EVENT PREVIEW
CONTAINER SHIP VS MPV
CARRIERS IN THE BALANCE:
We asked Miroslav Jakab, Manager of Global Container Negotiations for FLUOR, five key questions about his criteria for selecting a carrier to ship project cargo in light of this very tough climate where decisions are critical – for everyone.
RELATED CONFERENCE SESSION Wednesday, 15 March 2017, 15:00 – 15:50
WEIGHING THE OPTIONS: ALTERNATIVES FOR HEAVY CARGO OCEAN TRANSPORT »
MODERATOR: Miroslav Jakab,
China Logistics Manager/Global Container Negotiation Manager, FLUOR
» Michael Juhler, Global Head of Special Cargo, MAERSK LINE
» Jum Gyu Kim, Managing
Director, SUPER RACK SHIPPING
» Oskar Orstadius, Global Segment Account Manager, Breakbulk and Project Cargo, HÖEGH AUTOLINERS
1
Obviously in this market, every carrier is hungry for cargo. Why are container carriers able to edge into this market?
Fluor manages an annual spend of US$16 billion in equipment, materials or services, so it is critical for us to be able to ensure equipment and materials arrive to project sites in a timely and cost-effective manner. We consider all options when making transport decisions to find the solution that is best for the logistics and infrastructure of that project. Over the last several years, we have seen the project transport market, which was traditionally dominated by multipurpose carriers, develop. One of the main factors is the entrance of container carriers into the project cargo segment. The market development over
CH12 BREAKBULK CHINA PREVIEW www.breakbulk.com/china
the past two years has emphasized this trend, with the demand for regular sailing with high frequency, economy of scales and global coverage. As a result, the modern container vessels, usually able to carry up to 500 tons of cargo, have become serious competitors to multipurpose vessels because they can offer frequent sailings, fast transit times and reasonable transport costs. However, multipurpose carriers still provide advantages, especially as good port infrastructure is needed for container vessels. In addition, you have to consider the lot size and with it connected the stowage plan and port time requirements. However, options are not limited to multipurpose and container carriers, as roll-on/roll-off carriers are also entering the project cargo market. We continue to see developments in this segment as providers adjust their operation models. Container carriers typically have fixed liner routes while MPVs and heavy-lift carriers are typically tramp carriers. Does a tramp carrier have an advantage in the project market?
2
Many consider HL carriers as carriers suitable of carrying cargo over 500 tons, so currently this is not in the container carrier’s scope. In addition, multipurpose carriers are not purely tramp carriers, as many have established regular liner or semi-liner service. Multipurpose carriers have several advantages, including their flexibility to accommodate multiple types of ports, ability to accommodate substantial amounts of heavy cargo and flexibility during shipping. For cargo owners, it is important to have a variety of carriers, such as multipurpose, roll-on/roll-off and container carriers that complement each other, so that we can make the best selection to support project needs.
ISSUE 6 / 2016
3
Do you see EPC engineers adapting project pieces so they can be transported in containers?
Our engineering and modularization teams work closely with logistics teams to optimize modular parameters for the maximum efficiency. State-of-the-art engineering solutions cannot be delivered without collaboration from specialized logistics teams. Transport is not only about the costs – our purpose is to have the right cargo, in the right place, at the right time. If we miss one of those elements, then we are being inefficient with our resources. Each project is different and poses its own challenges regarding the proper logistics; there is no “one size fits all” approach. For example, if there are shallow draft limitations, container carriers might not be the solution in that instance, but it may still be part of the overall project logistics plans. We also adapt cargo parameters to consider technical capabilities. We’ve already seen consolidation and collapse in the carrier segment. Do you think this will continue?
4
We are in the midst of a wave of consolidation in the container, multipurpose and heavy-lift carrier segments. The aim is to create a self-sustainable logistics model, where parties can be profitable, but deliver a level of capital efficiency that supports our project execution. Automation and electronic data exchange are bringing new aspects into the business model and hopefully can assist in creation of well balanced system in between two undesirable extremes – over-fragmented on one side and super monopolized on the other one.
In general, how would you characterize the project cargo market in China?
5
As one of the world’s fastest-growing economies, Chinese projects and customers have been significant for our company’s growth. China is a very important market for Fluor; we have had the opportunity to complete more than 350 projects across 20 provinces and municipalities. In recent years, the Chinese project market has not only concentrated on China but, in line with “One Belt, One Road” policy, rapidly expanded worldwide. Our belief in the long-term growth and the importance of China and the Asia-Pacific region is underscored by our joint venture with COOEC, COOEC-Fluor Heavy Industries Co., Ltd., that was announced in 2015. Through this joint venture, we own, operate and manage the Zhuhai Fabrication Yard, which is one of the world’s largest fabrication yards. The yard’s central, ocean-front location shortens shipping times to global markets. It is easily accessible to the region’s major cost-competitive suppliers and vendors, creating additional cost savings for our clients. Through this yard, we cannot only serve clients in Asia-Pacific, but around the world, creating numerous project cargo opportunities. BB
Zhuhai Fabrication Yard Fast Facts » Located on the South China Sea » Over 2 million square meters in size » Can accommodate the fabrication of modules weighing more than 50,000 tonnes » Current capacity is 150,000 tonnes per year, with a planned capacity of up to 400,000 tonnes by 2019
CREDIT: ZHUHAI FABRICATION YARD / FLUOR