BREAKBULK MIDDLE EAST RECAP

BREAKBULK MIDDLE EAST

Rates to Remain High in 2022

Rising Demand to Put More Pressure on Capacities

BY SIMON WEST

The project industry has been contending with sky-high freight rates for almost a year, with little consensus on when they will return to “normal.” Capacities meanwhile have been at a premium, with little room for maneuver.

What are the prospects for change? Are there opportunities amid the high-price environment? And what are some of the strategies for navigating the situation?

Those were some of the questions panelists tackled during the session: Managing Rates and Capacity: Outlook, Key Drivers and Remaining Competitive at Breakbulk Middle East 2022 in Dubai.

Cyril Varghese, head of global logistics at U.S.-based construction firm Fluor, and the panel moderator, kicked off the discussion by reminding delegates that demand for capacity is on the rise, driven by rapid offshore wind development, higher commodity prices that are supporting oil and gas projects, and a new mining super cycle.

“We see quite positive trends in terms of the demand for cargo going up, certainly for the next couple of years at least,” Varghese said.

A global container shortage is pushing rates, with new build orders from operators unlikely to come online in 2022. And while those rates remain elevated, MPV tonnage is getting pulled into the lucrative container market.

As a result, this year is likely to be another challenging one, panelists agreed.

“Everybody expects a correction in the container market, and once the correction comes in, and once we see from the order book new containers coming into the market, I think less and less focus will come on the MPVs from the container operators,” said Kyriacos Panayides, CEO at AAL Shipping. “But at least for the short term, there will still be demand from the container operators, and we do not see this changing in the short term.”

MPVs meanwhile have been hampered by a lack of shipyard capacity, not just for new builds but for repairs to an aging fleet. Martin Harren, CEO of Harren & Partners – SAL Heavy Lift, said new tonnage in the MPV market is not expected for another two years.

“Every ship owner has ambitions to do new builds for very good reasons. The first of course is to replace old tonnage. We are the same, and hopefully we can get delivery in 2024,” he said.

In the meantime, Harren offered advice for shippers on booking capacity, especially for projects of more than 500 tonnes. “My recommendation would be to book as early as possible. Maybe one year ahead would be sufficient I would say. Anything shorter is a risk.”

AAL Shipping’s Kyriacos Panayides makes a point in a discussion with moderator Cyril Varghese of Fluor; and, left from Panayides: Amadou Diallo, DHL Global Forwarding; Kristian Lund Knudsen, Maersk; and Martin Harren, Harren & Partner, SAL Heavy Lift.

ISSUES FOR FORWARDERS?

Kristian Lund Knudsen, global head of special cargo solutions at A.P. Moller – Maersk, dismissed fears that amid the high-price environment, carriers in the future could cut out forwarders and deal directly with shippers. Some see the shift from manual to digital, accelerated by the pandemic, creating an environment in which shippers bypass forwarders and go directly to carriers.

“This is a narrative that has been very popular in the media. It creates a lot of attention and a lot of heat and I think quite frankly it has been blown out of proportion,” he said.

“We are not moving towards a world where we do not want to deal with freight forwarders, or where there will be no room for freight forwarders, because I believe there is a very important space for freight forwarders and there is a very important role that they play in the market.”

Amadou Diallo, head of DHL Global Forwarding Middle East & Africa, said the cash flow situation for freight forwarders has been very challenging.

“We have all tried to find inventive ways of being able to manage our supply invoices and manage the fluctuations we have seen in the market,” such as hedging as a tactic to managing the situation.

So how can the industry manage high rates? For Varghese, it is a question of supply chain relationships.

“The relationships between stakeholders is not a one-way street. I cannot expect to treat the shipping lines like slaves when the rates are down and when the choices are plenty. It is a relationship that is built over multiple years,” the Fluor executive said. BB

BREAKBULK MIDDLE EAST

Saudi Arabia: A Land of Opportunity

Diversification Sees Big Investment in Non-oil Sectors

BY SIMON WEST

Saudi Arabia’s Vision 2030, unveiled by Crown Prince Mohammed bin Salman in 2016, is a sweeping nationwide project to diversify the economy away from oil towards more sustainable, private sector-driven industries.

The strategy is luring investors and providing breakbulk and project cargo with a slew of exciting new opportunities, speakers said during the Spotlight: Saudi Arabia panel event on the first day of Breakbulk Middle East 2022 in Dubai.

“We can see in the last five years how much has changed in the country,” said Rafael Vicens, head of global projects and industry solutions for Middle East and Africa at DB Schenker, and session moderator.

The panel pointed to several sectors that are likely to see massive development in the coming years as the kingdom opens its crude-dependent economy. Billions of dollars have been earmarked for projects in renewable energy, construction, port infrastructure, tourism and entertainment.

Sue Donoghue, CEO Arab Cluster at DHL Global Forwarding, pointed to mega-projects such as NEOM, a US$500 billion “smart city” on the Red Sea coast that will house port facilities, sports stadiums, green fuel plants and a high-tech 170-kilometer metro line dubbed The Line.

In renewables, Saudi Arabia is targeting 60 gigawatts of installed capacity by 2030, with PV solar plants accounting for two-thirds of planned projects. Big investment is also slated in wind energy – onshore and offshore – and other renewable sources.

“The market is growing, it is the land of opportunity, there is so much construction, there is so much investment – and it is fast-tracked,” Donoghue said. “The opportunity for the breakbulk industry is incredible.”

Panelists agreed that the success of Vision 2030 depends on the kingdom’s ability to lure foreign investment and know-how to expand the private sector into an engine for growth.

Ibrahim Behairy, managing director at diesel engine manufacturer Win GD Middle East & Africa, said Saudi Arabia’s vast territory and its rich natural resource base would appeal to investors.

“The changes that Saudi Arabia has gone through recently has made the country completely different. Saudi Arabia used to be known to all of us as an oil-dependent country. That is not the case anymore.”

Meanwhile, speaker Onur Yigiter, CEO of AMSteel, a Saudi-owned firm focused on port and steel services at King Abdullah Port on the Red Sea Coast, pointed to the kingdom’s political stability and strong central bank as other reasons that foreign firms would be tempted to invest.

“It is a fantastic time for Saudi Arabia investment. I believe more and more opportunities will come for investors.” BB

Pandemic Catalyzes Shift to Digital

Projects Like Maqta Gateway Transform Industry

BY SIMON WEST

The breakbulk and project cargo industry has not always been the quickest to embrace the shift from manual to digital processes. The productivity gains are clear, with the last two pandemic years clearly demonstrating the value of more automated and digital processes.

During Breakbulk Middle East 2022’s Digital Transformation session, a panel of expert speakers discussed key developments in digitalization, regional success stories and why push back and hesitation in the industry persist.

Khalid Al Shehhi, manager of marine projects at Abu Dhabi National Oil Co., or ADNOC, explained to delegates how the pandemic had crystalized the importance of digitalization. The executive pointed to ADNOC’s remote monitoring and control system for vessels, which has improved work procedures and strengthened data integration.

“As an operator and ship owner, we always try to improve our efficiency and reduce our operating costs. Covid-19 showed us all this in one year,” he said.

Morten Berg Thomsen, head of special cargo solutions for West and Central Asia at Maersk, one of the largest shipping companies in the world, agreed that Covid-19 has fast-tracked the shift to digital. “The pandemic has not changed the world. It has only accelerated trends we saw before.”

Mohamed Al Agha, director of smart solutions at Maqta Gateway, the digital arm of Abu Dhabi Ports Group, outlined the benefits of the UAE’s first digitalized port community system.

“Maqta connects all the key players in the trade industry, whether it is the carriers, the freight forwarders or the actual end customers and manufacturers – everybody in this chain is connected through this platform,” Agha said.

“What we have created is a wealth of data that is used to serve the community in a better way. And that translates into value-added services that can always be added to what we already have.”

Despite the advances, session moderator Mohammed Jaber, COO at DSV Abu Dhabi and MD for Air and Sea, asked why the shift to digital in the breakbulk industry has only come in “baby steps” compared with other industry verticals.

Al Shehhi believed the key was communication: “We would like more collaboration with companies, with the inventors, the makers of solutions. We are open to dialogue. We are open to conversation to develop systems together.” BB

Mohammed Jaber, (left), DSV, moderates the digitalization panel with, from left, Khalid Al Shehhi, ADNOC Logistics & Services; Mohamad Al Agha, AD Ports Group; and Morten Berg Thomsen, Maersk.

BREAKBULK MIDDLE EAST

West Africa Calling

Potential is Huge, But Challenges Remain

Hans-Ole Madsen, International Container Terminal Services Inc, (middle), makes a point during the West Africa discussion with Lars Greiner, Hamburg Port Consulting, left; and Ronni Nielsen, OBT Shipping, right.

BY SIMON WEST

With a wealth of untapped natural resources and rapid population growth, West Africa’s project potential is huge, with a slew of energy and infrastructure projects whetting the appetite of investors and industry professionals.

The Breakbulk Middle East 2022 session: Spotlight: West Africa, took a deep dive into the region’s project landscape, and some of the requirements for market entry. According to session moderator Lars Greiner, associate partner for Middle East and Africa at Hamburg Port Consulting, Africa’s development over the last 20 years has been “remarkable.”

According to the consultant, a key sector for projects in the coming years will be mining.

“If you look at West Africa there is a ridge of mines and mining concessions that runs along the whole coast from Morocco ... through all the countries from Cameroon down as far as Namibia,” he said.

“We have only really seen the start of going for that. There are a lot of gold mines; the iron ore mines have had a quiet period of late. They are starting to develop now with new mining concessions.”

A big boost for regional maritime logistics was MSC’s recently announced bid to acquire Bolloré Africa Logistics for US$5.7 billion. The deal constitutes a “major change” for Africa, said panel speaker Hans-Ole Madsen, senior vice president at International Container Terminal Services Inc.

“It is new people coming to Africa, new people with an interest to invest and bringing new technology. All in all, it is a positive for the region,” Madsen said.

Challenges in West Africa remain, with Greiner pointing to the lack of deepwater ports and no large-scale hub terminal. Countries in the region though are starting to respond by approaching terminal operators to invest in much-needed infrastructure.

Dubai-based DP World, for example, recently announced it had broken ground on a new US$1.1 billion deep-water port at Ndayane in Senegal, a project that constitutes the biggest single private investment in the nation’s history.

A next stage of regional development would have to focus on land infrastructure, Madsen said.

“The biggest challenge is not the ports themselves but the infrastructure behind it. It is the railway lines, sometimes thousands of kilometers long, which have to be built, sometimes through areas with disputes over who owns the land,” he said. “I think railways are extremely important for Africa.”

Meanwhile Ronni Nielsen, group chief commercial officer at OBT Shipping, pointed to the massive opportunities in the region amid rapid population growth.

“There is reason to believe a lot of production will be moved to West Africa. I think it is time to look into West Africa and ask what needs to be done, what can be done.” BB

CASE STUDY

SQUEEZING

OUT THE AIR

Tweaks to Reduce Weight Give Greater Flexibility

BY MALCOLM RAMSAY

Delivering breakbulk cargo by air is invariably a complex challenge, but one that is normally less visible to the public than ground transport. The relative lack of road closures and out-of-town location of airports mean that the efforts of many airfreight projects go unobserved.

With an ambition to address this, airfreight specialist Volga-Dnepr Airlines and logistics group Fracht FWO recently collaborated on a forwarding project and shared behind-the scenes footage of the process, raising awareness of daily all-cargo operations.

“The AN-124-100 fleet often generates a lot of interest wherever they go, and we recognize the achievement that customers and viewers feel in seeing such a unique aircraft,” Ekaterina Andreeva, commercial director at Volga-Dnepr Airlines, told Breakbulk. “To date, this has been our longest livestream, and was perhaps refreshing for reviewers to see how the aircraft is loaded from start to finish. It provided a greater understanding of the length of time needed to load heavy/oversized items due to the necessary precision.” The cargo moved for this project was an outsized boiler, weighing 83 tonnes, which Fracht was contracted to move from Milan to Iowa.

Chris Schumacher, vice president of airfreight at Fracht, explained: “One of our VIP U.S.-based customers asked us for pricing to deliver a single boiler from the manufacturer in Italy to a jobsite in Iowa.” Building on a long history of cooperation

with Volga-Dnepr, the firm then approached the airline to discuss charter services, scheduled services, and logistics services too. Headquartered in Basel, Switzerland, Fracht provides a range of breakbulk logistics services, with a history of project forwarding stretching back more than 50 years. “Fracht USA/Italy approached Volga-Dnepr on a charter requireEkaterina Andreeva ment for a heavy and oversized boiler from Milan to Nebraska. Due to Volga-Dnepr’s extensive fleet, includVolga-Dnepr Airlines ing AN-124-100s, IL-76TD-90VD, B747Fs, B777F and B737Fs, we have a strong partnership with the global Fracht team, who we have collaborated with on several projects,” Andreeva said. Aware of the risks of disruption in global supply chains and the need for detailed pre-planning, the two partners began preparation two months ahead of delivery. For Volga-Dnepr, the first step in this process was to brief their dedicated load planning

TOP: The livestream allowed for greater understanding of the length of time needed to load heavy/oversized items. CREDIT: VOLGA-DNEPR AIRLINES

A specialist cradle was designed by Volga-Dnepr.

CREDIT: VOLGA-DNEPR AIRLINES

and design team and begin narrowing the choices for optimal cargo transportation. This included not only safety compliance of cargo, but also modeling solutions to optimize lead times for the customer and reduce costs.

“In this case, the Volga-Dnepr load planning team used our own dedicated software CargoPlan to accurately review the load plan itself, which includes 3D modeling for evaluation,” Andreeva said.

Headquartered in Moscow and also with its own office in Ulyanovsk in the Central European part of Russia, Volga-Dnepr Airlines specializes in air charter services via a fleet of An-124-100/150 and IL-76TD-90VD (Stage IV) cargo aircraft.

CUSTOM CRADLE MANUFACTURED

Having modeled the boiler in detail, the teams then faced an additional challenge as it was calculated that the unit would need additional support during the flight.

“The cradle was needed to hold the boiler in place, while it withstood the ‘G’ forces associated with air travel. With the load being at the max weight of what the Antonov could transport, even the slightest shift of the cargo could have caused customized cradle design for production,” Andreeva added.

With the calculations completed, the partners agreed on a route that would take the valuable cargo from Milan in the north of Italy to Lincoln, Nebraska, with tech stops planned for Liege, Keflavik, Gander and Bangor.

major issues. Volga-Dnepr created the design of the cradle and the fabricator of the boiler sourced and built the cradle from scratch,” Schumacher said.

Full technical drawings and specifications of the boiler were the starting point for this design process, with Volga-Dnepr’s design team using SolidWorks and AutoCad, together with Ansys, to perform a stress analysis to check for tolerances inside the aircraft cabin. This allowed the team to check correct weight distribution and for engineers to carry out strength analyses based on cargo floor structure.

“Although safety is our primary purpose for cradle designs, we also look at what materials can be widely sourced by our customers for time management and cost benefits,” Andreeva said. While customers may design cradles themselves, the Volga-Dnepr team’s experience and knowledge of loading parameters for the various aircraft in its fleet is advantageous, she added.

“Once we present out initial design, we then work in collaboration with all concerned parties (often engineers from both charterer/manufacturer’s sides) to ensure everything matches with their requirements, before in turn creating the final

PAYLOAD LIMITATIONS PROMPT RETHINK

For this project, one of the biggest challenges for the flight was the maximum payload limitations en route, which in this case was 113 tons.

“At first, in consideration of the cargo piece itself, plus the weight of the cradle and our standard aircraft loading equipment, the total weight was 112.5 tons for loading, which can be risky should there be any unplanned weight deviations,” Andreeva said.

Opting to avoid the use of one of the airlines Volga-Dnepr AN-124-150 aircraft – which is often limited in availability and could result in higher costs due to global positioning – the team opted instead to optimize the weight of the cargo and turned to Fracht to reconfirm the weight using a lift at the shipper’s premises to avoid any surprises.

Having accurately re-weighed the cargo, Volga-Dnepr chose to reduce

the payload by using its own proprietary rampextension equipment plus a special spreading beam that was flown in from Ulyanovsk, Russia. This adjustment to the project move allowed the partners to reduce the overall payload by 8 tons, allowing for greater scheduling flexibility with the AN-124-100 aircraft – and also reducing costs for the customer.

As well as loading considerations, the weight of the payload also affected the route planning for the project as extra fueling was required to ensure safe transit.

“We were max weight of the Antonov, so we needed to make an extra fuel stop in Bangor,” Schumacher noted.

The customer’s final destination requirements for delivery to Nebraska also placed further restrictions on the route, as there was a limited selection of airports with the infrastructure necessary to accommodate an aircraft with such a heavy payload.

Lincoln Airport was chosen as the destination airport due to its capacity to handle the freight, but as it had no international customs facility it was necessary to arrange for clearance at another U.S airport. As a result, the planned tech stop in Bangor allowed Fracht to process U.S. customs clearance upon arrival.

GLOBAL STREAMING SUCCESS

With the route finalized the partners began final preparations to begin loading in Milan as well as coordinating with a film crew and IT teams to capture the operations for the live stream.

“We partnered with Jerry Dyer at Big Jet TV – who does this regularly – to capture this one live and hope to partner with him again for future shipments,” Schumacher said.

On the morning of the move itself, cameras were in position early, the loading procedure in Milan went ahead using ramp-extension equipment for loading through the aircraft nose cargo door. This process required cargo pieces to be lifted on to it using mobile cranes.

“For this flight two cranes were used to ensure flat alignment against the slope of our ramp-extension equipment. This method is often used in the case of long/heavy pieces to ensure precision control,” Andreeva explained.

Some additional measures were also required to compensate for the tight space onboard the aircraft, with Schumacher noting that “the position of the bolts on the boiler and cradle made in difficult to loosen/ tighten them. We had to use special wrenches to be able to fit in a tight space, in order to secure the boiler to the cradle.”

With Big Jet TV recording for more than five hours, the resulting livestream was viewed by more than 2,000 people worldwide, providing an unprecedented insight into the challenges and processes required to load such a large and heavy cargo.

Calling the project, a “live Mega Load operation,” Dyer of Big Jet TV complemented the teams: “With the expected challenges, the boiler was loaded flawlessly by Volga-Dnepr’s own ‘traveling’ team of loadmasters.”

“Live streaming on future projects depends on the customer and the airport of course. It is also a feature that we will look at when international industry events return again,” said Charlotte Willoughby, business development manager

Jerry Dyer at Big Jet TV created the five-hour livestream of the load.

at Volga-Dnepr. “We have also similarly welcomed Sam Chui (who has his own aviation Youtube channel) on board, with the video grossing 3.3 million views to date, showing just how much excitement there is around the AN-124100. Prior to the pandemic we would also offer local logistics communities in-person tours of the aircraft for better understanding of its capabilities and hope we will be able to resume doing so soon.”

With the cargo safely stowed, the aircraft then made its way to Lincoln, Nebraska, where unloading took place ahead of onward road transport to the final destination, a plant in Sioux City, Iowa.

There was one further challenge to overcome at this stage: here, Fracht encountered a lack of police escort availability. Schumacher explained that the police were short staffed due to the pandemic and that there was a back log of oversized truck loads moving across Nebraska. But close coordination with them allowed the team to find a suitable time to travel and keep the project moving.

The livestream of this move can be viewed here: https://www.youtube. com/watch?v=388jgStcNEk. BB

Based in the UK, Malcolm Ramsay has a background in business analysis and technology writing, with an emphasis on transportation and ports.