally piloted. Airbus is working on pilotless commercial planes.

Meanwhile in the UK city of Coventry, a temporary airport for flying cars is being built as a proof of concept of a zero-emissions hub for future modes of travel. Electric vertical takeoff and landing vehicles are being suggested as a low-carbon way to ease congestion as people travel between urban centers. At the January 2020 Consumer Electronics Show in Las Vegas, Uber and Hyundai unveiled a full-size model of a planned air taxi. Called the S-A1, it will be 100 percent electric, take off vertically, then transition to wing-borne lift; it can carry four people at speeds of up to 180 mph at an altitude of between 1,000 and 2,000 feet.

SHIP AUTONOMY PROGRESS

Elsewhere, companies involved in the “Designing the Future of Full Autonomous Ship Project” will carry out field testing of crewless domestic container ships working toward the commercialization of autonomous ships by 2025. The members expect that this demonstration of the crewless operation of ships in congested waters navigating over long distances and the early implementation of autonomous shipping will improve their international competitiveness.

The sensors and communication technology already exists to enable ships to safely navigate to a destination while avoiding collisions. Kongsberg is among those building situational-awareness systems that fuse imagery from cameras with lidar, radar and satellite uplinks. This data can either be sent to a skipper who operates the ship remotely from shore, or to on-board computers that entirely replace the human element of control.

Autonomous and remotely operated ships will be more efficient and cheaper to run for ship owners. Since the new generation of ships won’t be manned, there’s no need for crew quarters, galleys, water and sewage, and other amenities that take up space, weight and energy. Crewless ships will have less drag, consume less fuel, and be able to carry more cargo per voyage, resulting in significant economic and environmental gains.

It’s interesting that DARPA, the Pentagon’s research agency, wants to design a ship from scratch to be fully automated. The project, known as No Manning Required Ship, or NOMARS, aims to create a ship where every inch is available – or not wasted on human beings, depending on how you look at it. Which begs the question what will that do to the U.S. Merchant Marine?

A taste of the future. “Open the pod bay doors, HAL.” BB

Margaret J. Vaughan has more than 30 years’ experience in all facets of supply chain management.

Price vs Partnership

Value of Relationships in Recovery

Rationalization, efficiency improvement and digital solutions have always been necessary tools in our globalized world. In recent decades, they have formed a natural part of the development of our line of business. But are they the only recipe for success? And can they strengthen us through times of crisis?

A large part of traditional development originates from an aim to create financial growth. In a competitive world, such as the logistics industry, it is dog-eat-dog to retain existing market shares and capture new ones, especially in times of recession when there is less cargo to be transported.

But did we, in periods of uncertainty including armed conflicts, financial crises, oil crises and global pandemics, fail to see the obvious: the human equation? Could this be the key to not just “pulling through” the current crisis? Could human relationships enjoy a revival in the 21st century – and be more than just a phrase?

In times of crisis, it is necessary to look at all aspects that can optimize one’s business, and to ask if there is a better way to succeed beyond a sole focus on a price-driven mindset with an exclusive focus on economic factors. We need to consider what effect those reflections have on the relationship between the client and the logistics provider when we leave out the present state of the market.

Think about inviting the different interested parties to join the planning process at an earlier stage for a detailed, initial dialogue. This could align expectations and create transparency of knowledge. A solution-oriented approach, with equal partners with equal conditions, could prevail – “we need them, and they need us” – where the same value is assigned to loyalty, presence and trust as to the price.

These values are created through human interaction, and one can rightly ask whether fruitful cooperation can work without this interaction? A combination of these factors generates client satisfaction, mutual loyalty and the feeling of pulling through difficult times together. But does reality mean that when the market trends change for the better, our attention will revert to what it was before: a full focus on the bottom line?

SUPPORT FOR INNOVATION

Technological development – which has certainly been a must for our global industry – is not a solution by itself, and should not stand alone. Amid rapid development, we must not forget, or ignore, that a large part of our work is built on basic human interaction and trust. Despite modern technology, these values will always remain important factors in the way we do business together.

Ask yourself: does this partnership come with a price tag; how do we manage this balance in the best way; is the industry ready to bring these values to the forefront when we are no longer in a global crisis? Those who are ready can profit by mutually built trust and will come out winners. Is it naïve to believe that we, in our business, can move to a place where a strong bottom line price reflects these values, so that we are better equipped to withstand future fluctuations of the market?

Breakbulk logistics providers are expected to be magicians and troubleshooters. We will satisfy our clients’ needs no matter what; client satisfaction is a must. But we must understand the different mechanisms in play when “the times they are a-changin’.” Only those who learn to handle this will be truly successful. BB

Anders Maul is commercial director for oil, gas and industrial projects at Blue Water Shipping.

BY ANDERS MAUL, BLUE WATER SHIPPING

CREDIT: SHUTTERSTOCK

COVER STORY

PART OF THE FAMILY NOW

Projects No Longer a Sideline for Container Lines

Where do container carriers fit into the project cargo and breakbulk scene? The accepted narrative was this: if container volumes are scarce, container lines desperate to fill their vessels will try to get business from the project field, often offering knock-down rates.

More than a decade ago, this was exactly the fallout of the global financial crisis. As container volumes subsequently recovered, to use the words of one multipurpose vessel specialist at the time, “they dropped project cargo like a hot potato.” Container lines, he said, were opportunistic.

Today, container lines are looking at the project cargo opportunities very differently – bringing in the expertise, setting up separate divisions, investing in open-tops and flatracks, and refining services and software to match.

The CMA CGM Group started shipping project cargo decades ago through its various brands, said Stéphane Berninet, head of the CMA CGM project division. “In early 2017, we gathered our numerous project cargo managers in charge of these different lines into one single dedicated project cargo division. We now offer our customers a comprehensive organization with project cargo managers, pricers, key account managers and project cargo engineers, as well as a tender desk to better cover the market and serve customers.”

This dedicated division allows CMA CGM to streamline customer approach and share technical expertise and know-how within the team, Berninet said. “It also allows us to drive business development of project and special cargo by increasing market awareness of our service offerings and capabilities, and focus on delivering global solutions which meet our customers’ projects’ needs.”

Project cargo is very important and an integrated part of the way in which Maersk is run, according to Kristian Lund Knudsen, head of special cargo solutions at Maersk.

“We have organized ourselves by verticals, in order to do our research and really focus on what the customers in certain markets need,” he said.

BY FELICITY LANDON

American businessman Malcom McLean was known as the “father of containerization.” Starting in 1956, from his Ideal-X, a converted tanker, hauling 35-foot trailer vans and later containers, the former trucking company owner developed the concept of containerized transport, leading industry giant Sea-Land Service, and later, the ill-fated United States Lines. CREDIT: WIKIPEDIA

Stéphane Berninet

CMA CGM

Kristian Lund Knudsen

Maersk

“Maersk has been in the project cargo market for more than 25 years ... we have continued to refine our service,” said Kristain Lund Knudsen, head of cargo solutions. CREDIT: MAERSK

“We have seen that customers in the project cargo, or project logistics/special cargo, sector have similar needs – therefore we have organized this in the same way as our vertical for automotive customers, for example.

“We have been in the project cargo market for more than 25 years – since the 1990s we have been serving the oversized cargo market. So it is not a new development, but we have continued to refine our service.”

INTEGRATION CHALLENGES

Sarah Schlüter, Hapag-Lloyd’s senior director, niche products, described project cargo as a “hot topic” for container carriers today, but there can be challenges when it comes to integrating projects with container carriers’ strategies. “From a strategic perspective, project cargo and breakbulk at Hapag-Lloyd is being run separately,” she said. “My department [niche products] is separate, setting its own targets and budgets, everything related to commercial aspects and pricing, but also processes and operational requirements, IT requirements, and so on. So we are really at the helm of everything to try to improve the overall organization and smooth things out to make sure we are commercially successful.”

The key issue that needs to be considered, Schlüter said, is that container lines are run very much like a machine: “You can’t run projects like a machine – it is not so straightforward. Sometimes people really like to put things in boxes, literally things that don’t fit in boxes. It can be difficult within an organization to encourage people to think outside the box and to accommodate the not-so-straightforward.”

Hapag-Lloyd is working towards a more dedicated project cargo set-up with dedicated staff to provide expertise, she said. “It is not about selling a container full of T-shirts, which pretty much anyone might do. It is giving customers expert advice on how things should be handled, and that requires expert staff. We do have those experts already – but not enough of them, so we are focusing on getting more and more in place.” In this, Hapag-Lloyd

is sourcing from outside the company but also growing its team internally through training “by our real experts who are former seafarers,” Schlüter said.

This effort extends to sales and customer service staff, but also to training for customers. “We want to increase the expertise of our customers – educate them to come to us early and talk about it,” she said. “These

Maersk has hauled everything from wind turbine parts to factory components alongside standard containers.

CREDIT: MAERSK cargoes and their timelines are so crucial for the success of a project; we need to manage customer expectation, what is possible and what is not possible. And we need to be 100 percent honest, not promise something we can’t deliver on.”

Project cargo is part of HapagLloyd’s niche division but there is a strategic initiative to grow the segment over the next few years, Schlüter

FEW LIMITATIONS ON WHAT CAN BE CARRIED

Project cargoes carried by Maersk have included wind turbine parts, harvesters, tractors, buses, generators, transformers and factory components, alongside standard containers accompanying such out-of-gauge cargo.

“We move a lot of different items, basically everything you think of in the market,” said Kristian Lund Knudsen, head of special cargo solutions at the line. “The main limitation is items that are too big or heavy to be carried on a container ship.”

The advantages of using a container ship for the project cargo shipper? “First of all, it is the ease of doing business. We have very solid processes and they can book it online. They have access to weekly, scheduled services. They know the consignment is going to leave a certain terminal on a specific day and will arrive at a specific date at its destination. Also, it is possible to combine all of the cargo, whether in standard containers or out-of-gauge, into the same shipment.

As long as it is not too large or heavy to move on container ship, it works for Maersk. “Generally speaking, it is what can be carried on a standard flatrack or open-top container or what we can move as breakbulk and lash directly to the vessel.” There is, however, a limitation with terminal handling and what the cranes can manage.

Maersk continues to invest – in the physical equipment and in the online side, Knudsen said, finding ways to make the website even better and in general interacting with customers in a digital way. “We want to make that really easy so that the specialist resources we have in our sales and customer service teams can spend time talking with customers about their supply chains, rather than what is basically transactional stuff.” added. “It is – under normal circumstances – better paying than regular cargo. Right now, the world is upside down – including with freight rates – but it is part of our Strategy 2023.”

ENABLING ONLINE QUOTES

Maersk’s focus has been on online enablement, making it faster for customers to get a quotation and make a booking, through a dedicated, 95 percent automated website, Knudsen said. Its approach reflects a determination to treat this type of cargo as complicated only when necessary.

“In the past two years, we have reduced the average time to give a quotation for project cargo from more than 36 hours to less than four hours,” he said. “The customer can put in the dimensions and other details and get a quote back – sometimes instantly, or we can go to the relevant terminal if necessary and get back in four hours.”

Customers are at first hesitant about using Maersk’s website for a quote, Knudsen said. “They feel that this is a complicated business, they really need to talk to someone; why should they go on a website for a quotation? From our point of view, this is not a replacement for talking to someone, but making a booking and getting a quote online is freeing up our people to add value for you in other ways. Most customers, when they try it out, really like it. For example, they can sit at their computer at 2100 hrs and go ahead and get a quote.”

Rather than talking about price A or price B, Maersk wants to spend its time discussing how it can make sure it moves project cargo in a safe manner, instead of spending unnecessary time firming up a price. “Once the customer has a quote, etc., they can talk to us about the details later,” he said.

There are instances where Maersk needs to check in with a terminal to avoid confirming a booking, only to have the terminal saying it can’t handle or lift the cargo. However, that should happen less and less because of frequent discussions with terminals upfront to establish what they can handle in terms of size and weight. “So, if a customer comes up with something we already know is too big for the specified terminal, we can say sorry, we can’t do that, but maybe come up with an alternative.

CMA CGM has transported a number of racing yachts.

CREDIT: CMA CGM

“We have a database full of information on what any terminal can handle and it is being updated all the time. Every time we talk to them, we use what we have learned to update our information. Some terminals have very much the same as us. But others are a little bit more conservative and ask that we check and make sure with them each time regarding this kind of cargo.”

TERMINAL KNOW-HOW EXPOUNDED

Maersk Line works with hundreds of terminals across the market and determines in each case which would be the best terminal for this cargo, Knudsen continued. Its website will provide a quotation for the best product the line has available. “If our standard product is not able to cater to a load, for example if the origin terminal can’t handle it, then in those cases we have a salesperson who will reach out and suggest an alternative, such as trucking the load to another terminal nearby. If we don’t see a solution, we have to say so.”

Maersk started building up its automated website in earnest about four years ago. Eighteen months ago it started pushing it as channel to use.

“For a long while we kept the option of providing email quotations. Then, as these reduced to a trickle, we said now we move to the website as the only channel,” Knudsen said. “We continue to invest in making the online experience better – anything from the speed of it to using historical data to make the offer better. That is what we are trying to achieve, to make logistics simpler for our customers and become a global integrator; exactly this kind of ease where we take some of the complexity out of it and enable customers to handle their supply chains in a simpler way and with less friction.”

Special cargo volumes are experiencing strong growth for the CMA CGM Group, which is confident about this segment’s potential, Berninet said. “Having the capabilities of transporting oversized and heavy-lift cargoes allows us to provide an allin-one offer to our customers while taking large projects where most of the cargo is already loaded in standard containers,” he said.

CMA CGM has shipped highly technical projects, he added, which is a “testament to the skill of our organization and operational capabilities.”

Project cargo transport has included the maxi trimaran Banque Populaire IX, which was 32 meters long and 23 meters wide – as wide as the 900 20-foot equivalent unit vessel it was shipped on, operated on the Morocco-North East service. This was a tailor-made study and shipment including a private port call at the trimaran’s home base in Lorient. CMA CGM has also transported a 44-meter-long crane jib from

Shanghai to Algeciras, which pushed forward the line’s project cargo capabilities.

“The heaviest piece we shipped was a rock dumping unit (for the subsea sector), which weighed 457 tonnes and had dimensions 30 meters long by 11 meters wide by 20 meters high. This was from Rotterdam to Singapore, using floating cranes at both ends,” Berninet said.

BREAKING MINDSETS

Some project cargo forwarders still do not instinctively question container carriers for breakbulk rates because they are used to working with conventional heavy-lift and roll-on, roll-off carriers, Berninet noted. “So, keeping and raising awareness about CMA CGM’s service capabilities and offerings is a major aspect of our business development strategy.

“We are operating 285 shipping lines with 530+ vessels covering over 420 ports of call across five continents. Thanks to this network and our ability to transship oversized and heavy-lift cargoes, we can offer to ship breakbulk and out-of-gauge cargo on all trades and almost all ports with regular and reliable sailings at reasonable transport costs. We also offer highfrequency and fast transit time, with a positive impact on the overall project financials by meeting construction timelines and delivery schedule.”

CMA CGM is developing all areas, from spot shipments for one case to three-year long-term projects involving containers, out-of-gauge and breakbulk cargoes covering various origins and trades.

One of the biggest challenges for container lines handling project cargo is timing – including coordinating a collection of containers that need to arrive at the same time and place as the out-of-gauge cargo.

Hapag-Lloyd’s Schlüter commented: “It is not just fitting the

Project cargo does take up a lot of space, so there’s a breaking point for profitability, said Sarah Schlüter of Hapag-Lloyd, but the container line is far from that point.

CREDIT: HAPAG-LLOYD

cargo physically. It is a whole lot of making sure of the initial plan, checking bases with a lot of different stakeholders, making sure the equipment is available, do we have space, are there going to be delays, transshipment issues; we need very close, practical hand-holding. Of course, it is best to know as early as possible that you will have this breakbulk piece coming, so you can make sure you arrange everything and have the shipment build into the overall planning at the terminal.

“We would arrange the unloading of the equipment with the terminal – checking if the terminal is capable of getting the piece on or off the ship – do they need a floating crane, do they have one, what weight can the floating crane handle; all this is checked before the quotation is done for the customer.”

Her view is that IT enhancements can support the whole process, but when it comes to breakbulk, every piece is individual: “You don’t have standard costing, because everything is unique. That does make the quotation process more complex and manual, and driving efficiency is difficult.” Having said that, Hapag-Lloyd is working on IT improvements when it comes to the costing process, and will be making costs available to customers through its website, she said.

Typical shipments by HapagLloyd have included generators and propellers. Recently the line moved a series of subway cars from Italy to Lima, Peru, over a period of one year, which Schlüter recalled as one of the most spectacular transports she had seen.

FREQUENCY AND RANGE

Schlüter is in no doubt of the advantages that container shipping can offer to shippers in this segment. “We provide frequency and more ports. If you have a project accompanied by standard equipment, we sell the overall package alongside our global network. If there are urgent containers that are part of the overall shipment and have to go at the same time, we have ways to communicate this in the system.”

Hapag-Lloyd does not have a specific target for share of noncontainerized cargo. The line wants to grow, but with the acknowledgement that project cargo does take up a lot of space.

“That is space that you lose [for containers], so there is a breaking point where it doesn’t make sense anymore,” Schlüter said, adding that Hapag-Lloyd is still far from reaching that breaking point.

One question that often comes up for container lines carriage of project cargoes is whether lines can take last-minute oversized or overdimensioned cargoes. Practically, the answer is yes, Schlüter said, but in the current times, the answer is no. “Everything is possible, of course, but you don’t want to upset others and always commercial validation needs to take place.” BB

Container lines claim to have more ships and greater geographical coverage than

traditional MPVs. CREDIT: SHUTTERSTOCK

COVERAGE AND FREQUENCY KEY

Extensive port coverage and frequency of container services in core trading zones create opportunities for Swire Shipping to support project and out-of-gauge cargo business, according to General Manager Chris Robertson.

“As a container/MPP vessel owner, we find that we can meet the extensive requirements of projects in the regions where we operate, through the carriage of bulkier items in our purpose-built hatches, and containers or flatracks to match the demands of each project – specifically around the protection of weather-sensitive or higher value pieces,” he said to Breakbulk. “It would be a rare occasion if one of our vessels was not carrying cargoes specifically for the purposes of plant or infrastructure development.”

For Swire Shipping, frequent arrivals and being able to offload cargoes at ports close to the project site allow for “greater cost control,” he added, while service reliability provides assurance to project management teams.

Swire’s container ships transport all varieties of project and specialized cargoes. “Examples would range from low-value commodities for construction, like timber and cement, to more specialized equipment like heavy duty machinery, large trucks, bulldozers and plant,” Robertson said. “At the very top end of the value chain, we have carried switch rooms, transformers and generators.”

Felicity Landon is an award-winning freelance journalist specializing in the ports, shipping, transport and logistics sectors.

COVER STORY

BY CARLY FIELDS

BACK IN THE BLACK

MPVs Finally Move Out of the Doldrums

For years, the multipurpose sector has clutched at the advent of a new year to bring it a longed-for upturn. The phrase “cautiously optimistic” was destined to be engraved on the tombs of MPV companies that fell in the many dark years. But has that tide finally turned? As the calamity that was 2020 rolled into 2021, MPV operators at long last found real cause for optimism.

At the end of February, Drewry’s Multipurpose Time Charter Index was at a high of US$6,800 per day, a rise of 4.2 percent from the previous month and up 5.6 percent from February 2020. Drewry expected the index to rise a further 4.4 percent in March to reach US$7,100 per day. The index tracks one-year period charter rates across a basket of vessel types and sizes and forecasts the market movement over the coming month. The vessel types include breakbulk and project cargo ships.

Shipbroker Toepfer Transport’s MPP Index mirrored the optimism. In February, its per-day time charter rate stood at US$7.146, the highest since March 2020. Provided by a panel of operators, Toepfer’s index gives a monthly time charter rate assessment for a 6-12 month time charter of a 12,500 deadweight-tons F-type MPV.

Speaking to Breakbulk, Simon Guthrie, partner and shipbroker at Hamburg-based One World Shipbrokers, highlighted the wind sector as the MPV sector’s partial savior in 2021. He said “significant volumes” of cargo from the wind sector at the start of this year have propped up activity, volumes and sentiment for the MPV sector. This has helped to shift the market from oversupply to one where vessels are “in demand and space is valuable.”

“We have seen a shift in the market dynamic,” he added. “Owners have become selective over the cargoes they choose to take.”

CRASHING THE CONTAINER PARTY

Another spur has been the employment of MPVs for traditional containerized cargoes – an ironic shift given the MPV sector’s haranguing of container lines for “stealing” MPV cargoes in the past. Guthrie said that he had heard examples of cargoes being destuffed from containers to load onto MPVs.

Chris Robertson, global market manager for Swire Shipping, noted that the pronounced shift away from containerizing of cargo back to traditional conventional carriers might be a short-term phenomena and a trend that may be reversed as market conditions correct themselves. However, he added: “It will be interesting to see how many customers acknowledge their exposures to the fragilities of the containerized market and opt to build contingency layers into their supply chains in order to maintain optionality with dedicated breakbulk/project carriers.”

Drewry reported MPVs being chartered to carry empty containers for repositioning purposes, plus an increase in breakbulk demand for commodities no longer worth enough to stuff into containers. “This increased demand meant that January rates were even stronger than we had been expecting,” Drewry said. Going forward, the analyst expects this trend to continue, especially as there is already a market expectation that the usual slowdown for Chinese New Year holidays will not take place this year.

“MPVs comparatively have seen their rates strengthen,” Guthrie agreed. “Carriers are seeing the opportunities to capitalize on a strengthening market and will rightfully expect long overdue rising freight rates. Even from One World Shipbrokers’ perspective as a fresh company to the market we are seeing varied and increasing numbers of prompt requirements daily,” he said.

Hannes Holländer, managing director of Toepfer Transport, added that there is no distress tonnage available anymore, and that operators and charterers are overbidding each other. “It is very difficult to find ships,” he said, speaking in late January. “Demand for MPV shipping is in parallel high; we hear from various operators that they are booked out for the next six to 12 months.”

SUPPLY BALANCE OUTLOOK

Positivity for the rest of the year and into 2022 leans on a slim orderbook for MPVs, estimated by Guthrie to be just under 2 percent of the world’s active fleet. “That equates to around 60 vessels,” he said. This compares with an orderbook of 6.6 percent for capesize bulk carriers and 4 percent for handysizes.

Data from Dynamar records that 68 ships were delivered in 2020, which is in line with the range of 60-70 ships delivered in previous years. In contrast, Dynamar consultant Frans Waals said, 81 vessels of all sizes were demolished. He added that while the order book currently seems “rather small,” there is plenty of newbuilding capacity available with short lead times for those thinking of taking the plunge.

Guthrie pointed up a predicted 2 percent fleet growth over the next two years in a sector where the average age of tonnage is getting older. “All fleet operators will at some point need to renew their oldest vessels and replace them as part of an ongoing cycle,” he said.

About 40 percent of the existing fleet was built before 2000, according to Dynamar. “I would not be surprised if many of them operate in local trades and in this way are capable of avoiding the strictest regulations and enforcement,” Waals said. However, it is a fleet of two halves,

Drewry’s Multipurpose Time Charter Index

$ per day 7,000 Estimate

6,500

6,000

5,500

Feb 2019 Apr Jun Aug Oct Dec Feb 2020 Apr Jun Aug Oct Dec Feb 2021 Mar

Source: Drewry

Toepfer’s Multipurpose Index

Time charter rate per day 7.5

7.2

6.9

6.6

6.3

6.0

Feb 2020 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2021 Feb

This index represents the monthly average time charter rate assessment established by a panel of operators, owners and brokers for a 6-12 month timecharter for a 12,500 tons dwt MPP/HL ‘F-type’ vessel Source: Toepfer Transport

with the rest “relatively young,” and built since the turn of the century. “The bulk of them were constructed between 2004 and 2013 and should be capable of continuing operating for quite some time without regulatory problems,” he added.

The aging MPV fleet, it seems, does not give too much cause for concern. Toepfer’s Holländer pointed out that an aging fleet implies increasing freight rates on the back of reduced supply – a bonus that will be well received by suffering operators.

The consensus is that while there are still plenty of workable heavy-lift ships that can be considered as well past the average age of retirement, they continue to perform well and are highly regarded.

STILL CHALLENGES AHEAD

However, not everything in the MPV garden is rosy. There are challenges pending in pitting that aging fleet against the credit crunch and ever-increasing regulatory demands. Dynamar’s Waals admitted to being concerned about project delays and cancellations and the knock-on effects of those. Added to which, he pointed out that the oil market continues to be very difficult and there is the lingering threat of pure car and truck carriers shifting more towards breakbulk cargoes as global vehicle sales continue to languish.

There is also the shifting regulatory landscape to consider, a factor that is deterring MPV operators from placing replacement orders too early. Ships ordered today will, within their lifetime, fall within the International Maritime Organization’s 2030 carbon intensity reduction targets. A level of reticence on MPV ordering is understandable with the jury still out on what will be the shipping fuel of the future.

Guthrie hopes that the lack of newbuilds will give the market a chance to capitalize on rate increases which could then be channeled into R&D on innovative newbuilds in the MPV sector. Short term, though, MPV operators will simply be content to move from below-breakeven rates to a profit. “The sector has suffered many years of depressed income and for now it is a question of steadying the ship following a recent period of fleet consolidation,” Guthrie said. “There is no doubt a positive feeling in the MPV market. Perhaps these are the green shoots of change and experiencing a tonnage supply issue and increasing rates is what all have waited for.”

Looking ahead, demand for large cargoes will continue to be on the whim of macro influences, however optimism remains that the sector will continue to strengthen throughout this year. The accommodating nature and versatility of MPVs will be its gift as the world recovers from the pandemic. “There will always be a need for these vessels and the expertise their operators command,” Guthrie said. “No MPVs are truly the same. Whether it be crane strength, carrying capacity, speed or fuel consumption, there are never truly two identical vessels. By this definition there are MPVs ready to accommodate the current supply of varied breakbulk and project cargoes.

“At this rate it would be hard to not see MPVs benefitting from a rising market well towards the end of this year.”

The Wind Lift I has a 500-tonne capacity and a high outreach offshore crane. CREDIT: SAL

SAL’S WIND SECTOR AMBITIONS

With offshore work poised to significantly contribute to the robustness of the multipurpose vessel sector in 2021, operators are positioning themselves to capture that business.

A sister company to SAL Heavy Lift, SAL Renewables launched in January 2021 as a specialized provider for offshore wind services and installation. Its fleet consists of the 2010-built dynamic positioning, or DP, jack-up crane vessel Wind Lift I with 500-tonne capacity, a high outreach offshore crane and a fully equipped accommodation block for up to 50 people. SAL Renewables also has access to parent company Harren & Partner’s offshore DP2 heavy-lift ship Blue Giant.

“Wind Lift I represents an important enhancement of our fleet. It extends our scope of action to provide our customers with comprehensive, yet customized solutions,” said SAL Renewables’ Managing Director Heiko Felderhoff, describing the Wind Lift I as “like a Swiss Army knife.”

SAL Renewables is targeting the replacement and decommissioning of turbines as well as installation projects.

Martin Harren, managing director of Harren & Partner, described wind power as “a cornerstone of our business in the past few years,” adding that there continues to be significant projects coming up for tendering in that sector. “The world’s demand for energy is higher than ever before, and a major energy transition is currently underway. The projects resulting from this change are crucial to our business,” he said. Carly Fields has reported on the shipping industry for the past 21 years, covering bunkers and broking and much in between.

SAL, JUMBO PLAN JOINT VENTURE

Breakbulk specialists SAL Heavy Lift and Jumbo said they plan to form a joint venture, which stands to dominate the heavy-lift capable segment.

The two partners aim to combine a large part of their fleets as well as merging engineering and commercial activities.

“The Jumbo-SAL-Alliance would be focused on gaining logistical efficiencies, such as joint fleet operations, and benefits for its customers, such as increased flexibility and offering customers worldwide a carefree logistics solution for both breakbulk and outsized cargoes,” a spokesperson for SAL said.

Concrete details about the joint venture remain undisclosed, but the partners have stated a goal to improve sustainable transport capacity and growth.

The venture is subject to clearance by the Bundeskartellamt, the German competition authority, as well as Dutch incompany legal requirements.

Netherlandsbased Jumbo provides heavylift and project cargo services worldwide and operates a fleet of nine heavylift vessels, four with lifting capacity of 1,800 tonnes and a further two with 3,000 tonnes lifting capacity.

Hamburg-headquartered SAL Heavy Lift operates a fleet of 22 heavylift vessels, most with lifting capacity up to 900 tonnes and six vessels with combined crane capacities of 1,400 tonnes or more. SAL is a member of the Harren & Partner Group.

Last year, SAL acquired a “major stake” in cargo shipping line Intermarine, expanding its offering in the Americas and strengthening crossAtlantic trade. Intermarine operates as an independent brand within the SAL Heavy Lift Group.

Both companies intend to maintain their current headquarters in Netherlands and Germany. BB

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ENERGY UPDATE

TIDE TURNING FOR US WIND

Biden Proposals Could Unlock Offshore Industry

BY SIMON WEST

U.S. President Joe Biden’s fast and furious start to his first term, marked by a slew of executive orders aimed at tackling the climate crisis, will have given project logistics plenty to chew on.

The industry’s legendary coolheaded approach to business means talk of energy revolutions and green new deals is unlikely to cause alarm, but if Biden is able to overcome a divided legislature, and, crucially, win a second four-year term in 2024, then the U.S. energy landscape could look very different by the end of the decade.

In the election run-up, Biden had vowed to turn the U.S. into a clean energy superpower, unveiling an economy-boosting US$2 trillion infrastructure proposal targeting carbon-free electricity by 2035 and net-zero emissions economy-wide by 2050.

Within days of taking office on Jan. 20, he began putting his money where his mouth was, rejoining the Paris climate agreement and calling for new regulations on carbon sequestration, the electrification of the federal fleet, and much more.

The president also took a swipe at fossil fuels. New leasing on federal lands for oil and gas development was frozen pending a review, the permit for the Keystone XL crude pipeline revoked and fossil fuel subsidies cut.

“We have already waited too long to deal with this climate crisis. We cannot wait any longer,” Biden said on Jan. 27. “It is time to act.”

For project cargo and heavy-lift specialists, a pledge to expand renewable generation and build more clean power plants on public lands will boost cargocarrying opportunities, especially in wind with its bulky components and giant turbines.

OFFSHORE WIND PROMISE

Onshore wind is big business in the U.S., with capacity already exceeding 120 gigawatts, or GW, according to the Energy Information Administration, or EIA. Another 12.2 GW is slated to come online this year, with the states of Texas and Oklahoma accounting for more than half of new capacity.

The offshore wind sector though is barely out of the starting gate. Just one project is up and running in U.S. waters – the 30-megawatt, or MW, five-turbine Block Island Wind Farm off the Northeast state of Rhode Island.

With so much potential, the administration has set a goal of doubling U.S. offshore wind leases in public waters by 2030, an expansion that could generate billions of dollars in investments, said industry lobby group the Business Network for Offshore Wind, or BNOW.

A sticking point delaying buildout, according to the BNOW, is the federal government’s uncertain leasing and permitting process for offshore projects, which is managed by the Department of the Interior’s Bureau of Ocean Energy Management.

Delays have led to a backlog in rubber-stamping construction and operations plans for several large-scale facilities along the East Coast, whose shallow waters and a gently sloping continental shelf are ideal for installing fixed-bottom platforms for turbines.

The auctioning of offshore wind lease areas, last carried out in December 2018, also needs to be stepped up, the BNOW said. As part of their clean energy commitments, East Coast states have pledged to procure 30 GW of additional offshore capacity by 2035, but federal authorities have so far leased enough acreage for just 21 GW. Some 11.6 GW of capacity has already secured a financial mechanism.

While light on specifics, Biden’s executive order on offshore wind did include an instruction to his Department of the Interior to review siting and leasing processes, a call welcomed by the industry.

“We will see how the details shake out, but this is a very encouraging sign that the administration is working to address these issues,” Brandon Burke, director of policy at the BNOW, said to Breakbulk.

“Ideally, the U.S. federal government would focus on advancing construction and operations plan approvals for the 10 utility-scale offshore wind projects in the queue, increasing transparency and predictability in the permitting process and creating consistency and frequency in leasing expansion.”

READY FOR THE GREEN LIGHT

Developers are also upbeat on the government’s commitment to offshore wind.

Danish energy group Ørsted, operator of the Block Island Wind Farm, has been awarded almost 3 GW of offshore capacity along the U.S. East Coast through five projects, but permitting issues and the Covid-19 pandemic have delayed development.

The biggest of those is Ocean Wind off the coast of southern New Jersey, one of the largest offshore wind farms in the U.S., with 1.1 GW of installed capacity. Commercial operations are expected to begin by the end of 2024.

“In the U.S. the permitting processes had been challenging in the last period. But we’re seeing early signs that make us more optimistic now,” CEO Mads Nipper said in a conference call with investors on Feb. 3.

A new 30 percent investment tax credit for offshore wind facilities that begin construction before Jan. 1, 2026, passed by Congress in December, would also benefit the fledging industry, Nipper said.

Project cargo specialists who cut their teeth supporting the buildout of offshore wind in Europe are now ready to bring their expertise stateside.

“The shift towards renew- Bolloré Logistics handled two 300,000-pound CO2 able energy can be removal bed vessels for a chemical plant in Mont felt everywhere, Belvieu, Texas. CREDIT: BOLLORÉ LOGISTICS but the industry is especially excited about the U.S. right JONES ACT CHALLENGES now,” said Christoph Puschmann, United Wind Logistics and other managing director at United Wind non-U.S. shippers will still have to Logistics, a Hamburg-based ship owner contend with the Jones Act, which focused on offshore wind. Puschmann said is creating difficulties

The company was contracted to for stakeholders. In a “Buy American” transport turbine foundations for the executive order signed on Jan. 25, 800-MW Vineyard Wind project off Biden reaffirmed his support for the coast of Martha’s Vineyard, the the century-old law that says goods first utility-scale offshore wind farm in and equipment can only be shipped the U.S. That contract was cancelled between U.S. ports by vessels that amid continuous delays, in part due to are built, owned and manned by U.S. concerns about the facility’s impact on citizens. commercial fishing, but Puschmann The act was extended last year said he was confident of signing new to cover offshore renewable energy deals with the developers for the grow- production, prohibiting foreigning market. flagged vessels from transporting

Vineyard Wind, a 50:50 joint ven- cargo between American ports and ture between Avangrid Renewables and wind farms located in U.S. waters. Copenhagen Infrastructure Partners, Keeping to the rules means resubmitted its construction and opera- shippers such as United Wind tion plan in January after an initial Logistics are forced to either application was cancelled by the Trump contract U.S.-flagged boats to move administration in December. The proj- components from the hub port to ect is slated for start-up in 2023. the installation vessel, or take cargo

“It seems the difficulties surround- directly to the installation vessel ing the fisheries are dealt with and that themselves from bases in Europe or big projects are starting to take off,” Asia, bypassing the need to dock in Puschmann said. the U.S.

“This is quite challenging though because wherever offshore wind plants are built, it is not the best weather,” Puschmann said.

U.S.-based breakbulk movers, meanwhile, working on offshore and onshore projects, will be buoyed by Biden’s pledge to earmark some of his US$2 trillion stimulus plan for the country’s aging transport infrastructure.

The previous administration’s own US$2 trillion infrastructure proposal fell apart in 2019 after Trump reportedly refused to work with Democrats while the investigation into Russian interference during the 2016 election was underway.

“The industry has been calling for upgrades to highways, inland waterways, bridges, ports and access to port facilities for many years to enable the flow of project cargo imports, exports and deliveries to U.S. jobsites,” said Dennis Mottola, a global logistics consultant and former corporate logistics manager at Bechtel.

Project cargo executives speaking to Breakbulk also welcomed the planned investment, which Biden wants to deploy in his first four-year term. Leonard Headrick, director of industrial projects at Bolloré Logistics, said roads in the U.S. had been “neglected,” while Jim Shapiro, director at Baltimore-based Thunderbolt Global Logistics, said an overhaul of inland waterways was a priority.

“A lot of breakbulk cargo moves on barges to the inland, so it is as important as anything else in this country to have the inland waterways fully operational, properly dredged and properly maintained,” Shapiro said.

HURDLES IN CONGRESS

Biden’s climate-driven agenda will likely face obstacles in Congress. Although executive orders require no Congressional oversight, without legislative action, many of the new directives could be easily reversed by future administrations.

The Democrats’ control of both chambers of Congress gives the president leverage, but a 50:50 split in the Senate – with Vice President Kamala Harris holding the tie-breaking vote – means passing major legislation will be a challenge. And if the Democrats slip up in midterm elections in 2022, Biden could be looking at a two-year window to get his proposals approved.

“If he loses one seat in the Senate, he loses his majority, and that will be more difficult for him to get his

“The industry has been calling for upgrades to highways, inland waterways, bridges, ports and access to port facilities for many years to enable the flow of project cargo imports, exports and deliveries to U.S. jobsites.”

– Dennis Mottola, Bechtel

“A lot of breakbulk cargo moves on barges to the inland, so it is as important as anything else in this country to have the inland waterways fully operational, properly dredged and properly maintained.”

– Jim Shapiro, Thunderbolt Global Logistics

programs going. So there is a lot at stake in the first two years,” Shapiro said.

Many in Congress are concerned about the impact of energy transition on the economy and jobs, with Biden’s actions such as the cancellation of the Keystone XL pipeline attracting criticism from industry groups. The 1,179-mile pipeline owned by Canada’s TC Energy was designed to ship some 830,000 barrels per day of heavy crude oil from Alberta to Nebraska, then on to refineries on the U.S. Gulf Coast. The project had been revived by Trump in 2016.

American Fuel and Petrochemical Manufacturers, a downstream trade group, said revoking the permit for Keystone XL would jeopardize the project’s “economic, environmental and energy-security gains.” The pipeline would provide more than 10,000 high-paying union jobs during its construction phase, the AFPM said.

“The executive order halting Keystone XL is a good example of the challenges the industry is likely to face,” John Thieroff, vice president and senior analyst at Moody’s Investors, told Breakbulk.

“Pipelines have been coming under rapidly increasing pressure over the past decade, and that is likely to grow further during the current administration. Preventing the movement of oil and gas once it is produced is often easier than preventing it from being drilled and developed, but you can effectively achieve the same result.”

‘DELAYING THE INEVITABLE’

But Keystone XL aside, no other infrastructure permits have been revoked. And Biden’s 60-day freeze on new oil and gas leasing on federal lands affects just 22 percent of total U.S. oil production and 12 percent of natural gas production, according to the EIA. The pause does not curb drilling on private or state lands.

The Department of the Interior said oil companies had stockpiled millions of acres of leases on public lands and waters following a fire sale by Trump in his final days of office. Onshore and offshore, the oil and gas industry is sitting on some 7,700 unused, approved permits to drill.

Artem Abramov, partner and head of shale research at Rystad Energy, said major shale producers such as EOG Resources, Devon Energy and Occidental Petroleum could maintain activity at prospective assets in Delaware and New Mexico for another three to six years.

“Then, they will be able to reallocate capital and rigs to adjacent state and private leases and maintain lowcost activity for another 8-10 years in New Mexico. Finally, they have plenty of options in their portfolio on the Texas side of the Permian Basin, so long-term implications for them would be fairly marginal if the ban ends up being permanent.”

The impact of Biden’s actions on upstream activity may not be felt for some years, but the slow-burn transition to more sustainable forms of energy has begun, and for project logistics, this will spell more opportunities. Were the president to renege on his campaign promises now, he would just be delaying the inevitable.

“The future holds deep changes and we have to be prepared for what is to come,” said Daniel Berasategui, CEO of Noatum Project Cargo.

“While we continue to serve oil and gas companies, we are also increasing our renewable energy services portfolio with a greater focus on offshore wind. As the saying goes, when one door closes, another opens.” BB

CREDIT: BOLLORÉ LOGISTICS

Colombia-based Simon West is a freelance journalist specializing in energy and biofuels news and market movements in the Americas.

MARKET SPOTLIGHT

The 19,000 dwt S-Class AAL Dalian unloads 38,950 tonnes of hydrogen modules in Texas and

New Orleans. CREDIT: AAL SHIPPING

CHANGE AFOOT IN US BREAKBULK SECTOR

Ocean Shipping Poised for 2021 Growth BY MICHAEL MORLAND

The U.S. market has seen a ship in the U.S., where much noise record number of multi- was made about supporting the fossil purpose vessel, or MPV, fuel and coal industries. calls in 2020, despite the Because of the capital market havoc caused by the global pandemic nervousness over the fluctuation in and the trade war between China oil prices, the U.S. oil market has not and the U.S. AAL has operated at met the 2020 projections of investleast one sailing a month through the ment of US$190 billion, and liquefied region and frequently more than one natural gas facilities have been hit a month. hard with uncertainties surrounding

With a new U.S. administra- funding issues on the back of a lack tion in the White House, our faith of long-term contract purchases at in studies forecasting total annual sustainable levels. investment of US$60 billion up Despite this, throughput in 2020 to 2028 is increased our market share and increasing. sailing regularity. Our view is that The incoming large projects with billion-dollar administration’s capital expenditure have a very commitment for long lead time. The gap between the a strong political final investment decision and the push towards a order and manufacture of highly greener environ- engineered equipment is usually ment is good for counted in years rather than weeks the wind indus- or months. Therefore although some try, and makes project equipment manufacture has an interesting been delayed by the Covid-19 panMichael Morland contrast to the last four years of demic, most projects continue to be reasonably unaffected by Covid-19 at AAL political leader- this stage.

STABILITY FOR OIL PRICES

Of course, there are other factors which are even more vital to the development timeline of such projects, the most important of which is the price of oil. With the price, stability and predictability of oil being a baseline for calculating project profitability, many new oil and gas projects have been pushed out in time. We expect that this will create a gap or void in the project pipeline that will affect cargo flow. This void is already starting to become visible in the smaller projects and cargoes with a shorter lead time. As a result, the longer the capital market decides to sit on the fence on investments in the oil and gas sector, the greater the void will be in terms of starting up new projects.

To illustrate this, when looking for “part cargoes” or “completion cargoes” to top-up some of our voyages, we have clearly noticed a significant drop in the volume of smaller cargoes in the market usually made up of smaller equipment, steel cargoes for multiple industry uses

and other more regular cargo flows. This decrease is directly related to a drop in demand in the U.S.

That said, in the oil and gas sector, markets are recovering steadily and becoming more predictable and robust. While some projects and capital investment decisions have been postponed, it is likely that recovering and steadying oil prices should result in positive project investment decisions in the second half of 2021. Nevertheless, these projects will not generate cargo movement for another year, so the effect will not be tangible in the short term.

As for wind energy generation, this sector’s demands have not waivered during the Covid-19 pandemic and the forecast is that demand will remain strong as long as the U.S. continues to invest in clean energy. The trend here is shifting towards larger and larger wind turbines.

For smaller project cargoes and other breakbulk, we foresee that once the Covid-19 pandemic subsides we will see an uplift in cargo volumes driven by companies trying to catch up with time lost and replenishing stock levels. Nevertheless, this could be months away and will very much depend on the overall economic impact of the Covid-19 pandemic in the U.S. – and indeed worldwide – and U.S. trade negotiations, which will hugely affect supply chains.

BIDEN’S PLANS

I would also like to make some comments on how the president and his administration’s expected policies might impact the breakbulk trade climate. We see President Joe Biden looking to make more efforts in the Covid-19 fight. This could mean lockdowns in the short term, but an improvement of the situation in the long run. Coupled with increasing vaccinations, we hope that the U.S. will slowly improve in 2021 both from a population health and investment health perspective.

We believe this recovery has already been priced in by the markets, and the stability and predictability of an administration that takes on these issues will be welcomed by the finance and investment markets. We might see optimism that results in positive final investment decisions on some of the pending projects.

Biden is known for wanting to take the U.S. more rapidly towards the green transition that is happening elsewhere in the world. This will no doubt be a propellant for the wind industry and a launchpad for future projects, beyond what has already been committed to by previous administrations.

Another element that is of great interest is how Biden will address the country’s strained relationship with China, and how trade negotiations will shape up going forward. Although it is anticipated that the Biden administration will continue to take a stern line towards China, it is also expected that the negotiation climate will be conducted in a more productive way. Undoubtedly, an improvement in trade relations between the U.S. and China would be a huge positive for the breakbulk shipping industry as volumes will increase and demand for tonnage will grow. BB

Michael Morland is general manager for AAL Shipping in the Americas.

The 31,000 dwt A-Class AAL Melbourne transporting 38 yachts from the U.S. to Europe.

CREDIT: AAL SHIPPING

CARGO LENS

BY MICHAEL KING

DIGGING DEEPER

Tunneling Growth to Serve Project Movers Well

Covid-19 might have shut down large swathes of the global economy, but the tunneling market continued to grow in 2020, albeit at a slower pace than pre-pandemic.

With workplace restrictions expected to be eased this year as vaccines roll out, many stalled projects are ready to receive a green light, increasing demand for the specialist services required for handling the heavy and outsized cargo generated by major tunneling developments.

Olivier Vion, executive director of the International Tunnelling and Underground Space Association, or ITA, told Breakbulk many tunnels in Europe had suffered delays in 2020, including the Thames Tideway Tunnel, a 25-kilometer “super sewer” development in the UK, and the Grand Paris Express scheme in France, which is designed to improve transport links between Paris and its suburbs.

“We haven’t noticed a reduction in the volume of inquiries, however we have seen a number of jobs and projects pushed back due to the current pandemic,” confirmed James White, commercial manager of UK-based specialist ALS, one of the contractors on the Thames Tideway Tunnel scheme.

In South America, meanwhile, funding shortages have held back tunnel schemes in the last year, while in the U.S. many projects were put on hold either for political or Covid19-related reasons, Vion said.

He added that he expects markets to further pick up in 2021, and noted that China, the world’s largest tunneling market, barely paused its multiple tunnel developments last year, helping keep tunnel-boring machine manufacturers busy as other markets slowed. “Over 50 percent of the current market is in China, and they had a positive economy even in 2020,” he said.

Measured by project expenditure, last year the global tunneling sector did not expand at the 8 percent to 9 percent per annum rate enjoyed pre2020, but ITA expects full year data to reveal reasonable growth with upside potential this year. “Globally, 2020 didn’t have the usual growth of the tunneling market at maybe 2 percent to 3 percent, and we are seeing progress already this year, maybe 3 percent to 4 percent,” Vion said. “The market is still growing, but it has slowed.”

Martin Herrenknecht, CEO and founder of Herrenknecht, or HK, one of the world’s leading suppliers of tunnel-boring machines, or TBMs, told Breakbulk he was confident the sector “will emerge even stronger after the global coronavirus crisis.”

HK’s Martin Herrenknecht expects the tunneling sector to emerge from the pandemic “even

stronger.” CREDIT: PAVIMENTAL

RETURN TO NORMALITY

ALS’s current tunneling projects are predominantly UK-based, including Thames Tideway and Crossrail, an underground rail development in London, but the company has previously managed multimodal overseas shipments for the Barcelona Metro and flood relief tunnels in Canada and Argentina.

Jill Peacock, group marketing manager at ALS, said the “sheer size of the cargo” was usually the most demanding tunnel logistics challenge. “For example, if the cargo is too large

The 15.87-meter diameter Herrenknecht tunnel boring machine is the largest built and used in Europe, beating the previous 15.5-meter

diameter record. CREDIT: HERRENKNECHT

to move for the full journey by road, we often have to look at a multimodal solution,” she said. “This can include a combination of transport by road as well as utilizing barge and shipping networks.”

As the market returns to some sort of normality, ALS’s White did not expect the pandemic to have drastically changed the requirements of those who procure specialist transport logistics support for tunneling developments.

“Equipment operators and manufacturers are still looking for the most cost-effective yet experienced partners to assist with their logistics, although we would say that the market is a little bit more competitive,” he said. “However, there aren’t a great deal of logistics providers that have the experience needed to move tunneling equipment safely and cost effectively.”

AUSTRALIA ON THE UP

Fred Mohammed, group CEO of Australia-based Tranz Logistics, a specialist in tunnel logistics, said domestic inquiries had ceased entirely cars to warn traffic the loads are coming through. The pre-frames are for inner walls for the tunnels to concrete precast.”

during the country’s strict lockdowns. However, demand is returning, and he expects more tunnels to receive the green light this year. “Inquiries are picking up,” he said.

Tranz Logistics usually works alongside international forwarders and 4PLs such as DHL, Agility Logistics, Toll and DB Schenker on major ventures. They handle the overall freight contracts including international elements for tunnel builders such as Lendlease, CPB Contractors, John Holland, Bovis and Clough Group, with Tranz Logistics then subcontracted to provide on-site logistics and deploy its range of specialist handling equipment.

In November, Tranz resumed work on the Melbourne Metro upgrade scheme, one of many airport and rail tunneling projects the company has been contracted with in recent years. “We are transporting 200 oversize, 4.5-meter-wide tunneling frames, which we move 50 kilometers to the site using Tranz trucks,” Mohammed said. “Each load requires special government permits and two pilot escort

TBM MANUFACTURER SHIPS

Germany-headquartered HK supplies TBMs from three global manufacturing and assembly locations, with its footprint supported by three additional sales and service locations in China. In June last year the company, which boasted sales of €1.2 billion in 2019, supplied the largest TBM ever built and used in Europe. The machine, with a diameter of 15.87 meters, completed 7.5 kilometers of tunneling construction through the Italian Apennines.

The TBMs HK produces for its global clients are tailor-made to specific requirements and ground conditions. “Each machine is specific, even if some specs are common to all of them,” said an HK spokesperson. “The TBMs arrive by convoys to the site from the manufacturing plant and are mounted directly in the starting shaft. Some transports are just normal

trucks; some of them exceptional loads that have been accompanied by police at different points.”

HK is a major supplier of the Brenner Base Tunnel development. Due for completion by 2028, it will create the longest underground rail link in the world and help shift huge volumes of trans-Alpine north-south traffic from road to rail. As well as supplying hard rock TBMs for the project, HK is also providing a range of material logistics services critical to the tunnel construction process.

According to HK, one of its TBMs has already successfully completed boring of the exploratory tunnel on the Austrian side of the project. Three TBMs are in operation in Ital, and HK subsidiaries are also involved in upstream and downstream processes, for example supplying segment molds and navigation systems.

HK will also deliver 19 TBMs and one vertical shaft sinking machine for the Grand Paris Express development, which is served from its manufacturing site at Schwanau, located near Strasbourg. Transit times to Paris vary from one day to up to several days depending on delays and permitting for oversized loads.

RHINE TO THE WORLD

Oversize and heavy-lift TBM items manufactured by HK at Schwanau are also shipped on the Rhine River via the port of Kehl to northern European deep-sea terminals and, from there, to locations around the world by heavy-lift vessel.

One of HK’s partners for specialist transport out of its Schwanau plant is MSG Krandienst, or MSG. Based on the River Rhine at Kehl in Germany within easy reach of deepsea terminals served by ocean-going heavy-lift and general cargo vessels at ports such as Rotterdam, Antwerp and Zeebrugge, the company offers a range of heavy-lift truck, crane and barge shipping options.

“Our work stops when the Rhine barges arrive at the deep seaport,” Gerhard Nückles, project manager, told Breakbulk. “There we put it on land for the shipper, or we arrange a direct transshipment to ocean-going vessels which then ship the cargo to its final destination.”

Nückles said MSG was often consulted about TBM contracts two or three years before a development was due to start, as tunnel suppliers and their customers attempted to build transport costs into budgets early. However, he said the specifications, sizes and timing of any given contract were frequently subject to significant changes as the scheme progressed.

“That’s the business and you adapt,” he said. “There’s a point where you say, ‘No, sorry, this can’t go,’ but I would say for 99 percent of cargo and special demands we find the solution. It can cost money, it can cost no money, but the main point is to get it moving.”

Nückles told Breakbulk he was optimistic that the tunnel logistics sector would thrive as the global economy recovered from the pandemic.

“We’ve had years when we had more work than in 2020, but we do a lot of different projects with our cranes and heavy cargo trucks, so Covid hasn’t been so dramatic for us,” he said. “There were some postponements because of lockdowns in Europe, including in Paris, which was closed last year, so that was difficult for our trucks. It was very immediate with no warning from authorities and the police closed it all down and people onsite had to go home. But after a few weeks it was back to normal. We’re hoping for a better and a smoother 2021.” BB

Above: The 25-kilometer Thames Tideway Tunnel suffered delays in 2020. CREDIT: ALS Below: In June, excavation on the Santa Lucia tunnel through the Italian Apennines was completed using the Herrenknecht tunnel boring machine. CREDIT: PAVIMENTAL

Michael King is a multi-award winning journalist as well as a shipping and logistics consultant.

The Annual Energy Issue

THE RIGHT EDITORIAL ENVIRONMENT FOR PROJECT CARGO & BREAKBULK COMPANIES

Energy projects represent the majority of new business contracts for our industry. Advertise in Breakbulk magazine’s Annual Energy Issue to position your company as a major player in this market.

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Deadlines Reserve your ad by Friday, 16 April 2021 Ad materials due by Tuesday, 20 April 2021 Publishes Friday, 30 April 2021

Featured Exhibitors Jumbo, BBC Chartering, dship Carriers, Hapag-Lloyd

WHAT’S INSIDE ISSUE 3 / 2021

Energy Project Outlook With the pandemic accelerating the energy transition away from fossil fuels, project cargo needs are shifting. Breakbulk investigates where the sector’s specialists should look to for energy-related infrastructure demand in the medium to long term.

Future Fuels Without a clear direction on the dominant shipping fuel of the future, MPV and heavy-lift operators are reluctant to invest in new tonnage. Breakbulk looks at the forerunners and the left field fuel options. Emerging Markets: Hydrogen To meet ambitious environmental targets, shippers are signing up to projects that replace fossil-based hydrogen with hydrogen produced from renewable energy. Carbon Capture Spurs New Project Activity What opportunities will investment in carbon capture and sequestration infrastructure bring? Circular Wind

Decommissioning wind farm components offers big opportunities in Europe. Mexico Jettisons Renewables in Favor of Fossil Fuels Cancelled auctions and dozens of wind and solar projects put on ice as fossil fuels take the stage. Exceptional Transports » Transport and installation of an

FPSO mooring system in the

East Mediterranean set sets records for Jumbo. » dship Carriers moves 750-tonne pile installation frame from Rotterdam to

Taiwan. » How a year-long project to move 320,000 tons of wind turbine components is driving

Asian wind energy ambitions.

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INTERMEDIARIES

BY PAUL SCOTT ABBOTT

TRAINING RETOOLED

Industry Educators Expand Horizons in Pandemic-impacted Environment

As the world optimistically looks to emerge from the Covid-19 pandemic, leaders in education and training of breakbulk and project cargo professionals are seizing opportunities to enhance their offerings, including via increased online learning.

Whether the views of several such gurus, as expressed to Breakbulk in separate interviews, represent unwarranted sanguinity or a genuine new and improved reality remains to be seen. But one thing is clear: The learning environment is changing, and those addressing students – whether in person or by way of video conferencing – hope it is for the better.

“There is a magical opportunity for both industry professionals and students to use the transition from a Covid world to a widespread-vaccinated world to retool skill sets and to take the challenge to develop new ones,” said Margaret Kidd, director of the Supply Chain and Logistics Technology Program at the University of Houston.

“We took the chaos of a Covid world to redefine and pivot how we offered professional certifications, and launched a number of unique collaborative partnerships with global professional organizations,” said Kidd, who has a dozen years of academic experience in the logistics realm, including leading the supply chain program in the Houston school’s College of Technology since 2018.

Over the past year, the school has forged partnerships with such groups as the Chartered Institute of Logistics and Transport, or CILT, the National Customs Brokers & Forwarders Association of America, and the Association of Ship Brokers and Agents. Port Houston announced in December that it is supporting an online learning platform for CILT certificate courses with a US$50,000 grant.

ACADEMIA PARTNERING

Among industry professionals collaborating with Kidd is Marco Poisler, chief operating officer of global energy and capital projects at Houston-based global project cargo logistics firm UTC Overseas. As an adjunct professor, he teaches two courses at the University of Houston. One, which he designed, focuses on transportation, economics and public policy.

A return to face-to-face learning is expected.

CREDIT: SHUTTERSTOCK

The second, a practicum, taught with Kidd, deals with leading-edge industry issues, from biosecurity to international commercial terms.

Poisler is bullish on increased use of online learning, as spurred by the Covid-19 pandemic, and its merging with traditional classroom instruction.

“I’m all for this hybrid format,” Poisler said, noting that some of his current students live far beyond the U.S. “It opens an entire new world to go global. You’re not limited to the four walls. The flexibility is just amazing, but some of the interaction is not there with absolute lack of eye contact, and so participation is hard to measure.”

Nonetheless, Poisler has been able to take a personalized approach, including in addressing what he termed the biggest challenge for students and professors alike – “how to help the students in finding employment in this market with so many companies struggling in the present environment.”

Beyond furnishing practical instruction, Poisler said, he has assisted several students in successfully preparing for job interviews.

Real-world knowledge imparted by Poisler has included proposing a series of best practices and innovative technologies to mitigate impacts of Covid-19 upon the logistics industry. Such measures include enhancing supply chain visibility, appropriately deploying drones and autonomous vehicles, and geographically diversifying suppliers and manufacturing locations.

DELIVERY SHIFTING

Kidd said she believes the online element will continue to play a role in Supply Chain and Logistics Technology Program teaching, but she does see a shift this year back to more inperson instruction.

“I anticipate moving from 100 percent online in 2020 to 70 percent online in spring 2021 and, by fall 2021, offering 25 percent to 35 percent of our courses online,” she said.

“Lessons learned during Covid provided anecdotal evidence for the for a diverse range of participants throughout the U.S. and the world. “Professional development programs and universities have seen increasing interest in education and training and offer some courses even for free to raise the interest of new potential students and trainees.

“As the industry emerges from the pandemic and firms start hiring again, we will see a renewed increase in the need for training, development and future talents in the breakbulk and project logistics world,” he said. “This will open up opportunities for which universities and firms need to be prepared. We will have a varied mix of newcomers to the industry needing training, as well as experienced candidates with a need to brush up on their skills.”

Marco Poisler

UTC Overseas

John Hark

Bertling Logistics

need to balance offering both faceto-face and online courses to our students, many of whom work parttime or full-time,” Kidd added.

Regardless of delivery mode, Poisler remains convinced that it is imperative U.S.-based education for providers of breakbulk and project cargo logistics centers on maintaining such work as a profession, not merely a vocation.

“We need to replicate what Europeans, especially Germans, do,” Poisler said. “We’re selling knowledge to our clients, and, when we lose sight of that, we’re risking that work in our industry is not a profession.”

OPPORTUNITIES GROWING

Another project cargo business veteran also wearing a professorial hat is John Hark, who shares in the belief that the Covid-19 pandemic is triggering expanded learning opportunities.

“We will see more training and education opportunities for both professionals and university students,” said Hark, who, in addition to being director of Texas-based Bertling Logistics, has since 2002 been an adjunct professor at Texas A&M University, from which he graduated in 1989 with a degree in maritime administration.

The pandemic has opened up opportunities for training via the online environment and many professionals, including Hark, have availed themselves by participating in programs during this time, he said.

“I see this continuing as we go forward,” Hark said, noting that online offerings have facilitated engagement

WEARINESS SETS IN

Whereas students and teachers alike seemed to grasp the urgency of making an online learning environment work as classes moved beyond the 2020 spring break, according to Hark, ennui began to become widespread over the summer and into the fall semester.

“It was disappointing to see this manifest itself in the form of a lack of engagement with some students who struggled as the fall semester started and progressed,” he said, observing that this sense of boredom seemed to impact professional development courses and master’s programs less than undergraduate programs.

“I think we will see an increase in the utilization of online courses, knowledge sharing and training for university master’s programs and professional development programs,” Hark said, “but, for undergraduate and primary schools, we have seen that the most effective method for teaching is face-to-face in the classroom, with some online content via our new tools to supplement the inperson teaching.”

As, hopefully, the viral pandemic begins to move into the rearview mirror, Hark said he perceives a good balance being struck between faceto-face and online learning sessions,

Margaret Kidd, supply chain and logistics technology program director at the University of Houston, dons a mask to teach a class at the school’s College of Technology in January 2021.

CREDIT: UNIVERSITY OF HOUSTON

to ensure a greater familiarity with distance learning and to drive technological standards at educational institutions.

SEMINARS ADVANCING

In the Covid-19 environment, many companies have made use of the online environment for internal training and for company-led client seminars on various topics, Hark said.

“Here at Bertling, for instance, we have provided online seminars for our clients in regard to Brexit, and we have other topics planned for the future,” he said, adding that Bertling also has made use of online tools for internal training sessions on topics ranging from information technology to internal communications.

“This is a trend that will continue,” Hark said. “The industry does need to be cognizant of not producing an overload of online seminars that might cause a lack of interest to develop. Content needs to remain relevant, to the point and tailored to the specific target group.”

Hark said he is “very optimistic” about training and education opportunities for educational institutions, companies and trade groups as the world emerges from the pandemic. For example, a new initiative, dubbed The Collective, has been formed by Hark in the greater Houston area to connect students and young professionals with industry veterans while offering online presentations from expert speakers.

“I look forward to our future offerings from Bertling, Texas A&M and others to serve the evolving needs of our industry and enable future generations in a proper start to their careers,” he said.

LITTLE CHANGING?

Yet, another industry stalwart, Ed Emmett, said he believes, in the end, that relatively little will change after Covid-19 no longer poses significant pandemic risks.

Emmett, who is a senior fellow at Houston-based Rice University’s Kinder Institute for Urban Research, a fellow at Rice’s Baker Institute for Public Policy and a distinguished senior fellow at Boston-based Northeastern University’s Global Resilience Institute, said he has advocated for a return to classrooms.

“I think people in the breakbulk and project cargo business are going to be healthier, younger and without underlying conditions,” said Emmett, whose extensive professional resume includes a dozen years as county judge, the top elected official, of Harris County, Texas, of which Houston is county seat. Earlier, he served on the Interstate Commerce Commission and as president of the National Industrial Transportation League.

Emmett said one of the main advantages he realizes when teaching classes via video conferencing is the relative ease in connecting students’ faces and names, which appear beneath their likenesses on the Zoom screen. But, he said, Zoom tends to hinder productive interaction.

Factors beyond Covid-19 will have greater impact than the pandemic in terms of what those involved in movement of breakbulk and project cargo will have to learn and put into practice, according to Emmett.

Corporate managers will need to understand global commerce and regulations, so their focus will be upon changes in regulations, he said, while those engaged in hands-on loading and unloading must adapt to changes in equipment.

“I don’t think there’s going to be a huge change once we get past this [pandemic],” Emmett said, “because breakbulk and project cargo is going to continue to move the way it has.” BB

A professional journalist for nearly 50 years, U.S.-based Paul Scott Abbott has focused on transportation topics since the late 1980s.