TIGHT TRANSPORTATION MARKET TO CONTINUE

OUTLOOK – MARKET

Securing Space Not Getting Any Easier BY DENNIS DEVLIN

Entering 2023, we see a very different project logistics market than the market of several years ago, and one which is still changing. This brings both challenges and opportunities.

The very tight container market seems to be loosening up a bit, and this will help project shippers and forwarders in many ways, especially for shipments from Asia.

That said, on the breakbulk side, we are working in an environment with significantly less regularly scheduled liner breakbulk services than five or so years ago. The demise of some of the breakbulk liner carriers means the loss also of a significant base of regularly scheduled services. Gone are the days when it was easy to book small (less than 1,500 freight tonnes) cargoes from port to port in major trade lanes like Shanghai to Houston or Antwerp to Singapore, as well as to and from Mediterranean origins and destinations.

Yes, there are still some good breakbulk liner services in the market as well as some reliable and frequent roll-on, roll-off services, all of which can support many breakbulk shipments. But there are far less regularly scheduled breakbulk services than there were some years ago. And space is far tighter now too.

Due to a lack of new breakbulk/ multipurpose ship building and the increasing use of the fleet for wind energy projects, space on breakbulk and heavy-lift tonnage will remain tight. And although rates may fall a bit, they won’t likely fall to the levels we saw before the pandemic, levels at which carriers were losing money.

FORWARD BOOKING ISSUES

For larger volume breakbulk and heavy-lift shipments, the challenges are different. While shippers and forwarders may have inducement volumes with which to work, thus not needing to rely on liner services, the challenges will be booking far enough in advance to confirm the space. This will be especially true for super-heavy-lifts. Gone are the days of booking a month or so before the anticipated shipment date. In today’s market, carriers are booking cargoes many months in advance. Project cargo shippers and forwarders must work closely with carriers far in advance to ensure space. Planning and some flexibility are vital.

Other challenges will increasingly involve regulatory compliance. For example, in the U.S., in light of the Uyghur Forced Labor Prevention Act, signed into law on December 23, 2021, imports from China involve a far higher risk than before, especially for machinery and equipment with many parts and components, some of which might introduce the risk of non-compliance if one does not know where the parts were manufactured. Many project shippers will require detailed consulting services to meet this challenge, or they risk serious penalties and delays.

The project cargo market will continue to grow. Wind farms both on and offshore, mining projects, liquefied natural gas, chemical plants, and other projects will continue to be built. It remains a very interesting time to be working in the field of project logistics and transportation. But it is a significantly different market today than some years ago.

No quick solution to a lack of ship supply.

CREDIT: SHUTTERSTOCK

Dennis Devlin is senior director strategic programs at Maersk Project Logistics.

OUTLOOK – CARRIERS

CARRIER OPTIMISM FOR 2023

High Demand and Tight Tonnage to Continue BY ULRICH ULRICHS

We look rather optimistically into 2023. Despite current downward trends in the container sector, there are good reasons for a healthy mid- to long-term outlook for the multipurpose and heavy-lift sector, driven by the demand for energy and renewables, and other industrial projects.

There is no significant newbuilding activity for multipurpose tonnage, and the fleet continues to age. This, coupled with a high level of demand with large parts of the multipurpose fleet already being occupied with projects over the next few years, means that it will become more difficult for shippers to find suitable multipurpose tonnage to pick up their projects.

Meanwhile, delays in supply chains, disruptions in port operations and the issue of crew change remain challenges for our industry, which must be overcome.

Regarding regulations, as of Jan. 1, 2023 the Energy Efficiency Existing Ship Index (EEXI) enters into force requiring existing ships to implement technical measures for the limitation of their CO2 emissions. Additionally, the Carbon Intensity Indicator comes into force, limiting the CO2 emissions resulting from the operating profile of the vessel. Vessels that fall under these regulations will have to comply from their first annual class survey on or after Jan. 1, 2023, resulting in measures such as main engine power limitation or speed reductions, for example. Also, CO2 emission pricing will soon have its impact on costs attached to ocean transportation.

The pandemic has changed the work environment and has shown our capability to maintain our business operations even in times of lockdowns. Our IT infrastructure and setup was already able to cope with it when most of us shifted to work from home. Flexibility is key and we continue this path to ensure that in case it is needed; we are basically able to work from anywhere. This has become a decisive factor for the continuity of our business and adds to the need to further optimize and digitalize processes in our sector.

Finally, we also must make sure we have skilled and experienced staff that are capable of taking on the challenges our clients present to us with their cargoes. BB

Ulrich Ulrichs is CEO of BBC Chartering.

“There is a high level of demand with large parts of the multipurpose fleet already being occupied with projects over the next few years, meaning that it will become more difficult for shippers to find suitable multipurpose tonnage to pick up their projects.”

BBC expects a healthy mid- to long-term outlook for MPVs.

CREDIT: BBC CHARTERING