Breakbulk Magazine Issue 4 2021

Issue 4 / 2021

The Publication for the Industrial Project Supply Chain Industry

BIG AND BOLD Breakbulk Boom Propels Innovation

Cyber-Sense

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Ports Ride Recovery Wave

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Conquering Carbon

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IN THIS ISSUE

8

Cover Story

8 BREAKING NEW GROUND

Converging Factors Drive Innovation Cover image by Danny Cornelissen for AAL Shipping

20

30

24

39

12 COVER STORY

CYBER-SENSE

Addressing Technical Debt, Supply Chain Vulnerabilities

16 COVER STORY

04 EDITORIAL 05 CONVERSATION

28 THOUGHT LEADER

– IAN DEXTER PALMER

29 THOUGHT LEADER

– MICHAEL MORLAND

45 BREAKBULK EUROPE CONNECT21

52 B REAKBULKONE

SHIFTING FUNDING FIELD

Financing for Breakbulk Vessels Advancing its Own New Normal

PORTS RIDE RECOVERY WAVE

36 REGIONAL REVIEW

20 LOGISTICS PERSPECTIVE

39 EMERGING MARKETS

Asset Owners Tackle Emissions

Saudi Arabia’s Plans for World’s First Cognitive City

Rebound of Breakbulk Cargoes Welcomed

CONQUERING CARBON Also in this issue

33 LOGISTICS PERSPECTIVE

24 EMERGING MARKETS STOCKING THE CARBON STORES

Breakbulk to Support Nascent Capture Projects

30 PROFILE

PERFECT TIMING FOR MPV CONNECTION SAL, Jumbo’s Partnership Finds Market Sweet Spot

STEPPING ON THE GAS LNG to Drive Qatar’s Economy as Tensions Thaw

DRAWING THE LINE

42 CASE STUDY

ROTOR TAKES TO THE SKIES

Urgent Outsized Heavy-Lift Transport Fulfilled by Air

50 MARKET REPORT

CWIME TRANSFORMER DAY

Excerpts from Power Technology Research white paper

www.breakbulk.com BREAKBULK MAGAZINE 3

EDITORIAL

CONNECTING THE DOTS In this issue we focus on two planned topics, innovation and ports and terminals. But, like any area of focus in our industry, coverage is almost always deeply entwined with all other aspects.

So let’s take a quick look at our latest features that help you connect the dots.

Opening the issue, Breakbulk looks at the approach to innovation by the project and breakbulk sector, which one executive referred to as “old-fashioned.”

But Simon West, in “Breaking New Ground,” (page 8), finds “a confluence of drivers – rapid technoGary Burrows logical change, energy transition and the upheaval of Covid-19, which has forced forwarders to think and act in a more decentralized way – is transforming how the industry operates.”

As those drivers lead the industry to become more reliant on technology, all supply chain participants become more vulnerable to cyberattacks. Lori Musser, in “Cyber-sense,” (page 12), looks at recent industry breaches – which have included carriers, engineers, procurement and construction companies, railroads, ports, trucking companies and forwarders – and relays that connectivity and reliance upon all supply chain partners is a step in the right direction.

Ports and terminals, having successfully navigated the pandemic – after dealing with trade and tariff wars and the loss of breakbulk cargo through weakened business and inroads from container carriers – is riding a wave of optimism with the return of volumes. Felicity Landon looks at the success and developments of several key ports (“Ports Ride Recovery Wave,” page 16).

NURTURING CARBON CAPTURE

Breakbulk continues its focus on the industry’s efforts on reducing carbon 4 BREAKBULK MAGAZINE www.breakbulk.com

throughout the supply chain in a pair of stories in this issue.

Musser, in “Conquering Carbon” (page 20), observes that “asset owners have the job of tackling emissions all along the freight journey.” And for freight carriers, the problem is no longer if or when to tackle emissions. The time is now.

Meanwhile, Landon in “Stocking the Carbon Stores” (page 24) details evolution and development of projects that will provide successful carbon capture and storage, or CCS, operations.

LIVE! IT’S BREAKBULK AMERICAS!

Exciting news came in early June when it was announced that Breakbulk Americas, the region’s largest trade event for the project cargo and breakbulk industry, will return to the George R. Brown Center in Houston, Sept. 28-30.

It will be the first in-person Breakbulk event to be held since the pandemic’s shutdown in March 2020, following Breakbulk Middle East.

Breakbulk Americas had been held without interruption for than 30 years in a row since its founding, through hurricanes Katrina and Harvey until Covid-19.

This September’s event is all about getting together as an industry after a long and unwelcome break. Fortunately, the vaccine rollout has been very efficient, and Americans are able to move around with a great deal of freedom, which bodes well for the event this fall. However, international travel remains uncertain.

Breakbulk organizers are monitoring the global situation and will add remote coverage of the event if necessary for those unable to travel. Breakbulk is working closely with the City of Houston and the George R. Brown Convention Center to make sure that this is a safe experience for all.

Visit Houston, the city’s entity that governs events and tourism, has outlined its exceptional safety measures that will be in place for the event along with other improvements to support the region’s top event for the project cargo and breakbulk industry. https://americas.breakbulk. com/Home

EDITORIAL DIRECTOR Gary G. Burrows / +1 904 535 5460 gary.burrows@hyve.group NEWS EDITOR Carly Fields carly.fields@hyve.group DESIGNER Mark Clubb REPORTERS Paul Scott Abbott Felicity Landon Lori Musser Thomas Timlen Simon West

BREAKBULK EDITORIAL ADVISORY BOARD John Amos Amos Logistics

Noelle Burke

Eos Energy Storage

Dennis Devlin Maersk

Dharmendra Gangrade

L&T Hydrocarbon Engineering

John Hark

Bertling Project Logistics

Samuel Holmes Dennis Mottola

Global Logistics Consultant

Roger Strevens

Wallenius Wilhelmsen

Jake Swanson

DHL Industrial Projects

Ulrich Ulrichs

BBC Chartering

Margaret Vaughan Consultant

Johan-Paul Verschuure Rebel Group

Frans Waals

Dynamar D.V.

Grant Wattman

Jade Management Group

PORTFOLIO DIRECTOR Nick Davison nick.davison@hyve.group MARKETING & MEDIA DIRECTOR Leslie Meredith leslie.meredith@hyve.group To advertise in Breakbulk Media products, visit: http://breakbulk.com/page/advertise SUBSCRIPTIONS To subscribe, go to http://breakbulk.com/page/ subscribe-breakbulk-magazine, or email: gary.burrows@breakbulk.com A publication of Hyve Group plc.

The Studios, 2 Kingdom Street Paddington, London W2 6JG, UK

ISSUE 4 / 2021

THOUGHT LEADER

Broaden Knowledge Horizons ‘Forewarned is Forearmed’

BY MARGARET VAUGHAN

though, the issue has been more of a sore point with China, not a suddenly gaping wound.

The question is why? Simple really: most of the microchips used in today’s electronic products and devices are manufactured in Taiwan. And China wants to control the microchip industry.

The current “sudden” unrest in the Middle East between the Palestinians and Israelis is another long-simmering cauldron of hate that is unexpectedly boiling over. But it begs the question of why now? In the news on March 27, 2021, it was reported that China and Iran had formed a 25-year “Comprehensive Strategic Partnership.” The purpose of this partnership is the formation of an agreement in all areas of bilateral relations and regional and international issues. Iran – a virulent enemy of Israel – is one of the main supporters of Hamas. Some pundits have posed the question of whether the hostilities in the Middle East are a way for China to have the world look one way while it tries to accomplish its main goal – recovery of Taiwan – while no one’s watching.

If we don’t keep up with international current events, we lose sight of the big picture and its effect on our businesses and our world.

As the late great James Vaughan used to say, “anticipation is 90 percent of any game … and everything’s a game.” Praemonitus, praemunitus. BB Margaret J. Vaughan has more than 30 years’ experience in all facets of supply chain management. She has been a regular columnist with Breakbulk since late 2018. Sadly, she will step down at the end of the year, saying “it’s time to let someone else have a voice.” Her last submission will be in Issue 6 / 2021.

www.breakbulk.com BREAKBULK MAGAZINE 5

CREDIT: SHUTTERSTOCK

S

everal years ago, one of my staff was censoriously questioned by another manager as to why he was surfing the web and reading the newspaper on company time. My staff member simply said, “Go ask Margaret.” Which, of course, the affronted manager did. When he confronted me (interrupting my own surfing of the web), I simply said: “Praemonitus, praemunitus.”

Praemonitus, praemunitus is Latin for “forewarned is forearmed.” I recently wrote in this column about the butterfly effect. And while my article focused on shipping – container shipments particularly – there was more to it than that. It was a requirement for my team to be on top of world events. This was not simply whether events would or could affect shipping, but also their overall impact on our company’s global supply chain.

Unrest in the Middle East – such as we are once again experiencing – threatens the shipping lanes in the Middle East Gulf, Suez Canal, Mediterranean Sea, and potentially affects all shipments originating from as far east as India. Civil unrest in France can lead to general strikes, potentially shutting down transportation lanes to ports and airports in the heart of the European Union. Political upheaval or even governmental changes as a result of elections can impact trade issues. Severe poverty in places like Nigeria has impacted oil shipments because desperate people try to tap into the pipelines to siphon off oil, but inadvertently blow up the pipeline. And so on and so on.

Right now, for example, China has been doing a lot of saber-rattling over the issue of Taiwan. Yes, Taiwan has long been a source of controversy, as China claims dominion over it while most of the rest of the world regards Taiwan as a sovereign nation. Until recently

THOUGHT LEADER

MPVs Hit Green Targets Sector has Made Laudable Environmental Progress

BY JUAN VILCHES

6 BREAKBULK MAGAZINE www.breakbulk.com

adapted faster than most with regard to the 2020 IMO global sulfur limit of 0.5 percent in marine fuels. However, the chief concern for shipping firms remains the bottom line: if there is a profitable path towards “greening” – where companies stand to benefit by being early adopters of green technology – shipping companies have shown that they are willing to make the variations.

TECHNOLOGY PROGRESS

In a similar way, technological innovation when coupled with effective regulation in the maritime sector is showing definite green shoots. Eco-friendly vessels offer a unique competitive advantage in terms of environmental regulations, fines and incentives. This has led the breakbulk and project heavy-lift cargo industry to take the lead in the production of eco-friendly vessels that reduce fuel consumption and thereby maximize fuel efficiency.

These innovations are weighty in a sector where fuel consumption accounts for 25 percent to 50 percent of costs. Added to this, volatile fuel prices trigger the need for hull optimization – for example, hull air lubrication, among others. The first steps have been made to take green technologies from novel to the norm by proving their viability in recent years.

It is heartening how the MPV and heavylift industry is steaming ahead with the green agenda with stakeholders, through market-led incentives, implementing serious strategies to mitigate the adverse effects of shipping to the environment. The combination of effective regulation with technological innovation can provide the necessary incentives across the industry to understand and implement “going green” as an effective strategy that can marry the bottom line with corporate social responsibility goals. BB Juan Vilches is an operations analyst at Tuscor Lloyds.

ISSUE 4 / 2021

CREDIT: SHUTTERSTOCK

M

ore than a decade ago Lloyd’s List published its Future of Shipping supplement, where it highlighted a future shipping sector adapted to low carbon and with an emphasis on smarter logistics and the implementation of big data across the supply chain.

Twelve years on, this article sets out to take stock on where the “greening” of the shipping industry is and whether we have reason to be optimistic, particularly in the context of breakbulk cargo and multipurpose or heavy-lift vessels.

To do this, I will focus on two distinct driving forces behind the greening of the shipping industry and how these have impacted an MPV business which has historically had to adapt to a constantly changing environment. Firstly, this article will analyze the efficiency of the regulatory measures that have been implemented since 2009 by the International Maritime Organization’s Marine Environmental Protection Committee on fuel consumption, sulfur emissions and ballast water management regulations. Secondly, it will consider the direction of technological innovation and the strides that have been made in creating more energy efficient vessels.

The shipping industry can justifiably claim to be the most efficient means to move cargo in the market economy. Following the decisions taken at Paris COP21 in 2015 new ships now carry no ballast water to meet the demands set out by the Ballast Water Management Convention. Furthermore, while the greenhouse gas emission reduction scheme did not include shipping, the UK and European Union, among others, are now including shipping within the scope of their nationally determined contributions established in COP21. However, there does remain work to be done in setting out a clear road map for the implementation of the sulfur standards which will come into effect in 2023.

Ultimately, regulation has been effective in pointing the shipping industry in the right direction and heavy-lift vessels have

Dissection of an Accident No easy lessons from the Ever Given Incident

S

ince its opening in 1869, the Suez Canal has been one of the world’s most strategic maritime traffic spots.

More than 18,000 vessels transit it every year. On March 23, the Ever Given – one of the world’s largest container vessels – grounded after losing control and the traffic of the channel was blocked. This event highlighted the importance of this waterway and took maritime traffic to the headlines.

Since then, we have read and listened to different hypotheses about what happened on board the Ever Given and the causes of the accident. But before making baseless comments, we need to know the sequence of facts that triggered the vessel running aground.

Our experience as a port and maritime consultancy company, specialized in ship maneuvering, indicates that it is necessary to carry out an extensive compilation of all determining factors.

On one side, technical failure might have happened: engine stop, rudder blockage, bow thruster failure or malfunction of navigation instruments. On the other hand, there could be human failures: distractions, fatigue, routine factors, professional or personal stress, lack of communication and coordination, cultural contexts, or perception or decisionmaking errors. Meteorological conditions at the time of the maneuver – severe wind and a sandstorm – complicate the situation. These conditions hindered control of the ship and visibility of the pilot and captain on board.

Moreover, specific navigation conditions of a very large vessel in a narrow and shallow channel must be considered. Most commentators do not consider all of these facts.

CONSIDERATION OF RISKS

Risk assessment is essential in an asset as globally important as the Suez Canal, and here all aspects must be taken into account to build and analyze highly improbable scenarios. In this particular case, the severity of the consequences – personal, environmental, reputational, and economic damage, direct or indirect – could be so high so as to make global risks inadmissible. Therefore, effective preventive measures must be put in place. These include reliable aids to navigation and traffic

control, definition of meteorological operation limits, assessment by experienced local pilots, and speed restrictions or escort tugs assistance.

A detailed and specific operating regulation must be elaborated for each vessel class. Furthermore, additional redundancy measures could help reduce risk. In this way, a sufficient level of safety can be guaranteed, but always within as low as reasonably practicable criteria in terms of resources and cost.

The ongoing Ever Given research will help us learn about this incident in order to avoid future accidents, even if the experience shows us that every accident is always a chain of unexpected events and failures, in many cases difficult to predict or simply incredible.

It can be said that the outcome of the Ever Given has been rather fortunate, both for the shipping company, the country and the rest of the world because there was no human loss or environmental damage. The damage to the ship and its cargo was very limited and the costs of salvage, while significant, are not enormous. Of course, the butterfly effect on world trade and the small and large-scale economic losses remain unknown.

But we must congratulate the comparatively small amount of time it took to unblock the canal, and the rapid resumption of Suez passages.

It was only blocked for six days and we must remember that the Suez Canal has closed for months or even years in other historical times, causing radical changes in maritime traffic and to the world economy. What would have been the consequences if the accident had been different, and the blockade had been prolonged? Are we prepared to face a different scenario? BB Jose R. Iribarren is managing director at Siport21.

BY JOSE R. IRIBARREN

The Ever Given accident highlighted the importance of this waterway and took maritime traffic to the headlines.

CREDIT: SHUTTERSTOCK

www.breakbulk.com BREAKBULK MAGAZINE 7

COVER STORY

BREAKING NEW GROUND Converging Factors Drive Innovation

BY SIMON WEST

W

hile gains on productivity are clear, the transition from manual to digital is no easy endeavor, and the industry has not always been quick to embrace change.

One executive said to Breakbulk the sector was “old-fashioned” when it came to innovation.

But a confluence of drivers – rapid technological change, energy transition and the upheaval of Covid-19, which has forced forwarders to think and act in a more decentralized way – is transforming how the industry operates.

For breakbulk specialists such as Jumbo and Mammoet, mixed and fully artificial virtual reality are key elements in the digital remodeling of their business processes, but implementing such cutting-edge innovation is not always plain sailing.

Jumbo’s deckmarking technology for example has had to be tailored to function better in variable weather conditions, while work is still needed to improve the application’s interface with a cloud-based storage service to enable worldwide download.

8 BREAKBULK MAGAZINE www.breakbulk.com

‘DANCING AND SINGING ALONG’

Developers working on Jumbo’s digital deckmarking solution dubbed it the “Billie Jean” method.

For more than two years, the Netherlands-based heavy-lift shipping line has been rigorously testing the innovation, designed as an alternative to the age-old, time-consuming technique using paper drawings, tape measures and elbow grease.

The system uses Microsoft HoloLens mixed reality, or MR, smart glasses to locate predetermined support points on the deck of a vessel prior to loading complex breakbulk cargo.

Engineers donning headsets can visualize the cargo’s footprint projected onto the deck, allowing steel shimming plates to be installed at a much faster rate to prevent deflections during transport.

In the style of Michael Jackson in the video of his 1983 hit single, engineers get to see via their headsets deckmarking tiles lighting up as they tread the deck.

“During the development and testing of their software in the office we

sometimes saw them dancing and singing along,” said Otto Savenije, senior project engineer at Jumbo. “Personally I have not yet sung the song while working on the ship.”

Late last year, the system was used for the first time for a client when Jumbo transported a 24-meter-diameter carousel from Dusavik to Halden in Norway, the first stage of a job supporting two of offshore engineering firm Subsea 7’s installation projects for Total in Angola.

The carousel, along with a bundle of subsea umbilical cables, tensioners and other auxiliary equipment, weighed 1,255 tonnes, with a shim plan for the job calling for the positioning of 156 separate shimming plates.

“Each plate had to be placed within a couple of centimeters accuracy. This takes normally about half a day or a full day with two to three people. With the HoloLens I could manage it in just over an hour on my own,” Savenije said.

Jumbo is planning to use HoloLens for all of its more complicated deck layouts. The hardware could be applied in the future to show 3D projections of ISSUE 4 / 2021

a vessel’s entire cargo, although according to Savenije, capacity and processors need to evolve further to make this technically possible.

MOBILE MAPPING

Heavy-lift transport specialist Mammoet is also using MR and virtual reality, or VR, to upgrade its working processes, and has combined the technology with its Lidar mobile mapping system to speed up and optimize the transport of project cargo.

In a bid to address the often painfully slow task of route scanning, the Lidar car, equipped with a laser management tool, GPS antenna and a 360-degree ladybug camera, can scan the landscape at speeds of up to 80 kilometers per hour, doing away with the need for roadblocks and traffic measures that can enrage other drivers.

“You can measure every point with an accuracy of up to five millimeters while driving; you do not need to step out,” said Jacques Stoof, head of innovation at Mammoet.

Once Lidar has done its job, 3D data of the environment is processed and images of the cargo to be shifted are drawn up. MR or VR is then applied to simulate how the cargo will be moved along the route, alerting engineers to obstacles or weak infrastructure points.

Mammoet used the system for a recent refinery project in Germany for petrochemical major BASF. “We got a real scan of the whole area so it was 100 percent accurate, and then we mimicked the actual lift we were going to perform, and with virtual reality glasses we were able to position three individuals at different spots to look at the lift,” Stoof said. “You can actually practice from a safety aspect beforehand what is going to happen tomorrow. I can tell you, it feels real.”

“Global crises have historically given a push to innovation. I am sure in a couple of years we will look back and see all the innovation jumps currently taking place,” Greiner said. “I believe most had been talked about for a while but had not yet really materialized into actual implementation, and some are still waiting for implementation, but are now at least five years closer to realization than they were just months ago.”

A slew of recently launched digital services for customers, suppliers and other stakeholders is proof that innovation in the breakbulk and project cargo world is alive and kicking and ready to disrupt.

In November, G2 Ocean launched its new online platform, MyG2, aimed at digitalizing the customer’s journey.

Customers can now track the geographic location of their cargo during transit or find estimated arrival times through an app on their smartphones.

“The feedback has been very positive,” said Jonathan Harcourt, director of innovation and business development at G2 Ocean. “Since launching, we have registered an increased interest among customers for the new webbased platform. Into 2021, we will continue to onboard customers to the

platform as well as developing more functionality, such as cargo booking.”

G2 Ocean is also expanding its use of electronic bills of lading, as disruptions caused by the pandemic have slowed courier services Jonathan and document Harcourt deliveries. The Norway-headquar- G2 Ocean tered company teamed up with blockchain platform provider CargoX in 2019 to trial e-bills to fast-track transferring ownership of cargo.

Blockchain, widely used by cryptocurrencies, is a decentralized ledger that can offer a single contact point for all stakeholders involved in a project.

Information is stored in so-called blocks and linked together using secure cryptography.

“We are expecting it to take five-plus years for e-bills to take over from traditional paper bills,” Harcourt said. “A large number of parties involved in the maritime supply chain are accustomed

FAST-TRACKED INNOVATION Lars Greiner, associate partner for the Middle East and Africa at Hamburg Port Consulting, or HPC, said many digitalization and automation projects that had been slowly evolving in recent years had been catalyzed by the pandemic.

G2 Ocean’s MyG2 platform aims to digitalize the customer’s journey.

CREDIT: G2 OCEAN

www.breakbulk.com BREAKBULK MAGAZINE 9

INNOVATION

Jumbo’s deckmarking system uses mixed reality to visualize project cargoes.

CREDIT: JUMBO SHIPPING

Jumbo is rolling out an alternative lashing system that is 85 percent lighter than its steel counterpart.

Inset: Aspects of the DSM lashing system can be viewed digitally. CREDIT: JUMBO SHIPPING

to traditional bills and it takes time and effort to shape behavior and build digital trust.”

CARBON MEASURING PROGRESS

Other digital solutions are helping the sector navigate energy transition.

As fuel regulations become more stringent and climate goals more ambitious, breakbulk movers are rushing to switch their carbon-intensive practices for more sustainable alternatives.

In April, logistics firm C.H. Robinson launched its free Emissions IQ tool to boost the sustainability of supply chains. The tool allows companies to measure emissions and benchmark their carbon output against others in the industry.

In a pilot project, the tool helped 125 companies reduce their emissions by 350,000 tonnes of CO 2 equivalent.

“To cut transportation emissions, companies first need to be able to measure them, but most are not equipped to do that easily across truck, rail, air and ocean transportation,” said Tim Gagnon, vice president of analytics and data science at C.H. Robinson.

“That is where Emissions IQ comes in because without the necessary tools and data, many companies have not been able to pursue carbon reduction at all, or are investing a lot of time and effort that could be automated and eliminated.”

10 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 4 / 2021

INNOVATION

The industry is also seeing innovation in fuel and power production.

Jumbo has a joint venture with GoodFuels to test marine biofuel oil on an offshore decommissioning project, while Mammoet is looking into some pilot projects using hydrogen generators to generate electricity for their cranes.

“We have to become sustainable,” Stoof said. “And we should from our end push the manufacturers to go this way. And if they do not, we should develop things ourselves first and after the suppliers will follow.”

The Windmaster uses special wind vanes that counteract strong gales to stabilize suspended cargo. CREDIT: VERTON

TAKING A PRACTICAL APPROACH

But innovation in breakbulk is not confined to digital. Practical solutions too are transforming the sector, such as Jumbo’s bid to replace conventional steel lashings for crew-friendly synthetic versions.

Jumbo and sustainable solutions firm DSM have created an alternative system to secure cargo using Dyneema link chains, which are 85 percent lighter than their steel counterparts.

Lashing speeds are twice as quick, reducing vessel turnaround times, while the lighter material helps prevent injuries and limit cargo damage.

One of the company’s ships has been equipped with 120 chains, with plans to roll out the lashings on a project basis. Jumbo’s crews have given the lightweight system a big thumbs up.

“After initial learning to trust the ‘unusual’ light material the crew is highly enthusiastic, especially with the weight reduction, hence less strain,” said Peter Jacobs, senior project engineer at Jumbo. “The main challenge is the awareness of special care to be taken with regards to handling and storage.”

As technology and working processes become inextricably linked and the need to innovate intensifies, companies – even in an “old-fashioned” sector such as breakbulk – are ploughing more of their resources into development in a bid to maintain competitive edge.

Some operators such as G2 Ocean have set up dedicated innovation teams tasked with keeping track of external developments that affect the market.

Others such as C.H. Robinson have launched innovation incubators for creating, testing and scaling solutions for transporting project cargo.

PUTTING SAFETY FIRST

Some innovations adopted by the project sector focus on safety as well as productivity.

Taglines for example have long been a concern in heavy-lift operations.

Even lighter cargo is at risk of becoming unstable in gusty winds, with workers often positioning themselves perilously close to or even under moving loads.

Australia-based lifting specialist Verton has developed a “hands-free” load-management system that uses gyroscopic modules to rotate suspended cargoes, removing workers from high-risk drop zones and pinch points.

“Our equipment is scalable and we just integrate with existing rigging, so we are not changing anything,” said Esna Louwrens, global marketing and business development manager at Verton. “If somebody is doing a load with taglines hanging off, we just integrate our equipment into that rigging, and those taglines are eliminated.”

Verton’s latest remote-controlled device has been built specifically for lifting and orientating wind turbine towers, nacelles and blades. Mammoet, marine contractor Van Oord and wind turbine maker Vestas have partnered to develop the system, dubbed the WindMaster. The device, at proof-of-concept stage, uses special wind vanes that counteract strong gales to stabilize the suspended cargo, and is expected to be ready by this year’s fourth quarter.

Verton’s technology also includes built-in data capabilities for predictive maintenance, while a user dashboard lets clients monitor, track and benchmark their lifting operations.

“I can sit here today and if my equipment is working in the U.S. I can log in and see what they are doing, what they are lifting and how efficient they are,” Louwrens said. “If there are alerts going off in the machine to be aware of, then that will show up as well. We can actually dial into the machine and do the troubleshooting from here.”

The Emission IQ tool, for example, was a product of Robinson Labs, an incubator set up last year to drive “the next big ideas in logistics and supply chains.”

“When you talk about innovation it is such a broad topic at the moment.

You start with digitalization and process automation then you go to new fuels and new energy sources. If you can imagine it, you can do it; there are

just so many things,” HPC’s Greiner said.

“The smallest changes put in place in an innovation environment can have the most incredible effect.” BB Colombia-based Simon West is a freelance journalist specializing in energy and biofuels news and market movements in the Americas. www.breakbulk.com BREAKBULK MAGAZINE 11

COVER STORY

C

Addressing Technical Debt, Supply Chain Vulnerabilities

yberattacks can shut down even the largest and most tech-savvy logistics firms.

Cyber crooks look for “attractive” data, vulnerable security, companies with systems and training that haven’t been kept up to date, and industries that have to respond quickly, or risk a lot.

Cyberattacks cause harm and companies must manage the risk.

Vulnerabilities exist all along breakbulk and project cargo supply chains.

Anywhere that computers and connectivity exist, there is the risk of having digital data compromised and manipulated. Which means that investing in cybersecurity can create competitive advantages.

All supply chain participants are at risk, even ships at sea. Cybersecurity expert Ken Munro with UK-based Pen Test Partners, said to Breakbulk: “The problem is primarily one of ‘technical debt.’ Ship security didn’t matter so much in the past, as there was very limited internet connectivity … VSAT [very small aperture terminal] changed all that. Now vessels 12 BREAKBULK MAGAZINE www.breakbulk.com

are always online, exposing decades of under investment … Operators and owners are now struggling to play ‘catch up’ and get ahead of the hacker.”

The level of exposure may be exacerbated for vessel and asset owners whose “roots are in traditional loss control.” In bygone eras, security was related to specific times, places and operations. Cyberthreats know no bounds, according to Andrew Kinsey, senior marine risk consultant at Allianz Risk Consulting. “It is a race that is never going to be finished.”

Kinsey said: “I sailed for many years with Maersk and they were ahead of the curve with cyber … but they were still subject to Andrew Kinsey an attack. Constant vigilance is Allianz Risk needed. The key Consulting

BY LORI MUSSER

is any terminal anywhere in world is a gateway into your network.”

For carriers, a breach could be catastrophic. Munro said: “During test exercises, we have had remote control of steering gear, main engines, generators and navigational systems.

A compromise of any of these could lead to serious incidents.”

The threat of GPS jamming is particularly concerning. “The technology for short-range jamming is well within the reach of the average consumer. I believe that we will see a spate of jamming incidents,” Munro said.

While penetration testing has been able to breach almost every onboard technology in an effort to help owners identify shortcomings, “it’s more likely that outages of shore IT systems will prevent a shipping line from operating,” Munro said. That, however, is no reason to be complacent.

“IT and OT [operational technology] systems on board are also of interest to hackers. The opportunity to cause fluctuations in commodity prices by delaying shipments is a real possibility.”

ISSUE 4 / 2021

RECENT BREACHES

Global logistics provider Blue Water Group was hit by a cyberattack in September 2020. In its year-end financial announcement the company confirmed, “Several IT systems have been shut down to stop and limit the attack.” An intensive organizationwide effort “ensured the operation, service and execution of the clients’ transports,” but an adverse influence on the company’s bottom line, related to lower efficiency and additional costs, was reported. The company nevertheless racked up record profits for the year.

Many cyberattacks target large logistics companies, including all of the container majors. In 2017, A.P. Moller – Maersk was the first reported, followed by COSCO in mid-2018, Mediterranean Shipping Co. in April 2020 and CMA CGM in late September 2020.

While most cyberattacks don’t make the news, a quick online search reveals attacks on many project cargo and breakbulk movers, including an attack last August on North America’s largest flatbed trucker, Daseke, which reportedly resulted in stolen data being posted to the dark web, and an attack on Australian logistics giant Toll Group, which resulted in some services being offline for up to six weeks in early 2020. Kinsey told Breakbulk that attacks on the logistics industry have been happening longer than anyone knows, but they didn’t often make it into the press.

Some attacks are not malicious; sometimes companies try to keep attacks quiet; and, undoubtedly, sometimes companies quietly pay ransoms, against the general advice of law enforcement.

In a presentation to a U.S. congressional committee back in 2017, Port of Los Angeles Executive Director Gene Seroka said his port stops a whopping 20 million cyber-intrusion attempts monthly.

In December 2020, the Port of Los Angeles got approval to create a first-of-its-kind Cyber Resilience Center. “Collaborative cyber-threat information sharing is critical to

the safety and security of our port,” said Thomas Gazsi, deputy executive director/chief of public safety and emergency management. The center will put the Port of Los Angeles at the forefront of maritime cybersecurity initiatives he said.

At the Port of Rotterdam, cybersecurity is a top priority. It has cyber resilience specialists on staff and introduced a Cyber Notification Desk in 2018 to give the port sufficient information to roll out an appropriate response when needed.

The port was hacked a decade ago.

All business transactions came to a standstill as the Tax and Customs Administration’s computer system used for reporting imports and exports went down, according to the port website.

HELP AT HAND

Carriers, engineering, procurement and construction companies, railroads, ports, trucking companies, forwarders – all have been hacked.

But help is available. Munro said: “There are a number of flags, classes, regulators and more who are helping drive ‘cyber’ forward, with varying

success. The IMO cyber standard is a good step in the right direction.”

Kinsey added that we all depend on each other: “The big EPCs are relying on the shipping industry, truckers, barge lines, etc. That last mile depends on every piece of the supply chain. They deal with small operators. This isn’t a place where we want to exercise a cutthroat market approach. This is a place where we want to help each other.”

Industry associations like the American Trucking Association conduct cybersecurity educational outreach, helping members navigate the digital age with information on real-time cyber incident detection, or recent attacks against connected fleets. The Association of American Railroads’ Rail Information Security Committee likewise serves as a conduit, sharing information related to cybersecurity, best practices and benchmarking efforts.

The speed of sharing information on current attacks is critical: if one industry member is attacked via an industry-specific vector, others in the know can check their version of that same vector for compromise.

AIS tracks from a number of vessels circling over Point Reyes near San Francisco even though the ships can be confirmed to be thousands of miles away. False circling tracks from five vessels are shown here. CREDIT: SKYTRUTH, SKYTRUTH.ORG, AIS DATA COURTESY OF GLOBAL FISHING WATCH / ORBCOMM / SPIRE

www.breakbulk.com BREAKBULK MAGAZINE 13

COVER STORY

PROJECT SUPPLY CHAIN CONCERNS

For the project cargo business, Kinsey said, cyber breaches can impact project delivery. “When we are looking at just-in-time delivery, the cost of an interruption along the supply chain has to include the ripple effect … With project cargo delivery, everything is based on the next step. If a module or compressor is delayed, we have a follow-on impact,” which can be significant if a project has to shut down for even a day.

Business interruption insurance for construction projects (Delay in StartUp coverage) is a cost of doing business, but there are additional costs related to, for example, business entity reputation risk or negative public sentiment, which can impact a project substantially.

And if getting hacked isn’t enough,

there can be penalties for lax cyber security. For example, “the EU is not afraid to level big fines if there is a loss of confidential information for clients,” Kinsey said.

From a contract perspective, it is important to realize that cyber issues and protections are being written into contracts for supply chain services and project development. It isn’t just an individual company’s exposure to risk.

“More and more often it is becoming a requirement to have cyber protections in place in order to bid on and get contracts,” Kinsey said.

“Strategically, it’s difficult for an operator to know where to start. Where will investment show the greatest return? This is where a penetration test can help,” Munro said. Once the easiest routes to hack are identified and fixed, operators can “then get started on a

The Port of Los Angeles is creating a firstof-its-kind Cyber Resilience Center. In 2014, the port established the nation’s first Port of Los Angeles Cyber Security Operations Center. CREDIT: PORTLA

ASSESSING CYBER VULNERABILITIES

Computer defenses are similar across industries. Software and hardware firewalls keep attackers out, encryption hides data to thwart theft, and other measures, such as “white hat” penetration testing, allow owners to find and correct vulnerabilities.

Computer threats are also ubiquitous. The evildoer is malware, malicious software that damages (by stealing, misdirecting, erasing, corrupting, tricking staff, shutting down, etc.). Some forms are viral and can spread, some hold data hostage and demand ransom, and some just allow an outsider to peek around.

Botware even allows the hacker to control systems, which is particularly unnerving for operators of mobile assets.

14 BREAKBULK MAGAZINE www.breakbulk.com

program of improvement to comply with IMO MSC.428(98).”

Kinsey said: “Hand in hand with cybersecurity is making sure everything is up-to-date on networks,” allowing companies to “interface with customers who are updated. Mapping and tracking has come so far. Having an agile company now means having an agile network.” It is all part of the new cyber-aware industrial hygiene.

For vessel operators, “Tactically, it’s critical to ensure the security of your satcom systems. Simple passwords, unpatched terminals and weak network segregation on board make for easy routes to compromise a ship remotely,” Munro said.

ALL IN THE SAME BOAT

There is plenty of help for transportation and logistics companies.

Kinsey said: “The fact that this is an all-encompassing threat for everyone utilizing cyber helps.” There are frameworks and guidelines – NIST, Coast Guard, BIMCO, and others, he added.

Some are marine- or transportationrelated, but this is not just a marine threat.

Moreover, he said: “Make sure you work with your broker to ensure you have coverage. It is belts versus suspenders. You want to make sure you can operate successfully, and always do online updates, cloud backups, hard backups, etc., but you should still ensure you have coverage in the event of an incident.”

Unfortunately, “Most vessel insurance policies will specifically exclude cyberrisk through Clause 380,” Munro said, but there may be cyber buybacks allowed, especially for those demonstrating good cybersecurity controls, and “silent cyber” cover is sometimes present through poorly worded policy terms.

Connectivity is the backbone of the transportation industry as it supports efficiency. “Hackers jeopardize these efficiencies and bring wider risk to your operations,” Munro said.

Stopping them, or at least minimizing their impact on the supply chain, has become an all-hands-on-deck effort. BB Based in the U.S., Lori Musser is a veteran shipping industry writer.

ISSUE 4 / 2021

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COVER STORY

PORTS RIDE RECOVERY WAVE Rebound of Breakbulk Cargoes Welcomed

In the first three months of 2021, the Port of Antwerp’s breakbulk segment had its best quarter since the second quarter of 2019.

CREDIT: SHUTTERSTOCK

BY FELICITY LANDON

P

re-2020, many traditional breakbulk ports were already grappling with the impact of trade and tariff wars, on top of the loss of breakbulk volumes in the drive to containerize pretty much anything. The pandemic delivered another layer of challenges, particularly as major projects were delayed or postponed and other breakbulk cargoes fell, together with the need to adjust to socially distanced, Covid-safe working practices.

Is there room for optimism now? It seems so. In the first three months of 2021, the Port of Antwerp’s breakbulk segment had its best quarter since the second quarter of 2019. Volumes of iron and steel, the port’s main breakbulk cargoes, increased by more than 18 percent. This was due to a peak in the supply of steel, which could be partly explained by the new import 16 BREAKBULK MAGAZINE www.breakbulk.com

quotas that took effect on April 1, said marketing adviser Annick Dekeyser.

Steel volumes – dominated by coil – had been under pressure from mid-2019 due to several trade wars, she said. This was compounded by the arrival of Covid-19 bringing the automotive industry to a standstill, with steel volumes collapsing in April and May 2020. While there have been signs of a pickup in vehicle production this year, nevertheless the industry has been held back by a shortage of microchips – yet another side effect that could hold back demand for steel.

Antwerp, which has 15 terminals specializing in project and breakbulk cargoes, is pushing forward on several levels. In January, the port appointed a representative in Russia. Based in Moscow, Andrey Daskovskiy is focusing particularly on steel and project cargo.

“Russia is one of our top five maritime partner countries, so appointing a local representative is a next step in

broadening our international network by connecting more closely to the Russian market,” Dekeyser said. “All our representatives plan their activities in the framework of our commercial strategy, of which breakbulk is one of the six focus areas.” About 10 percent of Antwerp’s total steel volume is to/from Russia, she added.

A marketing campaign which ran to February this year sought to inform potential customers about what is possible in the Port of Antwerp in terms of handling steel: “We made movies focusing on different aspects of the service in the port, including warehousing possibilities and our hinterland connections by truck, train and barge. We spread the word through social media.”

Many companies ship a range of commodities, and it is possible they have not shipped steel for three or four years, so they are almost a “new” customer, Dekeyser pointed out.

“They might not know that Antwerp ISSUE 4 / 2021

can do these activities and is perfectly equipped – and they can, of course forget about you. So, the task is to keep being visible, not only in Europe but in steel producing countries like China, India, Russia and the U.S.”

PLATFORM PILOT

The campaign also publicized Bulkchain, a digital platform for breakbulk cargoes developed by the Port of Antwerp’s NxtPort subsidiary. A pilot with ArcelorMittal last year examined how Bulkchain could create more transparency and efficiency on the terminal, and the aim now is to get all players onboard, Dekeyser said. “The pilot confirmed many benefits for Acelor’s business. To name just a few – one platform for all stakeholders, efficient yard planning, standardized product references, integration with own software, more transparency thanks to real-time updates, increased efficiency and reduction of paperwork. We see several port companies in Antwerp starting to use the platform, because they recognize those benefits.”

Bulkchain can be used for all breakbulk exports. The next developments will focus on import cargoes, scheduled to be included by the end of 2021.

A specific project cargo campaign will follow in the autumn this year.

“We attribute great importance to project cargo, since a lot of employment and expertise is involved with the handling and shipment of project cargo,” Dekeyser said.

Antwerp’s huge petrochemical cluster is expected to generate a stream of project cargoes, thanks to some major expansions and refurbishments.

Among the highlights last year, a large module was brought in through the port for Borealis, while a 1,000-tonne autoclave measuring 50 meters by 8 meters was loaded out of Antwerp for shipment to Russia.

In the Port of Hamburg, heavylift, project and non-containerized breakbulk account for barely 1 percent of cargo volumes these days. As Axel Mattern, CEO of Hamburg Port Marketing, said: “Everything that can go into containers does go into containers.”

A few years ago, the shipment of a large transformer or generator, accompanied by a range of “normal” breakbulk cargo, was the norm – that is no longer the case, as all but the largest pieces are containerized, he said. “That is not so easy for the liner operators, because they need volume as well.”

Nevertheless, Hamburg handles a steady stream of heavy-lift and project cargo – ranging from gas turbines from Siemens in Berlin to generators, transformers and other power production components, railway equipment and track-laying locomotives, mining trucks, ship’s propellers and brewery equipment. Barge access is an important advantage, providing access to and from the port without limits, Mattern said.

“At the end of the day it is the only transport mode left remaining which is easy to be used for heavy and big cargoes. When I was working for a heavy-lift terminal in Hamburg several years ago, we received 100 to 150-tonne pieces by road on a regular basis. You won’t see that on the streets anymore.

“We talk to the producers of heavy

equipment and it is a problem in Europe because infrastructure must be modernized. For example, many bridges in western Germany are blocked for heavy truck loads. This is sometimes a signal for the industry to look for other production places in other regions.”

NEARSHORING WELCOMED

However, in the post-Covid era of rocketing container rates and a desire for resilience and shorter supply chains, another shift could deliver new project cargo flows for Hamburg. Manufacturers are looking to relocate production of consumer goods from Asia to countries such as Poland, Romania, Hungary and Bulgaria.

“This is something that is happening already and as we continue with these high prices of container transport, I am sure it will be a continuing trend,” Mattern said. “Look at what you paid for a container from China to Poland 18 months ago – US$1,000 maybe. Now we are at US$14,000 or US$15,000, and that will have an impact. What we see moving first is furniture, because it is a space-consuming cargo and you can easily move

Heavy-lift, project and non-containerized breakbulk account for barely 1 percent of cargo volumes through Hamburg today.

CREDIT: PORT OF HAMBURG

www.breakbulk.com BREAKBULK MAGAZINE 17

Port Houston’s multipurpose facilities have demonstrated strength this year with steel imports up 6 percent in the year to date.

CREDIT: PORT OF HOUSTON

production. It may be a little bit more expensive, but you are very close to your markets, quality control is easier, and there is the resilience issue.”

Of course, finished consumer items produced in Europe would no longer be imported through Hamburg. But new factories would be needed and the components for these could well be imported as project cargo.

Tesla’s mega factory being built close to Berlin is also of particular interest to Hamburg. “It is a greenfield project and completely changing the surroundings,” Mattern said. “While the batteries will be imported from Asia, the industry is looking to build battery production facilities in Germany as well and we are looking at a whole new industry building up. For all of this, they will need to bring cargo in.”

Meanwhile, could the high container rates lead to “decontainerization”

of some breakbulk cargoes? There seems to be some anecdotal evidence in support of this. Mattern said that when container rates were low, large amounts of fertilizer were moved through Hamburg to the Far East and elsewhere in containers. “Now it is back to bulk business, because of the high rates and because there are not enough containers in the market.”

OPPORTUNITIES IN HOUSTON

The Port of Houston may be experiencing something similar. Lisa Ashley, public relations director, noted that the port is seeing more ships carrying plywood, which is something it hasn’t seen in a while.

Within Port Houston’s complex of 200 private and eight public terminals along the 52-mile Houston Ship Channel is the largest general cargo/ breakbulk terminal in the U.S.

FLEXIBILITY KEY FOR PORT SERVICES The Covid-19 pandemic has made very clear that the services provided by every operator in the port ecosystem form a vital, if sometimes invisible, link in the global supply chain, said Lise Demant, managing director of Svitzer Europe.

“However, to say the least, the pandemic has also created a significant logistical and operational challenge that had an acute impact on volumes globally.

Some ports have been harder hit than others, depending on their main source of cargo, with ports heavy on oil and gas having been hit much more severely than container hubs.”

With less traffic in and out of most ports, towage companies have had to adapt, she said. “As the world recovers from the pandemic and begins its journey back to normality, we believe that maintaining flexible and reliable port services – including towage – is one of the ways that we’ll collectively be able to manage changes in the market.”

For example, during the pandemic Svitzer continued to serve Teesport, “which had some of the strongest growth in volumes for any UK port.” Operating patterns had to adapt accordingly, Demant said, with callout times as short as two hours’ notice rather than the usual six, 12 or even 24 hours. “For Svitzer, managing this demand with a highly flexible fleet is one way that we believe and hope we are playing our part to support a continued resurgence and return to normality in key segments like breakbulk.”

18 BREAKBULK MAGAZINE www.breakbulk.com

“Port Houston Turning Basin City Docks public terminal is the national leader for breakbulk cargo, in part due to the large laydown areas located adjacent to the general cargo and heavy-lift docks,” Ashley said. “Project and heavy-lift cargo that moves through Port Houston City Docks support the petroleum and petrochemical industry in either their upstream or downstream production activities.

“We are continuously investing and exploring new opportunities to add acreage and densify our facilities to support increased volumes in breakbulk, project and heavy-lift cargo. For example, over the next couple of years, several of our wharves will receive structural concrete repair, fender replacement and geotechnical rehabilitation.”

In May, Port Houston reported that its multipurpose facilities “demonstrated strength,” notably with steel imports up 15 percent in April and up 6 percent year-to-date. This was the second month in a row for steel increases, indicating the highly anticipated rebound in this sector, it said.

“Texas leads the U.S. in the production of wind energy, and wind turbine activity has seen considerable growth as new energy-related cargo unfolds,” Ashley said. “Port Houston has seen this increase in activity across its docks, along with handling a host of breakbulk cargo like pipe and wind equipment.” Tube bundles and other project cargo including wind power equipment is up significantly, she added.

Meanwhile, the Houston Ship Channel Expansion is moving ahead, after it was awarded a “new start” designation in January and US$19.5 million in federal funds.

Work to prepare the first dredged materials deposit area is due to start soon, and oyster mitigation and the first channel dredging projects are expected to start in the fourth quarter. The schedule allows for three to four years to complete priority segments, which cover most of the length of the channel, with remaining segments to follow. BB Felicity Landon is an award-winning freelance journalist specializing in the ports, shipping, transport and logistics sectors.

ISSUE 4 / 2021

ENERGY UPDATE

TC ENERGY TERMINATES KEYSTONE XL Americas Cross-border Pipeline Faced Decade-long Battle The developer of the controversial Keystone XL pipeline project, TC Energy, said it has officially terminated the project, having already halted construction in January when President Biden revoked a crossborder presidential permit.

The project has faced a more than decade-long battle between conventional energy supporters and environmentalists that questioned its safety and sought alternative energies to address climate change. A particular environmental concern is that the pipeline would carry oil sands crude from Alberta. That product requires more processing than most oil, emitting more greenhouse gases.

Pipeline supporters, largely centered on the oil industry, maintained

that the project would create thousands of well-paying construction jobs throughout the region. The U.S. State Department estimated that fulltime permanent employment would be closer to 50.

Calgary-based TC Energy began construction on the US$8 billion project last year and had built about 300 miles of the pipeline, which would have linked Alberta to the U.S. Gulf Coast.

Confirming it would now work with regional regulators to dismantle equipment and “ensure a safe termination of and exit,” company representatives voiced frustration over what they saw as political obstructionism.

“We value the strong relationships we’ve built through the

Land available adjacent to the Houston Ship Channel!

development of this project and the experience we’ve gained. We remain grateful to the many organizations that supported the project and would have shared in its benefits,” said François Poirier, CEO of TC Energy. “We will continue to identify opportunities to apply this level of ingenuity across our business going forward, including our current evaluation of the potential to power existing U.S. assets with renewable energy.”

Despite the setback, TC Energy said it predicts “tremendous opportunity” for it in the energy transition and will build on its 70-year history in natural gas and liquids transportation, storage and power generation to “continue to meet the growing and evolving” demand. BB

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www.breakbulk.com BREAKBULK MAGAZINE 19

Wallenius Wilhelmsen’s wind-powered 7,000-vehicle capacity, 220-meter pure car and truck carrier is scheduled to enter service in 2025. CREDIT: WALLENIUS WILHELMSEN

LOGISTICS PERSPECTIVE

CONQUERING CARBON

P

Asset Owners Tackle Emissions

roject owners and cargo buyers don’t want their supply chains to release greenhouse gases and accelerate global warming. Asset owners have the job of tackling emissions all along the freight journey, from the wellhead to the wake, wheel or welcome mat, as the case may be.

Robin Townley is head of special project logistics at A. P. Moller – Maersk. He believes carbon emissions reduction “is the right thing to do, and if you can do it, you should.” Consumers are signaling its importance, and there can be tax and other regulatory benefits. “It’s a societal imperative and a very smart business decision.”

Roger Strevens, vice president of global sustainability with Wallenius Wilhelmsen, lists the two main drivers for the transition towards carbon neutrality as compliance cost reduction and stakeholder demand. He said that these factors should have more clout now as new International Maritime Organization and EU regulatory initiatives are introduced.

Eleanor Kirtley manages North 20 BREAKBULK MAGAZINE www.breakbulk.com

BY LORI MUSSER

THE TIME IS NOW

Robin Townley

Roger Strevens

A.P. Moller-Maersk

Wallenius Wilhelmsen

American marine environmental certification programs at Green Marine.

She said that the global nature of the shipping industry is its most compelling reason to lower carbon emissions.

“The very stakeholders that own the ship, class it, flag it, load it, crew it – they represent the globe. Then add the end consumers to that group.

Each has a vested interest in helping to lower emissions, combat storm events, prevent sea level rise and keep temperature rise below the critical 1.5 degrees Celsius.”

Carbon-neutral sea voyages are already here. Zero emissions ports are on the horizon. Liquefied natural gas, compressed natural gas and electric transportation are in play. Even construction at the world’s largest project sites is going greener with solar, wind and portable hydrogen fuel cells.

For freight carriers, the problem is no longer if or even when to tackle emissions. The time is now. The problem is how – how to choose and get a fuel, retrofit or build assets to run on greener fuel, benchmark emissions and measure reduction, and bring supply chain partners up to snuff so that successful efforts are compounded.

Vessels need energy-dense fuel and lots of it. William Reinsch, of the Washington, DC-based Center for Strategic and International Studies, made the case for hydrogen: “Compared to other lowcarbon storable fuel alternatives (which also include biofuel and ammonia), hydrogen has a large existing market … can be retrofitted into existing ships with relative ease, and has attracted the greatest attention from the industry, ISSUE 4 / 2021

with dozens of pilot projects in the U.S. and Europe.”

The International Maritime Organization’s, or IMO’s, goal is to cut CO2 emissions from ships in half by 2050, compared with 2008 levels. Carriers are studying various fuel choices carefully; there will be more than one solution, including a possible reinvention of wind technology, this time with back-up power and vessel superstructure that doesn’t interfere with cargo and cranes.

“There will be a bunch of winners, not just one, to get to scale,” Townley said. The solutions chosen will not be based solely on engineering assets to operate on new fuels. Townley said the hard part will be to ramp up global production and delivery infrastructure for new fuels.

For example, hydrogen is classified as a dangerous good and faces significant regulatory bottlenecks related to scale.

PROJECTS TAKING SHAPE

In April 2021, Finnish bulk and project cargo shipping company Meriaura Group announced a project to design “a transport concept that targets 100 percent carbon neutrality … based on hybrid propulsion that combines sustainably produced bio-oil and battery technology.” Jussi Mälkiä, president of Meriaura Group, announced a 2024 launch for this, the “first transportation concept based on renewable energy since the era of large sailing ships.”

Maersk is working on a grain methanol fuel project in the Baltic with plans to launch its first carbon-neutral vessel in 2023. “That will be proof of concept. The new vessel will be on a local loop. We are going to have to prove to the world this can be done on a small regional scale and then use that to scale up,” Townley said to Breakbulk.

Maersk’s offshore supply division already invested in an innovative offshore charging buoy that will serve as a mooring point and a charging station for its offshore fleet. It will be tested on one of Ørsted’s offshore wind farms in 2021. There is great potential – the buoy can charge battery or hybrid-electrical vessels or can supply auxiliary power to larger vessels. They could be used outside ports, limiting in-port congestion while lowering emissions.

“We can only get to the goal by 2050 if everyone comes along with us.

Collaboration between supply chain members is needed. If you want to go fast, go alone – if you want to go far, go together.”

– Robin Townley

Voyage neutrality is typically achieved by using carbon offsets.

Strevens said, “Carbon neutrality is probably the best result that can be achieved for the world’s existing fleet of 50,000 vessels. However, we believe that the ultimate target for the industry should be zero emissions … which is an even greater challenge.”

As biofuels, hydrogen and other non-fossil-based ship fuels are developed, their distribution and delivery will become a major obstacle.

“The biggest pole in the tent hasn’t gotten a whole lot of attention yet.

There will be an entirely new market segment for engineering, procurement and construction companies,” and the entire project cargo supply chain, in building global distribution, storage and delivery systems for green fuels.

“A massive amount of investment is needed, and if we start now, it will take until 2050 to get it right,” Townley said.

CALCULATING THE CARBON

Asset owners have plenty of carbon calculators or sustainability scorecards to help them figure out emissions, but their accuracy, consistency and inclusiveness has been questioned. (See “Carbon Calculations a Joint Responsibility,” page 23) “There is consistency in certain aspects. The fuel consumed and the carbon content of the fuel are the main factors. It’s reasonably simple, particularly if you’re just calculating overall footprint,” Kirtley said. However, “coming up with a fair metric for efficiency or intensity does get more

complicated, especially between vessel types.”

Townley said the key to accuracy is not a fancy algorithm, it is having reality-based source data. “True, objective data is hard to get to unless you own the asset that is producing it.” Maersk, which operates three fleets (container, offshore and harbor-based tugs) uses the Global Logistics Emissions Council Framework. “Based on that, we have our own system called Emissions Dashboard.

It can compare the transport footprint through different modes. After being in beta testing for a few years, and working well for us, we took it to market,” Townley said.

Emissions calculators are a first step.

Companies need to look beyond their own carbon footprint, to the full lifecycle of fuel. “For biofuels, green ammonia, bio-alcohol and lignin, we have to look at the land used to produce them. We have to go back to the seed level and how fields are managed and how land would have been used if it didn’t grow fuel, then look at scale production, bunkering and fuel use on board ship,” Townley said.

Strevens added that the full life-cycle perspective is especially important for government “officialdom.” “Until and unless there is success with that, there may be limited uptake of lower carbon fuels,” he said.

In the case of hydrogen as a fuel, Reinsch said, “the combustion of pure hydrogen (or ammonia, for that matter) releases no carbon emissions directly, but the production process of hydrogen can.

‘Gray hydrogen,’ for example, is usually produced from natural gas, which releases CO2 as a byproduct. Without carbon capture and storage, gray hydrogen isn’t a significant improvement over bunker fuel – its emissions just come at a different stage of the fuel’s life cycle.”

ON THE SAME SIDE

The IMO and other standardsetting bodies will have to figure out how to regulate and verify the origin of newer fuels to ensure that they are truly low or net-zero carbon, Reinsch said.

It is time for “convergence and consolidation of reporting initiatives,” Strevens said. While tools that draw www.breakbulk.com BREAKBULK MAGAZINE 21

LOGISTICS PERSPECTIVE

Artist impression of Maersk’s offshore charging buoy. The buoy will serve as a mooring point and a charging station for its offshore fleet.

CREDIT: MAERSK

REMOVING MORE CARBON It takes energy to move freight by water, rail or road and that energy must come from somewhere. As long as fossil fuels are used to create any part of that energy, there will be a carbon footprint and potential for global warming.

Carbon offsets, or credits, allow a company to compensate for this footprint.

Offsets, typically representing a tonne reduction in carbon dioxide through a tree planting or similar project, can be purchased voluntarily or used in mandated markets.

Eleanor Kirtley, manager of North American marine environmental certification programs at Green Marine, noted that given the great diversity of the marine industry and magnitude of the emissions issue, “there is no simple solution, no single magic bullet. It will take a variety of measures, and carbon offset is one.”

Offsets can bring low-carbon trips down to carbonneutral status. In March 2021, the Höegh Trigger ran a carbon-neutral voyage from Europe to South Africa on advanced biofuels, said to decrease the vessel’s carbon emissions by up to 90 percent. A Gold Standard offset was used to make the voyage truly carbon neutral.

The Port of Seattle, a strong proponent of emissions Eleanor Kirtley reduction, energy efficiency, and clean energy, has its very Green Marine own carbon offset project, the Smith Cove Blue Carbon Pilot Project. It’s an innovative way to trap and process carbon, using aquatic vegetation and oysters (hence the blue carbon name) instead of the more typical land-based forests (green carbon). The Puget Sound project is expected to dissolve as much as a ton of CO2 per acre annually.

22 BREAKBULK MAGAZINE www.breakbulk.com

upon typical carbon intensity values for a transport mode and use them in conjunction with standard distances should be in agreement, actual voyages throw a wrench in the works. “For example, the Wallenius Wilhelmsen fleet average carbon intensity for 2020 was 33.58 g CO2 /tkm. However, for individual voyages the actual values may range from half that amount to several times that amount.” The differences stem from factors like how close a vessel is to maximum deadweight tonnes, and actual distance traveled.

The IMO shipping emissions goal is a start. Reinsch said: “The shipping industry could play a pioneer role in developing an alternative transportation fuel like hydrogen, which has also attracted interest from the trucking and rail transport sectors.” Absent a single regulatory body to dictate emissions rules across global supply chains, “the best way to promote the adoption of low-carbon fuels beyond the shipping industry is to successfully scale and demonstrate low-carbon fuels within the shipping industry,” he added.

“We can only get to the goal by 2050 if everyone comes along with us.

Collaboration between supply chain members is needed,” Townley said, citing the mantra, “If you want to go fast, go alone – if you want to go far, go together.”

It helps if a carrier gains direct control along a green supply chain.

For example, Townley said: “We avoid shore power if we can do it ourselves.

We’ve redesigned some containers to become batteries. We pull into a port with clean shore power produced by renewables, then take on power for our onboard battery system.”

Transportation assets owners are working toward carbon neutrality, switching to cleaner and renewable fuels, using offsets, and collaborating with supply chain partners.

Decisions on fuels, progress, timing, and emissions goals are complex, varying by asset type and supply chain parameters. Nevertheless, the benefits of going green are becoming more evident. Emissions reductions are no longer considered an extravagance; they are an imperative.

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

ISSUE 4 / 2021

LOGISTICS PERSPECTIVE

CARBON CALCULATIONS A JOINT RESPONSIBILITY Logistics has an important role to play in tackling emissions. When the topic of carbon footprint is discussed and how we develop consistent measures, I think about the progression of safety standards.

The U.S. Occupational Safety and Health Administration was created in 1971, which means in the thousands of years of construction projects, only in the last 40 years have we developed globally acceptable norms.

Today, if you search for “logistics carbon footprint calculator,” you will find plenty of websites. By completing some basic information of origin and destination along with the Stephen Spoljaric weight, volume or 20-foot equivalent units, the calculator will provide Bechtel scores related to “kilograms CO 2 per TEU kilometer” and “total CO 2 emissions per metric ton.”

Another website has a calculator that provides an amount of “kilograms of CO 2,” but doesn’t express the unit of measure to develop a ratio. Yet another website provides different output measures. Ultimately, I feel this indicates from the number of websites that the topic is continuing to grow in importance in our industry and to our clients, but it also emphasizes the inconsistency of how carbon footprint is measured and reported.

Similar to the example of safety standards, we will need to quickly accelerate efforts considering the IMO 2050 goals to reduce greenhouse gas emissions by 50 percent in 2050 as compared with 2008, which we have less than 30 years to accomplish. Bechtel is working closely with our customers to identify what is important for them in both measuring and implementing ideas on how to become more sustainable companies. Reviewing the quality and performance of those programs will require metrics. Neutral parties, such as universities and industry groups, could help to gain collective industry input to ensure a standard approach.

PLANS FOR PROGRESS

To truly make progress toward sustainability and reducing emissions, networks of low-carbon fuel storage and delivery facilities may need to be set up. But for which fuels? And why would anyone invest in fuel infrastructure when there are few shipping lines, railroads or trucking companies with the modal assets ready to use the LNG, hydrogen or other environmentally friendly fuel?

This is truly the “chicken or egg” dilemma. Some carriers are looking at soliciting expert input on developing their strategy for this network of production, supply infrastructure, storage, and propulsion/engine technology. All of these subjects are intertwined and dependent on each other. I would also mention that global supply chain and sourcing strategies change over time, influencing popular trade lanes.

BY STEPHEN SPOLJARIC

Artist impression of a hydrogen refueling point. CREDIT: SHUTTERSTOCK

I would encourage the maritime industry to meet and learn from the auto industry. The electric vehicle network has developed practically over the past 10 years, and I’m sure there are many lessons learned from their evolution.

In a similar way, we need to determine if marine vessel fueling locations should be in the same place geographically as they are today, if previous infrastructure can be modified or if completely new facilities need to be built. Some carriers have talked about dual-fuel ships that could rely on traditional marine bunkers but also have the capability to burn alternate fuels such as LNG, hydrogen or ammonia. This would be an initial step in the right direction but will probably require more aggressive development over time.

Bechtel’s interest in partnering with our logistics service providers as well as our customers will ensure mutual efforts for meeting these long-term sustainability objectives, leaving a lasting positive impact in the projects we support and a healthier society.

2050 is clearly the tipping point and we need to get to net-zero emissions and help our customers, partners and suppliers get there too. BB Stephen ‘Spo’ Spoljaric is Bechtel’s corporate manager of global logistics, Bechtel distinguished technical specialist and president at the U.S. Exporters Competitive Maritime Council.

www.breakbulk.com BREAKBULK MAGAZINE 23

EMERGING MARKETS

STOCKING THE CARBON STORES

BY FELICITY LANDON

Breakbulk to Support Nascent Capture Projects

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ipelines, storage tanks, giant compressors, processing equipment, ship-handling facilities – all this and more will be needed for the development and operation of successful carbon capture and storage, or CCS, operations.

It follows, then, that the specialists providing transport/shipping, handling, lifting and installation of such equipment will be in demand.

There is work ahead for project cargo specialists. But, it has to be said, in many cases “ahead” means a little 24 BREAKBULK MAGAZINE www.breakbulk.com

bit beyond the near horizon. While new CCS projects are proliferating and some target start-up dates are relatively close, many projects are still in the study stage. Decisions on logistics requirements won’t be made until the technical and business model details are rather more firmed up.

Driven by pressures and targets to achieve net-zero emissions, global CCS capacity grew 33 percent worldwide last year, according to the Global CCS Institute’s 2020 report. A total of 65 commercial CCS facilities are in

various stages of development globally. Twenty-six CCS facilities are in operation, capturing 40 million tonnes of CO2 per year. Many of these are related to CO2 use for enhancing oil recovery, said the institute.

The CCS project in Norway’s Sleipner field, which lays claim to being the world’s first CCS facility, has been injecting 1 million tonnes of CO2 a year for more than a quarter of a century. To give an idea of the magnitude of work ahead, the Global CCS Institute wants to see CCS capacity ISSUE 4 / 2021

Norway’s Sleipner field CCS project is the world’s first CCS facility and has been injecting 1 million tonnes of CO2 a year for more than 25 years.

CREDIT: KJETIL ALSVIK, EQUINOR STATOIL

increase more than a hundredfold by 2050.

CCS technology, and the interest in it, has moved forward rapidly in the past few years, said Chris Gent, policy manager at the Carbon Capture & Storage Association, or CCSA. “A few years ago, CCS was seen at a political level as a helpful tool to achieve climate targets. Now, especially in the UK, Netherlands and Norway, the conversations are about defining the commercial framework for a critical net-zero technology. Once projects

have an understanding of the business models, they are ready to deploy at speed and scale,” he said.

“A lot of people have been watching CCUS (carbon capture, utilization, and storage) with interest, but Chris Gent now the commitment to net zero Carbon Capture & Storage Association and emergence of CCUS clusters has really pressed down the accelerator.

“The implication of net zero means everyone has to decarbonize across the whole economy – and in some areas you have to go further, taking CO 2 out of the biosphere.

There is also now a lot of public support for net-zero targets and, as the Climate Change Committee has shown, investment in CCUS is one technology to help achieve net-zero.

As such, many companies who have few decarbonization options can see that investing in CCUS and aligning with net-zero is a positive thing both commercially and socially.”

In the case of the Sleipner CCS, the driver was Norway’s carbon tax.

CO2 is captured from the extracted natural gas, where otherwise it would have been vented to the atmosphere.

Once separated, it is now stored safely deep in the rocks beneath the North Sea, Gent said. “This project has been a lynchpin of understanding potential CO2 storage reservoirs, and has been critical for finetuning processes and monitoring and modeling how CO 2 behaves in the subsurface.”

LONGSHIP PROJECT

A project that is ahead of the pack in Europe is that of Heidelberg Cement in Norway. A full-scale carbon capture and storage facility at the company’s Norcem plant in Brevik, developed as part of the Longship project, was approved by the Norwegian government in December 2020. The first industrial-scale CCS project at a cement production plant in the world,

its target is to capture 400,000 tonnes of CO2 a year.

The cement industry is responsible for 6 percent to 8 percent of total CO2 emissions, said Per Brevik, sustainability Per Brevik manager at Heidelberg Cement Heidelberg Cement Northern Europe.

“We are a really big emitter. However, to defend ourselves, part of these emissions are unavoidable because two-thirds are from the chemical process – therefore, carbon capture is an interesting measure.”

The plant is on the western side of the Oslo Fjord, 170 kilometers south of the capital. Work on this project started 10 years ago. “We started with desk studies and have taken it step by step, with feasibility study, concept study and then engineering and designs,” Brevik said. “After approval by parliament in December, our part of the project started in January.”

The first stage is demolition of old parts of the cement plant and moving other parts, to create the space to build a plant to enable capture, conditioning and intermediate storage of CO2 .

“However, we are also producing cement at 100 percent of capacity, and that will be a key issue – production at the same time as building the new plant. This will definitely require a lot of scheduling and planning.”

The schedule will make maximum use of the plant’s annual three- to four-week winter repair shutdown.

The clearance work will take place in 2021 and 2022. The capture plant itself is due to arrive early in 2023 and construction will move ahead. Commissioning is due to start in the second quarter of 2024, ready for the arrival of the first shipment with captured CO2 in June/July.

“This is a huge building project. To some degree the equipment will come by barge in modules, although most will be built at the plant,” Brevik said. www.breakbulk.com BREAKBULK MAGAZINE 25

EMERGING MARKETS

“The machines and compressor will come in as units to be connected to the rest.”

Carbon capture technology has to some degree developed in parallel with the offshore industries, he said. “Many of the companies we are involved in have experience in the offshore industry, and of course there you have a lot of good expertise with scheduling and so on.”

The project manager is a Norcem employee, and others will be involved in the project full time. However, much of the management is being outsourced, and Norcem is working closely with the main technology provider, Aker Carbon Capture, the supplier of the capture plant, and the Danish equipment supplier FL Smidth, responsible for integration between the capture plant and the cement plant.

About 1 kilometer of pipeline will be laid, linking the capture plant, intermediate storage and loading station. Norcem will be responsible for

operations up to the point when the CO2 is in the tanks on the ships.

At that point, the responsibility shifts to the second partner in the Longship project. Northern Lights, whose partners include Equinor, Shell and Total, will build an open-access CO2 transport and storage infrastructure and transport the CO2 by tanker to a purpose-built receiving terminal. The facility will provide capacity above and beyond what is required by the Norcem site. Heidelberg Cement has eight CCS projects at different development points, with Brevik being the first.

UK CLUSTER PROJECTS

In November 2020, the UK government announced £1 billion of funding to support the development of four CCUS cluster projects by the end of the decade. The ambition is to have two clusters operational by the mid-2020s and two more by 2030, CCSA’s Gent said. Funding and government strategy is crucial, he added. CCS discussion

in the past often struggled with the “chicken-and-egg” scenario. “Build the CO2 storage infrastructure without a guarantee of CO2 supply? Or capture the CO2 without a developed store to put it? This is why government support to help develop the whole value chain together in CCUS clusters is absolutely critical.”

Meanwhile, he said: “Something that is not perhaps deeply considered outside of the CCUS sector at the moment is how some of the port facilities involved are going to be able to accommodate building of the infrastructure while ships continue to use the port, especially as the UK looks to scale up offshore wind. There is an emerging discussion about coordination between users of the offshore and port facilities to ensure offshore energy projects can develop safely and don’t unintentionally prevent each other progressing. Net-zero will certainly involve a concerted logistics coordination effort.”

Norcem’s Brevik project is the first industrial-scale CCS project at a cement production plant in the world. Its target is to capture 400,000 tonnes of CO2 a year. CREDIT: NORCEM

26 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 4 / 2021

EMERGING MARKETS

Technology Centre Mongstad in Norway is the world’s largest technology center for development and testing of CO2 capture technology. It started operations in 2013 and is owned and operated by Gassnova, Equinor, Shell and Sasol.

CREDIT: HELGE HANSEN; EQUINOR

The CCSA is facilitating a supply chain group that is looking at the market and the potential UK opportunities ahead. “Within this, we have had a look at modularization. At a high level to what extent could you modularize or standardize components, and what does that mean in practice?” Larger projects often need bespoke solutions and the scale for some of these larger projects is substantial, involving construction of amine scrubbing towers of 50 to 60 meters high, the installation of large pipeline networks and the shipping of large gas compressors. Other projects may be suitable for a more modular approach, perhaps using road or rail solutions.

SCALING UP

In Sweden, the CinfraCap project aims to create joint infrastructure for the transport of liquefied CO2 extracted using CCS technology. The project’s partners, Göteborg Energi, Nordion Energi, Preem, St1, Renova, and Gothenburg Port Authority, are seeking the most effective way of approaching the industrial scale logistics system required to support CCS. The aim is

to link it into other CCS projects and to create an open access system so that third parties can connect in the future.

A pre-study published in April 2021 noted that the volumes captured will increase in stages, with the plan being to expand the facility in modules as required. The number of vessels and ship calls would also increase gradually.

The intention is to start capturing CO2 in 2025, said Karin Lundqvist, business development manager at Preem.

Discussions continue, including around the business model and permitting and construction issues.

“Regarding logistics [for the construction/installation], I would expect we will have physical construction and equipment one or two years before start-up. We are much too early in this project to start to look at logistics questions – we haven’t even decided who would do the design.

Of course, there will be pipelines, storage tanks and other large equipment.”

The plan is to start small and then scale up, mindful that not all industries capturing CO2 will start at the same time. “Some will start in 2025, then it will be a gradual build-up to 2030. So we are thinking of building in a modular

way to build up capacity,” Lundqvist said.

CinfraCap is not far behind Norway’s Longship project, aiming for opening in 2025 against Longship’s 2024 date.

There are third parties interested in connecting to CinfraCap, and Lundqvist recognized that it would be a waste if all companies try to build up storage capacity and pipelines on their own. But while CinfraCap has found a technical solution, there are still a lot of hurdles to overcome, including business models, who would own the infrastructure, permits, and so on. “It is usually said about CCS, it is not the technology that is the hardest bit – it is the rest.” Every part in the chain has to be ready at the same time, from actual capture through transport to the harbor and the storage facility, and that will inevitably include movers of breakbulk cargoes supporting global CCS ambitions. BB Felicity Landon is an award-winning freelance journalist specializing in the ports, shipping, transport and logistics sectors. www.breakbulk.com BREAKBULK MAGAZINE 27

CREDIT: SHUTTERSTOCK

THOUGHT LEADER

Demise of Oil and Gas Writing on the Rig for Fossil Fuel Demand

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ill the decline in oil and gas production due to climate change be slow or rapid? A gradual adjustment or a painful disruption?

Some answers come by putting numbers on the U.S. greening of electricity and transportation, two of the largest uses of oil and gas.

President Biden’s goal is that U.S. electricity will be carbon-free by 2035. This means all 23 quadrillion BTU, or quads, of electricity now generated by coal and natural gas would have to go away, replaced by renewBY IAN DEXTER PALMER ables like wind and solar.

There are very serious consequences. The demise of coal-fired power plants under this scenario is not unrealistic, as many of them have already gone away or have an end-of-life date before 2035. But the demise of gas-fired power plants by 2035 would be a major hit to the oil and gas industry. From where it is now, natural gas consumption would have to drop by 32 percent over 15 years to meet Biden’s goal.

Oil usage in U.S. transportation was 26 quads in 2018. Comprehensive modeling predicts that sales of electric vehicles, or EVs will be 50 percent of new cars sold by 2040. If this means one-third of all vehicles on the road are electric by 2040, then the decline of transportation oil will convert to a 24 percent decline in production of oil in the U.S. by 2040.

In the U.S., renewables would have to increase by five times their current production to reach the goals of replacing all power plants by renewable electricity by 2035 and reaching 50 percent of new EV sales by 2040.

In the U.S., if demand falls in electrical and transport sectors of energy consumption, then supply is likely to follow and the numbers roughly suggest a 32 percent drop in natural gas by 2035 and a 24 percent drop in crude oil production by 2040.

28 BREAKBULK MAGAZINE www.breakbulk.com

There would be a serious retraction, not expansion, in U.S. oil and gas infrastructure, and a correlated expansion in renewables’ infrastructure.

This picture becomes more likely because the U.S. federal government has raised climate change to a “crisis” stature and there is a groundswell for climate action among the U.S. population.

ATTITUDES TO FUTURE INFRASTRUCTURE

In the European Union and UK, oil and gas companies are proactive regarding climate change due to government, stockholders and public urgings. BP has led the way by committing to be 40 percent invested in renewables by 2030. Total has also shown an ability to pivot and prepare for a greener future through a US$2.5 billion buy-in of Adani Green Energy.

This lies in contrast with the U.S., where many companies have adopted a “wait and see” position because they are still basking in the sunshine of shale success.

But some big companies are being proactive: ExxonMobil has set up a new company called ExxonMobil Low Carbon Solutions that initially will promote carbon capture and storage. Occidental is building a huge wall of fans to capture CO2 from the air and then bury it underground. And across the globe, a “tsunami” of new renewables will supply the majority of electricity in Australia’s main grid by 2030, as the market share of coal and gas collapses. It can seem that change happens gradually, then, presumably, all at once. BB Ian Dexter Palmer is an energy consultant, former fracking engineer, and author of The Shale Controversy.

ISSUE 4 / 2021

Room for Americas Optimism Government Recovery Stimulus Serves Projects Well

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he U.S.’s long-awaited US$1.9 trillion fiscal stimulus package has done its job and spurred consumer spending and reversed the fortunes of the local shipping sector. Latest U.S. Census Bureau figures show that imports have surged 6.3 percent to a record US$274.5 billion. Among these, multipurpose-related cargo imports, such as capital goods and iron and steel products, have grown by 13 percent and 11 percent, respectively, in the first quarter of 2021, compared with last year.

Consumer goods as well have seen first quarter growth of 25 percent, with imports from China up 49 percent to US$113 billion. Products shipped in containers and related commodities typically have a short lead time, so this growth has resulted in a sharp increase in cargo volumes and the sector is still coming to terms with it.

With the overheated container segment, the market is witnessing a lot of previously containerized cargo and commodities finding their way back to breakbulk-style shipments. This influx of cargo into the MPV segment has led to a capacity squeeze – with tonnage and space at a premium, a typical shipping scenario whenever there is a boom market. How long this will last remains to be seen. BlackRock Investment Institute has projected that U.S. consumer spending and underpinning fiscal support will grow until at least Q3 2022.

Despite such increased volumes in breakbulk and dry bulk commodities, the U.S. project cargo market is still flat across core verticals.

The explanation for this is simple: general cargo, breakbulk and bulk is driven by consumer demand, the results of which are instantaneous and translate immediately into cargo. On the other hand, project and heavy-lift cargo is powered by complex industrial performance indicators and requires huge capital investment – both which take time to research, approve and see through to fruition.

TRUE IMPACT OF PANDEMIC

We are entering a unique lull where the production of project equipment and components postponed during the pandemic is only now becoming apparent – one year later. These are project modules and equipment that normally

require a production lead time of six to 12 months. Therefore, cargo that should have been in production last year is not cargo-ready today, and there is little – or no more – project cargo in the water than this time last year. Nevertheless, we do expect things to pick up as U.S. capital markets get stronger and confidence grows. The perceived risk of greenlighting projects is lower than any time in the past year.

It is also expected that the Biden administration will make even greater effort in America’s ongoing fight against Covid-19. This could mean partial lockdowns in the short term and potential disruption to related port operations and scheduling. But this will improve the situation in the long term. With increasing vaccinations, we expect the U.S. will improve throughout 2021, both on a population health and investment health perspective. We believe this has already been priced in by the markets and we might see real optimism that results in positive final investment decisions on pending projects.

It is also worth noting that in current discussions about project cargo transport, shippers are reeling at the reality of a very different market and freight level compared with pre-Covid times. As the cost of transport today has significantly increased in comparison with when budgets may have originally been set, carriers and supply chain stakeholders need to work together to realign budget expectations.

With such solid market fundamentals, no immediate slowdown is expected in the burgeoning U.S. economy and consumer confidence. At the same time, some of its leading financial institutions, like the U.S. Federal Reserve, are advising against over-exuberance, and recommending caution and risk assessment just in case the pandemic takes a turn for the worse and derails the U.S. recovery. As a sector so sensitive and immediately impacted by sudden market changes, we would do well to listen. BB Michael Morland heads AAL’s team and operations in the Americas from AAL’s regional hub office in Houston.

BY MICHAEL MORLAND

The 31,000 deadweighttons AAL Singapore sails into Port Miami with two 210-ton, 32 meter-long Spanishmade walkway bridges for a port infrastructure project.

CREDIT: AAL SHIPPING

www.breakbulk.com BREAKBULK MAGAZINE 29

PROFILE

PERFECT TIMING FOR MPV CONNECTION

BY CARLY FIELDS

SAL, Jumbo’s Partnership Finds Market Sweet Spot

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hen Netherlandsbased Jumbo Shipping announced its joint venture with Hamburg’s SAL Heavy Lift, it was greeted with little fanfare. Pre-Covid, partnering up with past rivals was widely accepted as a necessary step for small to medium-sized operators looking to compete in a market where operating margins dipping below breakeven was the norm, not the exception. Which was the environment Jumbo and SAL faced when their management first 30 BREAKBULK MAGAZINE www.breakbulk.com

broached the subject of an alliance in 2019. Fast-forward two years and with the detail agreed, the Jumbo-SALAlliance entered into being in a very different era.

Speaking with Breakbulk, Felix Peinemann, vice president of sales shipping at Jumbo, and Jens Baumgarten, managing director at SAL Heavy Lift, acknowledged the fortuitous timing of the joint venture’s launch, with freight rates at record highs and strong demand for multipurpose vessels, or MPVs.

“It’s not a secret that the market is rapidly developing,” Baumgarten said. The scale of growth has, however, been unexpected, he added. “Even the experts were not expecting such a fast turnaround in the markets.” The aboutface was heavily driven by the wind energy renewable market, although the executives note high demand for MPV capacity from across other sectors too.

There is another important difference in today’s market, compared with 2019 when the joint venture was first mooted: today, direct buyers, ISSUE 4 / 2021

Baumgarten added that almost all indicators, indices and prices that drive the market are “really jumping at the moment.” This presents a risk in itself: if they surge too high, projects could get delayed or simply become too expensive. “There will definitely be a market reaction to this high demand, which we will see in the next few months to come.”

SPANNER IN THE WORKS

SAL Heavy Lift’s Trina and Jumbo Shipping’s Fairlane sit side by side in the harbor.

CREDIT: JUMBO SHIPPING

forwarders and brokers are seeking firm cover longer out. “So, spot which was typically four to six weeks is now 10 to 12 weeks or even more because people are frightened about the available capacity,” Baumgarten said. This dynamic is also supporting recovery, although he noted that there is a question mark over how long the uptick will last. “We are positive seeing the projects which are on the horizon, but it was a very fast flight and now we have to see if it will be really something which lasts to 2022/2023.”

Not only was the actual joint venture process long in the planning, it also had to contend with the arrival of Covid-19 at the start of 2020. While it evidently didn’t derail the progress of the joint venture, the pandemic did complicate the coming together of the two teams and the ironing out of operational wrinkles.

Peinemann admitted that the preparations were much easier pre-pandemic: “It was a lot easier before Covid, as then you had the chance to physically meet. As you might imagine, when you are working on such an alliance, you would like to sit together one, two or three days in a room and go through things.”

Over the two years of discussions, Peinemann said both companies established a very good, open family relationship. “I know when I call Jens in the morning, I will get what I need.

We know that we can count on each other. Everybody in this was really very open-minded. We had to ignore that we have been competing for quite a while and start talking to each other and find common grounds to work together.”

One aspect key to the successful outcome of the joint venture negotiations was the hands-on involvement of the operational teams. While the decision to form the joint venture came from top management, middle management were encouraged to be involved in the process from the start.

The principals were acutely aware that for the partnership to work, both sides needed to take their people with them on the journey. “We can only do this if the people talk to each other and have a positive feeling, because if you have one side holding back and saying, ‘I’m not trusting my counterpart,’ then you’re

“Cargo readiness versus pickup date is really something which is playing a key factor. It is mandatory that you can offer this flexibility to the clients. With the highest spectrum of vessels which we operate we can give this flexibility.”

– Felix Peinemann, Jumbo already on the wrong foot,” Peinemann said.

That both companies are family owned is a happy coincidence and was not a prerequisite for the partnership.

Many MPV operators have a similar set of vessels, services and markets covered, Baumgarten noted, so having the same or similar owner structure is an advantage, but not a driving factor in forming this partnership. Both executives firmly dismissed the idea of the joint venture being a precursor to a merger.

BUSINESS AS USUAL

For customers, nothing much has changed, Peinemann and Baumgarten said. “Our main driving factors here are not to confuse our clients and to serve our clients even better than before with an expanded service,” Peinemann said. “It will continue to be one person who responds to the request of the client, because otherwise it is just confusing,” Baumgarten added.

“All over the world we are merging offices and agents so that we have one representation. We work together, we sit together, we have the same IT environment.”

He noted that ensuring a unified approach to clients has been paramount, so both companies have worked hard to achieve this. By the end of 2021, both expect greater advantages for clients with wider geographical representation, freedom of vessels, greater flexibility, and increased safety for the execution of projects. www.breakbulk.com BREAKBULK MAGAZINE 31

PROFILE

The Jumbo Kinetic carries monopiles for the Yunlin Offshore Wind Farm.

CREDIT: JUMBO SHIPPING

Currently, the focus is on aligning the many regional offices of the two companies, but that will not necessarily lead to layoffs. “We are basically freeing up some manpower which we definitely need to develop our set-ups and concentrate on new markets, and so on, so there will be no cuts at all,” Baumgarten said. This, combined with the synergies of costs saved and merged offices, will bring additional benefits in the medium term.

EXCITED BY WIND

In terms of cargo hotspots, both operators are excited about the offshore wind prospects opening up to MPVs in the current market. With the sector taking off, both Jumbo and SAL recognize the need for a very strong presence, which cannot be covered by just one or two companies operating in a silo. “Even under the JumboSAL-Alliance, we are still, to a certain extent, a little bit short-staffed,” Peinemann admitted. “For example, we’d like to continue more and more for the module segment, especially for FPSOs,” or floating production storage and offloading units.

Looking at the size of upcoming 32 BREAKBULK MAGAZINE www.breakbulk.com

projects in the offshore wind sector, and seeing how big the projects there will be, Peinemann added that it will be very difficult for a single entity to perform. “It may be that on one project you will be forced to team up with somebody because the reality is, we would like to serve all our clients.

What we cannot afford to do is to put all our eggs in one basket, serving just one client for one big project. We need to have flexibility.” This flexibility is a key point and if reaching that goal means partnering with other competitors, so be it, Peinemann said.

Flexibility also applies on the engineering, procurement and construction company side, with Peinemann noting that clients are increasingly expecting their service providers to be more adaptable. “Cargo readiness versus pickup date is really something which is playing a key factor. It is mandatory that you can offer this flexibility to the clients. With the highest spectrum of vessels which we operate we can give this flexibility. This allows the JumboSAL-Alliance to ‘protect the project.’”

Another shipper trend is increasing demand for availability of all services from one source. Operators

today needs to be able to offer on a “best-for-project” basis. For the Jumbo-SAL-Alliance this means having the right ship for the right cargo and not dictating to the client which ship they have to use for their cargo.

To allow this, an operator needs to have a “critical mass,” Peinemann said. “And with the new fleet, we are able to really come in with a smaller ship when the client has a smaller parcel, but also with a bigger ship if they need that. We can now offer all under one umbrella.”

Fleet renewal is also on the cards with Baumgarten confirming that discussions have taken place on new builds. But with yards backed up with container ship orders, the arrival of new capacity will be some years off, meaning that the newest joint venture on the breakbulk block can sit pretty with its expanded fleet and celebration-worthy freight rates well into 2022. BB Carly Fields has reported on the shipping industry for the past 21 years, covering bunkers and broking and much in between.

ISSUE 4 / 2021

LOGISTICS PERSPECTIVE

$HIFTING FUNDING FI€LD

BY PAUL SCOTT ABBOTT

Financing for Breakbulk Vessels Advancing its Own New Normal

A

s a pandemic-stressed world advances fresh approaches to virtually all activities, the financing landscape for breakbulk ships continues to expand beyond time-honored bank models, looking to benefit from economic rebound, from rising demand and even from stricter environmental mandates.

While the playing field is undoubtedly shifting, several longtime industry players told Breakbulk they see opportunities as breakbulk vessel financing moves forward with its own new normal.

“The breakbulk sector may stand to benefit the most from the recovery, when one takes into consideration the new mindset that has prevailed with the Covid pandemic,” said Basil Karatzas, CEO of New York-based Karatzas Marine Advisors & Co. for the past 10 years.

Karatzas, who has more than two decades of experience in maritime financing, said lower interest rates should spark investing desire, while mounting worldwide emphasis on a cleaner environment is likely to be a stimulus for still more breakbulk cargo, including ecofriendly wind turbines, and thus a potential driver of investments.

INVESTOR POOL DIVERSIFICATION

An increasingly broad array of financiers should facilitate better matching of investments with opportunities, according to George Cambanis, managing director of marine finance at New York-based alternative investment platform Yieldstreet.

industry, so long as interests are aligned between market participants.

Nonetheless, as some observers note, the largest chunk of capital supporting the breakbulk sector still comes from the combination of international commercial banks, export credit agencies in Asia and Chinese leasing companies.

And it is true that these sources of funds primarily target the largest shipowners.

George Cambanis

Hannes Hollaender

Yieldstreet

Toepfer Transport

“The financing environment for the maritime industry, as a whole, has in recent years shifted away from the traditional model of banks providing the majority of debt capital to owners and operators, by becoming instead more reliant upon a more diverse, decentralized pool of financiers, made up of alternative finance providers, such as Yieldstreet; leasing companies; private equity firms; purpose-built family offices and so on,” Cambanis said.

“This more fragmented setting has allowed for the maritime industry’s capital requirements to be met by a more balanced mix of institutions, creating a tiered and targeted approach in terms of matching investment appetites to respective projects, whether in terms of specific assets, types of counterparty and/or individual project structures,” said South African-born Cambanis, who in 2002 established Deloitte’s global shipping and ports business group.

Today’s proliferation of varied avenues for financing, Cambanis said, should benefit all sectors of the maritime

LEASING MODEL EVOLVES

Among current trends is an acceleration of the leasing model, including shipyards financing newbuildings through the lease of the vessels to operators, according to Yorck Niclas Prehm, head of research for Hamburg, Germany-headquartered shipbroker Toepfer Transport, which also has offices in Singapore and Shanghai.

In addition, more big private equity companies are becoming engaged as asset users, Prehm said, with some shipowners improving liquidity by chartering vessels to operators with a purchase option at the end of the lease term.

Hannes Hollaender, Toepfer’s managing partner and co-owner, who has been with the company 20 years, said many financing banks have disappeared from shipping after having lost money at a time of overabundance of vessels in the global fleet.

Now, Hollaender said, with diverse financing and equity available, shipyards are getting busy building again, but, rather than focusing upon multipurpose vessels to serve the breakbulk market, it seems most are preferring to churn out containerships and tankers, which, he said, are simpler and more profitable to build. www.breakbulk.com BREAKBULK MAGAZINE 33

LOGISTICS PERSPECTIVE

“The financing environment for the maritime industry, as a whole, has in recent years shifted away from the traditional model of banks providing the majority of debt capital to owners and operators, by becoming instead more reliant upon a more diverse, decentralized pool of financiers, made up of alternative finance providers, such as Yieldstreet; leasing companies; private equity firms; purpose-built family offices and so on.”

– George Cambanis, Yieldstreet

The pandemic has resulted in greater demand for breakbulk cargo, as the global economy bounces back.

CREDIT: SHUTTERSTOCK

“Being in a niche market is always a difficult situation,” said Hollaender’s colleague, Prehm. “There is limited transparency in the market, and it is more difficult to find financing.”

Andrew Graham, chairman of London-based Infinity Maritime, said his company’s approach to financing the environmentally conscious vessels demanded by emissions-reduction initiatives such as the Poseidon Principles entails an asset digitization platform, providing fractionalized ownership and facilitating sustainable equity finance for a maritime ecosystem optimized to meet 34 BREAKBULK MAGAZINE www.breakbulk.com

Yorck Niclas Prehm Toepfer Transport

Andrew Graham Infinity Maritime

environmental, social and governance – or ESG – criteria.

Furthermore, Graham said, Infinity’s technology furnishes a secondary market, enabling investors to adjust their positions as market conditions evolve.

“Traditional sources of finance are less available to small and medium-size operators, and new capital needs to come into the industry to help accelerate the development of newer, more sustainable technologies,” Graham said.

“The global credit crunch combined with new banking regulations has caused the lack of finance available to small and ISSUE 4 / 2021

LOGISTICS PERSPECTIVE

medium operators,” Graham added.

“However, the pandemic has resulted in greater demand for breakbulk cargo, as the global economy bounces back.”

ESG IS ‘BLESSING, CURSE’

According to Karatzas, ESG requirements present both challenges and opportunities.

“In a sense, ESG is both a blessing and a curse,” Karatzas said. “Clearly it’s a blessing as it forces companies and operators to consider cleaner and more responsible practices, practices that are better for people as consumers and employees, better for society and better for the environment.

“On the other hand,” he said, “it’s a clear disruption for the way business has been done for a long time, and there is change afoot that companies have to face. As always with change, there is risk not only with making the change, but also making the right change or just the right degree of change.

“There may be companies that will see ESG as another business fad and they may ignore it because shipping has a long tradition and it worked in the past,” Karatzas said.

“We would think that would be a dangerous approach.”

Governments, banks, non-governmental organizations and charterers have been taking steps to encourage shipowners and operators to adopt ESG tenets, sometimes offering preferential financing for just such aspirants, Karatzas said, noting that Covid-19 has also been a catalyst for companies and consumers to change and demand more accountability.

Indeed, a historical lack of accountability and transparency has likely hindered investments in vessels.

“Often,” Infinity’s Graham said, “maritime operators have thrived on an opaqueness of transparency, which acts against the interests of investors in the vessels. Better governance will alleviate this. There is a rising paradigm within the industry of transparency in operations and supply chain, which is being solved by emerging technology companies.”

OPTIONS IMPROVING

Karatzas said he sees the marketplace turning the corner, with increasing financing options available

Environmental, social and governance (ESG) demands are sometimes seen as a blessing and a curse. CREDIT: SHUTTERSTOCK

and business conditions improving following the negative repercussions related to the Covid-19 pandemic.

“A year after the start of the crisis and now with light at the end of the tunnel, it seems that the options have improved materially,” Karatzas said. “With interest rates low and projected to stay as such for a while, with the recovery at hand, banks and financiers are getting more active with shipping finance, so much so that one again hears of stories of banks entering into bidding wars to finance shipowners.

“One would have thought,” he added with caution, “that, after the financial crisis of 2008, at least shipping banks would be more skeptical and more mindful of repeating the mistakes of the past.”

Noting the age-old rule of “cargo is king,” Karatzas said prudent banks – and other investors – would be welladvised to focus on opportunities where long-term traditional contracts or contracts of affreightment between shipowners and charterers are in place or at least circumstances in which a strong commercial brand provides assurance that vessels will be kept busy.

“Now,” Karatzas said, “with a recovering market, getting more cargoes and contracts allows for adding new pages to a company’s financial playbook.

“Still,” he added, “equity investors are hard to come by in the shipping

industry, given the losses they have sustained in the last decade and the false estimates of a market recovery.

Probably this is a blessing in disguise as it keeps the order book under control, while allowing for better returns for the existing fleets.”

‘LUCK’ PLAYS ROLE

Nonetheless, the ship order book needs bolstering, according to Toepfer’s Hollaender, with a particular demand for vessels built to meet contemporary ESG standards to replace aging, less-ecofriendly ships that are reaching the end of their economic lifespans.

“We all in the market have made a major mistake: We have neglected to order new ships,” Hollaender said.

“We’re experiencing a rising demand for multipurpose vessels, and that is the challenge we’re facing right now.”

As far as garnering financing for those newbuildings, Toepfer’s Prehm commented, “Sometimes it’s luck.”

His colleague, Hollaender, interjected that it takes a bit more than dumb luck. “Luck is a mathematical formula,” Hollaender said. “You must find the right shipyard, find the right broker and find the right partner for equity.” BB A professional journalist for over 50 years, U.S.-based Paul Scott Abbott has focused on transportation topics since the late 1980s. www.breakbulk.com BREAKBULK MAGAZINE 35

REGIONAL REVIEW

Qatar’s North Field is the world’s largest nonassociated natural gas field, with recoverable reserves of more than 900 trillion standard cubic feet (tscf), or about 10 percent of the world’s known reserve. CREDIT: QATARGAS.

STEPPING ON THE GAS

BY SIMON WEST

LNG to Drive Qatar’s Economy as Tensions Thaw

T

o say Qatar is all about one project is a bit unfair, given the tiny Middle East nation is hosting next year’s FIFA World Cup, the biggest sporting event on the planet.

But speak to any executive involved in the transport of breakbulk in the emirate, and talk quickly turns to the expansion at North Field, the largest liquified natural gas, or LNG, venture in the world, located 80 kilometers north of capital city Doha.

“A big project is usually 500,000 36 BREAKBULK MAGAZINE www.breakbulk.com

to 1 million freight tonnes,” a Middle East-based project cargo specialist, who asked not to be named, told Breakbulk. “This is 2.5 million freight tonnes. This is massive.”

The project’s first stage, known as North Field East, or NFE, is expected to boost Qatar’s LNG capacity by 43 percent to 110 million tonnes per year. Four mega trains with a capacity of 8 million tonnes per year each are slated to start producing by late 2025.

The expanded facilities will also produce condensate, liquified petro-

leum gas, ethane, sulfur and helium, said Qatar Petroleum, the state-run energy producer in charge of the US$29 billion development.

Japan’s Chiyoda and France-based Technip Energies have been awarded the engineering, procurement and construction contract for the trains, as well as for associated plants for gas treatment, natural gas liquids recovery, helium extraction and refining at Ras Laffan Industrial City.

“For all these megaprojects there are always a lot of small and medium projects around, so I think it is going ISSUE 4 / 2021

to be really good for the logistics and the project forwarders,” the executive said. “It is not going to be only one company (that gets contracts), I think everyone will get a slice of the pie. There is no one that can do everything.”

Natural gas will be shipped to shore via subsea pipelines from the 6,000-square-kilometer North Field reservoir off the northeast coast of Qatar. A new drilling campaign to support the NFE kicked off last year, with the first of 80 development wells spudded at the end of March.

A second LNG stage, North Field South, or NFS, is calling for the installation of another two mega trains that will increase output further to 126 million tonnes per year by 2027. Additional expansions were being evaluated, Qatar Petroleum said in a February filing announcing the deals with Chiyoda and Technip.

Qatar is banking on the project to help spur its economy after the slowdown caused by the pandemic and the disruptions to trade triggered by a three-and-a-half-year diplomatic spat in the region that was partially resolved in January this year.

BACK IN BUSINESS

The government gradually began lifting its Covid-19-related lockdown measures in late May, and while the political situation has cooled and trade routes have reopened, relations among Gulf Cooperation Council members remain strained.

Qatar’s ties with Iran and its support for political Islamist groups that rose to power during the Arab Spring has been riling its neighbors for years. Long-simmering tensions boiled over in June 2017 after Saudi Arabia, Bahrain, the UAE and nonGCC affiliated Egypt cut ties with Qatar, accusing it of backing militant jihadi groups and undermining the region’s security.

Qatar vehemently denied the charges, but the quartet imposed an economic blockade on its neighbor anyway, closing off the country’s sole land border – the Abu Samra border crossing to Saudi Arabia, a critical

Qatar is home to some 2.9 million people and has embarked on several major industrial projects that demand significant project cargo support. CREDIT: JSL

entry point for trade – and banning its planes and ships from using their airspace and sea routes.

Diplomats were expelled and Qataris living in other Arab states were given days to pack their bags and up sticks. Back home, panic-buying ensued as supplies dried up.

Gulf experts have argued that the emirate’s financial muscle helped it ride out the storm.

“The humanitarian costs were immense,” said Andreas Krieg, a professor at the School of Security Studies at King’s College London.

“But from an economic point of view, Qatar remains the most resilient economy in the region with unprecedented levels Andreas Krieg of wealth that it knows how to King’s College London use to translate

into influence and power. It was its vast reserves that it initially mobilized to bypass the blockade until new trade routes were firmly established.”

Saudi Arabia and its allies finally agreed to lift the boycott and restore diplomatic ties following a deal brokered by the U.S. and GCC member Kuwait just days before former President Trump left the White House.

Relations between GCC countries have since improved at “uneven levels,” said Will Todman, Middle East analyst at the Washington DC-based Center for Strategic and International Studies, although the underlying issues that led to the dispute remain unresolved, with full reconciliation yet to be reached.

“A future flare-up is possible,” Todman said. “But regional dynamics are shifting and Qatar could capitalize on its potential to play a mediating role. Qatar is well-placed for example to play a role in the emerging dialogue between Saudi Arabia and Iran and I would expect relations between Saudi Arabia and Qatar in particular to continue to progress.” www.breakbulk.com BREAKBULK MAGAZINE 37

REGIONAL REVIEW

Bigger vessels can now directly go to Hamad Port. CREDIT: MWANI QATAR.

HAMAD REBIRTH

The reopening of trade routes at least has helped facilitate the movement of cargo arriving by sea into Hamad Port, Qatar’s main commercial port, located south of Doha, and other terminals, and by land from Saudi Arabia, although one market source told Breakbulk that delays and red tape at the border were still an issue.

According to Krieg, Hamad Port itself got a boost during the blockade, luring billions of dollars’ worth of transshipment from Dubai’s Jebel Ali, the busiest port in the region.

Hamad, whose official launch in September 2017 came just weeks after the blockade began, had been seeking its own shipping routes that bypassed Jebel Ali, but was locked into longterm transshipping contracts with the UAE. “When the blockade happened, the UAE forced all existing contracts with shipping companies going to Qatar to be terminated,” Krieg said. “This freed up the Qataris to establish new routes bypassing Jebel Ali. Bigger vessels could now directly go to Hamad Port. It saved money and made Qatar more independent.”

With work on the NFE trains slated to begin later this year, Qatar will be keen to avoid further logistical disruption. According to Jigar Shah, director of projects and third-party logistics at heavy-lift specialist JSL Global Qatar, project cargo for the expansion is likely to arrive from Japan, South Korea, France, Italy and other European countries.

The easing of travel restrictions meanwhile will help fans and delegates 38 BREAKBULK MAGAZINE www.breakbulk.com

from competing nations travel freely at next year’s World Cup, when it starts Nov. 21. With 18 months to go, construction on the five stadiums is in its final stages, with contracts already awarded to forwarders. Daniel Nordberg, general manager at GAC Qatar, said most of the outstanding cargo destined for the championships would be containerized.

INDUSTRIAL PROJECTS

The emirate, home to some 2.9 million people, has embarked on several other major industrial projects that are demanding significant project cargo support.

Qatar’s National Vision 2030 development plan aims – among other things – to produce 20 percent of its electricity from solar energy by the end of the decade, and to help achieve this it is building its first world-scale photovoltaic, or PV, power plant at Al Kharsaah, 80 kilometers west of Doha.

The 800-megawatt, or MW, facility is being developed in multiple phases with operations expected to start up this year before hitting full capacity in 2022. International operators have been working on the plant since late last year, moving solar panels, trackers and steel structures. Qatar Petroleum is planning to build another 800-MW solar facility “in the near future,” the state energy producer said in February, as it targets more than 4 gigawatts of grid-connected PV power by 2030.

Elsewhere, expansion work at Hamad International Airport and the Doha metro system is slated to begin

in the coming months, while Qatar’s largest crude oil field, Al Shaheen, which sits just above the North Field reservoir, will also be a key sector for breakbulk cargo this year, GAC’s Nordberg said.

North Field is Qatar’s crown jewel, and expansion is set to strengthen its energy heavyweight status.

Ras Laffan is already home to the world’s largest LNG export terminal, and could shortly boast one of the region’s biggest petrochemical plants after Qatar Petroleum signed a deal two years ago with U.S.-based Chevron Phillips Chemical to build a world-scale ethane cracker in the city.

The project, expected to start up in 2025, would have a capacity to produce 1.9 million tonnes of ethylene per year.

As light flickers at the end of the tunnel for the pandemic, Qatar’s ability to maintain cordial relations with its neighbors and to keep trade flowing will be vital for the success of all its industrial projects.

“I think there is a certain amount of confidence, but at the same time there is still a certain amount of caution. Obviously after a period like this, it is always going to take a while to settle down while one sees what the new lay of the land is,” said Lars Greiner, associate partner for the Middle East and Africa at Hamburg Port Consulting. BB Colombia-based Simon West is a freelance journalist specializing in energy and biofuels news and market movements in the Americas.

ISSUE 4 / 2021

EMERGING MARKETS

DRAWING THE LINE I Saudi Arabia’s Plans for World’s First Cognitive City

t sounds like the stuff of fantasy.

A city built from scratch in the desert, with no cars or roads, powered only by green energy and run on artificial intelligence.

This is The Line, Saudi Arabia’s proposed 170-kilometer linear metropolis that its developers are calling one of the most complex and challenging infrastructure projects in the world.

Stretching from the Red Sea Coast up through the mountains and upper valleys of northwest Tabuk Province, The Line, dubbed the world’s first

cognitive city, could be home to more than 1 million residents by the end of the decade.

Here, cars are consigned to the dustbin of history, replaced by an ultra-high-speed underground public transit system that will propel you from one end to the other in 20 minutes.

Climate-busting fossil fuels will be swapped for solar, wind and hydrogen-based generation, while businesses and communities will be “hyper-connected” through a digital

BY SIMON WEST

framework incorporating AI technology and robotics.

A press release announcing its launch in January said the project was a “revolution in urban living,” and would address urban challenges such as legacy infrastructure, pollution, traffic and human congestion.

“The Line is the first time in 150 years that a major urban development has been designed around people, not roads,” the release said. “Walkability will define life on The Line. All essential daily services, such as schools, The proposed 170-kilometer linear metropolis claims to be one of the most complex and challenging infrastructure projects in the world. CREDIT: NEOM

www.breakbulk.com BREAKBULK MAGAZINE 39

EMERGING MARKETS

medical clinics, leisure facilities, as well as green spaces, will be within a five-minute walk.”

The Line is the first major building project at NEOM, a 26,500-square-kilometer high-tech business and logistics zone and a key component of Crown Prince Mohammed bin Salman’s Vision 2030 masterplan to pivot the Saudi economy away from oil and natural gas towards more sustainable, private sector-driven industries.

Once built, the US$500 billiondollar zone will house port facilities, solar parks, desalination plants, sports stadiums and tourist resorts.

The project is being financed by local and international investors as well as Saudi Arabia’s Public Investment Fund, or PIF, one of the largest sovereign wealth funds in the world.

Najah Al-Otaibi, a London-based Saudi political analyst, said The Line and other infrastructure projects at NEOM are driven in part by a national necessity to tackle joblessness, which currently stands at more than 12 percent.

“Unemployment is high among youth, and Saudi Arabia is serious about progressing in these projects,” Al-Otaibi said. “It is a genuine effort that is being added to all other efforts already taken by the Kingdom to diversify the economy away from oil.”

Information so far about The Line has been limited to a website and a press release, with details on building requirements and timeframes still undisclosed. NEOM’s management team declined to be interviewed.

A video posted on the project’s official YouTube channel said the city would be built on three levels: an overground “pedestrian” layer consisting of paths and green spaces, an underground “service” layer of infrastructure and utilities, and below that, a “spine” containing an AI-controlled transport system.

According to the press release, construction of The Line was slated to begin in this year’s first quarter.

Infrastructure costs are expected to reach between US$100 billion and 40 BREAKBULK MAGAZINE www.breakbulk.com

All essential daily services, such as schools, medical clinics, leisure facilities, as well as green spaces, will be within a five-minute walk.

CREDIT: NEOM

US$200 billion; in return, the project would create some 380,000 jobs and add US$48 billion to Saudi’s gross domestic product by 2030.

BREAKBULK EXCITEMENT

Despite the lack of data, the city is raising the prospect of some major breakbulk activity in the region.

An executive at Saudi Arabia’s King Abdullah Port said once work was underway, the project would have a major impact on the supply of building materials and other goods and equipment. “We will soon witness increasing cargo volumes,” said the executive, who asked to remain anonymous.

King Abdullah Port, a private terminal on the Red Sea coast about 900 kilometers south of NEOM, is one of the Kingdom’s largest handlers of breakbulk and project cargo.

Full operations at the facility began in 2014.

“We are situated along a straight uninterrupted highway to the northern regions of Saudi Arabia to cater to the supply needs of the new city,”

the executive said. “The possibilities that The Line promises to offer are inspiring, and we are fully equipped to seize new growth opportunities.”

Another Saudi-based project cargo executive, who asked not to be named, said he expected early-stage building materials to be sourced locally. Developing local manufacturing industries and production capacities is a central plank of the Kingdom’s plans to diversify its economy.

“They are focusing on stuff made in Saudi Arabia, like the steel and all those products. When the time comes and when they require some things to be brought from outside, maybe some hyperloops or some rails, then there will be some potential opportunities,” said the executive.

“At the moment it is at the very preliminary stage. There are a lot of projects also running like tourism projects and sea resorts, so maybe the focus is on something else at the moment. But sooner or later they will put the focus on The Line and then things will start moving.”

ISSUE 4 / 2021

EMERGING MARKETS

A cross-section showing the three layers of The Line. CREDIT: NEOM

Pedestrian layer

Service layer

Spine layer

Transport controlled by AI

Next generation freight Ultra-high-speed transit

OUTSIDE INVESTMENT CHALLENGE

The government’s ability to lure foreign investment and know-how will be crucial in getting the project built, said Steffen Hertog, associate professor of comparative politics at the London School of Economics and an expert on the Gulf’s political economy.

As part of its Vision 2030 plans, the Kingdom is intent on boosting its competitiveness and becoming the preferred regional base for international operators, overtaking Dubai as the main hub in the Gulf Cooperation Council, or GCC. The government has taken steps to cut red tape and cultivate a more pro-business environment, although operators still have to contend with Nitaqat, a system that grades firms according to the number of Saudis on their payroll. Those that meet targets get preferential treatment; those that do not face obstacles when opening new branch facilities, securing prequalification for government contracts or obtaining visas for foreign staff.

“It is likely that the Saudi government will be able to convince local investors to tie down some capital in the PIF’s megaprojects as it has a lot of influence vis-a-vis the national merchant class,” Hertog said.

“It will be harder to attract foreign capital given the limited information about The Line and the Kingdom’s limited track record with megaprojects outside of heavy industry. Finding first movers while the

project has not achieved critical scale, or ‘proof of concept’ will be particularly hard.”

Question marks remain over The Line’s feasibility, with much of the proposed technology, such as hyperloops, a transport system carrying people and cargo at high speed in special pods through low-pressure tubes, still in development stage.

Similar plans to build megacities from scratch in Saudi Arabia have failed to attract investors and residents.

In 2005, former King Abdullah bin Abdulaziz Al Saud unveiled a multibillion-dollar project to build six metropolises throughout the Kingdom, but just one of those ever got off the ground – the US$27 billion King Abdullah Economic City on the Red Sea Coast.

PANDEMIC DELAYS

Development of infrastructure projects in Saudi Arabia have also faced delays because of the twin shock of the Covid-19 crisis and the drop in the price of crude, which accounts for about 80 percent of government revenues.

“Saudi Arabia is part of this world and unfortunately the pandemic paralyzed everything,” Al-Otaibi said. “But that does not mean these projects will be affected in the longer term. Saudi has a strong economy and has survived lots of economic crises over the years. There is a political will that will make these projects proceed.”

Elsewhere in NEOM, with authorities targeting first-stage completion by 2025, contracts are already being signed.

Energy specialists Air Products and Saudi ACWA Power signed a deal with developers to build a US$5 billion green hydrogen production facility at the site, a project that will integrate some 4 gigawatts, or GW, of wind and solar power to produce 650 tonnes per day of hydrogen and 1.2 million tonnes per year of ammonia.

Hydrogen for industrial use is mostly derived from fossil fuels such as natural gas and coal, whereas green hydrogen is produced from electrolysis powered by renewable electricity.

Saudi Arabia’s eye on becoming one of the world’s heavyweight green hydrogen producers could eventually see pipelines being built to ship the fuel to Europe, Energy Minister Prince Abdul Aziz bin Salman told delegates at a virtual energy conference earlier this year.

U.S. engineering firm Bechtel meanwhile last year secured a contract for executive project management work on the development of primary base infrastructure in NEOM, although it was unclear if the deal was for engineering works for The Line.

“There are a lot of things happening, everyone is excited,” said the Saudi-based project cargo executive. BB Colombia-based Simon West is a freelance journalist specializing in energy and biofuels news and market movements in the Americas. www.breakbulk.com BREAKBULK MAGAZINE 41

CASE STUDY

ROTOR TAKES TO THE SKIES

Urgent Outsized Heavy-Lift Transport Fulfilled by Air

G

hana has made notable progress with respect to the diversification of its energy grid, motivated in part by climate change and the economic and environmental benefits seen in renewables. Globally, fossil fuel-powered plants still dominate, and this remains true for Ghana’s energy production, where hydropower comes in second.

One consequence of climate change that has impacted Ghana has been the resultant instability of its hydropower generation. To counter that, the government has looked towards other available renewable sources such as solar and wind to further diversify the mix. Of the two, the expansion of Ghana’s wind power production is showing impressive results and could put the country at the forefront of

BY THOMAS TIMLEN

Africa’s wind energy producers.

The progress with wind power in Ghana has not been without challenges. Securing government approvals can be problematic. More than a halfdozen independent power producers, or IPPs, actively lobby to maintain their share of the market, most being oil and gas powerplant operators whose electricity comes at a comparatively higher cost for end users.

Antonov Airlines used loading equipment designed by its in-house engineering team, while the external cranes for loading and unloading at airport were arranged by Rhenus Project Logistics USA. CREDIT: ANTONOV AIRLINES

42 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 4 / 2021

For the IPPs that utilize wind turbines to provide power to the grid, keeping their equipment online is critical. Any downtime results in revenue losses that persist until repairs are completed and the affected units are back in service. One such situation last year illustrated the related challenges, the underlying factors and the role of project cargo transportation providers, identifying a combination of entities with the know-how and equipment needed to implement timely solutions.

NEED FOR OVERSEAS REPAIRS

In July 2020 a rotor that required repair had to be moved from its location in Ghana to the manufacturer’s facilities in India. There were few options available to the IPP that owned the rotor with regard to where the repairs could be carried out. As Ritesh Nair, global sales director for projects at Rhenus Project Logistics, explained to Breakbulk: “This was proprietary material requiring specialized repair work, which had to be conducted by plants capable of handling the repair.”

Having no domestic Ghanaian repair facilities with the required capabilities that would also comply with the proprietary stipulations, the IPP approached The Heavy Lift Group, or THLG, seeking transportation solutions. The decision to approach THLG was no accident.

The rotor owner did so, based on THLG member Rhenus Project Logistics’ past experience of having handled similar emergencies.

By July the rotor was ready for transport, with no shortage of challenges ahead. About 250 kilometers of road had to be traversed between its location and an airport capable of accommodating an AN-124-100 Ruslan aircraft. The rotor itself has a weight of 54 tonnes and dimensions of 10.5 meters long, 3.9 meters wide and 4.1 meters high. Rhenus Project Logistics engaged Bethel Logistics to handle the 250-kilometer road haulage to Accra, as well as the crane procurement and operations.

For the air transport, another challenge arose. Weight was not an issue, as the AN-124-100 can carry payloads up to 120 tonnes, with some modified models capable of carrying 150 tonnes. In this case, size was the challenge. “The rotor was initially on a frame that would not fit in the aircraft,” Nair said. “Rhenus Projects’ in-house engineering team, the Antonov Airlines engineering team, and the client worked together to rework the transport frame to make it fit the aircraft with a few inches to spare.”

Antonov Airlines’ Commercial Executive Vladyslav Ishchuk added: “The in-house engineering team of Antonov have a lot of experience, and since they thoroughly know Antonov aircrafts, they were able to help design exactly what was needed, taking into account all the features and having full access to operational data.”

Of course, transport by sea would have avoided all the weight and dimension issues, however, as minimizing the overall transport and repair time was prioritized in view of the IPP’s revenue loss during the rotor’s downtime, the slower transport by sea option was not attractive. The ocean transport option could have added about two months to the unit’s downtime, on top of the time required for the repair works.

COVID-19 CONSIDERATIONS Once on board the AN-124-100, the rotor was on its way to India.

Rhenus arranged for the crane operations and the road haulage from Mumbai airport to the repair facility. After the rotor’s arrival at that facility, delays with the repair work and consequences stemming from the Covid-19 pandemic arose, both posing new challenges that had to be overcome.

Nair noted that challenges such as customs clearance time in Ghana and India are to be expected, along with the necessary procedures to reexport rotors from India that were imported under a temporary bond.

These were complicated, however, by the repairs taking longer than expected. “The challenges of repair work also meant that an extension had to be sought with Indian Customs to permit delayed re-export, in addition to export from another airport in a different Customs district,” Nair said. “Rhenus Logistics was actively involved with Customs, updating it on the status of shipment prior to arrival and prior to departure to ensure it was handled smoothly.

Antonov Airlines also made lastminute adjustments to a busy flight schedule to ensure the flight was effected within the extended time, in the middle of the holidays.”

The 54-tonne rotor measured 10.5 meters long, 3.9 meters wide and 1.1 meters high.

CREDIT: ANTONOV AIRLINES

www.breakbulk.com BREAKBULK MAGAZINE 43

CASE STUDY

The reworked transport frame loaded into the hold.

CREDIT: ANTONOV AIRLINES

Why was the return flight suddenly required to depart from a different airport? Here is where the pandemic came into play. “Difficulties arose on the return flight from India to Ghana.

The Ministry of Civil Aviation of India issued an Open Sky policy for non-scheduled cargo flights to and from India due to Covid-19,” Ishchuk explained. “The operations of foreign ad hoc and pure non-scheduled freighter charter service flights were restricted to six airports, namely Bengaluru, Chennai, Delhi, Kolkata, Hyderabad, and Mumbai. The flight was supposed to be operated from Ahmedabad, but due to this policy it operated out of Mumbai as closest to Ahmedabad, which is 500 kilometers away.” In turn, Rhenus had to make adjustments for this change of airport to get necessary permits to meet the flight in Mumbai.

Although the pandemic did impact this move, things could have been worse had the transport taken place 44 BREAKBULK MAGAZINE www.breakbulk.com

in 2021. “The Covid-19 situation was better managed in India during the time of this project and hence we did not have the problems India is having presently,” Nair said. “However, availability of equipment and personnel was still a challenge both of which was expertly coordinated by Rhenus Logistics locally to ensure a smooth operation.”

OVERCOMING HURDLES

Four months after its departure the rotor was back in Ghana in December 2020. Reflecting on the move, Nair summed up the significant challenges that were faced and how they were overcome.

“The shortest route could not be taken due to dimensions, but alternate routes were available. Permits and escorts needed to be arranged. The transport of the repaired rotor during holidays was more challenging than the transport itself, but it was overcome with detailed coordination

and backup plans that were already prepared,” Nair said. As part of that effort, among other things, Antonov Airlines developed the required technical instructions.

The role of THLG in bringing together the entities with the necessary know-how paid off for the Ghanaian IPP. “The THLG is staffed by members and works cohesively in the best interests of the members, their projects, and the group itself,” Nair said. “We come together to strategize and take best action forward on projects awarded to any member of the group, supporting such members with the best resources where it is needed. In this case, when we were approached, THLG members Rhenus and Antonov worked together to provide a viable solution to the client.”

The success of this endeavor was no accident, but rather reflects the longstanding professional collaborations between Rhenus and Antonov. Ishchuk concluded: “This transport operation required well-coordinated preparation and actions from both partners to fly such outsized and heavy cargo safely. Antonov Airlines showcased its flexibility by providing the AN-124 aircraft on the required dates during an extremely busy period for the customer to minimize any disruption that could have been faced.”

Nair added: “Rhenus Project Logistics USA and Antonov Airlines have an association going back over 15 years, which has involved multiple charter performances for mutual clients and is a testimony to the strength and expertise members of THLG bring to their clients.”

As wind turbines proliferate in all parts of the word, components will increasingly require urgent repairs, not all of which can be conducted on site.

As such situations arise, the owners of this equipment will likely be turning to air transport as long as the aircraft can accommodate the increasingly large dimensions and weight of the units involved. BB Thomas Timlen is a Singapore-based analyst, researcher, writer and spokesperson with 31 years of experience addressing the regulatory and operational issues that impact all sectors of the maritime industry.

ISSUE 4 / 2021

BREAKBULK EUROPE CONNECT 21

Breakbulk Carriers Urge Shippers to Book Early

Capacity, Equipment, Fuel Choice Also Pressing Issues

BY CARLY FIELDS

Breakbulk cargo carriers have wholeheartedly welcomed surging seafreight rates, but a red-hot freight market has thrown up its own problems.

Speaking on a Breakbulk Events Connect 21 panel, Ben Collins, global project cargo manager for MSC, explained that the strong freight market presents a challenge for everybody in the supply chain, carriers included. “The sooner we can get some normalized operations across the world, the better for everyone in reality,” he said.

Laurens Govers, director chartering and projects at the newly formed Jumbo-SAL-Alliance, explained that carriers face a very tight balancing act to be able to deliver. This is not helped by the fact that shippers are only now accepting that they need to come earlier to the freight market to guarantee sufficient and/or available tonnage. While shippers may not consider this as the new normal, they have to accept that this is the current state of play, he said, adding that he had seen some cargo volumes shipped at freight rates that exceed their values.

The turnaround in freight fortunes comes after years of unsustainable rates – what Govers referred to as the “perfect storm on the negative side” – and is not before time. “The industry, the clients and the EPCs all knew that the previous situation with the severe competition was not sustainable,” Govers said. “If you run the risk that there are only three or four players left because the rest have all disappeared, then that is not a bright outlook.”

Container line operators with a presence in the breakbulk market are also enjoying riding this wave. Sarah Schlüter, senior director niche products at Hapag-Lloyd, noted that all trades have increased massively, and some are still increasing. She added that some of the backhaul trades are also currently breaking even.

The freight premium coupled with a shift towards localization – already a feature before the pandemic, but now a political focus of many developed nations – could lead to a faster shift to nearshoring of breakbulk cargoes. Govers said to expect “more domestic, more controlled production from a strategic and cost point of view.”

However, MSC’s Collins noted that a skills shortage might curtail the potential of nearshoring in the short term. The skills needed have, in many cases, shifted to producing

A recording of “Carrier Check-In: Business, Environment and the Changing Cargo Base,” is available at https://youtu.be/fxca14GMhO4

countries, and their return to support nearshoring will not happen overnight.

Oskar Orstadius, chief sales officer at Höegh Autoliners, said the carrier had already experienced a huge shift in production through an agile market and quick production schedule changes in the car industry over the past decade. “We are used to these changes and we have a very agile trading pattern,” he said.

QUESTION OF SCALE

Collins said that scale is important in meeting the demands of shippers in today’s market: “From an MSC perspective we have a certain advantage through the scale of our fleet. We have started new services, approximately eight, since the start of the pandemic.” MSC has also reduced some port rotations, particularly on the transpacific route, to minimize port congestion. “The reality of it is that the lack of predictability of what can happen on some ports on some voyages is proving a huge challenge for all carriers at the moment. It’s very difficult to meet the berth slot.” www.breakbulk.com BREAKBULK MAGAZINE 45

BREAKBULK EUROPE CONNECT 21

There are also issues related to equipment and in ensuring that the right units are at the right place at the right time. Höegh’s Orstadius said that while the pure car and truck carrier has positioned itself to be balanced in its network, it is experiencing imbalances with cargo-carrying equipment, road trailers and so on. “We need to cope with this and reposition empty equipment,” he said.

One fix to the supply/demand imbalance is to bring in new tonnage; the trick is finding the happy medium between balancing the market and oversupplying it.

Three of the four panelists confirmed that they have either ordered or recently taken delivery of new ships for fleet replacement. HapagLloyd has ordered new ships, but delivery is a few years out. While the carrier waits, it is investing in special equipment to improve its service to customers. MSC is to welcome five new Gülsün class vessels before the end of the year, Collins said, all of which can carry out-of-gauge cargo.

Höegh Autoliners, meanwhile, has announced plans for its Aurora class vessels, the largest and most environmentally friendly car carriers ever built.

Jumbo-SAL-Alliance’s Govers, representing the only carrier on the panel that has not ordered new ships, observed that “every carrier is trying to get fat on the bones again.” He added that carriers looking to capitalize on the current market are already too late and with attractive newbuilding prices yards are already filling up.

“Tonnage renewal needs to be conducted so there will be newbuilds,” he said. “I just hope it will be more controlled than it was 10 years ago.”

FUEL CHOICE CHALLENGE

The most pressing question for any breakbulk mover looking to order new tonnage is what fuel to burn, especially in light of regulations from the IMO requiring lower carbon and eventually carbon free ships. The panel showcased a mix of approaches to the “which fuel” question. For its existing fleet, Orstadius said that Höegh Autoliners has completed biofuel trials, 46 BREAKBULK MAGAZINE www.breakbulk.com

Clockwise from upper-left: Ben Collins, MSC; Sarah Schlüter, Hapag-Lloyd; Laurens Govers, Jumbo-SAL-Alliance; Oskar Orstadius, Höegh Autoliners; Carly Fields, Breakbulk magazine.

delivering carbon-neutral voyages. For its newbuilds it has opted for a flexible design, multi-fuel engine, which can run on biofuel, conventional fuels and which with minor modification can transition to carbon-zero fuels such as green ammonia. Schlüter noted that Hapag-Lloyd already counts LNGready ships in its fleet and is exploring options for alternate fuel sources.

MSC is also trialing biofuels, but Collins noted that the biggest challenge is scaling these up.

Govers agreed that availability is far from guaranteed once a carrier moves out of a hub port. He

also noted that the conclusion from Jumbo-SAL-Alliance’s LNG trials was that LNG on a breakbulk vessel is “very challenging.” “Normally [the ships] are a smaller size and the LNG tanks are quite large. It’s also impossible to get a hot work permit to secure your cargo.”

Govers prefers to take a whole shipment approach when it comes to assessing environmental impact. For example, Jumbo-SAL-Alliance looks for optimized logistical packages combining, for example, certain load ports into one shipment or reducing the total number of shipments. BB

World Project Expo: Global Project Outlook View the regional reports, providing overview of the global project landscape: Europe: Nekkhil Misra, Director Europe, Middle East, Africa & Russia, Independent Project Analysis https://youtu.be/oHziEcWdrkg Asia: Wei Zhuang, Regional Manager Asia, BIMCO https://youtu.be/g4uHuR1fdbs Africa: Edward James, Director of Content & Analysis, MEED Projects https://youtu.be/BoyHHqy3vc8 Americas: Alex Azparrent, Director of Logistics, Supply Chain & Commercial Strategies; Andrew Gardner, President of Kiewit Supply Network, Kiewit https://youtu.be/gZnerhh15oA

ISSUE 4 / 2021

If They Come, Will You Build It? Is Supply Chain Ready for Offshore Wind Buildup?

BY GARY BURROWS

With projects facing such long lead times – anywhere from six months to three years – there are plenty of bottlenecks.

Throw into the mix that original equipment manufacturers, or OEMs, are increasing development times and increasingly developing new and larger turbine types and blade lengths, which further complicates adjusting supply chains to meet demand, Sender Mehl said.

“There are few newbuilds that can handle the largest components that we expect,” Fløtre said, with 14 to 15 megawatt turbines being developed by Gamesa, GE with its Haliade-X, and MHI-Vestas.

“It’s a competitive advantage for the OEMs right now. Who’s the best at beating the others,” said Thomas Sender Mehl, global sales and operations planning and supply chain excellence, KK Wind Solutions.

OEMs are bidding on “giga-deals where the turbines are not even specified. It’s just a number they commit to.”

Given that Europe’s offshore wind capacity is projected to increase four-fold by the end of the decade, is the industry ready for such a rapid ramp-up?

That’s the question that was posed to industry executives who focus on offshore wind during a Breakbulk Europe Connect21 session on serving Europe’s growing offshore wind industry.

Facing such a major supply chain port and storage capacities and, for capacity crunch, session panelists markets such as the U.S. East Coast, stressed that all players need to colthinking more regionally than the laborate and set priorities to utilize current state-by-state or even comand effectively grow existing capacmunity-by-community focus. ity to deliver such ambitious goals in Port of Tyne’s Brett noted that as Europe and other burgeoning global pan-European governments require offshore markets. a reduction in offshore wind costs, Rystad Energy projects the their demand for projects requires European offshore wind market will ever more expensive infrastructure more than double to 52 gigawatts, and service vessels, cranes and or GW, by 2025, nearly 28 GW of equipment. “It’s a vicious cycle.” added capacity from the 24.3 GW Panelists agreed that one of the in operation in 2020, said Alexanlargest problems is failing to “sign der Fløtre, vice president offshore the contract earlier,” Heiko Felwind. The energy research and intelderhoff, managing director of SAL ligence firm sees a further doubling COLLABORATION Renewables, said bluntly. “It starts of capacity by 2030 to more than 115 To resolve the industry’s conwith a signature that we can start our GW. straints, panelists called for bringing activities, right? And that goes down This “flood of projects” will begin together the collective elements of the line, as simple as that.” to come online starting in 2024 and the supply chain to collaborate on Instead, Sender Mehl said the building through 2030 and perhaps solutions.

OEMs should “look into end-tobeyond, said Simon Brett, commerThat begins with governments end solutions for the operators and cial director, Port of Tyne. Despite having the “political willingness” to owners, because then it would be setting lofty offshore goals, most address issues that are largely based easier to execute the project. If you European markets got off to a slow on their ambitious – though environhave the same interfaces, the same start and will have to pick up the mentally necessary – offshore goals,” lifting points, you can utilize equipslack by the end of the decade.

Sender Mehl said. This would include ment. But it takes an effort from the “I think nobody’s ever thought permitting, laying groundwork for OEMs.” BB about the sequencing of these projects,” Brett continued. “EveryThe full report of “Servicing Europe’s Growing Offshore Wind Industry: body wants their Keys to Success,” is available at projects installed https://www.breakbulk.com/Articles/connect21-if-they-come-will-you-build at the same time, and that’s where the challenge is going A recording of the session is available at https://youtu.be/QQ8DLfgALoU to come.” www.breakbulk.com BREAKBULK MAGAZINE 47

BREAKBULK EUROPE CONNECT 21

Sustainability a Shared Logistics Journey

Oil Majors, Supply Chain Partners Work Together

BY CARLY FIELDS

Transparency of carbon options for any user of logistics and being clear on the decarbonization pathways sector by sector will go some way towards shifting the dial on reducing carbon emissions from the breakbulk and project cargo sector, a Breakbulk Connect21 session heard.

Taking part in the “Greening of the World’s Oil & Gas Supply Chain” webinar, Beata Bac, global category manager international and project logistics at Shell, said that while there are answers to decarbonizing that are specific to each industry, there are some common solutions that can be adopted more widely in the logistics space. One, she said, is being more energy efficient and using lower carbon energy products and solutions.

Bac also urged stakeholders to listen to one another. “I’ve been asking myself ‘what is my expectation on sustainability of the partners I work with?’ Being able to collaborate and co-develop that journey to sustainability in logistics and the wider supply chain is truly important. For me, that means creating transparency of options and transparency of tradeoffs across multi-tiered supply chains.

Looking at the product life from design to disposal is truly important.”

Martyn Lawns, regional vice president of European operations, industrial projects at Deutsche Post DHL Global Forwarding, agreed that deciding on what to measure

when it comes to emissions is critical. “We measure well to wheel at DPDHL, meaning we measure our CO2 emissions from production of the fuel.” DPDHL has created carbon calculators, where users can enter the transport mode into the system and calculate the CO2 emissions depending on the mode, whether that’s air freight, rail or road.

DECARBONIZATION MARKER

Asked to give an indication of where the logistics industry is in terms of its decarbonization target of zero carbon by 2050, the panel gave a banding of 20 percent to 30 percent.

The specialists then considered how the industry could speed up its journey to full decarbonization.

Jan Kristian Schønheyder, head of global projects and industry solutions Norway at DB Schenker, said projecting on decarbonization the same attention that the industry currently commits to health and safety could yield promising results. “The lifesaving rules and the HSE focus that we see in our environment have a target and ambition of zero harm during operations. Putting in place policies that bring the same attention into sustainability could from an industry perspective really accelerate the journey.”

DB Schenker is pursuing the goal of reducing its global greenhouse gas emissions by 40 percent by 2030 compared to 2006. Schønheyder said that sustainability is a “busi-

ness imperative. It goes beyond one single department. We take a holistic approach to ensure we are resilient and future ready as a company. We have a vision to become the sustainability leader in our industry.”

Lawns, meanwhile, called for greater standardization in terms of measuring emissions, describing a “nirvana” where everyone is measuring on the same basis.

Bac added that for her, it is critical that stakeholders sit down together and look at the “root causes of selection” of one logistics system over another. “I really like to have KPIs and a baseline as this drives change, but I do think that we have to sit down and work out together what do we have to do with these KPIs and then what are the solutions.”

In April 2020, Shell set itself a target to become a net-zero energy business by 2050 if not sooner.

“Achieving our target would mean that by 2030 we are selling twice as much electricity as today, providing enough renewable energy for 50 million households, operating more than 2.5 million charging points for electric vehicles, increasing the number of biofuels in the fuels we sell,” she said.

“Most of the emissions we produce come from the energy, so we must also help our customers cut their emissions when they use that energy.

We are taking steps to cut emissions from our existing oil and gas operations to avoid generating more in the future.” BB

A recording of “Greening of the World’s Oil & Gas Supply Chain,” is available at https://www.breakbulk.com/Articles/connect21-shell-brings-dhl-db-schenker-togeth

48 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 4 / 2021

Women’s Path to Level Playing Field Connect21 Panel Explores Less Obvious Barriers, Solutions

BY GARY BURROWS

While companies work to remove barriers for employing women in industries including the breakbulk and project cargo sector, paths to career advancement require effort by companies, colleagues and women themselves.

That was the overarching message of the Breakbulk Europe Connect21 closing session, “Women in Breakbulk: Defining the Roadmap to Overcome Barriers Facing Women in the Industry.”

Women in Breakbulk has been developed with the EU Maritime Women Organization and its global women’s research partnership with WISTA International. WISTA is an international organization “combining ladies and shipping” in more than 50 countries, said Claudia Ohlmeier, president, WISTA Germany; head of section class systematics, data and operations center, DNV. Sue Terpilowski OBE, president of WISTA UK, and director of Imageline, introduced the project with Breakbulk earlier this year. She worked with Maritime UK to set up the Women in Maritime Task Force, which led to co-chairing the Diversity Task Force, “because what we found was, if you change something for women, you’re actually changing the culture within a company for everybody.”

Ingrid Vanstreels, board member of WISTA Belgium, and business development advisor of the Port

of Antwerp, said she had spoken with WISTA members in Belgium about the question of barriers to women. “Our conclusion is no; we don’t see barriers today.” She did acknowledge there are different circumstances outside of Europe in terms of openness to the employment of women.

Vanstreels did say that, within Europe, there are factors that “look like a barrier for women” in terms of attracting young people to the industry. Perhaps foremost is that young people are unaware of the shipping employment opportunities that exist.

Though Belgium houses the Port of Antwerp, Europe’s secondlargest port, local young people are unaware of the port or its wealth of employment, she said. At the maritime school within the port, women represent about 15 percent of new starters.

Christel Pullens, president of WISTA in the Netherlands, and managing director of Sea Ranger Service, agreed. Children in school are not exposed to role models in these professions. “We need to educate them about our industry and possibilities for women as a career path,” she said.

While the panelists largely agreed that men and woman share opportunities to begin within the industry, advancing can be a different story.

Pullens recounted times when she “needed someone in a decision-making role” to support

her candidacy.” Often, she found herself as the “second candidate” behind a male candidate. The female hire would be considered a risk, with employers fearing how customers or how the rest of the company would respond, so the male was the safer bet, regardless of qualifications.

DNV’s Ohlmeier said she has seen both sides: women who have had support in their career and those who have struggled. She noted that men and women are different, “which is good because that is also diversity and that helps us find different ways.”

One difference is how men and woman approach seeking promotion or advanced responsibilities.

Terpilowski noted a PriceWaterhouseCooper study that looked at its international graduate program and the gender split of new employees entering the company.

“Males seemed to progress greatly and the women diminished to almost zero, and they tried to find out why.

“It came back … males were going for jobs because they thought, ‘well I can do 50 percent to 60 percent of it and I can learn the rest on the job.’ And the women weren’t,” Terpilowski related.

Mentoring and encouragement is an important part of WISTA’s approach. WISTA and other organizations are developing management training to empower women to compete in advancing their careers. BB

The full report of “Women in Breakbulk: Defining the Roadmap to Overcome Barriers Facing Women in the Industry,” is available at https://www.breakbulk.com/Articles/connect21-womens-path-to-level-playing-field A recording of the session is available at https://youtu.be/tuI4NoVyueM

www.breakbulk.com BREAKBULK MAGAZINE 49

Market Report: Transformer Market and Component Developments

By Saqib Saeed and Hassan Zaheer, Power Technology Research

C

lean energy is a key pillar to achieve a low-carbon future for many governments around the world. CWIEME Transformer Day, held June 22, provided updates on innovative components and transformer solutions, exclusive insights on transformer and energy market developments and expert discussions on renewable and smart grid technology. Following are excepts from a white paper commissioned for the event.

Covid-19’s influence on the transformer market has been multidimensional, intricate and far-reaching, impacting the global economy and trickled down to the energy sector, particularly the power grid market.

In absolute terms, the global transformer market is expected to bounce back nearly to the 2019 level by the end of 2021. Moreover, delays in lead times and supply chain constraints experienced in 2020 have mostly returned to normal, providing an optimistic outlook for 2021.

Eco-sustainability, digitalization and solid state technology, or SST, are the key trends in transformer market nowadays. Grid dynamics are changing drastically owing to aggressive penetration of renewables and EVs, forcing the utilities to opt for active power control technologies.

Anticipating this, OEMs are investing heavily in developing cutting edge technologies for transformers.

Digitalization enables utilities to operate transformers for short or long-term above nameplate rating by utilizing optimal thermal conditions, monitor vital parameters using smart sensors and make informed management decisions, thus preventing overcapacity specification of transformers during tendering process.

Factoring the removal of fire safety systems, reduction in civil engineering costs and longer lifespan of ester oil-based transformers, PTR anticipates aggressive penetration of 50 BREAKBULK MAGAZINE www.breakbulk.com

KEY TRANSFORMERS MARKET US$148m

Distribution Transformer Power Transformer

US$187m

US$1,200m

US$1,147m

US$2,790m

US$2,620m

US$300m US$460m Source: Power Technology Research

US$124m US$178m

ester oil-based solutions in the coming decade.

Despite the flexibility and potential benefits being offered for grid modernization, higher cost and reduced lifespan have limited wide scale adoption of SSTs. OEMs have been researching to justify the additional cost and complexity of SSTs by offering features and services to add value for one-to-one conventional transformer replacement.

2021 Outlook

While the global health crisis lingers in the first half of 2021 with second and even third waves of the virus in many regions, accelerating vaccine rollouts and major stimulus packages in many advanced economies have provided a beacon of hope.

PTR anticipates the global transformer market will grow 10 percent in 2021, propelled by growth in the Asia-Pacific and Middle East.

• China limited the virus spread at early stages and was one of the few economies to report a positive economic growth in 2020. Dynamic growth for transformers is expected

US$685m

US$1,390m

to continue through 2021, driven by exports, but especially by domestic demand, including policy-sponsored infrastructure projects. The outlook significantly improved at the end of the year, driven by recovering industrial production.

• Early estimates project India’s transformer market growth in 2021 to compensate for the 2020 decline, although significant uncertainties remain linked to the evolution of infections and the rollout of vaccines.

• The U.S. transformer market is projected to reach pre-pandemic levels owing to the American Rescue Plan, “the Biden stimulus,” and a successful vaccine program.

• Major European markets Germany, France, and Spain, are anticipated to remain below 2019 levels, failing to fully make up for the declines in 2020. On a positive note, industrial production in the Europe is back to pre-Covid levels, owing to a recovery in international trade.

Saqib Saeed is executive director research and consulting, and Hassan Zaheer is executive director client relations and advisory, of Power Technology Research. n ISSUE 4 / 2021

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KNOWLEDGE HUB: VETERANS

TRANSIT TIME SLASHED FOR DRAGLINE REPAIR

Never Accepting ‘No’ Works for Mining Customer

BY MURRAY COOPER

Being in the right place at the right time helped to reduce the lead time of steel beams urgently required at a mining site in Queensland, Australia.

In the late 1980s and early 1990s, I was working with a leading project logistics management company that had transported more than six dragline knock-down kits to several Murray Cooper Queensland coal mines from LV Shipping Group various suppliers of mining equipment from the U.S., Germany and Japan. A typical dragline shipment was about 12,000 revenue tons of equipment, wire, rope, etc.

While visiting major U.S. mining suppliers in March 1991, I learned that a US$50 million dragline operating in an open-cut coal mine in Queensland had been put out of action when its giant bucket struck the dragline’s boom. To give you an idea of the size, the giant bucket would scoop out enough earth in one “grab” to leave a hole the size of a family swimming pool.

The coal mine management team faced the challenge of losing 25 percent of its production for at least three months while the dragline’s boom was repaired. Engineers working on the dragline repair remedial project determined that 90 tons of special quality steel beams were required to reconstruct the damaged boom section. The coal mine procurement team worked long hours identifying a supplier of the 52 BREAKBULK MAGAZINE www.breakbulk.com

steel beams, determining they would be sourced from a Pennsylvania steel mill, already cut in various sections and lengths to accommodate a speedy fabrication process onsite at the mine.

LOGISTICS CHALLENGES

Logistics challenges then came into play. Normally steel beams were shipped as breakbulk cargo or on flat racks, resulting in a 30- to 35-day vessel voyage transit time.

I was able to work with the mining engineers in Queensland, via cellphone (there were no video calls in those days), as well as the Pennsylvania steel mill supplier, and quickly determined that the steel beams could be shipped via airfreight, if we could convince the 747 freighter aircraft owner to accept the freight and present the aircraft with sufficient equipment to securely lash down the load.

In 1991, not many airlines had experience in shipping steel beams, and traditionally all pallets were loaded onto the aircraft using a scissor lift, which were plentiful in the U.S. But in Australia, the nearest airport with a scissor lift capable of handling the discharge process was in Sydney, more than 1,200 miles from the coal mine delivery point. After several days of negotiations, it was agreed the steel beams could be configured on aircraft pallets and then loaded into the 747 nose-loading freighter at JFK Airport using a scissor lift.

The airfreight shipment required the steel beams be presented in a pre-specified sequence to the airfreight terminal cargo consolidator to configure the steel beams onto aircraft pallets. Also, to reduce the 18- to 24-hour transit time from Sydney

Airport to the coal mine, we negotiated with the airline and local Brisbane airport personnel to discharge the steel beams using a crane in lieu of the nonexistent scissor lift.

It took a little more than 12 hours to load the steel beams onto the freighter at JFK and just three hours to discharge the cargo at Brisbane airport using a crane onto the road haulage trailers standing by on the apron.

The delivery of the steel beams from the U.S. mill to the Queensland coal mine took just five days and all the stakeholders involved were extremely happy with the outcome.

HOW WE DID IT

Behind the scenes, we conducted a risk assessment, and never accepted no for an answer. We assumed responsibility for downtime and repairs to the 747 freighter’s nose cone (if damaged during the discharge process), our company purchased insurance to cover our risks, thus turning what appeared to be an impossible task into reality.

Lessons learned here are get to the site of the action and pay attention to the details, conduct a risk assessment, and then supervise and expedite every step of the shipment process.

Murray Cooper, a 35-year veteran of logistics planning for abnormal loads, is director of corporate governance for LV Shipping Group and a Breakbulk Veteran. He has worked as a shipper and project logistics service provider in Australia, Indonesia, Malaysia and Singapore, where he now resides. He has executed supply chain logistics solutions in mining, resources, oil and gas, renewable energy, industrial projects, capital projects and sporting events. BBONE ISSUE 4 / 2021

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KNOWLEDGE HUB: BUSINESS OUTLOOK

‘SMART PORT’ PLAN FOR PORT OF AÇU

HPC, UTC Overseas, Radix, UH Partner

HPC Hamburg Port Consulting, UTC Overseas, Radix Engineering and Software, and the University of Houston’s Supply Chain & Logistics Technology Program are collaborating to develop a “Smart Port Digital Growth Masterplan” for the Brazilian Port of Açu, or PdA, Latin America’s largest private port.

The partnership’s goal is to develop a five to 10-year vision for the technological platform for PdA and its ecosystem. The plan will focus on optimization of operations, attracting new technologically aligned businesses, and establishing a technological governance plan and systems architecture, according to a statement from UTC Overseas.

“Brazil is one of the strongest U.S. trading partners,” said Marco Poisler, UTC Overseas’ chief operating officer of global energy and capital projects.

“The Port of Açu has a strong relationship with the Port of Houston ...

Fostering and improving this connection through increased trade and advanced technology is very exciting.”

INNOVATION AND DIGITALIZATION

The masterplan development is based upon benchmarking of key worldwide ports, including Port of Antwerp, PdA’s strategic partner through the Port of Antwerp International, which is one of the pioneers in the smart port concept, focusing on innovation and digitalization.

“Large ports in the world, such as Antwerp, Rotterdam and Hamburg, use different and excellent port and maritime traffic management tools,” said Port of Açu Chairman José Firmo, “but few operate in the way that Port of Açu operates, integrating these tools in the same environment. There is a worldwide demand for greater integration of port and navigation systems.”

54 BREAKBULK MAGAZINE www.breakbulk.com

Luis Alfredo de Almeida Cruz, business development manager of Radix, said the company has developed digitalization projects for other ports, notably the CSN Port at the city of Itaguaí, Brazil, and some VALE ports.

“We’ve found that the digitization of the various stages of the production process will allow the analysis of medium and long-term trends, with the aim of increasing the availability and efficiency of the port. This will lead to better decision-making – based on data – reacting more quickly to the market and with a leaner, more reliable and economical cargo movement.”

PdA expects the digital masterplan to generate greater efficiency, reduce time of shipments/landing, and link all clusters and production steps, such as movement statistics, availability, maritime safety data, customer specifics, and engagement with all stakeholders in the ecosystem.

Pablo Bowen, associate partner of HPC Hamburg Port Consulting,

said digital plans are the first step to becoming a world-class port. “End-toend visibility of the extended supply chain, including the last mile, is one of the challenges. Availability of common software platforms for port communities’ stakeholders sharing information and with efficient processes is another challenge and makes the difference between port communities.”

The plan will propose digitalization of logistics processes and draw new businesses as a productive port.

“Beyond digitization, the ‘port of the future’ plans for new industry cluster needs, looks to collaborative partnerships to drive innovation and growth, applies the value proposition of the ‘triple bottom line,’ [and] understands the importance of filling the skills gap to not only prepare the ‘workforce of the future’, but more saliently to attract knowledge intensive industries, such as high-tech,” said Margaret Kidd, program director, Supply Chain and Logistics Technology, University of Houston. BBONE ISSUE 3 / 2021

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