Breakbulk Magazine March/April 2015 by Breakbulk Events & Media

Unfulfilled Potential n Bridging Mozambique n China’s ‘Pearls’ Unstrung n MPV Rebound Cloudy

MARCH/APRIL 2015

THE NEW BLOOD Recognizing Breakbulk’s Next Generation of Leaders

contents

30 MARKET SPOTLIGHT

UNFULFILLED POTENTIAL

Brazil, Chile and Colombia Face Barriers to Building Economies

36 CASE STUDY

47 ADVERTORIAL SPECIAL GULF COAST LOGISTICS

BRIDGING MOZAMBIQUE

Girder System, Teamwork Smooth Way for Transformers

40 FLEET OUTLOOK

SEEKING SILVER LININGS MPV Rebound Moves Further on Horizon

8 THE NEW BLOOD

Recognizing Breakbulk’s Next Generation of Leaders

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44 PORT NEWS

CHINA’S ‘PEARLS’ UNSTRUNG Shelved Port City Poses Sri Lanka Dilemma

70 PORT FOCUS

INDIA EYES PORT REFORM But Labor Opposes Corporatization Move

76 LOGISTICS PERSPECTIVE

INDONESIA’S INFRASTRUCTURE NEEDS

New Government Looks to Correct a Decade of Under-investment

Editorial 6 n China Nuclear Pushes Forward 69 n Rio Toasts ‘Port of the Future’ 81 n Digging Out: Managing Risks 82 Introducing the New Breakbulk.com 84 n Breakbulk Index 85 n Silk by Land, Silk by Sea 90 4 BREAKBULK MAGAZINE www.breakbulk.com

JANUARY-FEBRUARY 2015

editorial

FINDING FRESH VEINS

e tend to speak in organic terms when discussing shipping, transportation, logistics and supply chain management. Complex, living and breathing, there’s a life cycle to the movement of a module or generator. And while the prognosis of the industry’s bottom line may hover between robust health and need for healing, the practitioners of the trade continually prove themselves alive and well. It can be argued that logistics’ role is experiencing a golden age in the industry, a prominence not previously held. For years, any party with a role in a heavy-lift or project move would bemoan that they were only shown a seat at the table during the last weeks of Gary Burrows planning, or that the complexities and execution of their role was marginalized. Today, an engineering, procurement and construction team will often integrate partners years in advance of a move, employing keenly trained professionals that employ intricate systems and standards, deeply aware of environmental and safety issues, and balancing bottom lines with respect to lives. To achieve this level, it’s amazing that an industry with such a vast geographic stretch can seem near and dear; adhering to ethics, codes of conduct and international mandates yet can seem close and colloquial; with so many complex facets and intricacies yet seem so simple and straightforward. The common denominator among all these incongruities are the people who ply the trades, who bring life to such a unique industry. If this is the golden age, those who have built the industry shine with their experience, integrity, intellect and ingenuity. Despite a highly competitive busi6 BREAKBULK MAGAZINE www.breakbulk.com

ness environment, these linchpins of the industry create a culture of leadership that embraces mentoring and guidance both within operational walls and across corporate cultures. They teach, train and motivate the next generation, glowing examples that are noted in our cover story (The New Blood, page 8). The most exciting aspect of meeting these rising leaders is finding they display the same mettle as those they will eventually succeed. Reading through their responses to questions about their industry beliefs, you see the pride they feel working in this remarkable industry, their gratitude to those who’ve guided them, and their willingness to nurture their successors. But from where will their understudies come? This is a common concern among industry leaders regardless of tenure. One manager observed a gap among 20-year veterans and those with five years under their belts. Recruitment, training and retention are as vital an issue as the cost of oil, because this lifeblood runs as thick and deep for the industry’s continued success. Companies look within, creating training and professional development. Universities, in cooperation with industry executives, are forging programs intended to draw young hearts and minds into the business. Breakbulk, with its emphasis on education programs at its events, motivates many young adults. There is promising interest from all quarters in further developing the industry’s role in finding and cultivating its newest additions. In the coming months we hope to explore current efforts, help guide discussion for ideas and plans to further develop industry approaches and to acknowledge further efforts to invigorate breakbulk’s future.

EDITORIAL DIRECTOR Gary G. Burrows / +1 904 535 5460 gburrows@breakbulk.com DESIGNER Catherine Dorrough REPORTERS Alan M. Field Susan Oatway Eric Johnson V.L. Srinivasan Mike King Liesl Venter BREAKBULK EDITORIAL BOARD John Amos Amos Logistics

Ed Bastian BBC Chartering

Murray Cooper McDemott International Inc.

Etienne de Vel Fednav Belgium

Dennis Devlin Panalpina

John Hark Bertling Project Logistics

Dennis Mottola Bechtel Corp.

William Moyersoen ArcelorMittal Antwerp Logistics

Albert Pegg Antwerp Port Authority

Dirk Visser Dynamar D.V.

Grant Wattman Agility Project Logistics

MANAGING DIRECTOR Alli McEntyre / +353.21.470.9595 amcentyre@breakbulk.com ACCOUNT MANAGERS Kathleen Pinson / +1.678.954.0552 kpinson@breakbulk.com Manager for West, East & North Africa Kingsley Ekweariri / +1.353.89.952.4754 kekweariri@breakbulk.com

HEADQUARTERS Clifton House Lower Fitzwilliam Street Dublin 2 Ireland To subscribe, email breakbulk@halldata.com, or call from inside the US +1-877-475-4157, or from outside the US +1-847-763-4933 between 8:00 am and 4:30 pm CST. JANUARY-FEBRUARY 2015

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new Blood The

8 BREAKBULK MAGAZINE www.breakbulk.com

MARCH-APRIL 2015

Recognizing Breakbulk’s Next Generation of Leaders

Credit: Shutterstock

Breakbulk’s exhibitions in Europe, Americas and China, senior industry executives gather at VIP Leadership Summits to discuss key issues and challenges. It’s a chance for old friends, colleagues and competitors to get together, trade news, respect and good-natured barbs, but more importantly to passionately address hot-button industry topics. Increasingly, one issue resonates: from where will the ensuing generations of industry leaders come? There is growing concern of the ability to recruit, train and retain the best and brightest to ensure this industry remains as dynamic and progressive. Within that concern is a fear that there may become a gap between these long-time veterans and the younger executives seasoned enough to succeed them. That same concern is shared from the other end of the spectrum. One young executive recognizes “a large gap in this industry between people with 20-plus years of experience and people with five-plus years of experience.” That puts increasing pressure on the industry to recognize those rising executives to fill that gap. Breakbulk magazine reached out to nearly 100 senior industry veterans seeking input on who are the best and brightest managers and executives rising through the ranks. The goal was to find individuals representative of the types of executive needed to maintain continuity and growth within this vibrant business. The result is the 10 individuals

that follow, recognized for their excellence as well as their potential to lead the industry into the next generation. They come from the ranks of carriers; shippers; logistics providers; engineering, procurement and construction; shipping agents; and freight forwarders. These nominees recognize that breabulk and project cargo is a unique and dynamic industry. Despite its vast geographic reach, and depth and complexity, “it is a cohesive industry that sometimes feels very small,” one nominee said. They all pointed out the collaborative nature of senior-level colleagues, whose advice, counsel and challenge to succeed helped nurture nominees along. And they in turn mutually feel the obligation to reach out to those just entering the industry, a breakbulk circle of life, if you will. There is a sense of a strong code of conduct and ethics, and “a solid sense of pride in it ,” one nominee said. Management styles are diverse, but there’s a common thread of collaborative, instructional and flexible leadership. Leading by example is a common and appropriate bond they share. If there is one word universal to the nominees it’s this: passion. From their perspectives, the nominees also recognize the need to attract, develop and retain fresh young talent to keep the industry vital and productive through promoting, training, performance initiatives and talent retention strategies. “It’s the people who create the solutions that deliver the most value to the market,” one succinctly put.

ALEX AZPARRENT GLOBAL LOGISTICS DIRECTOR FLUOR

“Alex Azparrent has more than 15 years’ experience in the execution of logistics for capital projects both with Bechtel and currently with Fluor. He displays all the characteristics of one who will continue to rise in the logistics field. His experience is in multiple business lines, working domestically and internationally with all modes of transportation. He is well regarded in his current position with Fluor and well known within the organization as one who ‘solves problems.’” Nominated by David Fox, president of FOX Logistics LLC (retired from Fluor in 2011) HOW YOU CHOSE THIS INDUSTRY I had an opportunity to work for a major engineering, procurement and construction company on a mining job in South America during my summer break of my junior year at Iowa State University. This internship was a great introduction and a gateway to the world of projects. It was very enjoyable and I knew that’s what I wanted to do. www.breakbulk.com BREAKBULK MAGAZINE 9

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PROFESSIONAL BACKGROUND I have a bachelor’s degree from Iowa State University in Business Administration, with an option in Transportation and Logistics. I am also in the midst of completing an MBA at TRIUM, program composed of three world-class universities: The London School of Economics and Political Science, NYU Stern, and HEC Paris. Last year its MBA program ranked No. 1 worldwide in the Financial Times Executive MBA 2014 rankings.

ALEX AZPARRENT

INDUSTRY’S SIGNIFICANCE, FROM YOUR PERSPECTIVE The most important thing in my opinion is how dynamic the industry is, and how every day can be different from the previous day. It is also an industry that relies heavily on a strong code of conduct and ethics, which has a solid sense of pride in it. A MENTOR OR INDUSTRY LEADER WHO GREATLY INFLUENCED YOU I’ve been fortunate to have had a number of mentors through my career who helped me grow in different stages, several individuals to whom I am indebted. I recognize the value and power of mentoring, which I strongly promote in our organization. In the last several years of my career at Fluor, David Fox was a great influencer. He saw my potential and gave me an opportunity to excel in the organization. Fluor offers an ecosystem that is ideal for professionals to excel, a combination of professionals, systems, environment, standards and reputation. In addition, David’s values, stature and reputation in the industry were also of great example to me. 10 BREAKBULK MAGAZINE www.breakbulk.com

MANAGEMENT STYLE Leading by example and being hands on. Our industry is enjoying momentum where logistics is at the forefront and center of discussions on every major project. Easily accessible resources such as oil, gas and minerals are gone. Most of the new projects are hard to reach and require a much higher level of logistics. We must stick to the fundamentals, take full advantage of technology, and always be connected with project execution. My management style is taking a combination of those elements, always leading looking at the big picture but also being connected with execution. LONG-TERM PROFESSIONAL GOALS The last few years have been very dynamic for me; I have been fortunate to have roles that have allowed me to continuously contribute and excel. I am passionate about this industry and enjoy it every day. Going forward I want to continue contributing to our industry, most probably through different roles. YOUR ROLE AS A DEVELOPING INDUSTRY LEADER The most important issue in my view is to not forget about the fundamentals of our industry. We are in the project execution business, we hold strong values, we have a strong code of conduct, and we bring value above and beyond traditional logistics. MOST IMPORTANT INDUSTRY ISSUE The industry is enjoying notoriety that we have not seen in the past; we are at the center of every major project discussion, as an industry we must capitalize on this focus and take full advantage. It’s a great opportunity to continue moving up in the value chain.

PAOLA BERARD PROJECT CARGO MANAGER TUSCOR LLOYDS SPAIN

“Over the past 10 years Paola Berard has developed experience and high understanding of her clients’ needs and developing integrated logistics solutions for them. She has shown industry expertise, market knowledge of suppliers and global infrastructure, careful and constant attention to detail and customers’ needs during cargo transport, and innovation when planning ‘tailor-made’ logistics solutions.” Nominated by Camila Mejia, marketing director, global logistics, Tuscor Lloyds HOW YOU CHOSE THIS INDUSTRY Certainly I can remember being a little girl and spending many hours staring at the big vessels in Veracruz port. So more than an option this has been my passion. Choosing international trade as my major at university was the beginning of “choosing” this industry. INDUSTRY’S SIGNIFICANCE, FROM YOUR PERSPECTIVE It is such an interesting and diverse industry. I think some of the key assets in the industry are the customer service, flexibility offering tailor-made solutions and the relationships you make. Each and every cargo is different and so are the clients, so having the right partners at the right time as well as knowledge makes a huge difference. MARCH-APRIL 2015

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A MENTOR OR INDUSTRY LEADER WHO GREATLY INFLUENCED YOU Andres Lozano, our general manager at Tuscor Lloyds in Spain, has opened for me another perspective of this industry. Being from the client’s side, it had never crossed my mind that I would be able to do sales or operations for breakbulk or project cargo. He gave me the tools and support to believe in myself and what I am capable of in this business, and he keeps pushing me and supporting me. Also Nick Rodriguez and Neel Ratti, our project specialists in UK, have guided me.

PAOLA BERARD

PROFESSIONAL BACKGROUND I was born and raised in Mexico and started my career at the automotive industry, working for Volkswagen in Mexico and in SKF in the international purchasing departments and taking care of transportation and logistics solutions. After four years I moved to the energy industry, leading the logistics and international sourcing department for Union Fenosa/Gas Natural in Mexico, and then collaborating in for the petrochemical, oil and gas industry in Mexico, before finally coming to Spain. I worked for a Spanish engineering company (Cobra & Dragados Industriales Mexico). Five years ago I decided to do my masters degree in logistics management in Madrid. I started working for Tuscor Lloyds in 2010 as project cargo manager. MANAGEMENT STYLE I would definitely define it as flexible; my decisions mostly depend on the task, people involved and the situation that has to be managed. I strongly believe in fairness and responsibility.

PHILLIP BROWN Product Director – Logistics Fluor

Nominated by Kathy Canaan, Global Director Trade Compliance, Fluor 12 BREAKBULK MAGAZINE www.breakbulk.com

LONG-TERM PROFESSIONAL GOALS To continue developing my career in this industry. There is a lot to learn and so I look more to the short- and midterms of my career now. I would like to make the project department in Tuscor Lloyds Spain grow and become a wellknown name in this industry and people seeing us as a reference.

to know that there is a lot of young and fresh talent in the industry, and I feel very confident on how the business environment has sheltered us and given people like me the opportunity to have a leader role in the industry, I believe we can contribute with new management skills and new ways of networking and business.

I would also love to be involved in any kind of altruist activity that has to do with logistics. At the end it is all about own long-term satisfaction. YOUR ROLE AS A DEVELOPING INDUSTRY LEADER Of course I want to play a very important and participative role. I am very pleased

MOST IMPORTANT INDUSTRY ISSUE This is a very dynamic industry and a very competitive market. Every project is different and it’s not a local business at all. One day you are focused on Latin American markets and the next you have to develop business in Asia. We need to be like a chameleon and adapt ourselves to every situation.

“Phillip Brown sets the standard for young leaders within Fluor by bringing innovative ideas to an always evolving, yet often overlooked function. By exhibiting a high

level of accountability, solving problems, and communicating effectively, he has advanced the consideration of logistics execution with clients and also more extensively within the company.” MARCH-APRIL 2015

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PHILLIP BROWN

HOW YOU CHOSE THIS INDUSTRY I knew I wanted a career in the maritime industry from the time I started high school. I attended Texas A&M University at Galveston, where I immediately fell in love with the business and operations side of the commercial shipping industry. My course work reaffirmed my passion for the maritime industry, but like a lot of students, I was not sure specifically what kind of career I wanted or where I wanted to work until my junior year. It was in my brokerage and chartering class that I knew what I wanted to pursue as a career. INDUSTRY’S SIGNIFICANCE, FROM YOUR PERSPECTIVE The maritime industry is unique in that it is a huge global industry, yet it is a cohesive industry that sometimes feels very small. It is also steeped in history, shaped with practices and maritime laws that date back hundreds of years. 14 BREAKBULK MAGAZINE www.breakbulk.com

A MENTOR OR INDUSTRY LEADER WHO GREATLY INFLUENCED YOU There are several, but two individuals stand out who greatly influenced my career path and professional development. When I was still in college, I was very interested in pursuing a career in admiralty law. Dr. Thomas C. Fitzhugh III, my admiralty law professor, gave me some great advice: work in the industry for a few years and get some experience before looking further into pursuing law school. John Hark taught my brokerage and chartering course. He introduced me to a few people and I ended up starting with BBC Chartering directly after graduation. After working a few years at BBC, I thought back to how much I had learned after school and it was then that I realized why Dr. Fitzhugh had suggested waiting to pursue law school. I have had the privilege of working with both men

professionally and I still reach out to them for advice. PROFESSIONAL BACKGROUND I started my career in the maritime industry with BBC Chartering in May 2008, working through an 18-month-long training rotation as a vessel agent, vessel operator, in documentation, with the port captains and finally settled at the chartering desk. Without the training that I received in those roles within the company, I would not have had the knowledge or appreciation for what went into moving breakbulk cargo. I moved to the global projects group, focusing on specific accounts such as GE, Siemens, Alstom and Fluor. I worked as a chartering broker for BBC until March 2012, when I made the move to Fluor to work as product director for logistics. I was attracted to Fluor since it has a MARCH-APRIL 2015

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movements, helping the specialized operators. Inside of me I feel a bit intrigued to know how these pieces had got there.

strong global logistics team. The support from peers and management, as well as an environment that encourages learning and professional development, has helped shape my professional development. I have since been involved with several projects at Fluor ranging from small international jobs to large domestic projects.

INDUSTRY’S SIGNIFICANCE, FROM YOUR PERSPECTIVE Each shipment, rigging or movement is different. The level of expertise and commitment that you may reach is not measurable; behind each movement there is always a high impact project of social and/or economic nature. In managing this type of logistics we see our efforts reflected in an industry project completed.

MANAGEMENT STYLE My goal is to treat my colleagues with respect. I feel that if you treat people respectfully and fairly that most of the time it yields the best working relationship. LONG-TERM PROFESSIONAL GOALS When you love what you do for a job, it makes going to work each day a pleasure. I am very passionate about this industry and my specific field of work, and hope to keep growing professionally to be able to become a leader and mentor for future generations entering into a career in logistics. YOUR ROLE AS A DEVELOPING INDUSTRY LEADER There is a large gap in this industry between people with 20-plus years of experience and people with five-plus years of experience. I am trying to gain as much industry knowledge and experience from those with more experience than myself in order to be a better and more knowledgeable individual. It is my goal to absorb as much knowledge as possible so that when I am an industry veteran, I can pass on my knowledge on the fundamentals and industry practices that set the foundation to future generations coming up in the industry. MOST IMPORTANT INDUSTRY ISSUE One issue I see is the gap in knowledge and experience in our industry. The other issue I see is with technology. People today rely on automation and email correspondence. While email communication is standard practice, we can’t forget to pick up the phone. Whether it’s a vendor, service provider or a client, a phone call is much more personal and often times more beneficial than simply sending an email. We can’t lose sight that it’s the people in this industry that make it great. Maintaining those relationships is key to successful business. 16 BREAKBULK MAGAZINE www.breakbulk.com

PERLA CAMBEROS

PERLA CAMBEROS LOGISTICS MANAGER, MEXICO SIEMENS MEXICO

“Perla Camberos is results driven. Over the years I have seen her position herself in the middle of the action in different project cargo initiatives. Her unique background in the industry makes her valuable in each of the companies she has worked for. With the Mexican energy and infrastructure markets growing, she has the capability of leading future project teams successfully. She is breaking ground for other young talented female professionals in Mexico.”

A MENTOR OR INDUSTRY LEADER WHO GREATLY INFLUENCED YOU Primarily my father. As a mechanical engineer he always challenged me and dared me to prove my ideas. In the industry, I’m lucky to have the chance to work with the best! In specialized rigging, Ruben Chavez director at Global Crane & Transport, taught me all I know about maneuvers and cranes; in transport, Raul Cuevas, owner of Transportes Muciño, and Rafael De Los Santos, CEO Mexico of Tradelossa. Operationally in transport I learned a lot from Pedro Hernandez, owner of ATHER Transport. In specialized maritime I learned a lot (and I still do) from Ernesto Roman, commercial director of Armamex. PROFESSIONAL BACKGROUND I attended Universidad Hispano Mexicana in Mexico City in Business Administration, and earned a master’s degree in analysis and statistical process control at Queretaro University, In New York I received a diploma in Business Transfers For Import and Export at Boricua College, Brooklyn.

Nominated by Rafael de los Santos, TRADELOSSA

I have worked in manufacturing, the automotive industry, integrated logistics, maneuvering and rigging-lifting projects and specialized transport. I have served as a planner buyer, logistics team leader, logistics negotiator, transport facilitator, strategic logistics buyer, operations manager, and execution logistics manager in projects of national impact.

HOW YOU CHOSE THIS INDUSTRY I started at 18 as a forklift driver, handling metals and structures in a maquila company. I felt passionate to perform those

I have moved cooling towers and tanks for clean fuels project with Pemex; transformers and air coolers for power plants with CFE; transport and lifting MARCH-APRIL 2015

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columns and girders to the second floor of the center via of México City; international transport, customs clearance and maneuvers based on laying of foundations for segments, crowns, rolling hoops for Cemex to their cement kilns; international chartering aircraft to move urgent cargo goods to Cemex; performed the transport of turbines, blades and nacelles for a wind farm in Oaxaca (Huchitán) with Gamesa; handled international transport of storage tanks to the dam La Yesca in Nayarit; high tonnage transformers for ethylene XXI project; and currently am performing international transport and customs clearance of E Houses for Pemex oil platforms. MANAGEMENT STYLE Participatory, focused on solving, committed. I tend to be stubborn, but objective. I manage to work well in a team, but always my goal is leadership. I’m usually very nosy into the details because I think that from details the real knowledge is achieved. LONG-TERM PROFESSIONAL GOALS Reach the specialization, gain recognition within the sector in which I actually develop myself, participate in projects with high social and economic impact along America, and to work in the U.S. where I’m sure I can contribute and learn much more. YOUR ROLE AS A DEVELOPING INDUSTRY LEADER Update myself continuously with respect to technological advances in the industry, interacting with key leaders, looking for exposure, early and direct involvement in my projects for the breakbulk industry, giving results in optimal conditions, solving and resolving, improving with new ideas. MOST IMPORTANT INDUSTRY ISSUE I am very concerned about the image the outside world has of Mexico. It worries me there are doubts about the logistics capacity we’ve reached and the infrastructure we’ve achieved. We have good leaders with solid knowledge in all areas of breakbulk, and we have shown that we can move almost any piece according to the highest world standards and we can equate with first-world countries. 18 BREAKBULK MAGAZINE www.breakbulk.com

ANDY FEBUS TRANSPORTATION PROJECT MANAGER NOOTER-ERIKSEN

“Andy Febus utilizes his strengths and abilities in critical thinking, complex problem solving, communication, decisionmaking and collaboration. He identifies strengths and weaknesses of alternative solutions, deals with complex problems and develops solutions. He creates options for addressing problems/ opportunities and achieving desired outcomes; consistently includes others in the decisionmaking process and consistently implements decisions or initiates action within a reasonable time. He works effectively with other industry leaders as he has established and maintains solid working relationships through his years of experience.” Nominated by Derek L. Deterding, Manager of Logistics, Nooter-Erikson HOW YOU CHOSE THIS INDUSTRY Through the growth of my company and expansion into the international power generation market, I found myself needing to build upon my knowledge of trucking and rail transportation. I needed to learn how to integrate the ocean transport piece and with the ever-increasing sizes and weights of the components we ship globally. Project cargo is where my primary focus now lies.

ANDY FEBUS

INDUSTRY’S SIGNIFICANCE, FROM YOUR PERSPECTIVE I believe you have to be among the best of the best to move project cargo. Project cargo is not something just anyone can do, and you need to be sure you know who you are doing business with. Do they have the capabilities and experience? I also believe you really have to enjoy the challenges involved or you become passive, and this is when mistakes are made and safety is at risk. With that said, there are many in this industry that are experts at what they do. In some cases have become so well educated in the shipper’s cargo that they are able to offer additional value to the end product we provide to our customer. A MENTOR OR INDUSTRY LEADER WHO GREATLY INFLUENCED YOU I have been influenced by a number in the industry, from freight forwarders, rail and heavy-haul carriers, fellow shippers and even competitors. Lynn Stewart of South Texas Shipping and Adrian Hawkins of Kuehne + Nagel are the most notable, as they have taken the time over the years to teach me and to make sure I really understood what and why things happen the way they do. MARCH-APRIL 2015

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PROFESSIONAL BACKGROUND My background has always been in transportation and logistics. I have a degree in transportation and logistics management. I have held positions focused on air, rail, truck, less-than-truckload, ocean and warehousing. Employers have been from industries such as engineering and project management, manufacturing, grain processing, and transportation. MANAGEMENT STYLE I am not a micromanager, though when dealing with project cargo you cannot be hands-off either. I believe in making sure we have the right tools to do our jobs. I want people to understand not only what to do, but also why we do it a certain way. There needs to be a clear understanding of the objectives, risks involved, and who the right partners are to aid in successfully accomplishing what needs to be done.

LAURENS GOVERS MANAGER COMMERCE SHIPPING JUMBO SHIPPING VOF

“Laurens Govers has been working at Jumbo for 15.5 years in several commercial job positions. He is able to market new products and services linked to developments and trends in the heavy lift shipping industry.” Nominated by Fred Bedford, director, Jumbo Shipping HOW YOU CHOSE THIS INDUSTRY After graduating from Nautical College I worked for the Port of Rotterdam and Maersk Lines. I quickly discovered that these companies did not have the shipping dynamics I was looking for. Hence I applied for a job as chartering broker with the heavy-lift shipping company Jumbo and never regretted it since. 20 BREAKBULK MAGAZINE www.breakbulk.com

LONG-TERM PROFESSIONAL GOALS I see myself always being involved in planning and execution of specialized moves in some capacity. I truly enjoy the challenges that they present. My long-term goals are in continuing education and becoming the most well-rounded individual I can be from a logistics perspective. With this I believe I can have a significant impact on my company’s success and those around me. YOUR ROLE AS A DEVELOPING INDUSTRY LEADER I don’t see myself as an “industry leader,” but rather as someone who wants to know what it takes to accomplish a move of real significance as it relates to size, weight or geographically. I enjoy talking to people who are interested in the industry and recognize that what we do is something special. I want others to understand that project cargo moves are very challenging no matter how routine they may become or how easy they may appear from the outside. INDUSTRY’S SIGNIFICANCE, FROM YOUR PERSPECTIVE It is a dynamic industry where many external factors have their influence on the marketplace, for example, geopolitical issues, the euro/dollar exchange rate or fluctuating oil prices. Every day is different in this industry and therefore in some ways unpredictable. Every project is different, because every cargo has its own specific requirements. There is no one-size-fits-all solution and every client is different. A MENTOR OR INDUSTRY LEADER WHO GREATLY INFLUENCED YOU I have had the privilege to start working in the industry for the market leader, Jumbo Shipping. Jumbo has set the industry standard for almost 50 years and is still doing so despite the fact that the playing field has drastically changed. Over the past 10 years there has been an influx of vessels and heavylift companies supported by banks and/ or investment companies. In this rapidly changing marketplace it is inspiring to work for an independent, family-owned company that continuously sets the industry standard.

MOST IMPORTANT INDUSTRY ISSUE Rates are always at the top of the list. Whether they are being affected by the economy and the level of work going on, the fluctuating price of oil, or even the financial stability of some carriers, trying to gauge where rates will be 12 to 18 months from now is extremely difficult. Bidding on future work is very challenging. Also, I believe there are companies who promote themselves as project cargo specialists that may not necessarily be accurate. It is one thing to have experience moving a few over-dimensional/ overweight pieces via breakbulk. It is another to move shipments of extreme size, weight and volume along with other unique characteristics. The level of risk, planning involved, support of carriers, and a true understanding of the cargo are all taken to a much greater level. This goes back to knowing who you are doing business with and their true capabilities. PROFESSIONAL BACKGROUND Rotterdam Internal Logistics platform was cooperation between public and private parties to optimize container logistics for the Port of Rotterdam, where I worked right after graduation. This optimization contributes to the competitive advantage and increases business opportunities for the entire port region. Afterwards, I worked for Maersk Lines in the Far East department and for Jumbo Shipping as a chartering broker and within the past few years as manager of the commercial department. MANAGEMENT STYLE I have the privilege to work with an international team of highly experienced people with long lasting careers within the industry. Therefore I would consider my main management style to be a participative one. If possible, I invite others to express their views and opinions and use those to make a business decision. YOUR ROLE AS A DEVELOPING INDUSTRY LEADER I feel that it is important that the industry is regarded as a safe and reliable one. MARCH-APRIL 2015

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LAURENS GOVERS

However, we see that clients and owners are tiptoeing to execute their projects in time. Carriers are invited at the very latest stage of preparation, leaving little room to incorporate their knowledge of heavy-lift transportation into the design of lifting/lashing lugs and or load spreading requirements. Sometimes, carries have less than six weeks between the initial inquiry and the actual transport. This automatically puts a huge strain on the engineering resources and the crew of carriers to execute the work safely. I notice a growing Quality, Health, Safety and Environment awareness within the industry, especially during fabrication, preparation and on the final jobsite. During the inquiry or tendering phase there is great emphasis on engineering standards, QHSE procedures and compliance, etc. But unfortunately it sometimes seems the industry takes the execution for granted. We invite every client to have its own QHSE officer present during load out, 22 BREAKBULK MAGAZINE www.breakbulk.com

MOHAMMAD JABER

if only to ascertain that we are working according to the standards as agreed in the contract. We must remain alert that quality and safety remain crucial in every step in the process.

MOHAMMAD JABER CHIEF OPERATING OFFICER,

MOST IMPORTANT INDUSTRY ISSUE I feel that structural oversupply is the main one. Less than a decade ago, there were maybe a dozen ships that could lift heavy cargoes of 500 tonnes and more. Nowadays there are more than 70 ships. Besides increased lifting capacity these vessels have also become bigger and thus cargo carrying capacity has increased exponentially. Despite this grim fact there are still parties that invest in adding even more tonnage to the market. We have seen a similar trend in related industries like the container industry. Increasing capacity puts prices under pressure, which may lead to more industry consolidation. That is not any different for the heavy-lift shipping industry.

“Mohammad Jaber has shown his willingness to learn, keen business acumen and a penchant for health and safety. From his initial role in working for our transport operations to leading the team and now in transition to the Agility Project Logistics Management Board, his strong project logistics skill sets set him well for growth along the

REGIONAL DIRECTOR – PROJECT LOGISTICS AGILITY (ABU DHABI)

MARCH-APRIL 2015

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cover story

specialty track in our global project network, as well as leading a country within a regional setup. With his strong tactical positioning his advancement capability is limited only by him.” Nominated by Grant Wattman, president & CEO, Agility HOW YOU CHOSE THIS INDUSTRY Today our world is criss-crossed by a vital life support network of trade routes that are fundamental to our daily lives – but which many barely know are there. I have always found the global logistics and transport industry fascinating, and especially so in the Middle East and Africa region. After beginning my career

Cis4357_ARRC-AD_124mm X 178mm_p.indd 1

24 BREAKBULK MAGAZINE www.breakbulk.com

with Hay Logistics, I became intrigued by other sides of the industry, and joined Agility in 2007 as fleet manager, most recently becoming regional lead for project logistics in the Middle East and Africa region.

of emerging markets. The company started as a local warehousing provider in Kuwait and grew to become the largest logistics company in the Middle East and one of the world’s largest integrated logistics providers.

INDUSTRY’S SIGNIFICANCE, FROM YOUR PERSPECTIVE It’s a fast-paced industry where anything feels possible. The rise of emerging markets in the global economy is the single-biggest factor shaping global logistics and trade today. There is a huge demand for innovative logistics solutions that address increasing demands on cost control and productivity.

This kind of growth has only been possible because of the way global trade patterns are constantly shifting. Right now the Middle East is at the center of one of these major shifts, with location, infrastructure and services providing a perfect combination for trade.

It is an industry that is challenged by geography and the environment, which has to constantly adapt to survive. Agility’s own story parallels the rise

A MENTOR OR INDUSTRY LEADER WHO GREATLY INFLUENCED YOU I have been affected by so many industry leaders who I consider as business partners, who are always challenging us to address their specialized demands. Agility invested in a leadership program

2015-02-04 2:27:41 PM

MARCH-APRIL 2015

which helped me enormously, in terms of managing the business and our resources efficiently. We move, manage and distribute the goods, which takes unmatched local knowledge and a diverse and talented team. Training and development opportunities are essential to maintaining that edge. PROFESSIONAL BACKGROUND I have a bachelor’s degree in agricultural engineering from the University of Jordan, and since joining Agility in June 2008 I have held a number of key roles across the organization that have been instrumental in the successful growth of the Abu Dhabi’s business. I started as a fleet manager and then became a transport manager, where I

later took responsibility for the projects business development operation. My areas of specialization are oil and gas, project logistics, heavy lifting and agricultural logistics. MANAGEMENT STYLE Agility’s culture is built on employee dedication, accountability and determination to go “above and beyond.” We strive to deliver personal service by taking ownership for results. Within project logistics it is crucial that staff feel empowered to take decisions and provide solutions for our customers. We also take seriously our responsibility to act with integrity and give back. I believe that acting responsibly helps guide better management practices, benefits the communities where we work, adds to the sense of pride and col-

lective spirit among our employees, and strengthens our relationship with customers and shareholders. LONG-TERM PROFESSIONAL GOALS It is an incredibly exciting time to be at the forefront of logistics, and watching how it can transform emerging markets. My long-term interest is to provide creative solutions to our customers, with a significant focus on developing our workforce and differentiating Agility in the areas of customer service and health and safety. MOST IMPORTANT INDUSTRY ISSUE Fluctuations in fuel prices and political stability in several areas of the region are having a profound effect and will continue to impact the industry in the short and medium term.

www.breakbulk.com BREAKBULK MAGAZINE 25

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ANDRÉS LOZANO

ANDRÉS LOZANO DIRECTOR TUSCOR LLOYDS SPAIN

“Andrés Lozano is a logistics professional with more than 17 years of shipping industry experience. In 2004 he began Tuscor Lloyds’ Spanish operations in Barcelona. He has since expanded the Spanish offices to Valencia and Madrid, positioning Tuscor Lloyds as one of the top freight forwarding companies in Spain. With a background as a customer and then as a professional in this sector, he has used all of his skills to lead the Spanish team to 26 BREAKBULK MAGAZINE www.breakbulk.com

achieve its market leading position. 2010 saw further expansion of service offering into projects, outsized and heavy cargo. He demonstrates entrepreneurship, leadership, profound knowledge of the market and negotiating capabilities.” Nominated by Camila Mejia, Marketing Director, Global Logistics, Tuscor Lloyds HOW YOU CHOSE THIS INDUSTRY A little bit by accident. In 1997 I was still thinking on becoming a stockbroker, but my first job when I was still in university was in logistics and then I just loved it. A very dynamic industry with lots of global interactions. INDUSTRY’S SIGNIFICANCE, FROM YOUR PERSPECTIVE Globalization for sure. Giving the possibility to all types of companies to export or

import any type of goods no matter what dimensions, weight, characteristics, etc. A MENTOR OR INDUSTRY LEADER WHO GREATLY INFLUENCED YOU Not in the industry but in my first job. He just made things happen no matter what; there were always possibilities to achieve anything. PROFESSIONAL BACKGROUND Seven years working as head of logistics at Walmart Mexico and then 11 years at Tuscor Lloyds. First one was buying logistics and second one was selling it. MANAGEMENT STYLE Very freestyle with plenty of confidence in my staff. Empowering people and always willing to try different approaches. I also believe in delivering results as the ultimate goal, so any style is welcome. LONG-TERM PROFESSIONAL GOALS Be happy and make many more happy families. MOST IMPORTANT INDUSTRY ISSUE Collaborative thinking. MARCH-APRIL 2015

BEAU SCHINDLER DIRECTOR OF GLOBAL ACCOUNTS

BEAU SCHINDLER

INTERMARINE LLC

“Beau Schindler is a trustworthy and proven leader in the project cargo industry. With more than 15 years in the project cargo industry from an ocean carrier’s perspective, he has been successful in all of the aspects of the business that he has worked in, whether it has been operations, line management or business development. He has the skills that make him a successful leader.” Nominated by Jake Swanson, regional logistics manager, Americas, engineering, construction and maintenance, oil and gas, CB&I HOW YOU CHOSE THIS INDUSTRY In 1997 I was working at a shipyard in New Orleans and needed a change of pace. I was hungry for a new challenge and happened to connect with some fellow U.S. Merchant Marine Academy alumni who worked for Intermarine at the time. We met for dinner and over a handshake I accepted a position with Intermarine. The perpetual change of pace and abundant challenges remain to this day. INDUSTRY’S SIGNIFICANCE, FROM YOUR PERSPECTIVE We are quite a unique niche that is small, yet versatile. The challenges we face each day are seemingly infinite – challenges which few industries can hold a candle to. Pirates, monster storms, ever-changing regulations, heavy-lifts, tight schedules, political turmoil, labor strikes and pricing pressures are just a few. Any one of these issues can literally destroy a successful voyage if not dealt with properly. It’s companies like Intermarine that are mindful of these issues, mitigate them

and continue to remain significant and influential in the market year after year. A MENTOR OR INDUSTRY LEADER WHO GREATLY INFLUENCED YOU Roger Kavanagh and Sue Robertson both positively impacted my personal and professional lives. Kavanagh founded Intermarine in 1990, and I was fortunate enough to work under him while he was alive and leading the company. He exuded tenacity and persistence in everything he did. If he saw that you cared about the business the way he did (albeit a nearly impossible feat), he would go out of his way to teach and challenge you. Kavanagh taught me to always be prepared, something that I pass along to my employees today. Robertson, a former vice president of national accounts, was my first boss. Also tenacious in her approach to the business, she epitomized the term professionalism. During her time with Intermarine, she took on some of the company’s most demanding accounts, while never compromising on class and reputation.

PROFESSIONAL BACKGROUND I graduated from the U.S. Merchant Marine Academy at Kings Point in 1997. I began my professional career with Avondale Shipyard’s outfitting department in New Orleans, where I was responsible for developing outfitting strategies for the Navy’s LPD17 vessels. In early 1998 I entered the breakbulk industry by joining Intermarine as a sales trainee. After some training I was “kicked out of the nest” to handle accounts and call on shippers, brokers and forwarders across North America and Canada. In 2001 I pursued an MBA fulltime at the University of California, Irvine. Post-graduation, I spent twoand-a-half years in Marseille, France, with Bourbon Offshore, chartering workboats to companies like Shell and British Gas. I moved back to the U.S. and accepted a job doing offshore vessel operations management in the Gulf of Mexico for Rigdon Marine, handling boats for Shell, Western Geco and Apache. www.breakbulk.com BREAKBULK MAGAZINE 27

cover story

In 2008 I found myself back in New Orleans trying to scratch that itch I found at Intermarine. I reconnected with some former co-workers at Intermarine and have been here ever since. MANAGEMENT STYLE The five key elements I manage by include: leading by example, staying positive, listening, being consistent and being transparent.

important factors to consider, I try to place more value on doing versus saying. I also communicate by sending clear, concise messages geared to be more constructive in nature.

Today, it is easy to get caught up in managing people based on numbers, metrics and rigorous processes. While those are

MOST IMPORTANT INDUSTRY ISSUE? Human resources – specifically, recruiting, developing and retaining top talent. Fancy ships, jazzy marketing campaigns, and high-tech gadgetry are aesthetically appealing, but it’s the people who create the solutions that deliver the most value to the market.

JAKE SWANSON REGIONAL LOGISTICS MANAGER,

on top of the logistics leadership in the very near future if he is provided the support from the industry.”

AMERICAS, ENGINEERING, CONSTRUCTION AND MAINTENANCE, OIL AND GAS CB&I

“Jake Swanson has shown great leadership skills and enjoys sharing his knowledge with others. He has also been instrumental in taking a more direct involvement in chartering vessels with the carriers, which has been an excellent cost savings option and has improved schedules. He has also joined multiple outside logistics committees including leading one committee for ECMC on educating up-and-coming logistics professionals. He is certainly one of the industry’s brightest stars, and will be 28 BREAKBULK MAGAZINE www.breakbulk.com

I think all companies and disciplines in our sector are struggling with this, including agents, stevedores, forwarders, carriers and shippers. In a broader pool of resources, the breakbulk industry seems to lose out to the perceived greener pastures of information technology and oil and gas. By fostering organizational cultures that put training, performance review systems and talent retention strategies at the top of our priority lists, our industry can make great strides and address this important issue.

Nominated by Doug C Hickey, global director – logistics, engineering, construction and maintenance, oil and gas, CB&I HOW YOU CHOSE THIS INDUSTRY To be honest the industry chose me and I went with it. I went to Kings Point, which got my foot in the door in the shipping industry, and shortly after that I got into the project cargo industry. I started on the terminal and warehousing side, then I transitioned to the ocean carrier side before coming over to CB&I. INDUSTRY’S SIGNIFICANCE, FROM YOUR PERSPECTIVE What I like about our industry is that we are all working together to build something. Whether it is an LNG facility, refinery, power plant, wind farm or steel tanks, it takes everyone working together to deliver projects in a safe and cost-effective manner. The significant part is the communication and coordination between industry professionals that help bring every together. A MENTOR OR INDUSTRY LEADER WHO GREATLY INFLUENCED YOU I have been fortunate that in every stop

JAKE SWANSON

that I have made in my career there have been experienced and senior-level colleagues that have taken me under their wing and showed me the ropes. Without their willingness to share their experiences and guide me along, there is no way that I would be in the position that I am in today. PROFESSIONAL BACKGROUND My background lies in ocean transport, specifically operations and chartering. Prior to joining the shippers’ side at CB&I (in 2011), I worked for two project carriers (Intermarine and Beluga), and prior to that I worked on the operations MARCH-APRIL 2015

side of a terminal and stevedoring and warehousing company. I attended the U.S. Merchant Marine Academy, which exposed me to a wide variety of ocean transportation experiences. Although, now I am focused on all modes of transportation, my heart will always lean toward ocean transport. MANAGEMENT STYLE My management style is collaborative and working to build consensus within the group or team that I am working with. There are times when this style is not possible, however what I have learned is that when everyone buys into and feels a part of what you and they are doing as a team, everything seems to come together more easily.

LONG-TERM PROFESSIONAL GOALS My long-term professional goals are to continue to learn and challenge myself in what I am doing. I enjoy the challenge of working on projects and with projects and the people associated with them. To me that does not get old.

level within my organization. Additionally, from an industry perspective, I hope to be able to champion these types of efforts that will help the next generation prepare to take a leadership role in our industry.

I enjoy leadership and development in all of its forms and working with people from other countries and cultures. I hope to continue to do these types of things throughout my entire career.

MOST IMPORTANT INDUSTRY ISSUE I believe that it is attracting and developing new talented young people into our industry. The project industry is a niche that not all high school and college students are aware of.

YOUR ROLE AS A DEVELOPING INDUSTRY LEADER I hope to help develop and support training and education in our industry. I had the good fortune of some great mentors that helped to bring me along, and I hope to be able to do the same on an individual

As an industry, we need to do a better job to promote our industry at that level so that we can better attract the best and brightest. And once we have them in our industry, we need to do better at training and developing them so that we keep them. BB

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market spotlight

UNFULFILLED POTENTIAL Brazil, Chile and Colombia Face Barriers to Building Economies By Alan M. Field

or decades, Latin America’s biggest strength – its remarkable wealth of natural resources – has also functioned as one of the biggest barriers to transforming its most promising nations into modern industrialized countries. Over the past decade, China’s emergence – and its seemingly unquenchable need for Latin American iron ore, coal, steel and lumber – made it possible for Brazil, Chile, Colombia and Peru to enjoy strong growth while nevertheless postponing their dreams of becoming modern industrial economies. In 2014 GDP growth in Latin America and the Caribbean grew by only 1.3 percent, the second-lowest growth rate in 12 years and more than one percentage point below the rate projected in April 2014. The largest downward revisions were those for Argentina, Brazil, Chile, Peru and Venezuela. A combination of external and domestic factors explained these sizable downward revisions. On the external side, the weakening of key commodity prices has created a general sense of leaner times and caused the private sector to curb its spending. Domestic policy uncertainties have further depressed confidence in several countries. For 2015, the Economic Commission for Latin America and the Caribbean is forecasting GDP growth for the region of 2.2 percent. However, ECLAC also forecasts that Brazil, the 30 BREAKBULK MAGAZINE www.breakbulk.com

MARCH-APRIL 2015

Most recent statistics available / Source: ISSB Ltd.

world’s seventh-largest economy, will grow by only 1.3 percent this year, because of sluggish demand for its commodities on the part of key trading partners such as China and the European Union. In contrast, ECLAC predicts growth of 3.2 percent in Mexico, 3 percent in Chile and 4.3 percent in Colombia. The weakest performers in the region will continue to be Argentina and Venezuela, two populist governments that have not welcomed foreign investment. With the recent slowdown in the Chinese economy – and continued forecasts for weak growth in Chinese demand for such commodities – has the region’s squandered its last, perhaps best opportunity for expanding its manufacturing capabilities been squandered?

Brazil Stumbles

Given Brazil’s high global profile as the “B” in the BRIC bloc of nations (along with Russia, India and China), it’s not surprising that the South American country dominates the steel sector in the region (See “Leading South, Central America Steel Exporters”). And yet, crude steel production in Brazil increased by only 21 percent from 2000 to 2008, with a 2009 decline to a level even lower than in 2000. Production declined once more in 2012, before falling back still further in 2013 to remain at 4 percent below the 2007 output. According to the World Steel Association, Brazil finished 2013 as the world’s ninth-largest steel producer, with an output of 34.2 million tons. Historically a strong exporting nation, in 2014 Brazil also posted its first annual

Aerial view of a Brazilian iron mine. China’s waning demand for raw goods has contributed to Brazil’s recent economic slump. / Credit: Eye Ubiquitous/Newscom

trade deficit in more than 14 years last year, Brazil’s Trade Ministry said. According to a recent report by the Latin American Steel Association, there are three key barriers to fulfilling the region’s potential for becoming a major exporter of industrial inputs and finished goods: • The appreciation of many Latin American currencies after 2010 “remains an important challenge for international competitiveness and represents one of the main causes of inflationary pressures, as well as an emerging risk of the “Dutch disease” among many countries. (The Dutch disease refers to the apparent inverse relationship between economic development of a country’s natural resources and a decline in its manufacturing sector). • The region’s continued overdependence on raw material exports, precipitated by exceptional demand from China, rushing to catch up with other major nations of the world. “This makes Latin America vulnerable to international turbulences and pushes the economies towards a basic production structure that do not add value to the goods and therefore affects the growth potential and development path in the long term,” said the steel association’s report. “The trend that pushes into mining and raw materials activities has already provoked an impact on the manufacturing sector. Since 2009 there has been little, if any, progress in industrial production. Those figures have been stagnating and alerting the sector about a worrying deindustrialization process.” One of the world’s largest iron ore producers, Brazil exported 170 million tons of iron ore to China in 2013, nearly www.breakbulk.com BREAKBULK MAGAZINE 31

market spotlight

MEXICO BECOMING INDUSTRIAL POWERHOUSE In February Mexico for the first time replaced Brazil as the most promising Latin American market for Japanese manufacturers, according to a survey by the Japan Bank for International Cooperation. In that survey, Mexico ranked as the sixth-most-promising country in the world for Japanese manufacturers surpassed only by, in descending order, India, Indonesia, China, Thailand and Vietnam. For decades, mineral oils and fuels were Mexico’s most valuable category of imports, but last year, only two of Mexico’s top 10 exports were commodities: crude oil (12.8 percent of total exports) and gold (2.4 percent). Other leading export categories were electronic equipment (29.3 percent of total exports); vehicles, excluding trains and streetcars (20.3 percent); machinery (14.2 percent); and optical, technical and medical apparatus (3.4 percent). By contrast, nine out of Brazil’s 10 largest categories of exports (in 2013) were commodities: iron ore, crude petroleum, soybeans, raw sugar, poultry, soybean meal, coffee, corn and refined petroleum.

The only manufactured-good category to make Brazil’s list was aircraft, which amounted to 2.1 percent of its total exports. While South America’s largest countries have yet to make the transition into value-added manufacturing, Mexico is leading the way among Latin American nations. The Organization for Economic Cooperation and Development’s November 2014 forecast notes that “a strong rebound of exports, improved confidence, and fiscal stimulus have driven a recovery, with manufacturing leading other sectors.” What is fueling Mexico’s manufacturing boom? Over the past five years, Mexico has attracted nearly US$10 billion in foreign direct investment from the automotive sector, according to the Center for Automotive Research in Ann Arbor, Mich. Ford, Mazda, BMW, Ford, Audi, GM, and Nissan are among the major producers to construct or plan construction of automotive plants in Mexico, all focused on continued on page 34

MEXICO’S TOP 10 EXPORTS

VALUE

Electronic equipment Vehicles excluding trains and streetcars Machinery Mineral fuels including oil Optical, technical and medical apparatus Pearls, precious stones metals and coins Furniture, lighting, signs, prefab buildings Plastics Iron or steel articles Vegetables

$77.84 29.3% $77.19 20.3% $53.95 14.2% $48.79 12.8% $12.81 3.4% $9.82 2.6% $8.19 2.2% $8.08 2.1% $5.73 1.5% $5.45 1.4%

% OF TOTAL EXPORTS

In $billions, 2013 is most recent year statistics are available. Source: International Monetary Fund’s World Economic Outlook Database

32 BREAKBULK MAGAZINE www.breakbulk.com

three times as much as the 60 million tons it exported to China in 2005. According to BBVA Research’s Commodity Concentration Index, the dependency rate of Brazilian iron ore exports on demand from China increased 48 percent from 2005 to 2013. Alicia García-Herrero, chief economist for emerging markets at BBVA Research, said the recent slowdown in demand from China would have significant implications for major iron ore producing economies in the region. China is the world’s largest consumer of iron ore, importing more than 930 million tons in 2014, she added. Its largely investmentled growth model through much of the last decade helped to fuel a commodity Alicia Garciasuper cycle, propping Herrero up iron ore prices and benefiting commodity exporters. Other iron exporters in the region, such as Argentina and Peru, also saw their dependency increase during the same period. Walter Walter Kemmsies Kemmsies, chief economist at global infrastructure advisors Moffatt & Nichol, said that when global prices of iron ore, copper and other commodities shot up, Brazil, Chile, Peru and Colombia “really started to benefit from that. But these countries thought that this commodity cycle would last forever, so they overinvested in terminal capacity.” Huge investments were made in expanding the capacity of iron ore terminals, in particular. “In Brazil alone, the prime capacity for iron ore terminals built – and planned – exceeded the tonnage of iron ore traded in the entire world, as of two or three years ago,” Kemmsies said. “It should come as no surprise that a lot of these terminals have (later) been under financial distress. South America needs to rethink its development and export strategy. It MARCH-APRIL 2015

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is not that this demand will fall, but that it is not going to grow much. The sooner everyone gets their heads about that, the better off everybody will be.” • The third major barrier to expanding Brazilian exports of iron ore and other products has been the weakness of its transportation infrastructure. For steel exporters, Kemmsies noted, a major concern is figuring out how much ter-

continued from page 32 serving the U.S. market. In 2014, Mexican plants produced more than 3.2 million vehicles, a nearly 10 percent increase over 2013, of which they exported 82 percent – overwhelmingly to U.S. consumers – according to Eduardo Solis, executive president of the Mexican Automotive Industry Association. This year, Mexico could manufacture as many as 3.5 million light vehicles (cars and trucks), Solis predicted. By the end of this decade, he project Mexico’s annual production will total 5 million vehicles. In dramatic contrast, Brazil’s automotive sector suffered the second straight year of declines in 2014, as the Brazilian economy almost came to a halt. Unlike Mexico, Brazil exported only 15 percent of the vehicles that it manufactured. Thus, Mexico edged out Brazil as the world’s seventhlargest automotive producer, and fell further behind Mexico as a vehicle exporter. For Mexico, other recent capital-intensive investments to be completed include: • Chinese high-tech giant Huawei’s US$1.5 billion plant, research and development center and network operations center. • American off-road vehicle maker Polaris Industries’ US$110 million expansion. • China-based Risen Energy’s US$600 million solar power plant.

34 BREAKBULK MAGAZINE www.breakbulk.com

minal capacity will be required. Should exporters’ primary goal be to increase the capacity of those terminals, or to increase their efficiency? He argues that, “with steel prices being down, along with other commodities, you have to worry about efficiency. It’s all about efficiency. Otherwise, you can’t make a profits if prices are low.” However, a major challenge to boost-

• Kellogg’s US$52 million investment at its cereal manufacturing plant in Querétaro. What’s behind the sudden burst in Mexico’s appeal for foreign manufacturers? Mexico’s proximity to the U.S. has enabled it through the North American Free Trade Agreement (NAFTA) to provide Asian, U.S. and European investors in Mexico with duty-free access to the huge U.S. consumer market. Moreover, the U.S. economy has finally recovered from the financial crisis that began in 20082009, sparking strong demand for vehicles. Made-in-Mexico vehicles offer U.S. consumers major global brands, without advertising the fact that they are assembled south of the border. Over the next few years, Mexico is expected to become an even greater vortex of industrial trade, as the government proceeds with its ambitious initiatives to open its energy and telecommunications sectors to capital-intensive foreign investment. As for the ports handling this burst of activity in industrial trade, Walter Kemmsies, chief economist at Moffatt & Nichol, said, “the Mexican approach has been more balanced and more progressive than anywhere else except Chile. The terminal operators are investing in concessions, and they are working with railroads to get them to move around the ports,” rather than prolonging the sorts of bottlenecks that are endemic in Brazil.

ing terminal efficiency is improving access into and out of those terminals, by improving surrounding road and rail infrastructure. In at the Port of Santos, South America’s largest port, congestion continues to be significant, largely due to the roads serving the port not being equal to the task. So another major road is being planned to relieve that congestion. “But even if you make the terminals more efficient, you still have to worry about the whole supply chain; building rail access to the terminals,” Kemmsies said. As world trade volumes recover over the next few years, “things are going to get a lot worse” at ports like Santos, before they get better. “Unless the private and public sector work together on a master plan to improve the weaknesses in infrastructure,” there won’t be enough money and planning to get the job done right, he said. Brazilian-born economist Felipe Monteiro, a professor at INSEAD business school in Fontainbleau, France, forecasts that 2015 will be neither a good year nor a chaotic year for Brazil. “It is important to counterbalance [negative forecasts] with the observation that, while Brazil’s exports are heavily commodity-dependent, most of Brazil’s GDP does not come from exports. Exports are only a small portion of the GDP.” Monteiro added that the deterioration Felipe Monteiro in the “terms of trade” of Brazil – the ratio of export prices to import prices – “does not necessarily mean that it will have a big impact on the Brazilian GDP.”

Chile, Colombia Challenges

Chile and Colombia face their own share of challenges. In Chile, where copper is king, no effort has been made to add capacity to copper terminals. Chile has focused instead, quite properly, on “improving the efficiency of its terminals,” Kemmsies said. Authorities in Chile recognized years ago that if they lowered their production costs, they could still make a profit even MARCH-APRIL 2015

SOUTH AMERICA, MEXICO GDP, INFLATION FORECAST GDP Forecast

Inflation Forecast

Economists report that Latin America’s overall GDP growth slowed to 1.4 percent in 2014 but is expected to rebound in 2015, forecast at 2.4 percent.

While Latin American inflation rates vary widely, Argentina and Venezuela are forecast to continue to head the pack by a significant margin through 2015.

COUNTRY

2011 2012 2013

2014 2015*

Peru 6.9 6.3 5.8 4.3 5.3 Bolivia 5.2 4.8 6.7 5.5 4.7 Paraguay 4.0 -0.9 14.4 4.9 4.4 Ecuador 8.0 4.8 4.5 4.1 4.3 Colombia 5.9 4.0 4.7 4.8 4.6 Chile 6.0 5.6 4.1 2.3 3.5 Uruguay 5.7 3.9 4.4 3.1 3.7 Mexico 3.9 3.9 1.1 2.5 3.8 Argentina 8.9 1.9 2.9 -1.6 0.2 Venezuela 4.2 5.6 1.3 -2.6 0.2 Brazil 2.7 0.9 2.5 1.0 1.4 *Forecast / Source: Consensus Economics, www.consensuseconomics.com

when world prices for copper declined. In Chile, the government has launched a strong public and private investment program worth about US$28 billion through 2020. This program includes 25 public-private partnerships and private initiatives, including many still under study, for upgrading roads, logistics, and urban and port infrastructure. According to research firm BNamericas, “there is a consensus among authorities and investors that projects need to be improved and contracts need to be refined in order to prevent later cost overruns for all parties involved.” In Colombia, whose economy is more diversified than Chile’s, there were grandiose plans to invest in expanding the country’s coal production capacity, and build the expensive infrastructure required to transport coal across mountain ranges to the ports from which it would be transported to China. However, such plans have been greatly jeopardized by two recent developments: • International benchmark prices for coal have dropped nearly 50 percent from peak levels to about US$62 per tonne. • “The Chinese say they are going to burn less coal,” because of growing awareness of climate change, and growing opposition to coal in Europe and the U.S., Kemmsies said. “So the whole global demand story for coal is kind of shot.” Fearful of overdependence on com-

2011 2012 2013

2014 2015*

Venezuela 29.0 19.5 52.7 67.7 55.6 Argentina 9.5 10.8 10.9 29.3 26.7 Uruguay 8.6 7.5 8.5 8.4 7.4 Bolivia 6.1 5.3 6.5 7.7 6.2 Brazil 6.5 5.8 5.9 6.4 6.1 Paraguay 4.9 3.9 3.8 5.1 4.6 Ecuador 5.4 4.2 2.7 3.5 3.7 Mexico 3.8 3.6 4.0 3.9 3.5 Peru 4.7 2.6 2.9 3.0 2.7 Chile 4.4 1.5 3.0 3.8 2.7 Colombia 3.7 2.4 1.9 3.3 3.2 LATIN AMERICA 7.1 5.9 8.7 12.1 10.9

modity exports, Colombia has also been making efforts to move up the value chain to become a value-added manufacturer. “Colombia is taking definitive steps in its transport infrastructure to reduce logistics costs, reduce travel times and connect production centers with export ports,” according to a recent report by BNamericas. Here again, public-private partnerships will play a major role in this strategy. The government has set a goal of increasing both public and private investments in roads, ports, rail and airport infrastructure from about 1.5 percent of Colombia’s GDP currently to at least 3 percent of its GDP by 2016. In Brazil, encouraged by the more recent depreciation of the Brazilian real, Brazilian exporters are gearing up for a major export push, hoping that the government takes a more proactive stance, not only to reduce infrastructural barriers to Brazilian exports, but the legendary bureaucratic obstacles known as “The Brazilian Cost.” Armando Monteiro, minister of development, industry and foreign trade, said Brazil has been suffering “economic difficulties,” and that it now needs a commercial policy that is “more active and more pragmatic.” In anticipation of Brazil’s new National Export Plan, expected in March, Monteiro noted there would be new tax exemptions for exporters,

measures to stimulate financing, and new investments aimed at making Brazilian companies more competitive abroad. Monteiro has said the Amazon River port of Manaus, and its free trade zone would receive some extra export incentives. Nevertheless, delivering on Brazil’s long-delayed potential as an industrial powerhouse will take years. According to Brazilian government forecasts, it will also take a great deal of money – about US$23.8 billion in new investments through 2017 – to Armando implement a major Monteiro new initiative to tackle the bottlenecks stifling Brazil’s port system, thus speeding up movement of all categories of cargo, and reducing logistics costs. Concessions to operate ports will be awarded to those investors that offer to provide the greatest handling capacity at the lowest cost. At best, however, major greenfield projects are expected to take four to seven years to go into operation, which means that projects planned in 2015 may not be ready in time to relieve the even greater congestion expected as global trade accelerates into higher gear in the years beyond. BB www.breakbulk.com BREAKBULK MAGAZINE 35

case study

BRIDGING MOZAMBIQUE By Liesl Venter

n 2012 power and automation technology group ABB won an order worth about US$50 million to refurbish the Cahora Bassa high-voltage direct current (HVDC) converter station in Songo, Mozambique. The contract entailed replacing key equipment including three transformers – no easy task taking the location of the substation at the top of the Songo Pass into consideration. Moving high-value abnormal cargo through war-ravaged Mozambique is difficult enough, thanks to primitive road and bridge infrastructure. Navigating it up the nearly 10-kilometer

pass with its extreme slopes and gradients is another matter altogether. Instar Projects (formerly BDP) was tasked with the challenge. “We had been in discussions with ABB around the project, but we came on board officially at the end of 2013 and planning started in earnest immediately,” said Hendrik Wagner, engineering director for Instar Project Logistics. There was very little time to waste, as the three transformers had to be delivered prior to the start of the Mozambican rainy season in November 2014. Treacherous roads in the dry season are common enough in the southeastern African country. Rains would make the roads near impassable

Girder System, Teamwork Smooth Way for Transformers with the very real possibility of all road upgrades done for the project washing away during flashfloods. “From the very beginning it was clear that a custom solution would be required. The big question was what solution would be the most cost effective in the long run,” Wagner said. Developing a customized transport solution “would not necessarily see a return Hendrik Wagner on investment and would not be used in any other projects, but would require less infrastructure

One of three transformers, weighing in at 149 tons, crosses a propped bridge in Mozambique while en route to the Cahora Bassa power plant in Songo. The transformers were moved through Mozambique using a specially designed girder system, which allowed the cargo load to be spread over a wider area, ultimately meaning fewer bridges had to be propped or bypassed. / Credit: Instar Project Logistics and ALE

36 BREAKBULK MAGAZINE www.breakbulk.com

MARCH-APRIL 2015

improvements.” The other option would be “standard transport solutions but spend heavily on upgrading the roads and propping of bridges.” The three transformers, weighing in at 149 tons each, would be the heaviest loads ever to pass through this particular section of Mozambique. “The biggest concern and challenge with this project was the last 200 kilometers in Mozambique, and the investment into the road and bridge infrastructure would have been significant. Keeping the budget below the benchmark given by past transports was what we had promised ABB, even though we’re moving a 15-ton heavier load,” Wagner said. Instar had been toying for some time with the idea of a girder system that spreads cargo load more evenly over a wider area. “The basic concept was on our desks already by the time we got the Cahora Bassa contract, and so it was really about seeing if it would work for this particular project,” said Wagner, who spoke about the project during a case study execu-

tive presentation at the Breakbulk Africa Congress in February. By building a girder system – effectively customizing the transport solution – the team would have to prop and bypass far fewer bridges. The girder system finally won out thanks to the information garnered from a detailed analysis of the road and its infrastructure, investigating the expertise and capability of local partners and taking the timelines available into consideration. “The transformers, manufactured in Sweden, were transported via sea freight to the Port of Richards Bay in South Africa from where they were trucked some 2,000 kilometers through South Africa and Zimbabwe to Mozambique,” Wagner said. A total of 45 bridges – most with typical spans of 15, 18, 20, 25 and 27 meters – were crossed during the journey. Ultimately only five were propped and three bypassed – all within the last 200 kilometers of the route in Mozambique. “The bridge infrastructure was far better than what we had initiatally antici-

pated. ” Wagner said. “But the need to only prop five bridges was thanks to the girder that we developed that was far more optimum a solution than trying to mobilize transport equipment from abroad or even to try and source from the local market and upgrade more bridges.”

Building a Girder

The concept of the girder would allow the team to distribute the loads of the transformers far better on the mostly precast concrete beam bridges being crossed. “The girder would allow us to spread to the width of the structure, thus reducing the total load on the bridges,” Wagner explained. “What we designed was a transport combination that was much lighter than what was available on the market.” Consisting of a frame of 30 meters by 4.5 meters weighing 30 tons suspended between two nine-axle trailers, the girder incorporated the transformer into the load distribution. “The concept was taken from the bridge construction business and adapted for the transport business. The transformer

www.breakbulk.com BREAKBULK MAGAZINE 37

case study

Three 149-ton transformers were maneuvered to the top of the Songo pass with a selfpropelled modular transporter (SPMT). / Credit: Instar Project Logistics and ALE

was thus suspended in the frame across the two trailers,“ Wagner said. The decision was taken to prebuild the girder in Germany as well as the five bridge props that would be used. This was all sent in containers to Africa. “A laydown area was constructed in Mozambique just after the border post, and this was where the girder was assembled and from where the bridges were propped,” he said.

Transport Combinations

Three transport combinations were used during the movement of the cargo, said Johann van Zyl, project manager of East Africa for ALE, the heavy service lift provider on the project. For the first 2,000 kilometers, one 11-axle-line Cometto trailer and two 14-axle-line Goldhofer trailers, each with a two-file configuration, were used. “The transformers went directly from the heavy line vessel onto the trailers on arrival at the port. There was a bit of a delay in the departure as the cargo had to be weighed to be granted permits, but within a week they were on course,” van Zyl said. The most challenging part of the route was navigating two notorious border posts – Beit Bridge between South 38 BREAKBULK MAGAZINE www.breakbulk.com

Africa and Zimbabwe, and Nyamapanda between Zimbabwe and Mozambique. “Also shortly prior to the project a rockfall damaged the Chivake Bridge in Zimbabwe, and we had to unexpectedly bypass the bridge along a 50-kilometer gravel road,” van Zyl said. On arrival in Mozambique the transport combination was adjusted for the girder system, and the transformers were taken to the foot of the Songo pass one at a time using the girder. “There was a lot of preparation work that needed to be done for this project, as it was essential once the load was moving that we Johann van Zyl would have to work quick and fast,” van Zyl said. With the transformers only arriving in South Africa in the first week of September the team had just two months to complete the transport before the rains set in. According to Van Zyl, none of the transport combinations, however, would make it up the final 9.8 kilometers of the Songo pass, so it was decided to use a self-propelled modular transporter (SPMT) for the final leg of the journey,

while the transformers were finally positioned in the substation using jacking and skidding techniques. “The pass has a road width of only seven meters with a gradient that varies from 9 percent to 16 percent with very tight hairpin bends. The girder was not going to make it to the top, and the most efficient way to deliver the transformers up the pass was using an SPMT,” van Zyl said. Only 60 days after arriving in Africa the transformers were up and running at Songo. “There were several challenges that had to be overcome, from working in extreme heat to keeping to very tight deadlines thanks to the looming rainy season,” he said. “But valuable lessons were also learned for future projects including the importance of involving the local communities in the activities.” Theft was a major concern for the team, but a decision to ask local leaders to appoint locals living in the villages along the route to watch and guard over the cargo as opposed to hiring a professional security team paid off with not a single item lost to theft during the entire project. “You also have to have the right team in place,” van Zyl said. “The African conditions are harsh and the infrastructure is very sparse with little or no mechanical and spare part backup. There is no room for error and so any teams working on the ground have to be in tune with each other and constantly communicating to ensure that everyone is on the same page. There is no cutting of corners, and one has to make sure that you have trustworthy people who are committed to the project as part of the team.” Wagner concurred saying teamwork made the difference. “In Africa one has to expect the unexpected. The truck convoy was delayed for more than two hours one day as the team had to get a black mamba out of the cab of one of the trucks. You never know what is going to happen, but being able to work as one, you are guaranteed that a solution will be found,” he said. Ultimately leveraging vast technical competence, combined with strong local presence and a clear understanding of the market this project was successfully completed allowing for the upgrade of the Cahora Bassa power plant. BB MARCH-APRIL 2015

fleet outlook

By Susan Oatway

SEEKING SILVER LININGS MPV Rebound Moves Further on Horizon

e are just back from Breakbulk South Africa, and the optimism and enthusiasm from that country is brightening up a dreary London morning. There was a lot of optimism for project cargo in the region and African trade in general. Although falling oil prices have hit the region in the short term, recovery is inevitable and a potential boom is coming. It is a sentiment that Drewry agrees with – although with slightly more caveats.

40 BREAKBULK MAGAZINE www.breakbulk.com

MARCH-APRIL 2015

MPV FLEET AGE PROFILE AS OF JAN. 1, 2015 3000

20,000 18,000

2500

16,000 14,000

2000

12,000 1500

10,000 8,000

1000

6,000 4,000

500

2,000 0

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

left axis: number of vessels 2-5,000 DWT

5-10,000 DWT

2008

2010

2012

2014

right axis: average DWT 10-15,000 DWT

15-20,000 DWT

20-35,000 DWT

35,000+ DWT

Source: Drewry Maritime Research

Fleet Demand

Drewry estimates that dry cargo volumes grew about 6 percent in 2014. This demand growth is expected to average 4.8 percent this year and 2016. We have done a lot of work over the last year with the UN Commodity Trade Statistics Database, or UN Comtrade, and we have worked to produce a comprehensive time series for dry cargo demand by commodity and mode, in conjunction with colleagues on the container and bulk teams. We estimate that general cargo demand rose 3.6 percent in 2014 and container cargo increased 5.2 percent. We expect these sectors to see growth of nearer 6 percent and 5 percent, respectively, over the next two years. Meanwhile non-containerized general cargo grew about 2.7 percent in 2014 but is expected to see increases in line with the general cargo sector as a whole to 2016. Having made our assessments of total cargo growth, we then look at the potential share of each part of the market available to the multipurpose and heavy-lift fleet. The share of the bulk cargo is principally to do with the minor bulks, everything from agricultural products to steel to timber to aggregates. This share dropped significantly over 2013 as competition from the other sectors intensified. However, recovery was seen in 2014 and is expected to continue at an average of about 15 percent over the forecast period to 2016.

With regard to general and project breakbulk cargo, the multipurpose share of this has continued to fall over the last three years. But as market conditions in competing sectors improve and demand continues to grow, we would expect this to stabilize at about an 18 percent to 19 percent share.

MPV, Heavy-Lift Fleet

As of Jan. 1, the multipurpose fleet (as defined by Drewry) numbered 3,252 vessels with a combined total deadweight of 29.5 million tonnes and an average age of 14 years. More than 70 percent of this fleet (in terms of number of ves-

sels) is below 10,000 dwt but the average deadweight is rising. From the current operating fleet, the average deadweight for 1980 was 5,500 dwt, growing to 8,000 dwt in 2000, 13,000 dwt for 2010 and reach 18,150 dwt in 2014, even though deliveries fell. Looking at the project carrier fleet in more detail, the vast majority of these vessels are in the 10,000-15,000 dwt and 15,000-20,000 dwt sectors, and more than 25 percent of both these sectors are premium project carrier tonnage. There are currently 850 vessels with this enhanced lift, 26 percent of the total fleet number, of which 316 have a lift capacity

MULTIPURPOSE FLEET DEVELOPMENT TO 2016 (‘000 DWT) 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0

2008 multipurpose vessels

2009

2010

2011

2012

2013

2014

2015

2016

project carriers including heavy lift

Source: Drewry Maritime Research www.breakbulk.com BREAKBULK MAGAZINE 41

fleet outlook

greater than 250 tonnes. More than 60 percent of the fleet larger than 10,000 dwt has enhanced lift capacity, whereas only 16 percent of vessels below 10,000 dwt are classed as project carriers. When we forecast fleet development, we look at the schedule of expected newbuilding deliveries and any expected further ordering levels, combined with an assessment of future demolitions. Deliveries have come down from the peak in 2011 and indeed hit a new low in 2014, but they are expected to settle at a historical average of just below 1 million dwt. Demolitions also dropped further in 2014 but are, again, expected to settle around the 1 million dwt mark. It is interesting to note that the majority of deliveries are for project carriers whereas the majority of demolitions are for simple MPVs. Meanwhile the current orderbook is at just 6 percent of the operating fleet. This is particularly low, especially when compared with the container and bulk sectors. Within the orderbook, the most popular sectors are the 10,000-15,000 dwt and 20,000-35,000 dwt, whereas below 10,000 dwt the orderbook represents barely 2 percent of the fleet, and the 15,000-20,000 sector, which has no newbuilding activity at all. When Drewry calculates fleet development, we also look at slippage levels for newbuildings, to ascertain a more realistic delivery schedule, and we calculate projected demolition levels. Slippage levels fell considerably over 2014 as the orderbook emptied. We calculated that

just 16 percent of the 2014 orderbook was not delivered within its original dates, compared with nearer 30 percent in 2013. We believe that figure will remain at about the same level over the coming year as the orderbook in this and other sectors continues to wane after the high numbers of newbuilding deliveries over the last few years. If we take all of our assumptions for slippage, newbuilding and demolitions, we arrive at a fleet development as shown in figure 3. This is for MPV and project carriers combined and produces a fleet growth of barely 0.1 percent a year over the period shown. However, it is clear that all of the fleet growth is in the project carrier sector while the simple multipurpose vessel is on the decline. Project carrier deliveries over the last five years have averaged 63 percent of the fleet newbuildings per year. Meanwhile the simple multipurpose vessel continues to age, at an average 17 years compared to just eight years for the premium project carriers. If we split the fleet into simple MPV carriers versus project carriers, we can clearly see the potential decline in the MPV fleet numbers, with little investment beyond replacement tonnage. But the project carrier fleet – which is after all the smaller and younger of the two – shows growth of about 3 percent per annum through 2016. This is because firstly the fleet is too young to see significant demolition numbers, but also owners are replacing their “simple” ships with high-specification vessels that can

SUGGESTED DEVELOPMENT OF GENERAL CARGO MARKET (MILLION TONNES) 2,000 1,600 1,200 800 400 0

2010 total container cargo

2011

2012

2013

non-container/general cargo

Source: Drewry Maritime Research 42 BREAKBULK MAGAZINE www.breakbulk.com

2014

2015

2016

add value to any contract. So, if we take all of these assumptions we can make some assessment of the growth in supply and demand. Firstly the effective fleet – one where an allowance is made for increased productivity for newbuildings versus older vessels being demolished – the effective combined fleet is expected to stagnate over the next few years with an average growth of just 0.1 percent, with all of the growth in the project carrier sector. However, the effective demand for the fleet – taking into account all the competing areas where these vessels find cargo – is expected to grow at about 5 percent per year. This is a little slower than 2014, but much of the growth there was making up for decreases seen in 2013. The fly in the ointment is always the competing sectors. Much of this improvement – especially on the demand side – relies on container and bulk rates improving and those vessels returning to their more conventional volumes. But if bulk and container rates do not improve quickly and the over-tonnaging scenarios in both sectors exacerbate the demand shortages in their sectors, then utilization could fall again. At Drewry, we are putting together our annual report on the multipurpose and heavy-lift market. We believe that the competition to this sector is the key to determining how rates will move over the next two years. Currently rates are at all-time lows in most sectors, and there is nothing to suggest that MPV owners will be able to move those rates higher any time soon. That said, the continued concern of shippers regarding the reliability of carriers is only exacerbated by news from the bulk carrier sector of another bankruptcy. It is our opinion, at the very start of the year, that 2015 will show little improvement on 2014, but there is potential for improvement over 2016. BB The above article is taken from the latest Drewry Multipurpose Shipping Market Review and Forecast. A year’s subscription is priced at £2,295, which includes the annual market review and forecast report, to be published March 16, supplemented by three quarterly updates. All enquiries to oatway@drewry.co.uk MARCH-APRIL 2015

port news

Gwadar, Pakistan Chittagong, Bangladesh

Kyaukphyu, Myanmar

Point Pedro KKS

Trincomalee

Bagamoyo, Tanzania (proposed) Colombo

Oluwil Hambantota

Galle

SRI LANKA’S PORTS

Shelved Port City Poses Sri Lanka Dilemma

CHINA’S ‘PEARLS’ UNSTRUNG By Eric Johnson

ngineering contractors in the forefront of China’s ongoing infrastructure build-out – a modernization effort famous for bullet trains and skyscrapers – have also been busy hammering down overseas port, road and rail projects with remarkable success. These state-run engineering, procurement and construction firms, or EPCs, backed by the Beijing government’s soft-power diplomacy and state 44 BREAKBULK MAGAZINE www.breakbulk.com

banks, have worked on a wide range of infrastructure in emerging Africa, East Europe and Southeast Asia over the past decade. For example, Ribbons were cut last year for a 1.4-kilometer highway bridge in Serbia, and a 338-megawatt hydroelectric power plant in Cambodia. No wonder, then, that the Chinese EPC sector was taken aback in January by a surprise decision to shelve a major port construction project in Colombo, the capital of Sri Lanka, on orders from that island-nation’s newly installed government. The decision snapped what had been

an impressive series of overseas success stories for Chinese EPCs, especially those working on ports and related projects in southern Asia. Not only was the contractor left in the lurch, but the Chinese government and state companies may have been forced to reevaluate their overall strategy for port projects in several countries ringing the Indian Ocean. China’s interest in Sri Lanka stems from what’s often called Beijing’s “string of pearls” plan to extend commercial – and some say military – influence via sea ports stretching from southeastern MARCH-APRIL 2015

China to eastern Africa. “Pearls” already set in place include Pakistan’s third-largest port Gwadar, which was built by a Chinese EPC and opened in 2005. More recently, China helped upgrade the Chittagong port in Bangladesh, which someday may become a trading hub linking southwest China and the Indian Ocean. The newest pearl in China’s long string is a deepwater port in Kyaukphyu, Myanmar, that opened in February. Its biggest draw is an oil terminal built to accommodate tankers supplying a recently completed, Chinese-owned pipeline. The pipeline pumps crude northward from the sea to China’s Yunnan Province. Later this year, work was expected to begin on a China-financed port development in Bagamoyo, Tanzania, on the Indian Ocean’s western edge. The

Reuters news agency said the multi-year project would cost some US$10 billion.

Port City

Colombo’s now-frozen plan for what’s called Port City was unveiled in early 2014. China Communications Construction Co. Ltd., the Chinese state-run and Hong Kong Stock Exchange-listed contractor, was to lead the project, starting with a major sea reclamation phase. China Communications was then to build US$1.5 billion worth of ship berths as well as an urban complex on about 200 hectares. Port City would be Sri Lanka’s largest-ever foreign investment. The plan calls for three, 58-hectare container terminals with 470-meterwide yards for stacking rows of stacked containers, according to the Sri Lanka Ports Authority and an artist rendition

released by China Communications. Apartments for a quarter-million people, office buildings and recreation facilities would be built nearby. The horseshoe-shaped facility with about 6,800 meters of breakwater and one side open to the sea, would provide protective berths for ships not far from the city’s existing port. Today’s Port of Colombo handles breakbulk cargo and roll-on, roll-off ships, but focuses on the container business, servicing box ships at two terminals. The Port City deal appeared to be sealed last September when Chinese President Xi Jinping and then-President Mahinda Rajapaksa met in Colombo to cut a ribbon, symbolically launching the project. Signing the financial contract were officials from the state-run port operator China Merchants Holdings and the Sri Lanka Ports Authority.

www.breakbulk.com BREAKBULK MAGAZINE 45

port news

Rendering of China Communications Construction’s Port City development. / Credit: China Communications Construction Co. Ltd.

Government leaders at the time touted the deal as a win-win benefiting both countries: A Chinese EPC would do the work through a Chinese-financed contract, and Sri Lanka would get a modern port with greater access to international trade as well as a trendy urban neighborhood overlooking the sea. But the project screeched to a halt after Rajapaksa lost a presidential election in January. Within weeks of taking office, the administration of newly elected President Maithripala Sirisena decided to take a closer look at the port project’s legalities and possible environmental hazards. The inspection was continuing as this issue of Breakbulk went to press. One question revolved around whether the deal to lease some sea-reclaimed property to China Communications was valid in light of a Sri Lankan law that bars foreign control of land. Colombo Port City would be the second China-built-and-financed port construction project in Sri Lanka. The first got under way in 2008 when China 46 BREAKBULK MAGAZINE www.breakbulk.com

Communications crews with Chinese financing started modernizing the port of Hambatota, about 220 kilometers east of Colombo on the island-nation’s southeast shore. An oil terminal has been built as part of the ongoing project, which is to be completed later this year. The Chinese government has defended its Sri Lankan port projects against charges it wants to challenge nearby India militarily by basing naval ships at Hambantota and Colombo. Commerce and bilateral trade are the key drivers, Beijing argues. The military charges were fueled in 2013, however, when presidents Rajapaksa and Xi met in Beijing and released a communique saying their nations would “deepen defense cooperation.” And on at least two occasions last year, Chinese submarines raised eyebrows in India by docking temporarily at Colombo. Ever since Sirisena defeated Rajapaksa in the election, Sri Lanka-China relations have been cast in a new light, with a focus on the future of the Colombo port project.

When Sri Lankan parliament members recently asked for a port project update, Prime Minister Ranil Wickremesinghe offered this explanation of the government’s stand: “All the relevant activities to the Port City were not done in a transparent manner,” he said, according to a government website. “Several lawful methods were not adhered to. The agreement with regard to the project was signed without cabinet approval. In addition to that, there was no proper response to the allegations that the proper environment impact assessment reports have not been obtained.” The port project’s status was expected to be on the table at a meeting between Sirisena and Xi scheduled for March in Beijing. China Communications officials haven’t commented on the situation. But Beijing authorities remain hopeful. Ministry of Foreign Affairs spokesman Hong Lei said at a February press conference that in China’s eyes the project is still alive, having already been “fully approved” by Sri Lanka. BB MARCH-APRIL 2015

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2015

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ordana A/S - part of Weco Group - is a privately owned international shipping company with headquarters in the North of Copenhagen, Denmark. With more than 130 years’ experience, we operate owned and chartered vessels in both liner services and worldwide project cargo transports. NORDANA LINER DIVISION operates regular multipurpose/RoRo services encompassing 4 main trade lines between the Americas and the Mediterranean. NORDANA PROJECT DIVISION operates its own modern fleet of specialized project ships worldwide, as well as managing chartered tonnage for full flexibility in lifting any cargo challenge. The name Nordana is taken from its NORwegian and DANish background. The service started in 1957 as a joint venture between Norwegian Fearnley & Eger and Danish DFDS. F & E decided to withdraw

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50 BREAKBULK MAGAZINE www.breakbulk.com

and the service continued under Danish management, but the name and the values remain as strong as ever. We are very proud of our heritage and fly the swallowtailed Danish flag – the Dannebrog – with great pride. The US Gulf Coast is one of Nordana’s important trading areas and a direct liner service from USA to the Mediterranean was implemented in 1961. Since then Nordana has constantly developed and improved our services, in order to bring our customers business’ ahead and thus this gateway to Europe is still going strong. To further strengthen our position, we are in the process of moving to new modern premises in Houston. Refurbishment of the new offices has commenced and we expect the move-in to take place during April 2015. Nordana recognises that continuous advancement is essential in order to meet changing demands and needs both from our customers and from the shipping industry

in general. We acknowledge the importance of investing in our fleet and are thus upgrading present fleet and engaging in an extensive newbuilding program. The Liner Division’s fleet renewal commenced in June 2014, when the Green Star 3 Design Italian built MV Wedellsborg initiated her inaugural voyage in the Mediterranean - Americas service. The MV Williamsborg entered the same service in July 2014 and will be joined by the MV Wilhelmsborg in Q2 2015. This upgrade enables us to offer larger and faster vessels that run at even more precise schedules while at the same time optimizing fuel consumption and keeping emissions to a minimum. Nordana Project Division, an independent division within Nordana, has likewise improved their fleet by chartering in several 12000 ton tweendeckers on long term basis. In addition 14 newbuildings will be delivered over the next 2 years as from the beginning of 2015, including 8 Great Dane Mark II vessels with a lifting capacity up to 500 tonnes. 21st February 2015 the Nordana Sky, the first of a series of 6 Symphony Class newbuildings, was launched and christened at a ceremony in Leer. The spectacular side launch can be viewed at Nordana’s LinkedIn profile. With a vast amount of expertise in our local offices in Denmark, the USA, Thailand and Singapore combined with the ongoing renewal of our fleet to fully equipped, environmentally friendly, state of the art vessels, we are confident that Nordana is able to efficiently transport all types of cargo– both present day and in many years to come. Bring us a challenge so we may rise to the occasion…….

[

For further details please visit our website: www.nordana.com

[

MARCH-APRIL 2015

[ GULF COAST LOGISTICS | 2015 ] ADVERTISEMENT

PREMIER PROJECTS SERVICES – FROM THE GULF AND FOR THE GULF

ver the past decades, the world of break-bulk and project shipping has grown remarkably and further established its own expert niche in the global shipping business. Together with their customers and business partners, BBC Chartering supported the development of this expert niche globally also with a strong focus on U.S. Gulf activities. Today, BBC Chartering is a global expert for engineered transports and amongst the most trusted names in the industry. The carrier is known for arranging engineered transports and best-in-class shipping performance through a modern fleet of currently 150 multipurpose and heavy lift vessels. Not only limited to the U.S. Gulf, BBC Chartering supports many of the world’s most prestigious projects, operates dedicated liner services, works on improving regional shipping services, and now improves their port handling, too.

RECENT PROJECT DELIVERIES

Amongst the most visible projects recently was a loop reactor for the giant CP ethane cracker facility in Baytown, Texas. Fabricated in South Korea the large reactor was shipped onboard the BBC Coral, a 14,800dwt heavy lift vessel, to Freeport, Texas in October 2014. In January 2015, the Port of Charleston Authority recorded one of its heaviest energy project moves to date, a 1.5 million pound (680mt) Westinghouse Electric Company steam generator for the South Carolina Electric & Gas Company nuclear power plant expansion near Columbia, SC. The generator was transported by the BBC Aquamarine, another BBC Chartering heavy lift vessel.

DEDICATED LINER SERVICES

With its BBC AMERICANA LINE , the carrier offers a monthly sailing with vessels calling Brazil and Argentina, loading primarily out of Houston. The service operates roundtrip with dedicated vessels ranging in size from 6,000 dwat to 17,000 dwat and with lifting capabilities of up to 240 mts. With its ANDINO EXPRESS LINE , BBC operates roundtrips from the US Gulf to Ecuador, Peru and Chile every 14 days and plays a major role in the development of the construction and mining industries. The new BBC GULF LINE service utilizes vessels that

52 BREAKBULK MAGAZINE www.breakbulk.com

can carry up to 20,000 dwat and have the ability to lift up to 700 mts. Customers can expect two voyages a month leaving US Gulf ports, Veracruz, Houston and Mobile. The service calls major ports in the Arabian Gulf including Damman, Doha, Dubai, Jebel Ali, Muscat and Shuwaikh. The BBC TRANS-PACIFIC SERVICE connects Asia and the United States on a monthly basis. With the introduction of the Trans-Pacific Service, loading ports are Shanghai, Masan, Kobe and Yokohama and discharge ports are Long Beach (West Coast), Charleston and Houston. BBC Chartering offers the flexibility to call any required port en-route on an inducement basis. The same flexibility applies to the procured tonnage, in case more cargo or lifting capacity is needed.

REGIONAL SERVICES

Caytrans BBC provides weekly sailings between the Gulf of Mexico, North Coast of South America and the Caribbean. Specializing in project and heavy lift cargoes, Caytrans BBC is a key player in the steel and bulk cargo market. With a shallow draft, the four dedicated vessels operating this line also offer the unique ability to deliver to some of the smaller regional ports in the area, which can be called on an inducement basis.

DEDICATED PROJECT TERMINAL

BBC Chartering has observed a constant growth in its US-based business, as well as record numbers for port calls in Houston. In more than 250 loading and unloading and operations in the past 12 months, BBC vessels spent over 800 days in the port of Houston. This was reason enough for BBC Chartering to look into options to consolidate and improve economics and service quality which should also benefit the carrier’s American and global clients. To that end, Manchester Terminal in the port of Houston seemed to be the right fit. It offers a unique combination of services: warehousing, break bulk and container facilities, light manufacturing and assembly operations if required. BBC is pleased to announce that Manchester Terminal is the carrier’s new dedicated project terminal in North America. Managed through Gulfstream Marine, BBC vessels and their customers can now enjoy priority berthing and 24/7 serviceability in Houston.

MARCH-APRIL 2015

[ GULF COAST LOGISTICS | 2015 ] ADVERTISEMENT

BIG JUST GOT BIGGER

öegh Autoliners is a leading global provider of Ro/Ro transportation services. This year, the company takes a new step in its investments in the breakbulk market, introducing a new generation of vessels with improved capabilities for carrying high and heavy cargo. This is only one of the activities Höegh Autoliners is taking to improve its services to the break bulk market where new equipment and a dedicated organizational set-up are other significant investments. By 2016, Höegh Autoliners will have six of the New Horizon vessels in its fleet, operating within the company’s global trade network. The vessels will be of the Post Panamax size and offer ramp capacity up to 375 tonnes and 6.5 meter door opening height. With five out of 14 decks being liftable, the vessels will enable loading of a wide variety of cargo and offer high flexibility in trade. Besides offering excellent cargo operation opportunities the New Horizon vessels can also pride themselves with a better environmental footprint compared to standard car carriers and the vessel model is given DNVGL’s class notification “CLEAN” for cleaner design.

DEDICATED RESOURCES

To further enhance the company’s capabilities in the breakbulk segment, Höegh Autoliners last year launched a new global breakbulk and project cargo group. Oskar Orstadius, Head of Breakbulk segment says: “Our team exclusively service those accounts that move breakbulk and project cargoes. Everyone in the team has long experience in this cargo segment and we are spread across the key breakbulk markets, ensuring personal and local service to customers.”

NEW EQUIPMENT

Höegh Autoliners did last year complete the implementation of a program to introduce two new sizes of mafis or roll trailers to add to the traditional 20’, 40’ and 62’ sizes. The newest roll trailers 54 BREAKBULK MAGAZINE www.breakbulk.com

are now 72’ and 80’ in length and custom made to accommodate longer cargo. They also have rails in the bed of the trailers making them even suitable for rail cars and locomotives. Oskar Orstadius continues: “The rails offer safe and smooth transportation of trains and trams as it enables cargo operation without lifting the unit. It also offers a more cost efficient solution as there is no need to hire cranes for the operation.” Höegh Autoliners continues to invest in specialised equipment to accommodate for even bigger and heavier cargo suitable for the New Horizon vessels.

LOOKING FORWARD

Höegh Autoliners are very excited about what the future holds as the company expands and provides new levels of service to its customers. New markets are likely to evolve and put new requirements to the trade networks. Höegh Autoliners already has presence on all continents and offers a global trade network. Now with a dedicated project cargo team, investments in equipment and the world’s largest PCTCs soon in its fleet, Höegh Autoliners is ready to welcome new customers with even bigger and heavier cargo.

[

www.hoeghautoliners.com

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MARCH-APRIL 2015

[ GULF COAST LOGISTICS | 2015 ] ADVERTISEMENT

LOGISTICAL ADVANTAGES UNLIKE ANY OTHER PORT IN THE WORLD

he Port of New Orleans is a deep-draft multipurpose port at the center of the world’s busiest port system — Louisiana’s Lower Mississippi River. Connected to major inland markets and Canada via 14,500 miles (23,335 kilometers) of navigable waterways, six class I railroads and the interstate highway system, the Port of New Orleans is the ideal gateway for containers, chemicals, coffee, steel, project cargo, natural rubber, forest products, manufactured goods and more. Gaining recognition for our premium connectivity, world-class customer service and strategic location, the Port was named Business Facilities’ top Logistics Leader in 2013 and Port Operator of the Year by Lloyd’s List in its 2014 top North American Maritime Companies. In 2014 cargo worked at the Port totaled 8.37 million tons, the highest total since 2000. Imported steel led the growth, as imported iron and steel rose 101.6 percent in the 12-month-period to 3.54 million tons. With the influx of auto manufacturers into Mexico and the Port of New Orleans’ proximity to Central America, the Port sees the opportunity for steel in this market. The Port is looking into the possibility of a short sea shipping service to/from Mexico to capitalize on steel and automobile related cargo. The Port and its tenants and operators are constantly hunting for value-added services to enhance Louisiana’s natural resources that are already exported via the Port. In 2014 TCI Plastics noted a trend of Louisiana-made plastic resins being railed to out of state ports and exported there. In the wake of this information TCI decided to invest $36.5 million to grow its mega-plastics district, capturing cargo otherwise bound for out of state export. Currently TCI receives rail cars filled with polyethylene resin pellets. The material is transferred by vacuum into silos, then bagged, palletized, wrapped in plastic, loaded and exported. By adding the plastic film-manufacturing component, TCI is doing its part to

56 BREAKBULK MAGAZINE www.breakbulk.com

create new value-added manufacturing at the Port of New Orleans. TCI’s expansion will produce 600 additional cars per month to its polyethylene operation. With the expected increase in exported plastics and the large capacity of barge transportation, the Port is considering shipping the 1-ton super sacks of PVC resin by barge. Due to the historic industrial expansions and new construction both on the Lower Mississippi River and along the Gulf Coast, Port of New Orleans stevedores are experiencing a real boost in project cargo. Terminal operators Coastal Cargo, Empire Stevedoring, New Orleans Cold Stage, Ports America and Seaonus Stevedoring-New Orleans offer a wealth of experience and decades of commitment to the Port of New Orleans shippers. Louisiana, the nation’s number one producer of crude oil and the second-highest producer of natural gas, is attracting mega projects. In the past several years, $80 billion in capital infrastructure investments have been announced in Louisiana, including an estimated $21 billion investment by South Africabased Sasol to build an ethane cracker as well as an integrated gas to liquid (GTL) facility. Several other projects coming to Louisiana boast a capital investment of more than $1 billion each, including a $2.1 billion expansion of CF Industries’ Louisiana nitrogen complex in Donaldsonville and a $1.2 billion methanol manufacturing plant in Plaquemines Parish by Castleton Commodities International. In 2015, the Port completed two of the heaviest project cargo lifts in its history successfully discharging a 718-ton, absorption tower and a 790-ton ammonia converter from ship-to-barge. “Shippers of such goods as steel, nonferrous metals, forest products and rubber, as well as heavy lift project cargo, choose the Port of New Orleans because we offer logistical advantages unlike any other port in the world,” says Gary LaGrange, President and CEO of the Port of New Orleans

MARCH-APRIL 2015

OUR

CAPABILITIES RUN DEEP. In New Orleans, we’re known for letting the good times roll. But to our customers, our capabilities are as world-class as our food and music. The Port of New Orleans is America’s most intermodal port. We connect you to major inland markets and Canada via 14,500 miles of waterways, all six Class-I railways, 50 ocean carriers, 16 barge lines and 75 truck lines. The Clarence Henry Truckway, a dedicated two-lane roadway on Port property, makes fast transit times even faster. The Port also offers near-dock rail and ship-to-barge services. Looking forward, the Port of New Orleans is always innovating and expanding, so you can comfortably do business here.

You’ll be glad you came.

portno.com

[ GULF COAST LOGISTICS | 2015 ] ADVERTISEMENT

KOG WELL EQUIPPED TO HANDLE CLIENT NEEDS

OG TRANSPORT, INC. is an International Freight Forwarder, active mainly in the Project Freight Forwarding Field. In North America, they have been established since 1981, and effected logistics and forwarding services for numerous projects for the Oil and Gas, Cement, Power and Steel Industries. Among others, they have been involved for many years in the shipment of Air Columns, Heat Exchangers, Cold Boxes, and related cargoes for the chemical processing industry.

58 BREAKBULK MAGAZINE www.breakbulk.com

Presently, KOG is involved in two major Oil and Gas Projects in the U.S. Gulf Area with unit weights ranging from 100MT to 800MT each, with planning that has taken over two years. KOG understands the intricacies in the planning and execution of such mega projects, and are well equipped to handle their client’s needs, as required. Below are a few pictures of KOG’s project cargo handling in the U.S. Gulf Area. KOG is a specialized Project Forwarder with offices in over 20 countries worldwide.

MARCH-APRIL 2015

BIG ENOUGH TO HANDLE, SMALL ENOUGH TO CARE

Truly a Project Forwarder, we work with our clients from feasibility to execution, no matter where the cargo originates or destined, specializing in North America, Europe, The Middle and Far East.

Your Worldwide Project Coordination Centers:

USA: KOG TRANSPORT, INC. 299 Broadway, Suite 1815 New York, NY 10007 Contact: Juergen Osmers Telephone: + 1 212 346 9800 Telefax: + 1 212 748 6133 Email: josmers@ kogusa.com

SWITZERLAND: KOG TRANSPORT, AG Zugerstrasse 1 CH-6330 Cham, Switzerland Contact: Rolf Gubler Telephone: + 41 (0) 41 781 1510 Telefax: + 41 (0) 41 781 1530 Email: rgubler@ kogzug.ch

JAPAN: KOG JAPAN KK WBG Marive West 23rd Floor 2-6 Nakase, Mihama-ku, Chiba-shi Chiba 261-7123, Japan Contact: Masahiro Kosaka Telephone: + 81 43 297 3155 Telefax: + 81 43 297 3166 Email: mkosaka@ kog-japan.co.jp

[ GULF COAST LOGISTICS | 2015 ] ADVERTISEMENT

THE LATEST “NEW” FROM THE PORT OF GREATER BATON ROUGE

anked 9th nationally in total tonnage, there’s a lot of “new” these days at the deepwater Port of Greater Baton Rouge. For example, say port officials, NEW COMPANIES locating at the port, NEW INVESTMENT in infrastructure, and NEW LAND AVAILABLE for development. Highlights of these new developments include:

• Genesis Energy, L.P. is constructing a $150 million crude

oil, intermediates and refined products import/export terminal, expanding that company’s commitment to providing efficient mainstream supply and logistics services to the region.

• Drax Biomass, one of Europe’s biggest renewable electricity

generators, has launched its $30 million wood pellet storage and transfer operation. The storage facilities have the capacity to store approximately 80,000 metric tons of wood pellets. Each storage dome is approximately 200 feet in diameter by 145 feet tall including the mechanical housing unit atop the structure.

• Stupp Coatings, LLC has constructed a facility on 24 acres at

the Baton Rouge port’s Inland Rivers Marine Terminal to operate concrete weight pipeline coating services for the oil and gas industry. The site is service by rail, truck and barge with access to the Gulf Intracoastal Waterway.

60 BREAKBULK MAGAZINE www.breakbulk.com

• Louis Dreyfus Commodities is successfully operating its new, state-of-the-art grain dock and export grain elevator.

• Westway Terminals, LLC has completed its $3.5 million expansion at the port’s liquid bulk terminal.

• Over $10 million in improvements have been made to the port’s rail lines and infrastructure.

• Acreage at the port’s Inland Rivers Marine Terminal is available

for development, with access to the Gulf Intracoastal Waterway.

Recent reports show that cargo worked at the Port of Greater Baton Rouge’s public docks in 2014 more than doubled the amount handled in 2013, according to year-end statistics from the port. In 2014, the Port of Greater Baton Rouge handled more than 9.2 million tons of cargo, an increase of more than 100% over the 4.2 million tons that passed through in 2013.

[

For the more information, officials at Louisiana’s capital city port suggest giving them a call to ask, “What’s new?” Contact Greg Johnson, Director of Business Development, at 225.342.1660.

[

MARCH-APRIL 2015

[ GULF COAST LOGISTICS | 2015 ] ADVERTISEMENT

THE PORT OF CHOICE FOR ALL YOUR MULTIPURPOSE CARGO

he Port of Port Arthur has carved itself a niche as a MULTIPURPOSE PORT. The Port of Port Arthur is North America’s most modern and ultimate direct transfer facility for International Shipping. Located 19 miles inland from the Gulf of Mexico and directly on the Gulf Intracoastal Waterway, less than two hours from sea buoy to dock enables vessel owners to quickly work cargo. The Port is positioned to effectively handle any type of cargo from steel, pipe, forest products, project and military to name a few. Seventeen acres (68,795 sq. meters) of asphalted Open Storage space equipped with CCTV’s with DVR backup

and additional forty acres ready for development is available. The Terminal has 3400’ of Berthing plus an 82’ RO/RO dock enables efficient multimodal access via water, rail and highway. Add two natural gas generators plus a 500 gallon diesel generator and you have uninterrupted port operations. On the horizon is expanding berthing by 600’ and additional 6,000 ‘of rail track terminal capacity. Please call Floyd or Orlando (409) 983-2011 and find out what shippers

already know - that the port of choice for all your multipurpose cargo is … THE PORT OF PORT ARTHUR .

RLTransportca RLTCA R&L TRANSPORT

[ GULF COAST LOGISTICS | 2015 ] ADVERTISEMENT

PORT OF MOBILE: ONE OF THE FASTEST GROWING PORTS IN THE U.S.

he Port of Mobile is one of the nation’s largest seaports in overall cargo volume representing nearly 60 million tons annually. The full service, public seaport terminals are owned by the Alabama State Port Authority. The public terminals handle containerized, breakbulk, dry and liquid bulk,

WHERE

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GLOBAL

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THE PORT OF MOBILE Alabama State Port Authority www.asdd.com

64 BREAKBULK MAGAZINE www.breakbulk.com

frozen poultry, and oversized / heavy lift cargoes. Since 2000, the Authority has invested nearly $800 million in terminal infrastructure and rail improvements. In Fiscal Year 2014, the Authority handled a record 29 million tons of cargo through its facilities. Export metallurgical coal posted a record 13.7 million tons handled. Steel topped just over 5 million tons making Mobile the second largest steel port in the nation. Our container terminal volumes continue to post double digit growth since opening the facility in 2008. To complement investments at the container terminal, the Port Authority is currently constructing a $36 million, Phase I Intermodal Container Transfer Facility (ICTF) providing by year end 2015 containerized cargo shippers via the Port of Mobile and 5 Class I railroads expanded market access into the Southeast, Midwest, and the Ohio and Tennessee River valleys. The Port Authority’s newest steel coil handling facility started operations in December 2014. This $36 million, Phase I facility delivers a 178,200 sq. ft. warehouse with three fifty (50T) ton overhead bridge cranes and 168,000 of open storage yard. Another planned improvement at the port is an automotive terminal. The Phase I $65 million RO/ RO terminal is a one to three year capital improvement program, and the Authority is currently seeking expressions of interests from automotive logistics providers. The Alabama State Port Authority’s terminals connect to 2 interstate systems (I-10 and I-65) and 5 Class I railroads (CSX, Canadian National, Burlington Northern Santa Fe/Alabama & Gulf Coast Railroad), Norfolk Southern and Kansas City Southern), and is home to the C.G. Railway, providing waterborne rail service every four days to Mexico. The Authority’s terminals also connect to nearly 15,000 miles of inland and Intracoastal waterways providing low cost water access to ports along the Gulf of Mexico, the Tennessee, the Ohio, and Upper Mississippi Rivers. The transportation assets and strong community support make the Port of Mobile one of the nation’s fastest growing ports.

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For more information, go to www.asdd.com

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MARCH-APRIL 2015

[ GULF COAST LOGISTICS | 2015 ] ADVERTISEMENT

THE PORT OF LAKE CHARLES: GATEWAY TO A GLOBAL ECONOMY

n Southwest Louisiana, the Port of Lake Charles and its dozens of industrial facilities are greater than the sum of their parts. The Port is currently ranked as the 13th-busiest seaport in the U.S.—based on cargo tonnage—by the U.S. Army Corps of Engineers, and between its strategic location on the Calcasieu Ship Chan-

Go with the flow. Breakbulk cargo flows through the Port of Lake Charles with the greatest of ease.

As the nation’s 13th-busiest port district, the Port of Lake Charles flows cargo rapidly and efficiently, from arrival to storage to departure. The Port’s new dock and rail facilities mean increased capability for handling heavy-lift project cargo and large unit trains. Whatever your cargo, the Port of Lake Charles can make it flow smoothly toward its destination.

66 BREAKBULK MAGAZINE www.breakbulk.com

Lake Charles, Louisiana www.portlc.com 337-439-3661

nel and its gravitational grip on economic development, the Port of Lake Charles acts as steward to America’s energy corridor. The Port of Lake Charles encompasses 203 square miles of prime channelside real estate. Over 54 million tons of breakbulk and bulk cargo are transported annually on the channel, including forest materials, aluminum ingots, grains, rice, petroleum and petroleum products, frac sand, and heavylift project cargos. The Channel begins in the Gulf of Mexico 32 miles from landfall and extends an additional 36 miles inland to Lake Charles in Calcasieu Parish, and it is the conduit for 7.5 percent of the nation’s daily fuel consumption, which comes from refineries along the channel. With over $80 billion in capital investments announced for Lake Charles and Southwest Louisiana over the next decade, the Port of Lake Charles has expanded its heavy-lift and breakbulk cargo capacity while reinforcing its core services for tenant companies. Much of the economic boom, as well as current area growth, are fueled by facilities that rely on the Port and channel. The Port of Lake Charles is investing $190 million in capital improvements to grow cargo-handling capabilities, including new dock and storage facilities. IFG Holdings, a tenant company, developed an expansive grain elevator system that works with the Port’s innovative two-loop track system, allowing unit trains with up to 120 rail cars to be unloaded and processed for shipping. Together they substantially increase the Port’s cargo capacity, handling speed, and overall efficiency. The Port of Lake Charles is governed by a seven-member board of commissioners, which oversees two marine terminals, over 4,000 acres of property zoned for industrial use, and an industrial park.

[

For more information on the Port of Lake Charles, call 337-439-3661 or visit www.portlc.com.

[

MARCH-APRIL 2015

18-21 May 2015 Antwerp Expo Port of Antwerp, Belgium

WE’RE CELEBRATING OUR FIRST DECADE... JOIN US! Project Cargo - New Opportunities, New Strategies! We’re celebrating our 10 year anniversary with the Port of Antwerp. Ten years of Breakbulk Europe’s commitment to the success and advancement of traditional breakbulk and project cargo logistics professionals. It won’t be a celebration without you! Breakbulk Europe 2015 will be

the largest Breakbulk event to date with 6,500 delegates and over 300 Exhibitors and Sponsors expected. Special parties and celebrations plus four days focused on career-advancing workshops and unparalleled networking opportunities with project cargo experts from around the world.

NETWORKING Unparalleled networking with industry experts. EDUCATION Expert trainers focused on advancing your skills. OPPORTUNITY Start new business relationships, find new solutions.

www.breakbulk.com/europe » USE PROMO CODE BBE09 TO ACTIVATE 10% DISCOUNT

[ GULF COAST LOGISTICS | 2015 ] ADVERTISEMENT

TUSCOR LLOYDS AND THE MIDDLE EAST, GROWTH STRATEGIES

ubai, with 8,26 millions of inhabitants, is one of the most important epicenters of the world economy. We are talking about an area that leads the economic development of the Gulf countries through impressive projects and that has become the neuralgic center of the world business and tourism. Dubai also enjoys of an strategic location, good sea and air connections, efficiency in its ports and airports, and low warehousing and free trade zone costs, many good reasons that enhance Dubai’s position as the world’s leading trading hub. Taking advantage of the business opportunities offered by the country, Tuscor

68 BREAKBULK MAGAZINE www.breakbulk.com

Lloyds had also set its eyes in the Gulf countries where its first participation was in the project cargo division several years ago. With an experienced Project Management Team, Tuscor Lloyds was asked to move an oversized cargo to the Middle East for a major construction project. This was the company’s first incursion in the region was only the first of several that were completed within the following years. Nowadays, with more experience and an increasing network of trusted agents in the area Tuscor Lloyds continues to work to increase its participation in the Gulf Countries in the Project Cargo and Heavy Lift division. In another hand, with an important trajectory as a logistic partner part of the

supply chains of several alimentary companies around the world, last February, Tuscor Lloyds visited the international exhibition Gulfood, as a business strategy to continue increasing its business within this industry. The English company is strongly betting for the traffic with the Middle East, currently they have the advantage of collaborating with the main world carriers to be able to offer the most competitive rates, and they also have a wide range of agents with extended experience of business in the area. All these indispensable qualities are allowing Tuscor Lloyds slow but safe introduction in a market that, without doubt, will continue growing in the next years.

MARCH-APRIL 2015

energy update

CHINA NUCLEAR PUSHES FORWARD Heavy Lifting Continues for Plant Construction Program

eavy-lift accomplishments are adding up fast in China as the world’s largest nuclear power plant construction program rolls on. Some 26 nuclear power plant units were under construction and 22 units were operating at 13 sites around the country at the end of 2014, according to state media. Cranes and crews were busy with complex projects from transporting reactor vessels by ship to fitting 140-ton steel domes atop reactor containment buildings. In late November, according to China National Nuclear Corp. (CNNC), one of the country’s nuclear plant-builders, the first made-in-China AP1000 reactor vessel was successfully delivered to one of two units under construction at the Sanmen site in the central-east coastal city of Taizhou. A bulk cargo ship was used to haul the reactor vessel about 800 miles to Taizhou from the port of Dalian, where it had been manufactured by China First Heavy Industries through an agreement with the vessel’s designer, Westinghouse Electric. The reactor vessel will be installed at the Sanmen 2 plant, while the Sanmen 1 plant is getting an AP1000

manufactured in South Korea by Doosan Heavy Industries. It’s a goal of China to design, manufacture and build its own nuclear reactors at home and abroad. Installing the AP1000 at Sanmen 2 “has played a positive role in pushing forward” this national strategy, said a press release from state-run CNNC. In another heavy-lift development, CNNC’s Jiangsu Nuclear Power Corp. said a 530-ton-capacity crane was successfully tested in early December for use in moving Russian-made power plant equipment at the Tianwan 3 and 4 units. The units are under construction near the coastal city of Lianyungang. The oceanside crane is designed to lift reactor pressure vessels, steam generators and other equipment from ships onto the plant site. Officials also announced the completion of all testing for a reactor containment building dome-lifting and installation project slated for the Tianwan units, hinting that the project could begin soon. Tianwan is being built under a joint venture between Jiangsu Nuclear and the Atomenergoproekt subsidiary of Russia’s Rosatom. Tianwan units 1 and 2 are already running.

By Eric Johnson

China’s nuclear power program has been surging since the government lifted a one-year moratorium in the wake of the 2011 Fukushima disaster in Japan. The government wants 15 percent of the nation’s energy to come from non-fossil fuel sources by 2020, with about half of that amount generated by nuclear plants. Moreover, CNNC and China General Nuclear Power, which in December raised more than US$3.1 billion on the Hong Kong Stock Exchange, have been working with Chinese EPCs such as Dongfeng Electric to bid for plant contracts abroad with all-Chinese parts. But most of the action is on the mainland. In late 2014, two new reactors started commercial operations in China: the Fangjiashan 1 plant near Shanghai and Fuqing 1 north of Hong Kong. A second unit is under construction at Fangjianshan, and three others are being built at Fuqing. The next plant to come online could be the Ningde 3 unit on the sea north of Hong Kong. CGNC said it had started pre-operations testing at the plant in October. Ningde 1 and 2 are already operating, and Ningde 4 is under construction. BB

The twin-unit Sanmen nuclear power station under construction near Taizhou.

www.breakbulk.com BREAKBULK MAGAZINE 69

port focus

By V L Srinivasan

INDIA EYES PORT REFORM

But Labor Opposes Corporatization Move Credit: Shutterstock

orporatization of Indiangovernment-run seaports is expected to gather momentum in the coming few months, unmindful of veiled threats issued by nearly a half-dozen trade unions opposed to the move. Only one of the 13 seaports, Ennore Seaport near Chennai, has been privatized thus far, while the remaining seaports are managed by trusts. Even the two new seaports under construction at Dugarajapatnam in Andhra Pradesh and at Sagar Island in West Bengal will be corporations, and they will be registered under the Indian Companies Act. The 12 seaports managed by trusts 70 BREAKBULK MAGAZINE www.breakbulk.com

(see box) are registered under the fivedecades-old Major Ports Trust (MPT) Act, which has outlived its utility in view of the Indian government and its globalization and liberal economic policies. Major trust-operated ports have shown no major growth in cargo traffic over the past four years, in contrast to increases at private ports over the same period. Port utilization at the seaports has been less than 70 percent. Cargo traffic was 555.6 million tonnes for India’s financial year ending March 31, 2014, compared to total annual capacity of 800.5 million tonnes. Performance for port trusts is lagging not only private ports but also minor ports, officials say.

As India plans to expand its sea trade, the government is looking to the private sector for investment to upgrade and develop existing facilities. The government believes that, with corporate governance structure in place, the ports would have better access to capital markets while management will have greater accountability, autonomy and flexibility, as decision-making will not need to await government approval for all port-related issues. Private operation will also mean port tariffs will be marketdriven and productivity will increase. Nailesh Gandhi, director of Mumbaibased Express Global Logistics Private Ltd., said that corporatization would MARCH-APRIL 2015

JAMMU & KASH MI R

port focus

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Dugarajapatnam

KARNATAKA

Ennore (Kamarajar Port) Chennai

KERALA

Cochin Alappuzha

ensure accountability, modernization of ports, quicker expansion and improved service levels among other benefits. The trade unions, however, voiced concern that the move would put an end to social responsibility. Nailesh Gandhi At a Sept. 15 meeting, five trade unions with combined membership of 48,000 employees threatened to strike if the government went ahead with its corporatization plans. The port corporatization proposal 72 BREAKBULK MAGAZINE www.breakbulk.com

TAMI L NAD U

Nagapattanam Tuticorin

was mooted by the then National Democratic Alliance government during its tenure in 1999-2004, but was shelved due to opposition from employees. The Congress Party, which regained power in 2004, could not act, as its survival was depending on the support of the communist parties, which opposed any such reforms. Though the Congress Party retained power in 2009, it wilted under pressure from port employees and backtracked after announcing Kochi port in the South Indian state of Kerala would be corporatized. A 21-member committee led by Rakesh Mohan, former deputy governor of the Reserve Bank of India (Indian

Major ports run as trusts

Company-run ports Non-major ports

Central Bank), recommended to the Congress government that the 12 port trusts be transformed into landlord port authorities, and their terminal operations converted into public-sector corporations. “Incremental improvements, while retaining the essence of the current centralized structure, will not yield the desired benefits. The path recommended for major ports is of corporatization and decentralization,” the report said.

Labor Opposition

The unions, however, feel that handing over major ports activities to the private sector under the guise of infraMARCH-APRIL 2015

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port focus

‘Herculean Task’

MAJOR, NON-MAJOR PORTS VOLUMES Cargo share for major ports fell from 75 percent to 57 percent in the past 12 years while non-major ports’ share has risen from 25 percent to nearly 43 percent in the same time. 600 500 400 300 200

major ports non-major ports

100 0

‘01-’02 ‘02-’03 ‘03-’04 ‘04-’05 ‘05-’06 ‘06-’07 ‘07-’08 ‘08-’09 ‘09-’10 ‘10-’11 ‘11-’12 ‘12-’13 ‘13-’14 In million tonnes / Source: Indian Ports Association

structure development would not only be detrimental to labor interests, but also against the sovereignty of the country at large. “It’s not only ill-advised but suicidal,” says Sudhakar Apraj, a trustee of the Mumbai Port Trust and general secretary of Mumbai Port Trust Dock and General Employees’ Union. According to Apraj, privatized ports would not take any interest in the trade and commerce of society’s requirements and the local expectations. The major ports have been intended to serve the country as not-for-profit institutions, but the government never allowed them to function independently with the powers set under the MPT Act, he pointed out. He questioned the government’s claims that corporatization would generate more revenue for the ports, as the port handling charges collected by the private companies were much higher than governmentSudhakar Apraj managed ports. “Corporatization or privatization is not necessary to modernize the ports,” he said. Apraj added a security angle to the controversy. As the Indian Navy is nestled in most of the major ports, allowing private companies, including multinational firms, to operate would 74 BREAKBULK MAGAZINE www.breakbulk.com

pose a threat to the country’s safety and integrity, he claims. The Parliamentary Standing Committee on Transport, Tourism and Culture, in its report submitted to the Rajya Sabha (Upper House in the Indian Parliament) in February 2013, cautioned the government that corporatization would ultimately lead to privatization, which would adversely impact job security of the workers, their wages, working conditions as well as post-retirement benefits. The trade unions have formed a National Coordination Committee of Major Ports Workers’ Federation to launch protests if the government ignores its demands.

Express Global Logistics’ Gandhi disagreed with the trade unions’ concerns. He said the business of trade unions is to ensure fair wages for workers, which is good, but they also want quantity and not quality. Trade unions fear they would lose control once the ports are corporatized. “One of the options for the government is to take the workers into confidence by announcing a roadmap on the future of the labor force. It should have a plan to upgrade next generation/ family of the current work force, define and share a plan and make them part of the change,” Gandhi added. Expressing similar views, M.M. Tripathi, vice president (Projects) of ABC India Ltd., said the trade unions were apprehensive, as the ports would be turned into commercial entities and target profit as well as efficiency. “The seaports will try to become lean and in the process, remove the in-built inefficiencies,” Tripathi said. “This may require bringing in the new technologies such as remote camera inspection of empty containers and remove the obsolete equipment. This will also require the retraining of a few and change of mindset for all.” Changing the mindset of workers and removing the animosity towards corporations should be the foremost task of the government, which can tackle the issue by various means like offering

A security guard walks among Hyundai cars parked for export at the port in Chennai. Credit: STRINGER/EPA/Newscom MARCH-APRIL 2015

voluntary retirement schemes and production-linked incentives, he said. Also the surplus staff can always be engaged in extended services such as warehousing and equipment maintenance and management. “Convincing the workers will be a herculean task for any government, as any corporation will rationalize the human resource vis-à-vis M.M. Tripathi productivity,” Tripathi said. “This may result in reduction and redeployment of existing work force and mechanization of some of the handling and documentation process. In the end it is bound to become a bone of contention which will need a deft handling.”

Any change from the existing bureaucratic, trust-guided ports setup to a profit-driven entity will likely create an atmosphere of suspicion and questionable intentions. “This requires a structural change and the government should bring in more professionals at the senior level,” he said. Dismissing the contention of the trade unions that such a move would backfire, Tripathi said: “Corporatization of the ports is bound to help as we can see smooth functioning of some of the ports located on western coast. They operate in a dynamic atmosphere and understand the requirement of all the stake holders.” For instance, he said Mundra Port, which was established only 13 years ago, handled 100 million tonnes of cargo in 2014, compared to 87 million tonnes at government-managed Kandla Port, only P A S S E NG E R

F R E I G HT

R E AL E STAT E

60 kilometers away. Similarly, the turnaround time at Mundra Port was 18 to 20 hours, compared to the national average of three to five days in the government-run ports. “This speaks loud and clear about the efficiency of a port working as a company. In fact, most of the new ports established on the western coast, such as Pipavav, Hazira, Essar and Adani, follow the same trend, and are growing at a rate of three to five times,” Tripathi said. He also said the government should do away with Tariff Authority for Major Ports (TAMP) while implementing the public-private partnership model in development of ports. Tariff regulation has punished their efficiency, hindered business, hurt profits and affected the capacity to invest in improving technologies and service, he said. BB

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logistics perspective

The highway leading to Jakarta’s Tanjung Priok Port in 2013. / Credit: Veri Sanovri Xinhua News Agency/Newscom

INDONESIA’S INFRASTRUCTURE NEEDS

New Government Looks to Correct a Decade of Under-investment By Mike King

riving around the congested side roads and flyovers that entwine and dissect the many terminals that make up the port of Tanjung Priok – Indonesia’s national gateway – there is a tangible sense of chaos. Everything – parking, warehousing, storage areas, houses, offices and the 76 BREAKBULK MAGAZINE www.breakbulk.com

roads themselves – is maxed out. Shippers and terminal operators readily agree that the port, a hub for domestic and international shipping and key access point to the capital Jakarta, has been operating beyond its intended capacity for years. Establishing new container facilities has been a long drawn-out process that still hasn’t been concluded, further piling pressure on to the port’s general cargo and breakbulk facilities. Tanjung Priok’s capacity crunch is

representative of the country as a whole. Investment in the roads, railways, power stations, communications and transport hubs that are supposed to bind together this 17,000-plus island archipelago, which is home to more than 250 million people, lags far behind demand and has done so for some time. But Indonesia’s new government under President Joko Widodo is promising to clear a path through the regulatory and financing hurdles that have prevented sufficient investment in MARCH-APRIL 2015

INDONESIA TOTAL FREIGHT FORWARDING MARKET FORECAST 2013-19 3500*

2013-2019 CAGR

3000

14.7% 11.7% 2500

8.8%

2000

1500

1000

2013

2014

2015

2016

2017

2018

2019

High Logistics Performance Index Increase (+0.6 points) Moderate (Expected) LPI Increase (+0.4 points) by 2019 Low LPI Increase (+0.2 points) by 2019

infrastructure by public or private companies for much of the last decade. Aided by the collapse in oil prices, “Jokowi,” as the popular president is widely known, was quick to remove most of the subsidies on fuel that have drained public finances for so long. This has created a vast new war chest that is largely being committed to new toll roads, ports and airports, and other infrastructure designed to improve inter-island Joko Widodo and international trade and boost economic growth – all part of the president’s plan to turn Indonesia into a “maritime axis” between the Pacific and the Indian Ocean. It is this, as much as the country’s rich natural resource industries, that will drive specialist logis- Jakob Sorenesn tics demand in the years ahead. “The aggressive plan from government on infrastructure projects this year is expected to have a positive impact on the breakbulk/projects segment,” said Jakob Friis Sorensen, managing director of Maersk Indonesia. “We expect

*in million euros Source: Transport Intelligence

imports of capital goods will improve and that in turn stimulates exports.” Jokowi’s strategy will be good for the country as well as the forwarders, liners and logistics majors that will manage to bring it to fruition, according to a new report by Transport Intelligence, Indonesia Transport & Logistics 2015 - A New Dawn. This argues that Indonesia has a once-in-a-generation opportunity to boost economic growth and reduce its reliance on raw materials exports by attracting more manufacturing activity for the domestic market and export. But to achieve this the country’s logistics performance needs to improve and this will only be possible by heavy infrastructure investment (see related story). Falling commodity prices have hurt both the economy and the transport and logistics industry that has invested in “supporting new commodity production projects in places such as Kalimantan and Sumatra, David Buckby where miners and agricultural interests are now reining in their commitments,” said Ti analyst David Buckby. “Some 3PLs have closed offices in places like Balikpapan, where the primary business has been supporting mining and other raw materials extraction. The oil price

collapse has also postponed many Indonesian energy projects. “But we believe that Indonesia could still prove to be one of the fastest growing forwarding and logistics markets in the coming years, especially if it can reduce its logistics costs which are currently a major drain on GDP.” Ti’s report predicts an increase in the total Indonesian forwarding market of 11.7 percent compound annual growth rate over 2013-19. However, this will rise to 14.7 percent CAGR if trade facilitation and infrastructure investments reduce the cost of doing business (see table). “Over the full horizon of Ti’s latest forecasts for Indonesia covering 20132019, project forwarding volumes should recover in line with oil prices,” Buckby explained. “Increased infrastructure investment over the period – the key to boosting forwarding volumes across all sectors – offer a strong source of optimism for Indonesian project logistics.” Demand for logistics services across the Indonesian archipelago will not just come from fresh transport infrastructure projects either. The Jokowi government has also kept in place a ban on the export of many mineral ores unless they are processed within Indonesia first. This is also expected to continue to boost investment in smelting capacity. And Indonesia is still expanding its electricity industry, creating fresh flows of project work as new power stations and supporting grids are built to meet consumer demand, often on remote islands with little infrastructure. The diversity of future demand was evident in investments made across the country in the first quarter of 2015. Azhar Lubism, deputy director for investment monitoring and implementation for the Investment Coordinating Board (BKPM), reported that first quarter investment would total around US$9 billion, up 12.6 percent on the year earlier period. The quarterly investment covered a wide range of fields such as infrastructure, smelters and agro-commodity processing and included advanced projects such as a pulp and paper mill in South Sumatra, palm-oil refineries in Riau, smelters in Sulawesi, and an electronic component factory and a synthetic rubber and chemical plant in unspecified www.breakbulk.com BREAKBULK MAGAZINE 77

logistics perspective

Workers build a highway in Jakarta in 2012. / Credit: BAGUS INDAHONO/EPA/Newscom

locations. The quarter also saw the start of construction in North Sumatra of a toll road connecting Binjai with Medan, the new multipurpose Kuala Tanjung seaport, plus ongoing investment in a string of coal-fired power plants. Certainly those logistics executives interviewed by Breakbulk were positive on Indonesia. “Although Vietnam has benefited the most when it comes to OEM (original equipment manufacturer) relocation and as a new key sourcing country, we see Indonesia as the next big trend,” said William J. Wascher, president and CEO of Seko Logistics. “Indonesia is a key focus for us in 2015, and we should

be expanding in the country there this year.” But it is not all optimism and sunshine for Wascher. “The biggest obstacle for both 3PLs as well as original equipment manufacturers will continue to be infraWilliam Wascher structure,” he said. “There is a severe lack of prime warehousing and facilities for manufacturing.” Paul Booth, vice president of project logistics in the Asia Pacific at Agility

Logistics, pointed to huge commitments made to building new power station capacity through 2020 at an estimated cost of US$80 billion and a budget of US$55 billion for seaport extensions. He said that although the oil Paul Booth price had collapsed, demand from major projects in Indonesia has, so far at least, been resilient. “With regards to oil and gas we don’t expect any drastic drops in the near

NOTABLE LOCATIONS AT A GLANCE Port

B i nj ai

Medan

City

K u a la Ta n j u n g

Province

R IAU

KALIMANTAN Ba lik pa pa n

S U M AT R A

SUL AW ESI Tan ju n g Prio k J AVA

78 BREAKBULK MAGAZINE www.breakbulk.com

MARCH-APRIL 2015

logistics perspective

future,” he added. “BP, Chevron and ENI will continue with their mega projects. Apart from that oil prices may recover by end 2015 or early 2016. “Mining is a little more problematic, but again major players like Freeport and Vale intend to go ahead with their expansion projects. Besides, due to the Indonesian Mining Law, lots of smelters need to be built,” Booth said. GAC Indonesia is also optimistic about Indonesia. The company’s

operations are conducted via two longstanding alliances with local partners – PT Andhika Lines for shipping and the Samudera Group for logistics services. “The development of new infrastructure and facilities, coupled with the recovery in regional and international trade, will give rise to a greater demand,” said Pramodh Ellath, general manager of GAC Samudera Freight Services. “The question is how soon and fast can the development take place and

be completed. Indonesia has announced an addition of 40,000 megawatts of power, and this will have good project movements. With the ban on export of raw minerals, new smelters are being planned and this constitutes a major investment plan. “Project cargo handlers are likely to benefit as companies import machines, construction equipment, facility components and other goods for these facilities.” BB

OBSTACLES TO DOING BUSINESS Indonesia’s byzantine border controls, murky legal environment and long history of institutional corruption places the country at the low rank of 107th out of 175 nations in Transparency International’s Corruption Perception Index. And these are just some of the factors that make doing business in Indonesia difficult. Domestic ocean transport costs between its hundreds of populated islands are also often prohibitively expensive and inefficient due to the poor quality of the national fleet, the enforcement of cabotage laws and the poor management of state-owned ports. Ministries and government agencies in many areas have overlapping powers that undermine efforts to enforce laws and regulations and often renders obtaining the correct permits and licenses a lottery. As a result, the World Bank’s Doing Business report for 2015 ranks Indonesia 114th out of 189 economies for ease of conducting business. Compared to East Asia and Pacific averages, Indonesia was behind in every measure. However, its lack of infrastructure is perhaps the biggest drain on industry and one of the main reasons for the country’s poor logistics performance. The World Bank’s Logistics Performance Index (LPI) uses six

80 BREAKBULK MAGAZINE www.breakbulk.com

metrics to measure overall logistics performance: • Customs efficiency. • Infrastructure quality. • Ease of arranging international shipments. • Logistics quality and competence. • Tracking and tracing ability. • Timeliness of shipments. Each metric and the overall score is measured up to 5. In the 2014 Index, Indonesia was ranked 53rd globally and 12th in the Asia Pacific with a score of 3.08 out of 5. Its infrastructure score was 2.92, placing it behind Malaysia (3.56), Thailand (3.40) and Vietnam (3.11). “Ti estimates that at present logistics costs account for 24 percent of GDP. This acts as a major drag on economic growth and the attraction of foreign direct investment,” explained Ti analyst David Buckby. Another glaring weakness is how difficult it is to arrange international shipments in Indonesia, which scored 2.87 and ranked 74th globally in the latest LPI, substantially behind its four ASEAN competitors. It also ranked poorly for customs efficiency and tracking and tracing and was in the middle of the pack for logistics competence and timeliness. All of which makes Indonesia a hard place to operate for specialist

logistics providers. “Infrastructure to handle the projects segment in Indonesia is still lacking if we compare it to peers in South East Asia,” said Jakob Friis Sorensen, managing director of Maersk Indonesia. “Different capabilities between Indonesia ports to handle project cargo has become one of the main challenges, especially outside Java. This often means dependency on high-cost land transport.” Francois Traversa, managing director of Andhika GAC Indonesia, also pointed to the very different cultures found on Indonesia’s islands. “The lack of adequate and proper infrastructure and cultural diversity are some of the challenges for heavy-lift project operations in Indonesia,” he said. “Customs clearance, government regulations, road and Francois Traversa traffic conditions and obtaining the necessary permits and approvals can affect the speed at which project cargoes are cleared and delivered to the destination. Hence, careful planning is imperative for every project move, and involves taking into account special requirements and permits to route surveys.”

MARCH-APRIL 2015

port news

Brazil President Dilma Rousseff (right) and Luiz Careiro, president of MultiCar and MultiRio (left).

RIO TOASTS ‘PORT OF THE FUTURE’ Project, Container Complex Boasts Expansive Quay By Rob Ward

io de Janeiro’s leading breakbulk terminals saw the first phase of a Reais1.8 billion (US$557 million) expansion scheme inaugurated by Brazil President Dilma Rousseff at the city’s Caju quayside. Rousseff, whose second term as president is under fire for wrongdoing at state-controlled oil and transport company Petrobras, officiated at the opening of the newly extended 1.86-kilometer quay for the MultiCar car terminal and MultiRio (both part of the Multiterminais holding group) along with the neighboring LibraRio container terminal. The new quay is believed to be the longest continuous quay in South America. MultiRio is a project cargo and container facility, and handles about 95 percent of all project cargo in/out of Rio de Janeiro, including heavy machinery for the Comperj refinery the other side of

Guanabara Bay and for projects related to last year’s soccer World Cup and next year’s Rio Olympics. The three complexes together have been christened Porto do Futuro (Port of The Future) and a new link road and tunnel will be built to move cargoes directly from the Caju area to Avenida Brasil, thereby reducing congestion in the center of Rio de Janeiro. Luiz Carneiro, president of MultiCar and MultiRio, said MultiRio now has 1 million TEUs of annual capacity, up from 670,000 TEUs prior to the Porto do Futuro expansion. The pier extension added 800 meters to MultiRio and up to 260 meters for MultiCar plus an additional 15 meters using dolphins. Additional equipment includes bringing ship-to-shore gantry cranes from five to nine, and adding 28 rubber-tired gantries. A new dredging contract signed by the Special Ports Ministry (SEP) will improve the minimum draft for the three terminals to 15 meters, from 13 meters currently, by the end of next year. Future plans would

deepen draft to 17 meters. The expansion will see Multi-Car eventually increase its annual capacity 36 percent to 326,000 vehicles. The vehicle terminal has already seen a number of modifications including the addition of covered parking for 7,000 vehicles. “Over the last decade, we have seen an increase in the size of ships at an unprecedented pace, all seeking economies of scale,” Carneiro said at the ceremony for the expansion. “As the vessel sizes grew, we were gradually losing the ability to operate two ships simultaneously. If nothing was done, we would have lost about one-third of our installed capacity, along with the ability to provide an efficient and competitive service, since international best practice dictates a container terminal must have a minimum of two berths.” Rousseff’s second term as president is reeling under pressure over Petrobras. She claims no knowledge of the bribery scandal despite being on the board during some of the years under investigation. BB www.breakbulk.com BREAKBULK MAGAZINE 81

opinion

DIGGING OUT

Managing Risks Associated with Port Disruptions By Jason Odgers and Jason Palumbo

W Jason Odgers

Jason Palumbo

Credit: Shutterstock 82 BREAKBULK MAGAZINE www.breakbulk.com

hile the U.S. Northeast and Midwest continue to dig out from the onslaught of this winter’s record snowfall, the West Coast must now dig out from under the backlog of cargo resulting from the protracted labor dispute between the International Longshoreman and Warehouse Union and Pacific Maritime Association. Although the labor dispute has been resolved, experts anticipate that it may take several months to work through the congestion. Unfortunately, cargo will continue to be exposed to increased levels of risk until shipment patterns return to normal. Whether it’s containerized cargo or breakbulk, heavy-lift or project cargo, there are several specific issues about which cargo owners and transportation providers should remain vigilant: Accumulation: Cargo at rest is cargo at risk, and when cargo idles on a ship, at the port or in a warehouse, the likelihood of damage or theft increases significantly. Even when Shipper’s Interest Cargo Insurance is purchased, extensive delays can lead to coverage insufficiency. Policyholders should make certain that cargo values are monitored throughout a disruption, as choke points within the supply chain may result in accumulations beyond standard policy limits. These limits are commonly expressed in terms of “one conveyance/one place/one time.” Any exposures in excess of those policy limits are “held covered” pending the timely reporting of the expo-

sures to underwriters, who may require payment of additional premium. Finally, most cargo insurance policies stipulate a maximum liability in the event of unintentional accumulation, and excess losses are excluded entirely. Delay: Losses due to delay are specifically excluded by most cargo insurance policies. Some commodities have a limited shelf life or increased susceptibility to atmospheric conditions. Even if cargo is transported in a temperaturecontrolled unit, losses resulting from the withholding of power, fuel or labor may be excluded from coverage. These losses are not fortuitous or accidental and therefore are not covered. Cargo policies do not address the risks of lost sales, profits or markets, as these are consequential financial losses and not physical loss or damage to the cargo. Finally, additional costs associated with expediting replacement freight via alternative modes or routes are not recoverable under most cargo insurance policies absent cargo loss or damage resulting from a covered peril. Force Majeure: During a labor disruption, carriers may declare “force majeure,” meaning forces beyond their control precluded them from fulfilling their obligations under the contract of carriage. The carrier is then permitted to discharge cargo at an alternate port and terminate the contract of carriage. Force majeure requires the cargo owner to move the cargo, at its own expense, to its final destination. Consider the following points as they relate to insurance coverage: • Shipper’s Interest Cargo Insurance is not intended to cover the additional transportation costs realized. MARCH-APRIL 2015

• Cargo may be discharged in a country excluded from coverage, subject to special insuring conditions and/or additional premium. • Cargo transported by ocean under two separate bills of lading is considered “transshipped” and is excluded by most cargo insurance policies. Coverage may be further compromised if the second transit is via barge since many policies exclude barge transit except as a connecting conveyance. Intermediary Liability: Improper release of cargo is a common source of Errors & Omissions (E&O) claims, so after a disruption it is imperative that proper protocols are followed when releasing freight. Increased workload, confusion and urgency can easily result in misreleased freight and costly claims. Other examples of E&O claims resulting from port disruptions may include:

“The consequences of port disruptions have a broad impact throughout the supply chain.” • Negligent selection of underlying carrier or route. • Failure to advise client of potential delay. • Failure to monitor/advise client of impact to cargo insurance (accumulation/deviation, etc.). Finally, due to the “joint and several liability” clause included in most carriers’ terms and conditions, the intermediary can be held liable for unpaid freight and related charges if the cargo owner abandons their shipments. Intermediaries should consider purchasing extended coverage under their legal liability policy to address such exposures.

The consequences of port disruptions have a broad impact throughout the supply chain. The risks of accumulation, delay, force majeure and liability claims are only a few of the potential pitfalls. Cargo owners and transportation intermediaries should be aware of these risks, actively manage their exposures and maintain a regular dialogue with their insurance provider to preserve coverage. BB Jason Odgers is vice president of client development, and Jason Palumbo is product development and support coordinator of Roanoke Insurance Group.

www.breakbulk.com BREAKBULK MAGAZINE 83

technology

INTRODUCING THE NEW

BREAKBULK.COM Redesign Emphasizes Events, Images By Leslie Meredith

reakbulk.com has relaunched with an entirely new look and feel, with added features to provide information about Breakbulk events, publications and industry news faster than before. The biggest difference is a stronger 84 BREAKBULK MAGAZINE www.breakbulk.com

focus on Breakbulk events – displayed prominently on the homepage with quick access to each event’s full channel and links to registration for upcoming events. Each event section has been reorganized for faster access to the information you need at a given time. Within the menu, pages are organized by user, delegates and exhibitors. The revamped site is rich with large images of events and cargo moves.

There’s no doubt that over the past five years there has been a tremendous shift towards visual content across the Internet, from the rise of photo-centric social media sites like Instagram and Pinterest to the revamp of traditional news sites such as CNN and BBC. Why? Scientists have found our brains process pictures 60,000 times faster than text, and in today’s world of media overload, we want your Breakbulk minutes to be as engaging and informative as possible. Fortunately in this industry great industry visuals are easily within reach. Breakbulk transporters move the world’s biggest cargoes to destinations around the globe. Photos and video convey the scale of these massive moves and are always engaging. Likewise, images capture the crowds and camaraderie found at Breakbulk events. That’s why you’ll see large photos accompanying each news story, along with photo galleries, slideshows and videos throughout the site. All of our event and news photos can be viewed in one location, on Breakbulk’s Flickr account at flickr.com/photos/ breakbulk-events. Behind the scenes, added features make the website responsive. Pages automatically adjust to the size of a device’s screen, from a small smartphone to the largest desktop monitor or bigscreen TV. The platform has also been fine-tuned for faster loading times and greater stability. But our development doesn’t stop with this launch. Moving forward, expanding the site’s language options will better suit the preferences of Breakbulk’s global audience. We’re also looking at ways to streamline the materials submission process for exhibitors and sponsors. If you have features, news stories and press releases you’d like to see added to Breakbulk.com, send them to lmeredith@breakbulk.com. Include at least one high-resolution image. The website can also showcase complex movements, with photos and video along with a description of the job. Breakbulk.com can help build connections throughout this dynamic industry. BB MARCH-APRIL 2015

INDEX

reakbulk cargo is an eclectic mix, encompassing forest products, steel, pressure vessels, windmill blades, rolling stock and out-of-gauge items. With this in mind, BREAKBULK INDEX data ranges from steel production to details of planned capital projects. The global nature of today’s breakbulk and heavy-lift sectors requires transportation professionals to be on top of economic trends worldwide, which calls for inclusion of focused macro-economic data on prices and events that affect EPCs, the breakbulk community and the multipurpose fleet.

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FORWARDING INDEX

FOREST PRODUCTS: PULP INDEX

EUROPEAN FREIGHT FORWARDING INDEX

EUROPE

The index, based on European forwarders’ actual and expected freight volumes, remains below 50 although August marked an increase. Values below 50 on the zeroto-100 scale indicate a decline. Actual

2012

FORWARDING INDEX

bb index

2013

125

Forecast

100

O N D

J F

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F 2012

2013

2014

2015

NORTH AMERICA

A M

Delivered pulp prices were normalized to 100 in January 2000 and are based on average US$ prices of northern and southern bleached softwood kraft, bleached eucalyptus kraft, and northern bleached hardwood kraft pulp weighted by production volume.

J J

175

A S

150

O 125

2014

100

J F

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F 2012

A M

2013

2014

2015

ASIA

J A

Pulp prices cost, insurance and freight to main East and Southeast Asian ports were normalized to 100 in January 2003 and are based on average US$ prices of northern, southern and Russian bleached softwood, radiata, eucalyptus and mixed tropical hardwood pulp weighted by production volume.

175

150

N D 2015

125

100

A 0

Source: Danske Market Equities, www.danskebank.dk

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F 2012

2013

2014

2015

Source: RISI, www.risi.com

Credit: Shutterstock

FOREST PRODUCTS

Pulp prices cost, insurance and freight to main European ports were normalized to 100 in January 2000 and are based on average euro prices of northern and southern bleached softwood and eucalyptus kraft and northern bleached hardwood kraft pulp weighted by production volume.

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MARCH-APRIL 2015

LOGISTICS

LOGISTICS PERFORMANCE INDEX 2014

The LPI index is a multidimensional assessment of logistics performance, rated on a scale from 1 (worst) to 5 (best). The six core components captured by the LPI survey are rated by respondents on a scale of 1–5, where 1 is very low or very difficult and 5 is very high or very easy, except for question 15, where 1 is hardly ever and 5 is nearly always. LOGISTICS TRACKING INTERNATIONAL QUALITY AND AND LPI RANK LPI SCORE CUSTOMS INFRASTRUCTURE SHIPMENTS COMPETENCE TRACING TIMELINESS % OF LOWER UPPER LOWER UPPER HIGHEST ECONOMY RANK BOUND BOUND SCORE BOUND BOUND PERFORMER RANK SCORE RANK SCORE RANK SCORE RANK SCORE RANK SCORE RANK SCORE

Germany 1 1 1 4.12 4.07 4.17 100.0 Netherlands 2 2 5 4.05 3.97 4.12 97.6 Belgium 3 1 6 4.04 3.96 4.13 97.5 U.K. 4 2 5 4.01 3.96 4.07 96.6 Singapore 5 2 7 4.00 3.95 4.06 96.2 Sweden 6 1 20 3.96 3.68 4.24 94.9 Norway 7 1 19 3.96 3.69 4.22 94.8 Luxembourg 8 1 21 3.95 3.65 4.24 94.4 U.S. 9 6 10 3.92 3.87 3.97 93.5 Japan 10 6 12 3.91 3.85 3.97 93.4 Ireland 11 5 17 3.87 3.73 4.01 91.9 Canada 12 9 17 3.86 3.77 3.95 91.5 France 13 9 17 3.85 3.77 3.92 91.2 Switzerland 14 11 17 3.84 3.78 3.91 91.1 Hong Kong SAR, China 15 11 17 3.83 3.77 3.89 90.5 Australia 16 11 17 3.81 3.74 3.88 90.0 Denmark 17 2 28 3.78 3.52 4.05 89.1 Spain 18 17 23 3.72 3.63 3.80 87.1 Taiwan, China 19 16 23 3.72 3.62 3.81 87.0 Italy 20 18 23 3.69 3.64 3.74 86.2 Korea, Rep. 21 18 25 3.67 3.58 3.75 85.4 Austria 22 11 35 3.65 3.41 3.89 84.8 New Zealand 23 5 39 3.64 3.28 4.01 84.7 Finland 24 9 39 3.62 3.32 3.93 84.0 Malaysia 25 22 28 3.59 3.52 3.66 83.0 Portugal 26 18 39 3.56 3.34 3.78 82.0 U.A.E. 27 25 32 3.54 3.48 3.60 81.3 China 28 26 32 3.53 3.48 3.59 81.1 Qatar 29 20 39 3.52 3.34 3.70 80.6 Turkey 30 26 35 3.50 3.43 3.57 80.1 Poland 31 24 38 3.49 3.35 3.64 79.9 Czech Rep. 32 21 39 3.49 3.31 3.67 79.8 Hungary 33 25 39 3.46 3.32 3.61 78.9 South Africa 34 24 43 3.43 3.23 3.64 77.9 Thailand 35 29 39 3.43 3.33 3.53 77.8 Latvia 36 25 44 3.40 3.20 3.61 77.0 Iceland 37 22 49 3.39 3.13 3.65 76.6 Slovenia 38 26 43 3.38 3.20 3.56 76.3 Estonia 39 20 58 3.35 3.00 3.69 75.1 Romania 40 34 54 3.26 3.08 3.44 72.4 Israel 41 36 50 3.26 3.11 3.41 72.4 Chile 42 38 50 3.26 3.12 3.39 72.3 Slovak Rep. 43 33 55 3.25 3.03 3.48 72.2 Greece 44 40 52 3.20 3.08 3.32 70.5 Panama 45 38 57 3.19 3.00 3.38 70.3 Lithuania 46 33 66 3.18 2.88 3.47 69.8 Bulgaria 47 40 57 3.16 3.00 3.31 69.1 Vietnam 48 40 59 3.15 2.99 3.32 69.0 Saudi Arabia 49 45 51 3.15 3.10 3.20 68.8 Mexico 50 44 55 3.13 3.03 3.23 68.2 Malta 51 39 69 3.11 2.85 3.36 67.5 Bahrain 52 20 124 3.08 2.45 3.71 66.7 Indonesia 53 40 66 3.08 2.89 3.27 66.7

2 4.10 1 4 3.96 3 11 3.80 8 5 3.94 6 3 4.01 2 15 3.75 9 1 4.21 4 10 3.82 15 16 3.73 5 14 3.78 7 12 3.80 16 20 3.61 10 18 3.65 13 7 3.92 11

4.32 4 4.23 11 4.10 2 4.16 12 4.28 6 4.09 3 4.19 30 3.91 1 4.18 26 4.16 19 3.84 27 4.05 23 3.98 7 4.04 15

3.74 3 4.12 1 4.17 4 4.36 3.64 2 4.13 6 4.07 6 4.34 3.80 4 4.11 4 4.11 2 4.39 3.63 5 4.03 5 4.08 7 4.33 3.70 8 3.97 11 3.90 9 4.25 3.76 6 3.98 7 3.98 8 4.26 3.42 1 4.19 31 3.50 5 4.36 3.82 14 3.78 22 3.68 1 4.71 3.45 7 3.97 2 4.14 14 4.14 3.52 11 3.93 9 3.95 10 4.24 3.44 9 3.94 3 4.13 16 4.13 3.46 10 3.94 8 3.97 11 4.18 3.68 15 3.75 12 3.89 13 4.17 3.58 16 3.75 18 3.79 21 4.06

17 3.72 14 9 3.85 12 13 3.79 17 19 3.63 20 21 3.55 24 29 3.36 19 24 3.47 18 23 3.53 25 6 3.92 22 8 3.89 28 27 3.37 26 31 3.26 31 25 3.42 21 38 3.21 23 37 3.21 29 34 3.23 27 32 3.26 46 33 3.24 36 48 2.97 40 42 3.11 38 36 3.21 30 35 3.22 51 22 3.54 33 41 3.11 32 26 3.40 35 59 2.83 64 43 3.10 45 39 3.17 41 52 2.89 37 28 3.36 42 40 3.15 52 44 3.04 39 64 2.75 53 61 2.81 44 56 2.86 34 70 2.69 50 46 3.00 47 30 3.29 49 55 2.87 56

3.97 14 4.00 18 3.82 9 3.77 21 3.64 5 3.78 17 3.79 28 3.64 40 3.67 8 3.52 20 3.56 10 3.37 29 3.70 43 3.67 22 3.44 16 3.53 48 3.08 24 3.29 13 3.18 32 3.20 25 3.40 39 3.03 33 3.34 49 3.35 57 3.34 34 2.77 36 3.11 96 3.17 53 3.22 38 3.17 62 3.00 47 3.18 55 2.94 37 3.11 42 3.34 70 3.04 46 3.08 41 3.04 58 2.92 74

3.58 13 3.81 13 3.87 18 4.00 3.52 17 3.75 16 3.81 26 4.00 3.65 18 3.74 36 3.36 3 4.39 3.51 12 3.83 26 3.54 17 4.07 3.71 25 3.60 17 3.79 25 4.02 3.54 23 3.62 14 3.84 22 4.05 3.44 21 3.66 21 3.69 28 4.00 3.26 26 3.56 10 3.93 23 4.04 3.67 27 3.56 38 3.33 40 3.72 3.52 19 3.72 39 3.31 38 3.80 3.64 32 3.47 23 3.58 31 3.92 3.43 20 3.71 20 3.71 35 3.87 3.20 31 3.50 24 3.57 32 3.92 3.50 35 3.46 29 3.50 36 3.87 3.55 28 3.55 32 3.47 34 3.87 3.18 22 3.64 19 3.77 41 3.68 3.46 33 3.47 27 3.54 15 4.13 3.59 29 3.51 25 3.56 39 3.73 3.40 37 3.33 15 3.82 20 4.06 3.45 24 3.62 41 3.30 33 3.88 3.30 38 3.29 33 3.45 29 3.96 3.38 42 3.21 30 3.50 19 4.06 3.15 34 3.46 35 3.38 53 3.51 3.05 30 3.51 28 3.51 37 3.82 3.34 39 3.27 47 3.20 49 3.55 3.32 43 3.20 34 3.39 27 4.00 2.71 36 3.35 46 3.20 12 4.18 3.12 44 3.19 40 3.30 44 3.59 3.30 46 3.16 63 3.02 30 3.94 2.97 40 3.23 61 3.03 54 3.50 3.18 68 2.87 37 3.34 42 3.63 3.10 57 2.99 49 3.17 43 3.60 3.31 55 3.00 76 2.88 24 4.04 3.22 49 3.09 48 3.19 56 3.49 2.93 48 3.11 54 3.15 47 3.55 3.19 47 3.12 55 3.14 46 3.57 3.23 54 3.00 52 3.15 81 3.15 3.04 51 3.04 42 3.29 119 2.80 2.87 41 3.21 58 3.11 50 3.53

continued on page 88 www.breakbulk.com BREAKBULK MAGAZINE 87

bb index continued from page 87 LOGISTICS TRACKING INTERNATIONAL QUALITY AND AND LPI RANK LPI SCORE CUSTOMS INFRASTRUCTURE SHIPMENTS COMPETENCE TRACING TIMELINESS % OF LOWER UPPER LOWER UPPER HIGHEST ECONOMY RANK BOUND BOUND SCORE BOUND BOUND PERFORMER RANK SCORE RANK SCORE RANK SCORE RANK SCORE RANK SCORE RANK SCORE

India 54 Croatia 55 Kuwait 56 Philippines 57 Cyprus 58 Oman 59 Argentina 60 Ukraine 61 Egypt, Arab Rep. 62 Serbia 63 El Salvador 64 Brazil 65 Bahamas, The 66 Montenegro 67 Jordan 68 Dom. Rep. 69 Jamaica 70 Peru 71 Pakistan 72 Malawi 73 Kenya 74 Nigeria 75 Venezuela, RB 76 Guatemala 77 Paraguay 78 Côte d’Ivoire 79 Rwanda 80 Bosnia and Herzegovina 81 Maldives 82 Cambodia 83 Sao Tom. & Principe 84 Lebanon 85 Ecuador 86 Costa Rica Kazakhstan 88 Sri Lanka 89 Russian Fed. 90

49 40 44 44 40 50 52 51

56 76 77 78 92 69 68 71

40 99 47 80 51 74 56 70 51 86 47 104 56 86 51 102 44 125 60 90 55 106 56 104 50 120 59 100 60 99 66 92 66 96 60 112 56 120

3.08 3.01 3.05 2.8 3.01 2.79 3 2.78 3 2.67 3 2.85 2.99 2.87 2.98 2.84

3.15 3.3 3.23 3.23 3.33 3.14 3.1 3.11

66.6 65.8 64.4 64.2 64.1 63.9 63.6 63.3

65 2.72 58 50 2.95 55 68 2.69 43 47 3 75 53 2.88 59 74 2.63 57 85 2.55 63 69 2.69 71

2.97 2.63 3.3 2.96 2.75 3.17 2.96 2.81 3.11 2.94 2.84 3.05 2.91 2.7 3.12 2.88 2.59 3.16 2.87 2.7 3.05 2.86 2.61 3.11 2.84 2.45 3.24 2.84 2.69 2.99 2.83 2.59 3.06 2.81 2.59 3.03 2.81 2.48 3.14 2.81 2.62 3 2.81 2.63 2.99 2.8 2.66 2.93 2.78 2.64 2.92 2.76 2.53 2.99 2.76 2.49 3.03

63 62.9 62.8 62.3 61.2 60.1 60 59.6 59 59 58.5 58.1 58 57.9 57.9 57.6 57 56.4 56.3

57 2.85 60 113 2.37 66 51 2.93 72 94 2.48 54 45 3 65 60 2.83 62 78 2.6 76 80 2.58 73 54 2.88 61 96 2.47 67 58 2.84 69 62 2.79 48 151 1.96 102 117 2.35 83 109 2.39 74 63 2.75 88 90 2.49 97 120 2.33 101 89 2.5 113

2.88 2.92 3.16 2.6 2.87 2.88 2.83 2.65

44 61 89 35 60 31 64 67

3.2 52 2.98 56 2.76 59 3.33 61 3.01 63 3.41 73 2.96 62 2.95 72

3.03 57 3.11 51 3.51 3 59 3.11 62 3.37 2.96 50 3.16 60 3.39 2.93 64 3 90 3.07 2.92 65 3 65 3.31 2.84 80 2.84 67 3.29 2.93 53 3.15 55 3.49 2.84 45 3.2 52 3.51

2.86 77 2.73 54 2.63 45 2.93 81 2.74 63 2.84 51 2.59 65 2.61 71 2.84 86 2.72 69 2.67 56 3.04 108 2.4 50 2.56 107 2.61 68 2.54 76 2.46 79 2.41 75 2.32 88

2.87 58 3.12 53 3.2 45 2.8 50 2.96 64 3.15 117 2.96 60 2.93 65 2.79 84 2.94 76 3.08 75 2.63 70 3.15 90 2.63 85 2.94 77 2.87 87 2.83 78 2.87 95 2.78 92

2.99 43 3.23 99 2.99 3.02 69 2.94 48 3.55 3.16 66 3 128 2.75 3.05 62 3.03 61 3.39 2.92 99 2.64 72 3.19 2.45 84 2.76 73 3.19 2.94 96 2.67 58 3.46 2.91 72 2.91 76 3.18 2.72 89 2.72 83 3.14 2.78 83 2.81 66 3.3 2.79 86 2.73 123 2.79 2.86 100 2.63 100 2.99 2.65 60 3.03 45 3.58 2.7 51 3.16 57 3.46 2.76 70 2.92 74 3.18 2.68 93 2.68 68 3.24 2.76 74 2.89 70 3.22 2.62 67 2.97 64 3.31 2.64 68 2.94 63 3.34 2.73 107 2.55 59 3.44 2.79 92 2.7 148 2.51 2.67 71 2.92 129 2.75

62 114 2.75 2.52 2.97 56 124 2.75 2.45 3.04 56 125 2.74 2.44 3.04

56 105 2.41 84 56 49 2.95 82 55.8 71 2.67 79

2.55 87 2.56 72 2.58 78

2.78 81 2.92 74 2.83 89

56 52 67 87 66 67 78

55.5 55.3 54.8 2.87 54.4 54.3 54.3

2.59 66 2.53 118 2.5 83 99 2.43 2.38 100 2.23 115 2.59 102

2.95 109 2.5 56 3.13 125 2.77 2.53 67 2.89 44 3.22 108 2.89 2.79 97 2.61 95 2.67 77 3.18 106 2.63 69 2.86 82 2.83 95 2.68 83 2.72 81 2.83 69 3.24 2.56 66 2.91 85 2.76 85 3.12 2.64 80 2.74 79 2.85 84 3.14

124 135 112 69 121 120 103

2.73 2.46 2.73 2.36 2.71 2.53 112 2.7 2.7 2.47 2.7 2.48 2.69 2.6

3.01 3.1 2.89 2.53 2.93 2.91 2.79

103 2.42 78 124 2.29 89 92 2.49 94 54.5 110 2.39 121 2.33 106 84 2.56 126 133 2.2 77

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MARCH-APRIL 2015

Uruguay

70 115 2.68 2.51 2.85

53.8

111 2.39 90

2.51 103

2.64 100

2.58 75 2.89 91 3.06

LOGISTICS TRACKING INTERNATIONAL QUALITY AND AND LPI RANK LPI SCORE CUSTOMS INFRASTRUCTURE SHIPMENTS COMPETENCE TRACING TIMELINESS

% OF LOWER UPPER LOWER UPPER HIGHEST ECONOMY RANK BOUND BOUND SCORE BOUND BOUND PERFORMER RANK SCORE RANK SCORE RANK SCORE RANK SCORE RANK SCORE RANK SCORE

Armenia 92 60 136 2.67 2.35 2.99 Namibia 93 64 136 2.66 2.35 2.96 Moldova 94 67 127 2.65 2.42 2.89 Nicaragua 95 67 127 2.65 2.42 2.88 Algeria 96 67 127 2.65 2.40 2.90 Colombia 97 72 125 2.64 2.45 2.83 Burkina Faso 98 60 143 2.64 2.29 2.99 Belarus 99 70 127 2.64 2.42 2.85 Ghana 100 66 138 2.63 2.33 2.93 Senegal 101 58 146 2.62 2.24 3.00 Liberia 102 67 134 2.62 2.36 2.88 Honduras 103 78 127 2.61 2.42 2.79 Ethiopia 104 49 158 2.59 2.04 3.15 Nepal 105 77 132 2.59 2.38 2.80 Sol. Islands 106 72 137 2.59 2.34 2.84 Burundi 107 61 154 2.57 2.15 2.99 Bangladesh 108 81 133 2.56 2.37 2.76 Benin 109 64 153 2.56 2.16 2.96 Tunisia 110 72 144 2.55 2.27 2.83 Fiji 111 52 158 2.55 1.99 3.10 Angola 112 77 143 2.54 2.29 2.80 Chad 113 66 154 2.53 2.14 2.92 Tajikistan 114 85 138 2.53 2.32 2.73 Mauritius 115 73 148 2.51 2.22 2.81 Georgia 116 91 138 2.51 2.33 2.69 Macedonia, FYR 117 86 143 2.50 2.28 2.71 Libya 118 86 143 2.50 2.28 2.72 Mali 119 79 148 2.50 2.22 2.77 Botswana 120 70 154 2.49 2.14 2.84 Bolivia 121 78 152 2.48 2.16 2.8 Guinea 122 91 146 2.46 2.24 2.69 Zambia 123 73 154 2.46 2.10 2.82 Guyana 124 93 144 2.46 2.26 2.66 Azerbaijan 125 81 154 2.45 2.15 2.75 Papua New Guinea 126 86 154 2.43 2.15 2.71

53.6 75 2.63 107 53.1 125 2.27 81 53.0 98 2.46 85 53.0 72 2.66 130 52.8 66 2.71 87 52.5 79 2.59 98 52.5 88 2.50 111 52.5 87 2.50 86 52.1 130 2.22 70 52.0 76 2.61 116 51.9 83 2.57 80 51.5 67 2.70 124 51.0 102 2.42 134 50.9 123 2.31 122 50.8 91 2.49 96 50.2 77 2.60 104 50.1 138 2.09 138 50.0 73 2.64 109 49.7 146 2.02 118 49.5 106 2.40 95 49.4 114 2.37 140 49.0 97 2.46 112 48.9 115 2.35 108 48.5 128 2.25 91 48.3 131 2.21 100

2.38 90 2.57 97 2.55 52 2.20 98 2.54 117 2.44 95 2.35 105 2.55 91 2.67 93 2.30 59 2.57 114 2.24 85 2.17 121 2.26 104 2.46 146 2.40 111 2.11 80 2.35 99 2.30 73 2.47 94 2.11 84 2.33 136 2.36 92 2.50 109 2.42 138

2.75 79 2.75 114 2.50 98 3.00 2.70 86 2.69 106 2.56 82 3.15 3.14 118 2.44 131 2.35 109 2.89 2.69 98 2.58 104 2.58 79 3.17 2.54 102 2.54 109 2.54 94 3.04 2.72 91 2.64 108 2.55 111 2.87 2.63 94 2.63 115 2.49 71 3.21 2.74 116 2.46 113 2.51 93 3.05 2.73 121 2.37 73 2.90 113 2.86 3.03 103 2.53 98 2.65 146 2.53 2.57 71 2.86 105 2.57 144 2.57 2.79 112 2.47 101 2.61 121 2.79 2.50 96 2.62 97 2.67 78 3.17 2.64 107 2.50 87 2.72 92 3.06 2.22 82 2.72 88 2.72 102 2.96 2.60 106 2.51 112 2.51 126 2.76 2.82 93 2.64 122 2.45 75 3.18 2.69 123 2.35 123 2.45 115 2.85 2.91 120 2.42 124 2.42 80 3.16 2.72 139 2.22 118 2.47 101 2.97 2.79 128 2.31 103 2.59 96 3.02 2.33 125 2.34 90 2.71 97 3.02 2.73 113 2.47 119 2.47 133 2.74 2.63 110 2.48 133 2.34 110 2.88 2.32 119 2.44 102 2.59 87 3.09

48.0 116 2.35 92 47.9 104 2.41 119 47.9 141 2.08 129 47.8 112 2.38 125 47.4 108 2.40 133 46.9 119 2.34 141 46.9 86 2.54 115 46.7 99 2.46 105 46.4 82 2.57 68

2.50 132 2.29 140 2.20 82 2.23 129 2.17 135 2.10 125 2.31 152 2.4 128 2.71 113

2.38 105 2.29 131 2.80 142 2.42 99 2.35 88 2.47 124 2.13 114 2.43 133 2.57 149

2.51 121 2.46 118 2.81 2.29 78 2.85 114 2.85 2.20 91 2.70 106 2.90 2.58 127 2.40 103 2.94 2.68 94 2.68 141 2.60 2.35 126 2.41 86 3.10 2.47 120 2.47 105 2.91 2.27 117 2.47 131 2.74 2.14 148 2.14 143 2.57

45.8

2.23

2.47

107

2.40 127

126

115

141

2.27 135

2.73

Note: The relative LPI score is obtained by normalizing the LPI score: Percentage of highest performer = 100 Å~ [LPI – 1] / [LPI highest – 1]. Thus, the best performer has the maximum relative LPI score of 100 percent.

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www.breakbulk.com BREAKBULK MAGAZINE 89

opinion

SILK BY LAND, SILK BY SEA

C By Janet Nodar

“China appears ready to pour its billions into willing trade partners.”

hina is pivoting west, and fast. Its much-discussed “Silk Road” land and sea trade lane initiatives will affect far more than the Asian market, and the recent decisions of European countries including France, Germany and the U.K. to join in the China-backed Asian Infrastructure Investment Bank, despite U.S. disapproval, show their grasp of this reality. These ambitious initiatives have interesting implications for the project logistics transportation industry. The Silk Road Economic Belt and the 21st Century Maritime Silk Road initiatives, to give them their official titles, were first proposed in 2013 by Chinese President Xi Jinping. China’s envisioned “belt” is a land-based path of road and rail that crosses Eurasia from China to Turkey, loops up through Eastern Europe to Moscow and then down through Western Europe to Rotterdam and Venice. The maritime “road” knits together China, Southeast and South Asia, the Indian Ocean, East Africa, the Middle East and the Mediterranean. Precisely how China’s ambitions will be achieved remain to be seen, but earlier this year Beijing began preparing a raft of new free trade agreements and RMB offshore clearing centers that included the UK, Germany, France and Canada, according to global reports. Overall investment and trade in the Silk Road idea has trillion-dollar potential. Meanwhile, China’s slowing economy means it has a wealth of idle capacity to export. Building roads, ports, rail, pipelines, air and Internet connections across Southeast Asia, the Middle East, North Africa and Europe would use up a lot of its not-sobusy steel, manufacturing and construction industries. China appears ready to pour its billions into willing trade partners, naming hungry Greece, for example, as potential EU bestie and continental gateway. Will China favor Chinese project transport providers as this vast project unfolds,

90 BREAKBULK MAGAZINE www.breakbulk.com

or will global providers get a fair shot at the business? According to knowledgeable observers attending this year’s Breakbulk China Exhibition, we can expect China to move toward more inclusive international business standards over the next few years – but the reality remains to be seen. Officially, China’s Silk Road strategy is all about the soft power of trade, about reigniting the ancient, intertwined Eurasian market, leaving politics out of the equation. However, plenty of risk remains. China’s avowed disinterest in other countries’ politics cuts both ways. Several African countries claim that they have felt the sting of a new generation of colonial-style exploitation thanks to Chinese investment. To assume that can’t happen elsewhere is hubristic. Additionally, corruption can be a ruinously expensive mistake in western nations, and Chinese business practices are not necessarily governed by western assumptions about the rule of law. China’s neighbors may not sympathize with its Silk Route ambitions, either. Russia, Myanmar and India all have land border disputes with China, while Japan disputes its maritime border. China also has trouble controlling some indigenous peoples in its western interior. Silk route investments would help China secure alternative routings and strengthen ties with new allies, potentially political rather than economic strategies. Still, investments in roads, rail, ports, power and other sorely needed infrastructure will be an enormous boon in the developing regions along the proposed modern silk routes; and nothing can happen without the breakbulk and project cargo transport industry’s involvement. BB

MARCH-APRIL 2015

30 Years of

Lighting the Way There’s a big reason RTM has been a trusted name in trans-ocean transport and logistics for more than three decades. It’s our unique door to shore approach to cargo management plus our friendly personalized service that’s been a hallmark of our company since the beginning. And while we’re proud of our heritage we’ve set a course for a bold new future including a new look to our brand, a beautiful new website and renewed dedication to offer the industry’s most competitive rates. Experience the new RTM

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