Breakbulk Magazine November/December 2015 by Breakbulk Events & Media

Lesson In Banking n Back To The Future n Breaking The Mold n Crunch Time

NOVEMBER/ DECEMBER 2015

Cargoes Show No Loyalty To Multipurpose Sector

MUSCLING IN

contents

20 FLEET OUTLOOK

A LITTLE LIFT

Enhanced Lifting Capabilities Increasingly Popular

26 INFRASTRUCTURE

LESSONS IN BANKING

Calls For Stability On Ex-Im Charter

34 TRADE NOTES

BACK TO THE FUTURE

European Investment Plan Aims To Revive Growth

10 MUSCLING IN Cargoes Show No Loyalty To Multipurpose Sector

42 REGIONAL REVIEW

TURKMENISTAN PLAN

Overcoming Issues To Reach Gas Export Potential

48 EMERGING MARKETS

BREAKING THE MOLD New Argentina President Could Spur Breakbulk Revival

SPECIAL ADVERTISING SECTION

2016 BUYERS’ GUIDE

8 Editorial n 101 Cut From A Different Cloth n 102 Here And Now n 107 Breakbulk Americas Coverage 118 Breakbulk Middle East Coverage n 122 Photo Contest n 123 Breakbulk Index n 126 The Leapfrog Factor 4 BREAKBULK MAGAZINE www.breakbulk.com

NOVEMBER-DECEMBER 2015

Best Shipping Line 2015 Project Cargo

AFSCA

The Asian Freight & Supply Chain Awards

Best Shipping Line 2014 Project Cargo Best Maritime Cargo Provider 2014

contents

88 CARRIER PROFILE

RIGHTING THE SHIP Germany’s Rickmers-Linie Reverses Its Fortunes

92 CARGO TRENDS

CATTLE DRIVE

Changing Global Diets Propel Livestock Demand

56 CRUNCH TIME Industry Faces Skills, Talent Shortfall

education

96 CASE STUDY

INLAND INNOVATION

River Transport Option Offers Congestion Relief

103 THOUGHT LEADERS

A HEAVY LOAD Polish Haulers Penalized For Weight Excess

BONUS SECTION

2015 BREAKBULK HOLIDAY

6 BREAKBULK MAGAZINE www.breakbulk.com

NOVEMBER-DECEMBER 2015

editorial

COMING IN FROM THE COLD

T Gary Burrows

hat multipurpose vessel operators are struggling is hardly news. Ever since the recession, MPV carriers have been watching for evidence of a turnaround like children with noses pressed against windowpanes, searching for signs of winter’s first snowfall. In Carly Fields’ cover story though, (“Muscling In,” page 10) she reports that equally suffering container lines, including industry behemoth Maersk, are looking to horn in on breakbulk business to mitigate their own bleeding bottom lines. Meanwhile, all carriers keep building new ships, adding to the capacity glut, while new MPV entrants like d.ship scoop up second-hand ships, and partnerships are formed to pool resources in an attempt to live within razor-thin margins. Drewry Shipping Consultants’ Susan Oatway, in her analyses shared with Breakbulk in recent years, has sought the silver lining, seeing the potential for improvement on the horizon. However, in this issue there’s no pretense; only cold assessment. “Drewry has become increasingly pessimistic” for the MPV sector, not anticipating a turnaround until 2017 at the earliest (“A Little Lift,” page 20). Expectations continue for mergers and liquidations among carriers; rumors begin, hedging bets as to which ones are at risk of failing. All of this would normally bring glee from shippers equal to kids on a snow day. In the long-waged tug of war over rates, the carriers’ plights

8 BREAKBULK MAGAZINE www.breakbulk.com

would motivate shippers to give a vigorous yank on the rope. Each side has an elephant’s memory of when times were hard and the adversary showed no mercy. As 2015 turns to 2016, shippers have troubles of their own, however. Falling oil and gas prices have forced one of heavylift’s and project cargo’s core industries to scale back on plans, and that loss of business ripples outward impacting all. To flip a cliché, evaporating oil and gas prices are sinking all boats. CB&I’s Doug Hickey points out in a sidebar to Fields’ feature that there’s little upside for EPCs and shippers to low-ball carriers on rates. Carriers already warn that low margins are keeping them from maintaining their ships. Why risk the safety of your cargo, or have it hung up with an arrested vessel? This was a common theme among Breakbulk Americas sessions and shared by top executives at the VIP Leadership Summit: relationships carry the day (see event coverage, pages 107-120). Calls for collaboration have long been industry lip service – delivered by the side on the short end of the rate stick – and usually followed with a chorus of Kumbaya. But given the current environment, with no one holding the upper hand, it’s a matter of survival. Being able to serve customers through an effective, reliable partnership during the worst of times will pay dividends down the road. It’s better to nurture relationships in order to weather the storm until business finally heats up again.

EDITORIAL DIRECTOR Gary G. Burrows / +1 904 535 5460 gburrows@breakbulk.com NEWS EDITOR Carly Fields carly@breakbulk.com DESIGNER Catherine Dorrough REPORTERS Alan M. Field Mary Shacklett Lori Musser Mark Willis BREAKBULK EDITORIAL BOARD John Amos Amos Logistics

Ed Bastian

BBC Chartering

Murray Cooper

McDemott International Inc.

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Dennis Devlin DB Schenker

John Hark

Bertling Project Logistics

Dennis Mottola Bechtel Corp.

William Moyersoen

ArcelorMittal Antwerp Logistics

Albert Pegg

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Dirk Visser

Dynamar D.V.

Grant Wattman

Agility Project Logistics

MANAGING DIRECTOR Alli McEntyre / +353 87 381 4021 amcentyre@breakbulk.com ACCOUNT MANAGERS Kathleen Pinson / +1 678 954 0552 kpinson@breakbulk.com Manager for West, East & North Africa Kingsley Ekweariri / +353 89 952 4754 kekweariri@breakbulk.com

HEADQUARTERS Clifton House Lower Fitzwilliam Street Dublin 2 Ireland To subscribe, email bb.breakbulk@adsg.info, or call from inside the US +1 855 613 8186 between 8:00 am and 5:00 pm CST. A publication of ITE Group plc Transport & Logistics business 105 Salisbury Road London NW6 6RG, UK.

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Finding solutions

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cover story

The big container ship boys are keen for a slice of the MPV action. / Credit: Maersk Line 10 BREAKBULK MAGAZINE www.breakbulk.com

NOVEMBER/DECEMBER 2015

MUSCLING IN Cargoes Show No Loyalty To Multipurpose Sector By Carly Fields

ou don’t have to look very far to find evidence of container lines hemorrhaging cash; sales of red ink to the box-ferrying brethren have rocketed this year. And next year looks set to smash the upset of 2015. Add canceled sailings, laying up of ships amid continued deliveries, and threats of consolidation and you have an industry grasping at straws. Why should breakbulk, heavy-lift and project cargo specialists care about any of this? So what if container lines are hurting; they’ve had the good times, now they need to roll with the bad. But ignore these portends at your peril: as box trades deteriorate, container lines are desperately seeking alternative sources of revenue, mainly to appease anguished shareholders. While the likes of lower volume container carriers such as Taiwan’s Wan Hai or Turkey’s Arkas don’t pose much of a threat, the project cargo whims of the top container movers matter. “There is no doubt that the cyclical nature of ‘boom and bust’ is continuing in the container shipping industry,” said Dean Davison, principal consultant at Ocean Shipping Consultants, a company of Royal HaskoningDHV. “There are greater numbers of larger ships entering

trades that are already overtonnaged and with demand not matching the bigger capacity ships in service the economies of scale are not being gained – leading to poor profit margins and losses. “As a result I expect all container shipping lines to look more intensely at any and all possibilities that will help fill ships with cargo. I would expect this to include edging into geographic locations and ports that are more traditionally served by multipurpose ships.” Davison pointed Dean Davison out that many container lines also have capabilities for handling out-of-gauge and project cargoes. Some have specialist divisions to promote and attract these cargoes. Maersk Line heads the pack, but HapagLloyd, Mitsui O.S.K. Lines, UASC and Zim, to name a few, all offer out-of-gauge cargo handling. “It is a logical move because these operators have the ships, expertise and networks in place and demand exists for out-of-gauge and project cargoes to move globally,” Davison said. “I expect www.breakbulk.com BREAKBULK MAGAZINE 11

cover story

Specialist MPV operators offer in-depth knowledge of ‘difficult’ cargoes. / Credit: AAL

these areas to see much greater development and marketing from those lines primarily associated with containers with the objective of bringing muchneeded revenues.” The container lines’ struggles are well documented. A revised profit outlook from Maersk in the third quarter of 2015 honed in on the crisis in the key Asia-Europe liner trade, which accounts for about 40 percent of the line’s cargo volumes. Shortly after making the announcement, it emerged that one of its flagship 18,270-TEU Triple-E container ships would be heading for lay-up. A number of sailings in the first quarter of 2016 on the North Europe-toMediterranean trade have already been “blanked,” or canceled, in an attempt to shore up freight rates by removing some of the surplus capacity. But this is only a stopgap, say analysts; capacity needs 12 BREAKBULK MAGAZINE www.breakbulk.com

to be permanently removed to make any real dent in the downward slide. Shipping consultant Drewry expects 12 container ship deliveries in 2016, 22 in 2017, 22 in 2018 and five in 2019, the majority of which are destined for the sagging Asia-Europe trade. And more orders are rumored. Then there’s the consolidation. China’s main carriers COSCO and China Container Shipping Lines are expected to join forces; the rumor mill is working overtime on a potential partnership between South Korea’s Hyundai Merchant Marine and Hanjin Shipping; and NOL’s APL confirmed it was in merger talks with CMA CGM and Maersk in mid-November.

Carrying the Specials

While a near household name for its container shipping activities, Maersk is certainly less known for its so-called Special Cargo division. It deems special

cargoes as those that cannot be transported in conventional container sizes, but can still be transported on container ships. Its unique selling point is that it already has access to an established and far-reaching trade network through Maersk Line’s container services. Port facilities are the deciding factor about whether a special cargo can be carried, although there is also a 300-ton weight restriction to consider. Maersk sees special cargo as a strategic investment, and one that makes sense from a risk diversity point of view. Nikolaj Forsberg, global head of special cargo at Maersk Line, explained to Breakbulk that the line sees a pending switch from MPVs to container ships for project cargoes as a “third wave of conversion.” The first, more than 30 years ago, saw the conversion from specialized dry NOVEMBER/DECEMBER 2015

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cover story

bulk ships to dry containers; the second, some 15 years ago, led to a conversion from specialized reefer vessels to reefer containers. The third, in Forsberg’s view, will convert special cargoes from specialized breakbulk vessels to standardized equipment, such as open tops and flat racks. This third wave will see above-average market growth, expected Forsberg, as this conversion takes hold. “So even in the current slow growth environment we see short and mid-term, the conversion will boost the growth within the sector,” Forsberg said. “We are unable to quantify how much, but we forecast that we will outperform the normal market developments.” Cargoes can range from oversized vehicles to larger deliveries for infrastructure projects. Some breakbulk carriers contacted by Breakbulk were concerned, others less so. But all were keeping a weather eye on developments. Rickmers-Linie CEO Ulrich Ulrichs believes the MPV and heavy-lift sectors have to watch container lines, especially at base ports. While they are not necessarily flexible enough to call at some outports or Ulrich Ulrichs to compete for certain types of cargoes, their sheer size and the choices they are able to offer make them serious competition. “We can’t ignore them; some of our pricing is already dictated by how they price,” he said. Kyriacos PanKyriacos ayides, managing director of Singapore- Panayides based AAL, said that container lines are a threat for certain types of commodities, but not for wider project cargoes. “There is not much that traditional container lines can do to compete with the quality of engineering, hardware, or ship profile that already exists within our sector,” he said. Other multipurpose carriers shared the same lack of concern. Joerg Roehl, 14 BREAKBULK MAGAZINE www.breakbulk.com

LOW RATES LEAVE A BITTER TASTE By Carly Fields While a weak multipurpose and project cargo market is certainly bad news for ship operators, it does bring with it the benefit of lower freight rates and an increased choice of available vessels. On the face of it this should be good news for shippers, but for those in it for the long haul, it’s nothing to celebrate. Doug Hickey, CB&I global director of logistics, engineering, construction and maintenance, explained that drastically lower freight rates are not good for the industry in the long term. “I’d prefer to see a more stable and healthier industry ocean carrierwise because if it’s unhealthy we start to lose strategic carriers. Then we have less and less resources to choose from and that will impact on service levels,” Hickey said. He expected 2016 to be an extremely tough year for ocean carriers with possible mergers to avoid closing down. “It’s going to be a very shaky year, and we are somewhat nervous about where the industry is at.” Christophe Grammare, AAL’s managing director, liner services division, agreed with Hickey’s assessment. “I think that there will be a lot of consolidation going Christophe forward. CompetGrammare ing to the bare bones is not a successful long-term strategy today.” With a limited pool of project cargo to move, some carriers with empty vessels are bidding below market price and below costs just to secure the cargo. The implication of this for shippers is that their cargo could end up with a carrier that is in a bad financial state.

“There is then a higher risk of the vessel being seized with your cargo on board, meaning that you are increasing, instead of lowering, your risk,” Hickey said. “It’s a vicious cycle; we have to be very careful with our carrier selections moving forward so we can better manage our potential risk.” Carriers should, in Grammare’s view, stop complaining about the state of the market and deal with the here and now. Too many players are playing a long game and waiting for better days, but the goalposts on growth keep moving. “In AAL management’s view it’s the here and now that’s important, and we’ve been able to show that despite a declining market we can expand – we have tripled our turnover in the last three years.” The traditional tramping model, where one key parcel is fixed and then built up with others to make up a voyage, is outdated in certain depreciated trade lanes, he added. The confidence needed to make that model work has evaporated, leaving tramp operators with cold feet. “If you fix one parcel there is no guarantee that you will fix anything else, so this is now a much more risky strategy,” Grammare said. NOVEMBER/DECEMBER 2015

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chief commercial officer of Germany’s Hansa Heavy Lift, said that the container lines’ lack of flexibility would be their biggest barrier to entry. “We don’t believe that container carriers can outperform or be competition to MPV/tramp organizations. They can’t deviate from their normal liner services and routes, they can’t deviate from their general port calls, and they have the added requirement of needing to use feeder vessels.” But while Maersk concedes that cargo destined for heavy-lift or ro-ro sectors is not Joerg Roehl wholly appropriate for conversion to containerized ships, cargo destined for MPVs is certainly in its sights. And the competition for multipurpose cargoes takes other forms as well. Heavy-lift is getting lighter, ro-ros are getting more agile, and bulk carriers are getting increasingly desperate as they to try to counter their own ship supply glut.

New Entrants

If all that wasn’t enough to contend with, an influx of new carriers to the breakbulk and project cargo business is a further cause for concern. In February 2015, United Heavy Ship sprang onto the scene, offering tonnage through Akron’s heavy-lift fleet. Then in October, deugro Group launched a new line, d.ship, with a range of multipurpose breakbulk, heavy-lift, and bulk vessels with capacities ranging from 5,000 to 50,000 deadweight tons, and combined crane capacities of up to 500 tons. At the launch, deugro and d.ship were keen to stress their independence: d.ship will develop its own business as a global ocean carrier, while the deugro Group will continue to focus on the traditional project forwarding business model, including chartering with other ocean carriers. The launch of d.ship filled a gap, according to Chairman Thomas C. Press. Traditionally a freight forwarder covered A to Z, with shipping just a part of that service. Now, those roles have been 16 BREAKBULK MAGAZINE www.breakbulk.com

Hansa Heavy Lift vessel Richards Bay discharges a 560-tonne shiploader at the Port of Portland, Oregon. / Credit: Hansa Heavy Lift

separated out. Maersk and NYK are carriers with logistics arms; d.ship has simply flipped the model. Timing is everything, of course, and the depressed market conditions offer opportunities for those willing and able to take them. Low freight rates and access to tonnage make it easier and significantly cheaper to get a new carrier off the ground. But are they serious competition to established operators? No, say multipur-

pose and heavy-lift operators, with one important caveat: as long as the newcomers don’t order new ships. “Some say that new multipurpose and heavy-lift market entrants are a challenge, but from our point of view, their ships are already in the market – so even with a change of name and livery, they are still the same ships. What they are not doing, thankfully, is to put pressure on the market with added capacity,” said AAL’s Panayides. NOVEMBER/DECEMBER 2015

cover story

d.ship is new to the MPV sector. / Credit: d.ship

Maersk’s Forsberg described start-ups as “interesting,” rather than concerning. “We are a very asset-heavy industry and the entry barrier is quite high,” he said. “It takes a lot of capital to compete with our assets. I don’t see any startup buying the tonnage that we have floating on the seas right now.” “On new carriers, we’ve talked to quite a few that have been recently established and we understand the reasons,” said Rickmers-Linie’s Ulrichs. “We’ll have to see what happens, but I’m not overly concerned. If we compete with the same ship under this name, or that name it doesn’t matter as the ships are the same. Of course, here and there, there might be competition, but overall there is already plenty of competition in the world and many different carriers.” But if those newcomers dare to order ships the outlook changes. A flat MPV fleet offers a good chance of recovery in the short term; newbuilds upset that very delicate balance. A recent outlook from Drewry Shipping Consultants saw net growth of just 1 percent per annum for the multipurpose fleet over the next few years (See “A Little Lift,” page 20). But the aging profile of the existing fleet provides a driver for fleet renewal and 18 BREAKBULK MAGAZINE www.breakbulk.com

a ship-ordering spree in the not-toodistant future. Scrapping in this sector reached a record low in 2015, with demolition of nearly 500,000 dwt of multipurpose and project carrier vessels expected, an amount that Drewry’s multipurpose specialist Susan Oatway described as “unprecedented and unsustainable.” Lower oil prices allow older vessels to continue to operate at a profit. This coupled with low steel prices – reducing the recycling value – has kept older ships afloat longer than expected.

Diversification Drive

Some general and project cargo carriers have looked to diversification to protect their balance sheets, with limited success. Denmark’s Thorco Shipping was public in its drive to be more aggressive in the heavy-lift sector. However, even with established roots, branching out into other parallels wasn’t successful. The carrier’s decision to take super heavy ships into its fleet in 2014 ended up being a costly mistake. These were returned to the owners after it became clear that Thorco could not make a profit in this specialized sector. Other ships were also

returned to reduce its asset liability. The owner has since refocused on its core general and project cargo base, where it is championing the combination of short contracts and a large, varied and, importantly, flexible fleet. Thorco slashed its fleet by as much as one-third in 2015. Others have put their faith in partnerships and pools to make the most of economies of scale without the risks of an asset-heavy organization. AAL’s partnership with Peter Döhle on tramp and project shipping services and RickmersLinie’s Nordana and Swire associations are cases in point here. But while thinking smart to better use resources has so far kept the wolf from the door in the multipurpose and heavylift sector, is the worst yet to come? Maersk’s Forsberg warned the sector to not be blind to potential disrupters on the horizon: the easyJet, Hotels.com, or Uber of multipurpose shipping could be just around the corner. “We are not blind to the fact that this could happen,” he said. “Is there a way in which new entrants can operate a lot more cheaply than us? We have learned from history that new things will happen so we are also ready to take on new competition when it comes.” BB NOVEMBER/DECEMBER 2015

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fleet outlook

The BBC Everest offloads a 490-tonne carbon dioxide absorber and a 383-tonne flash drum directly to a barge at the Port of Nueva Palmyra in Uruguay. Forty percent of the MPV fleet has enhanced lift capacity of more than 100 tons and are classed as project carriers. / Credit: Tranship

A LITTLE LIFT

rewry has become increasingly pessimistic about the multipurpose, or MPV, sector over the year, as various global economic considerations have affected the market. We do not expect 2016 to bring a significant increase in demand growth but we hope that by 2017 the market may start to turn the corner. There are a number of factors affecting this forecast: global growth has been weak throughout 2015, principally due to the slowdown in China; the container market is on track to record its slowest annual growth rate 20 BREAKBULK MAGAZINE www.breakbulk.com

Enhanced Lifting Capabilities Increasingly Popular

for container demand since 1979 (excluding 2009); weakness in the market is not restricted to the Far East, Europe is also still in recovery; and competing sectors struggling with weak cargo demand are likely to encroach further into MPV’s share of general cargo. Drewry sees little letup in the concerns emanating from China, in the low oil price or the weakness in the competing sectors. However there is room for consolidation in this sector, and there is definitely space to recycle a fair percentage of the older vessels. On that note we hope to see the market turn by the middle of 2017.

By Susan Oatway NOVEMBER/DECEMBER 2015

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fleet outlook

MPV FLEET DEVELOPMENT TO 2017 Pure multipurpose vessel, or MPV, growth is forecast at 1 percent per annum to 2017. 3,000*

25,000

2,500 2,000

20,000

1,500 1,000

15,000

500 0

10,000

-500 -1,000

5,000

-1,500 -2,000 -2,500

2010

2011

2012

2013

2014

2015

LEFT AXIS

2016

2017

RIGHT AXIS

MPV not including project carrier deliveries

MPV not including PC demolitions

MPV not including PC fleet

PC including heavy-lift deliveries

HL demolitions

PC including HL fleet

*’000 deadweight / Source: Drewry Maritime Research

MPV Fleet

As of Oct. 1, the MPV fleet numbered 3,250 vessels with a combined total deadweight of 29.6 million tons and an average age of 15 years. More than 70 percent of this fleet (in terms of number of vessels) is below 10,000 deadweight tons, but the average deadweight is rising. Since 1980 when the average deadweight for vessels built was 5,500 deadweight tons; the operating fleet average had grown to 6,400 dwt in 1990; 8,000 dwt in 2000; 13,000 dwt in 2010; and 17,000 dwt in 2015. The majority of these vessels are classed as simply MPV, but 40 percent of the fleet (in deadweight terms) has enhanced lift capacity of more than 100 tons and are classed as project carriers. In the last 10 years more than 60 percent of the vessels delivered each year have had enhanced lift capabilities. Meanwhile, almost half of the current orderbook has confirmed enhanced lift capability. There are 859 vessels with this enhanced lift, 26 percent of the total fleet, of which 318 have a lift capacity greater than 250 tons. Drewry classes these as premium project carriers, and in that sector 25 vessels have a lift greater than 1,000 tons. Meanwhile, the orderbook is running at just 6.6 percent of the operating fleet. There are 128 vessels on order, of which 60 have declared heavy-lift capability. 22 BREAKBULK MAGAZINE www.breakbulk.com

This is a very manageable number, particularly in comparison to the bulk and container sectors. When Drewry forecasts fleet development, it looks at the schedule of expected newbuilding deliveries and any expected further ordering levels, combined with an assessment of future demolitions. The latter are likely to see a record low in 2015 of just 500,000 dwt. However, we believe that is unsustainable and expect demolitions to rise

back to nearer 700,000 dwt in 2016-17 due to a combination of the aging fleet, forecast rising steel prices in 2016 and further market weakness. Another factor in fleet development is the slippage levels for newbuildings. This has fallen back from the high of 46 percent in 2012, and we estimate no more than 15 percent of newbuildings missed their dates in 2014. However, we have seen an increase in newbuildings in the bulk sector that may cause slippage levels to rise again, albeit slightly. Going forward, we are estimating about 20 percent slippage. If we take all our assumptions for slippage, newbuilding and demolitions into account, we arrive at a fleet growth of just 1 percent per annum to 2017 for the MPV fleet. However, it is clear from Figure 1 that all of the fleet growth is in the project carrier sector while the simple multipurpose vessel fleet is in decline. This is due to low investment in the simple MPV fleet beyond replacement tonnage, whereas the project carrier fleet is too young to see significant demolition numbers. Also owners will often replace their “simple” ships with high-specification vessels that can add value to any contract. Thus we anticipate a growth in the project carrier fleet of around 4 percent per annum over the 2014-2017 periods.

Europrim Shipping handles project cargo in Romania. / Credit: CEE NOVEMBER/DECEMBER 2015

fleet outlook

Outside Variables

On the other side of the equation, the outlook for dry cargo demand has worsened over the last 12 months with the International Monetary Fund continually revising its projections for GDP and trade downwards. We use these projections, coupled with our analysis of a global commodity database, to produce historic series for cargo volumes and a forecast of the same. Drewry estimates that dry cargo volumes over 2014 grew at some 7 percent year-on-year, but 2015 is expected to see growth of just 2 percent, followed by average per annum growth of just 3 percent to 2017. General cargo, for the purposes of our report, is total dry cargo less total bulk cargo. While container cargo volumes grew strongly in 2014 at 6 percent year-on-year, non-containerized volumes recorded a more modest growth of 2.2 percent, albeit from a fall in 2013. Going forward both are expected to see average growth of between 3 percent and 4 percent per year to 2017. Translating general cargo volumes into potential demand for vessels in the MPV sector, we look at the potential share

DEVELOPMENT OF MPV MARKET SHARE TO 2017 (MILLION TONS) Erosion of multipurpose share of dry cargo market is expected. 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0

2010 bulk cargo

2011

2012

2013

MPV share of bulk cargo

2014 general cargo

2015

2016

2017

MPV share of general cargo

Source: Drewry Maritime Research

of each part of the market available to the multipurpose and heavy-lift fleet. The multipurpose share of general/project breakbulk cargo has recovered over the last few years to climb back to about 20 percent. But while the MPV share of the total dry cargo market is nearer 15 percent, going forward we expect to see further erosion of this share in the medium term,

with the expectation that any gains made over 2014-15 will be lost in 2016-17. The above article is taken from Drewry’s Multipurpose Shipping Market Review and Forecaster report. Susan Oatway is an associate with Drewry Shipping Consultants. For more information go to www.drewry.co.uk.

By Carly Fields Competition between bulk and container sectors topped a list of concerns from shipping consultant Drewry in a discussion on the sidelines on Breakbulk Middle East. “The biggest disrupter will be the other sectors,” said Susan Oatway, lead analyst at Drewry Maritime Research. “The biggest thing to knock our projections off will be if the bulk carrier market and the container market worsen, particularly the bulk carrier market.” The market is seeing more breakbulk cargoes being stuffed into containers, albeit there is a limit to that particular conversion. Bulk carriers, meanwhile, can carry traditional breakbulk cargoes, but not huge project cargo pieces. “It’s the simple MPVs that are going to suffer,“ Oatway said of multipur24 BREAKBULK MAGAZINE www.breakbulk.com

pose vessels. “Traditional MPV owners have realized this and are now building project carriers, rather than MPVs.” China’s slowdown in growth is another challenge: “While the Chinese slowdown will affect bulk more than breakbulk, we will likely see a shift in trade lanes as the tramp operators move to find cargo and leave liner operators facing difficulties as cargo drops on certain trade lanes. However, she noted there is still growth from China, but not at the familiar levels. In a pointed message to MPV operators, Oatway said: “Please don’t build any more new ships, definitely not the simple MPVs. If you’re going to build then scrap the old ones, don’t just sell them. But that’s clearly not happening. We’re at less than 500,000 deadweight tons of demolition this year and yet the owners are saying that things are hurting.”

Credit: Shutterstock

COMPETING SECTORS CHALLENGE INDUSTRY OUTLOOK

She added that there were many modern vessels on the market and that operators should consider buying a second-hand ship first. That said, if an operator still wants to invest in tonnage, those ships need to offer added value, she added. NOVEMBER/DECEMBER 2015

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Sens. Maria Cantwell, D-WA, and Amy Jean Klobuchar, D-MN, on June 11, the day they spoke in support of the Ex-Im Bank at a news conference along with fellow Senate Democrats Maria Cantwell and Charles Schumer. / Credit: Senate Democrats via Flickr

LESSON IN BANKING Calls For Stability On Ex-Im Charter By Lori Musser

ow might the U.S. government eliminate millions of domestic jobs, thousands of U.S.-based small businesses, and billions of dollars of revenues in one fell swoop? By not reauthorizing its Export-Import Bank of the United States’ charter. The charter lapsed at the end of June, but employees weren’t sent packing. The bank, which is particularly important to project cargo and heavy-lift shippers, continued to service its current portfolio; it just didn’t, as the banner on its website 26 BREAKBULK MAGAZINE www.breakbulk.com

proclaimed, “process applications or engage in new business or other prohibited activities.” The Ex-Im Bank is an independent federal agency that bridges the gap in private export finance, helping U.S. exporters make overseas sales and supporting U.S. jobs. U.S. exporters say its trade financing solutions – export credit insurance, working capital guarantees, and commercial loan guarantees for foreign buyers – are necessary for them to compete globally. In providing these tools, the bank says it levels the playing field for U.S. exporters of all sizes who are facing foreign competition.

Although the Ex-Im Bank receives bipartisan support, its charter reauthorization was blocked by Republicans in Congress who contended that it provided “corporate welfare” to multinationals, and was tantamount to “crony capitalism.” The bank was forced to close to new business, at least temporarily. Then, in early November, the U.S. House of Representatives passed a broad-based surface transportation bill that included renewal of the bank’s charter to Sept. 30, 2019. The Senate version of the transportation bill already included an extension of the charter.

NOVEMBER/DECEMBER 2015

infrastructure

On Dec. 3, the U.S. Senate overwhelmingly approved the five-year highway bill which essentially revived the Ex-Im Bank charter. The fact that it makes money for taxpayers is an incidental benefit. The Ex-Im Bank is primarily needed to maintain strategic U.S. manufacturing and services and global competitiveness, according to Lori Baer, with AECOM, a global engineering, procurement and construction company, or EPC. U.S. jobs rely on it. It provides financing for U.S. customers abroad, provides peace of mind for exporters, fills market gaps, lowers risk and is relatively transparent. Baer said the Ex-Im Bank is fundamental to U.S. strength and recovery. “It gives confidence and support at the highest level of our government. It provides a comfort level globally. There is a dependence on it. We can’t let that falter. Why would you erode a vital service?” William G. Schubert, former U.S. maritime administrator, said, “The failure to reauthorize the Ex-Im Bank would have left U.S.-domiciled companies virtually defenseless to compete for capital projects that require some level of ECA support.” Port Everglades CEO Steve Cernak called the bank “an important tool in the box to help manufacturers facilitate the trade and movements of goods. If that tool isn’t available, there is a detrimental impact on trade and employment in this country. It is a backstop for the unexpected.”

Steve Cernak

Brackett Denniston

for Angola, a US$668 million drinking water project for Cameroon, and a US$130 million sale of steam turbines to Vietnam. To compete for these business opportunities, GE and other American companies will have no choice but to move jobs to countries where export credit is available,” Denniston said. Any global company would likely do the same, shifting procurement of goods and services to countries that have active ECAs. Ex-Im’s smaller clients feel the effects of the lapse too. Ex-Im Bank Chairman and President Fred P. Hochberg suggested, in an open letter to clients, that they confirm the impacts caused by expiring Ex-Im guarantees or credit insurance coverage, which could include canceled or reduced lines of credit.

Fred P. Hochberg

Marco Poisler

Industry Impact

In a report issued two weeks after the lapse, GE’s Brackett Denniston pointed out that there were nearly 60 other export credit agencies, or ECAs, active in the world today. And some countries’ programs are many times larger than the U.S. China, for example, invests twice as much as Ex-Im, while Japan invests five times as much. Denniston said the lapse represented a naïve gamble with American jobs as the victim. “Twenty-seven countries so far have [required ECA backing] … Without Ex-Im financing, GE alone stands to lose a US$350 million deal to build locomotives

EX-IM SUPPORTS U.S. JOBS AND REDUCES THE U.S. DEFICIT Jobs Supported

Dollars Returned to Taxpayers

300*

1200†

250 900 200 150

600

100 300 50 0

2008

2009

2010

2011

2012

2013

2014

2012

2013

*in thousands / †in $US millions / Source: Ex-Im annual reports/Exportersforexim.org 28 BREAKBULK MAGAZINE www.breakbulk.com

2014

UTC Overseas Inc. has been involved with Ex-Im financed projects since the 1960s, including power generation and distribution project work, and has seen steady growth in the volume of Ex-Im guaranteed and assisted projects. “If our own experience is any guide, the impact [of the lapse] has been very significant,” said Marco Poisler, executive vice president, energy and capital projects with UTC Overseas. “We know from first-hand experience that these projects do directly sustain and expand jobs here in the U.S. for companies that export … to parts of the world with inadequate financial systems and resources,” Poisler said. Since the lapse, he estimated that projects with cumulative budgets of more than US$100 million have been put on hold, and in several cases the U.S. companies involved have had to sit by and watch those projects go to foreign companies, often with support from their own domestic version of export credit assistance. deugro (USA) Inc. has had a similar experience. Steve Drugan, regional vice president of the project logistics and freight forwarding company, said that over the last six years, deugro has handled the domestic and international, door-to-door, shipping requirements for eight large overseas capital projects financed through the U.S. Ex-Im Bank, NOVEMBER/DECEMBER 2015

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EX-IM BANK HOLDS UP TO SCRUTINY While specific amendments to the U.S. Export-Import Bank’s charter may be expedient, arguments that define the bank as a corporate welfare agency – supporting large U.S. companies to the detriment of small and medium sized business enterprises, or SMEs – isn’t borne out by the facts. Former U.S. Maritime Administrator Capt. William G. Schubert, now William G. president of InterSchubert national Trade & Transportation Inc., said his company has serviced more than 85 major Ex-Im transactions, including the top five capital projects approved by the bank board within the past five years, totaling US$15.5 billion. “The Ex-Im Bank does not skew

with more than US$10 billion in loans and guarantees. “Due to the 85 percent U.S.-content requirements of Ex-Im financing, US$8.5 billion of that money was spent in the U.S. on EPC materials, equipment and services,” he said. The spend on domestic trucking, heavy-haul, rail, barging and U.S.flag international container, breakbulk and heavy-lift shipping was more than US$150 million. Drugan added Ex-Im projects comprised up to 30 percent of deugro’s Steve Drugan U.S. project portfolio, and without Ex-Im the jobs and revenues of international capital projects will end up feeding the economies of other countries. The lapse is also starting to be felt by members of the U.S Exporters Competitive Maritime Council. While the project cargo business in general is not affected 30 BREAKBULK MAGAZINE www.breakbulk.com

their programs in favor of any company by size,” Schubert said. “It has programs that will sometimes benefit large companies (such as the Project Finance Program), and small companies (such as the Working Capital Guarantee Program).” When a large EPC contractor wins a contract with the support of Ex-Im Bank, the EPC will typically source goods and services from medium to small U.S. companies, he added. A 2014 survey of export credit agencies, or ECAs, published last year highlighted challenges facing SMEs – defined as companies with less than US$69.4 million in revenues and/ or 250 employees around the globe – but confirmed the ECAs were tailoring an increasing number of tools to SMEs. The argument that the private sector can bridge the funding gap doesn’t appear to hold water either. During the recent global financial

crisis, ECAs actually increased their business when banks were pulling out of trade finance, according to Amadou Sy, director of the Brookings Institution’s Africa Growth Initiative. Schubert agreed: “The continuing global financial crisis, the European sovereign debt crisis, and Basel III have … decreased availability of commercial financing, and increased the percentage of government sponsored ECA financing. Commercial lenders simply do not have the financial capacity to replace the ECA roles in the foreseeable future.” The crony capitalism argument is tempered by the fact that the agency actually makes a lot of money for taxpayers, and most of it comes from foreign fees. The bipartisan Congressional Budget Office, incorporating the potential for defaults and providing for loan/loss reserves, estimates the Ex-Im Bank will record US$14 billion in profit over the next 10 years.

The Ex-Im Bank approved a US$22.4 million loan guarantee to finance the export of U.S.made AgustaWestland AW139 helicopters to North Pole Investments in Panama for leasing and use in Colombia‘s offshore oil and gas industry. / Credit: Oleg V. Belyakov, Airliners.net NOVEMBER/DECEMBER 2015

infrastructure

The Ex-Im Bank authorized a pair of direct loans to two wind power projects in Peru for the export of wind turbines manufactured in Hutchinson, Kan., and Fort Madison, Iowa, by Siemens Energy Inc. / Credit: Siemens

by the loss of Ex-Im Bank financing, U.S. project cargo business, and the domestic supply chain that serves those projects, is, said ECMC President Margaret J. Vaughan. She added that a failure to win new projects means losses to American companies all along the supply chain 32 BREAKBULK MAGAZINE www.breakbulk.com

including manufacturers, office supply companies, transport companies, material suppliers, and all the smaller support companies that feed the machine of commerce. Reauthorization of the charter won’t completely quell industry fears of

a future lapse. And since it is unlikely that the U.S. will produce private-sector alternatives any time soon, exporters will have to be ever-vigilant to political action opposing the bank. “Unfortunately, there is a small but vocal faction in the halls of Congress who believe there is no legitimate role for government, even when the government agency makes a profit for the taxpayer,” Schubert said. He suggested that before the next reauthorization expires in September 2019, “We simply elect less of them.” Denniston commented: “Ex-Im opponents wrap themselves in a cloak of free-market ideals while shutting their eyes to the real-world impact of Ex-Im. Competitors from countries with ECAs will have the advantage.” Houston-based maritime industry consultant Tom Kornegay said the key to preventing a future lapse is best wrapped around the message about the big and small companies that depend on it, as well as their employees and the economic spinoffs of their businesses. “It is not just for the big companies. All of us depend on it,” he said. Experts agree it will take the grass roots support of thousands of U.S. companies, continuing to voice their opinions to their elected officials. As long as other countries have active ECAs supporting their country’s national interest, the Ex-Im Bank will continue to be essential to the strategic interest of the U.S. To that end, a coalition supporting the Ex-Im Bank, which represents manufacturers that rely on access to competitive export financing as well as lending institutions and suppliers, has surfaced, aiming to educate and mobilize the broader business community and public officials to ensure that exporters can compete in a tough global marketplace. “It’s a simple reality in today’s world that project sponsors will not proceed to Final Investment Decision for major capital projects unless there is some level of ECA support. This is particularly true for projects in developing countries,” Schubert warned. Without the Ex-Im Bank, U.S. businesses and employees compete on a very uneven playing field; U.S. industry would be wise to work hard to preserve this tool. BB NOVEMBER/DECEMBER 2015

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A vessel used during the construction of the Gabbard wind project in the UK. The Juncker Fund will invest £425 million in the Galloper offshore wind farm, which will be built close to the existing Gabbard development. / Credit: Shutterstock

34 BREAKBULK MAGAZINE www.breakbulk.com

NOVEMBER/DECEMBER 2015

BACK TO THE FUTURE European Investment Plan Aims To Revive Growth By Mark Willis

ormer U.S. Secretary of State George Marshall’s eponymous Marshall Plan did much to inject life into the post-war recovery of Europe. Initially comprising US$13 billion in loans and direct aid spread out during 194751, the plan represented a substantial economic stimulus package to wartorn European countries. It laid the framework for 30 years of almost unbroken post-war economic growth, productivity gains and industrial expansion.

As an example of publicly funded investment’s capacity to boost economic output, the Marshall Plan’s effectiveness has become increasingly relevant again, with contemporary supporters of Keynesian economics and regional policymakers calling for a similar program to reinvigorate the struggling EU economy. While the U.S. witnessed five years of economic recovery and subsequent job creation in the aftermath of the 2008-09 global financial crisis and recession, Europe has remained stuck in a seemingly endless downturn, with stubbornly high unemployment and stagnant economic growth.

www.breakbulk.com BREAKBULK MAGAZINE 35

trade notes

European Commission vice-president, Jyrki Katainen, lays the foundation stone at the Äänekoski mill, the first EFSI project. / Credit: Metsä Group

Principal among the causes of continued malaise has been a massive investment shortfall, with private sector firms unwilling to commit to new spending in an unfavorable economic climate, and public expenditure dramatically slashed by five years of rigorous fiscal austerity. The investment contraction has been particularly evident in the so-called peripheral economies of Greece, Ireland, Portugal and Spain, where a combination of elevated government borrowing costs, rising debt levels and external bailout packages has squeezed both public spending and private-sector sentiment. According to Grégory Claeys, a research fellow at the Brussels-based Bruegel think tank, the aggregate annual investment level within Europe remains about 10 percent below its long-term average, which has created a significant drag on economic output and job creation in recent years. Claeys outlined how the lack of investment from the public and private sectors has not only affected the short-term outlook, but is also likely to undermine the future growth potential of many European economies. It is a crisis that appears to have finally awoken policymakers. In a November 2014 speech shortly after taking over as president of the 36 BREAKBULK MAGAZINE www.breakbulk.com

Investment Bank, or EIB, the EFSI aims to revive economic growth by unlocking additional investment of at least €315 billion during 2015-17. Siobhán Millbright, European Commission press officer for Jobs, Growth and Investment, outlined the specified purpose of the new fund. “The Investment Plan for Europe has three objectives: removing obstacles to investment by deepening the single market, providing visibility and technical assistance to investment projects and making smarter use of new and existing financial resources. “According to European Commission estimates, the investment plan has the potential to add €330 billion to €410 billion to the EU‘s GDP and create 1 million to 1.3 million new jobs in the coming years. It aims to address the current situation where the EU has sufficient (financial) liquidity, but private investors are not investing at the levels needed,” Millbright said.

Limited Resources

Grégory Claeys

Jean-Claude Juncker

European Commission, Jean-Claude Juncker unveiled a new flagship investment program as a key pillar of his five-year term in office. “Today Europe is turning a page. After years of fighting to restore our fiscal credibility and to promote reform, today we are adding the third point of a virtuous triangle: An ambitious, yet realistic, “Investment Plan for Europe.” Europe needs a kick-start and today the commission is supplying the jump leads,” said Juncker. Central to proposals to kick-start business investment-driven economic growth is the European Fund for Strategic Investments, or EFSI, the so-called “Juncker Plan.” A joint initiative managed by the European Commission and European

With many regional countries still struggling under the weight of excessive debt piles and other governments, most notably Germany, unwilling to unleash a large increase in public expenditure, resources available to the EFSI has been fairly limited, with financial engineering therefore the basis for how the fund will operate. The fund will seek to leverage its own limited capital to address current market failures, stimulate private-sector participation, and encourage enhanced risk-taking. As a means of meeting the ambitious €315 billion target set for 2015-17, the European Commission and EIB have pledged €21 billion of capital to act as a first loss guarantee for private sector actors willing to invest side by side with the EFSI. Correspondingly, managers of the new fund are aiming to leverage its capital to private sector funds by a 1:15 ratio. Significant additional funding has already been committed by a number of EU governments, with the largest contributions advanced by the UK, Germany, Italy, France, Poland and Spain. Suitable projects applying for EFSI funding will be chosen on an ongoing ad hoc basis through a politically indeNOVEMBER/DECEMBER 2015

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pendent advisory committee, with no preordained member state recipient or sector quotas. Of its €315 billion target, about €240 billion has been specifically earmarked by the European Commission and EIB to target new infrastructure and innovation

projects, though the end figure will depend on the level of private sector interest. “It will mobilize additional investments in the real economy in areas including education and knowledge, innovation and the digital economy; energy union; transport infrastructure; social

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38 BREAKBULK MAGAZINE www.breakbulk.com

infrastructure; and natural resources and the environment,” Millbright said. “They must also mobilize where possible private sector financing. (The) EFSI will target projects that will, among other objectives, promote job creation, long-term growth and competitiveness,” she said. Critics of the Juncker Plan have highlighted the lack of adequate paid in capital as evidence that it should not be considered a second Marshall Plan, and may struggle to fill Europe’s substantial investment shortfall. “The solution proposed by the commission shows that a majority of member states had no appetite for such a massive public investment plan, and the commission has brought together only a very small amount of money relative to the extent of the investment problem affecting Europe today,” said Bruegel’s Claeys. The jaundiced eye of critical economists has also been cast over the fund’s willingness to invest in the type of risky projects most in need of financing, as well as its capacity to attract adequate volumes of private sector investment and leverage necessary to meet the overall €315 billion target. Notwithstanding criticism, the EFSI has already begun to approve and roll out funding for new investment projects. As of November 2015, the EIB Board, which is initially managing operations before the EFSI is fully operational, had given the green light for almost €4 billion in the initial financing of 27 new projects within a total of 13 EU member states. Under the first loss liability mechanism employed by the fund to create more favorable investment conditions and allow for the 1:15 ratio of private sector participation, it is anticipated that the new projects will lead to total new funding of more than €19 billion. “Of these projects, around half support renewable energy, energy efficiency and other investment that contribute to low carbon growth. The others include R&D and industrial innovation, digital and social infrastructure, transport, as well as access to finance for smaller businesses,” said the EC’s Millbright. Eight of the 27 successful applicants for EFSI finance have already been signed off, with infrastructure projects predominantly related to the renewable energy sector. NOVEMBER/DECEMBER 2015

First Funding

The first approved project was the construction of a new bio-product mill in Äänekoski, Finland, for which the fund has pledged to provide €275 million out of total estimated costs of €1.2 billion, making it the largest single investment ever made in the Finnish timber industry, and among the greatest investments of its type in Europe. The mill is scheduled for completion by the first quarter of 2017. Managed by the Metsä Group, the new mill will convert raw wood into biomaterials, bioenergy and pulp, and be powered by self-generated factory energy rather than fossil fuels. According to Metsä, the mill will produce about 1.3 million tons of wood pulp annually, comprising 800,000 tons of softwood pulp and 500,000 of hardwood pulp, for export to European and Asian markets. Generating more energy than required for factory operations, including tall oil and turpentine surplus byproducts,

EU GROSS FIXED CAPITAL FORMATION 2000-2014 Volumes chain-linked to 2010 for 28 European Union members. 3000 2900 2800 2700 2600 2500 2400

‘00

‘02

‘04

‘06

‘08

‘10

‘12

In € billions / Source: Eurostat

excess energy will be transferred to surrounding related firms in the mill hinterlands. As one of two main providers, the international technology group Andritz has signed a €100 million contract with

‘14

Metsä to supply a range of heavy machinery for the new mill. Minna Heinonen, a marketing manager within Andritz’s Fiber Technologies Division, said that “almost all main equipment (for the project) will be manufactured in Finland,” with Savonlinna Works Oy, an Andritz subsidiary, representing the biggest supplier. The remainder of machinery will be produced in China and Hungary. He added that Chinese-manufactured goods will be imported to Finland via the ports of Hamina-Kotka and Mäntyluoto, with a special truck providing subsequent transportation to the Äänekoski mill. According to Heinonen, equipment to be provided by the firm includes a complete wood processing plant, with debarking and chipping line, bark handling and stacker-reclaimer chip handling systems. The contract signed with Metsä also includes the supply of a soft and hardwood fibreline – representing the world’s largest

www.breakbulk.com BREAKBULK MAGAZINE 39

trade notes

low carbon emitting investment, Andritz has also been commissioned to produce the world’s most energy efficient black liquor evaporation plant with the highest capacity in Europe at 1,650 tons per hour. Further machinery provided by Andritz, and produced in Finland, include the world’s largest single line recausticizing plant, with a white liquor production capacity of 1600 cubic meters per day.

Wind Aspirations

Metsä Group’s bio-product mill in Finland was the first to benefit from the Juncker Plan. Credit: Metsä

production capacity (3,900 tons per day) – equipped with chip feeding system, a two-vessel continuous cooking plant and evaporation system for liquor extraction,

40 BREAKBULK MAGAZINE www.breakbulk.com

and seven drum displacer washers for brownstock washing and bleaching. Consistent with the EFSI’s emphasis on supporting the green economy and

In an overall project costing £1.54 billion, the Juncker Fund will also invest £425 million in the Galloper offshore wind farm in the UK. The project covers the construction and operation of a medium-scale offshore wind farm with about 336 megawatts of total capacity, located 27 kilometers off the coast of south-east England in the Outer Thames Estuary. As a four-way joint international partnership, ownership equity in the

NOVEMBER/DECEMBER 2015

project is equally distributed between RWE Innogy, the UK Green Investment Bank, Siemens Financial Services and Macquarie Capital. Germany-based RWE Innogy, which had been seeking new partners since Scottish and Southern Energy withdrew its investment in the project in 2014, is leading the development and construction of Galloper, which is due for completion by March 2018. Meanwhile, Siemens has been commissioned to supply, install and commission 56 SWT-6.0-154 wind turbines, with installation due to commence in May 2017. The contract to manufacture and install the wind turbine foundations has been awarded to specialist offshore marine engineering firm GeoSea. The nearby Port of Lowestoft was chosen as the base for the construction of the project through a partnership with Associated British Ports and OGN Group. In another renewable energy sector investment, the EFSI has also pledged to provide €250 million out of total required project financing of €650 million for the construction of the second phase (165 MW) of an offshore wind farm located 46 kilometers from the Belgian coast. With the green economy dominating the initial tranche of loans, French investment firm Omnes Capital recently received €50 million to carry out planned future investments within the renewable energy sector in Europe. In November 2015, the European Commission launched the availability of €7.6 billion in funds available to private sector firms willing to invest in the EU transport sector, with a total of €24 billion available for similar investments from 2014-2020. While technically falling within the Connecting Europe Facility with funding provided by the European Commission’s seven-year budget rather than EFSI, the proposals nevertheless highlight policymaker commitment to stimulating private sector infrastructure investment throughout the EU over the next several years. Another notable flagship EU infrastructure project scheduled for imminent development is the construction of the 500-kilometer GIPL gas pipeline between Rembelszczyzna, Poland, and Jauniunai, Lithuania, during

2016-19. The pipeline, which represents the first major gas interconnector linking central Europe with the Baltic States, is also scheduled to link up with Lithuania’s neighboring countries, Latvia and Estonia. The project, which will receive

almost €300 million in European Commission funding out of a total cost of €558 million, is representative of ongoing efforts to restructure the EU energy sector, and relieve excessive regional reliance, notably within the three Baltic states, on Russian energy supplies. BB

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regional review

LOW-RANKING LOGISTICS CONDITIONS A DETERRENT

The US$1.5 billion seaport expansion project at Turkmenbashi is expected to be completed by 2017. / Credit: RINA

TURKMENISTAN Overcoming Issues To PLAN Reach Gas Export Potential By Mary Shacklett

urkmenistan is not short of natural gas: as of January 2015, the country had estimated proven natural gas reserves of 265 trillion cubic feet and was among the top 15 dry natural gas producers in 2014. But Turkmenistan’s ability to export hydrocarbon products is stymied by infrastructure shortcomings that are characterized by insufficient pipelines to handle greater volumes. To help remedy the situation, Turkmenistan and foreign partners are investing in pipelines to transport the gas, and also in an expanded rail network. “Turkmenistan’s partially difficult terrain, sparse population, large

landmass and highly changeable weather conditions present inherent challenges in operating across the country,” said Neale Proctor, general manager of GAC Turkmenistan. “Accessing remote, inland locations can be difficult due to the limited road and rail networks. In desert areas, roads Neale Proctor are susceptible to blowing sand, which can make driving particularly hazardous.” Omur Oztas, deputy general manager of logistics provider Sinotrans Makzume, agreed with this assessment. The location of Turkmenistan itself is the challenging one, he said,

42 BREAKBULK MAGAZINE www.breakbulk.com

Turkmenistan ranked 140th among 160 countries rated in a World Bank Logistics Performance Index in 2014. Its “logistics competence” rank tied with Myanmar and was better than only four other countries. The World Bank performs LPI surveys in partnership with academic and international institutions, along with private companies and individuals engaged in international logistics. With scorecard ratings for each country ranging from a lowest score of 1 to a highest score of 5, Turkmenistan’s scores ranged from 2.06 to 2.56. The international scoring system uses six key dimensions to benchmark countries‘ performance in various aspects of logistics. It also displays a derived overall LPI index, which is the weighted average of each country’s scores on six key logistics dimensions: • Efficiency of the clearance process (i.e., speed, simplicity and predictability of formalities) by border control agencies, including customs. • Quality of trade and transportrelated infrastructure (e.g., ports, railroads, roads, information technology). • Ease of arranging competitively priced shipments. • Competence and quality of logistics services (e.g., transport operators, customs brokers). • Ability to track and trace consignments. • Timeliness of shipments in reaching destination within the scheduled or expected delivery time.

TURKMENISTAN LPI SURVEY RATINGS 2014

SCORE RANK

Logistics performance index Customs Infrastructure International shipments Logistics competence Tracking and tracing Timeliness

2.30 140 2.31 122 2.06 146 2.56 116 2.07 155 2.32 134 2.45 153

Source: World Bank NOVEMBER/DECEMBER 2015

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regional review

CABA provided ship unloading, transportation and installation services for a vacuum column weighing 263 tons for the Tore project in Turkmenistan. / Credit CABA

explaining that there is no direct line service, and most containerized cargo reaches Turkmenistan via the Black Sea. One alternative is to move cargo via Poti in Georgia, where the cargo can travel by railroad to Baku. However, the journey does not end there, as in order to pass over the Caspian Sea requires the use a ferry and contending with poor weather conditions, he said. Bandar Abbas is another port option, but only if the shipper is permitted to send cargo through Iran. “You can use trucking, which is the most common way to send your cargo to Turkmenistan,” Oztas said. “Turkish trucking companies have a good experience in the region, and Turkey is also the gateway to CIS countries.” While Istanbul and Mersin are the leading ports for transit cargoes bound for Turkmenistan, there is still the final challenge of getting goods to their final destinations. There is also a new port in Turkmenbashi as an alternative, but the same onward transportation issues apply. One viable route is Istanbul to the Black Sea to Rostov port in Russia, and then entry to the Volga River in order to reach the Caspian Sea. “However, 44 BREAKBULK MAGAZINE www.breakbulk.com

this route can only work during normal weather conditions, and was closed at least five months during one year,” Oztas said. “Situations like this present major challenges for project cargoes in logistics.” To cope with these difficult conditions, Turkmenistan is expanding its logistics infrastructure development. “Investment is being made in the construction of new power and fertilizer plants, refineries and other sizeable projects in the country, all of which require

breakbulk and heavy-lift logistics expertise,” Proctor said. A US$1.5 billion seaport expansion project at Turkmenbashi is to be completed by 2017. Once complete, it will include a roll-on, roll-off and passenger terminal with capacity for 300,000 passengers and 75,000 trailers per year. Other expansion projects include a general cargo terminal with capacity of 4 million tons a year, a dry bulk terminal with 3 million tons of annual capacity and a container terminal able to handle 400,000 20-foot-equivalent units per year. Additionally, a new airport development is expected to be ready in 2017. Proctor added that progress has been made in plans to invest in regional infrastructure projects to facilitate the movement of cargo through the country and improve exports of oil and gas to international markets. The volume of oil and gas activity in Turkmenistan has been relatively untouched by the drop in prices, although there has been some impact at the project activity level. “The biggest consequence of low global energy prices has been greater pressure on all parties in the logistics supply chain to focus on cost control, through improved productivity and greater efficiency in day-to-day operations,” Proctor said. “It is therefore essential that we continuously look for ways where we can help customers to benefit from efficiencies.” One of GAC’s efficiency efforts is its continuous investment into the training and education of local workers through its in-house GAC Academy.

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RU S S I A B la ck Sea

Poti Istanbul

G E O RG I A T U RKE Y

Caspian Sea

Baku

Turkmenbashi

T U RKM E N I S TA N

A Z E RBA I J A N

Mersin

M e d ite rranea n Sea

I RA N Bandar Abbas

NOVEMBER/DECEMBER 2015

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regional review

TOP 10 GAS NATIONS

RA N 2 I1,193 t r illion

G ERI A 10 AL 1 5 9 tril lion

Turkmenistan ranks a respectable sixth.

cubic feet

3 Q885ATAR t r illion

c u b ic f eet

SSIA 1 RU 1,688 t r illion cubic feet

cubic feet

EZUEL A 8 VEN 1 9 6 trillio n c u b ic f e e t

ITED 4 UN STATES 3 3 8 t r illio n c u b ic f e e t

6 TURKMENISTAN 265 t r illion

9 1 8 1 tr illion N I GE RI A

cubic feet

c u b ic feet

5 SAARAU DBIIA Source: U.S. Energy Information Administration

Growth in Activity

With the growth of infrastructure and logistics activity in Turkmenistan, logistics companies continue to play major roles. GAC has been operating in Turkmenistan for 15 years and has a dedicated marine and logistics base at the port of Turkmenbashi with a covered warehouse and open yard storage, suitable for breakbulk project cargoes. When it established its logistics base in Turkmenistan, it focused on developing a Caspian Sea fleet that today consists of 19 vessels and a barge. The fleet is comprised of diverse vessel types to meet the varying needs of customers for offshore support, including anchorhandling tugs, barges and crew boats. “Having our own established fleet offers particular advantages in Turkmenistan, where there are significant costs associated with bringing new vessels to the area,” Proctor said. “This is because vessels built outside the Caspian Sea area and transported to Turkmenistan incur considerable costs, as each one must be modified and towed through 46 BREAKBULK MAGAZINE www.breakbulk.com

E D A RA B 7 UE MN II TRAT ES 215 t r illion cubic feet

291 t r illion cubic feet

a canal system from the Black Sea to Turkmenistan. Upon arrival, the vessel must then be restored to its original condition.” GAC also has logistics and marine services operations at two smaller ports that are used primarily for logistics companies servicing the oil and gas sectors. These ports are Hazar, which is a major oil and gas port a three-hour drive south of Turkmenbashi, and Kiyanli, which is to the north of Turkmenbashi. GAC employs a local workforce of more than 500 employees. “If you select your team from the local operators and workforce, this will help you to set up your operation easily,” said Sinotran’s Oztas. “A local workforce has full understanding of the systems in the region and communication won’t be an issue at all. They can easily enter into the governmental offices, and they will speak Russian and their own language.” Russian remains a prevalent language in Turkmenistan. “If you find your labor in Turkmenistan for simple tasks, this will give you

a big cost advantage when you compare the cost associated with bringing in foreign labor. Turkmenistan is also not an easy region for foreigners to live. It has its own foods and traditions, and drinking alcohol in public is a big crime. You have to train your personnel about the basic rules of the country for their security and risks,” Oztas said. At the time of writing, GAC was involved in transporting a land-based rig from Turkmenistan to Kazakhstan. The journey planned to utilize numerous trucks and four coastal vessels for the move. An intermodal transportation strategy is crucial in Turkmenistan, Proctor said, since much of the cargo that flows to and from countries like Turkey is routed across the Caspian by ferry, with road and rail connections needed at the port of Turkmenbashi. The mode of transportation can vary, depending upon the cargo being hauled – which can make the logistics strategy for any given load a unique exercise in planning and execution in Turkmenistan. BB NOVEMBER/DECEMBER 2015

emerging markets

BREAKING THE MOLD New President Could Spur Breakbulk Revival in Argentina By Alan M. Field

Design: Catherine Dorrough / Source: Shutterstock

auricio Macri’s victory in the runoff phase of Argentina’s presidential elections on Nov. 22 marked the beginning of a new age for a nation long stuck in an alternative reality in which international trade and industrialization were ignored in favor of dependence on high commodity prices and populist government subsidy programs. In such an environment, trade in bulk commodities – such as soy and corn – and in energy products – such as oil and gas – became more profitable than breakbulk and containerized products in this Southern Cone nation of some 43 million people. With the departure of Cristina Fernandez de Kirchner in December, “important aftershocks are going to be felt across the region,” said Peter Schechter, director of the Latin America Center of the Atlantic Council, a Washington think tank. The results of the Argentine presidential election will have a profound effect on much more than domestic economic policy in Argentina, he added. “It is a dramatic moment of inflection for the country,” said Schechter, echoing comments from other experts who are optimistic about Argentina’s future. Those optimists point out that Argentina is a country with a sizable middle class, huge gas reserves, and an

48 BREAKBULK MAGAZINE www.breakbulk.com

educated population that could provide significant opportunities for the breakbulk sector, if the Macri administration makes the sorts of economic reforms its presidential candidate advocated during his campaign for the office. “Argentina is the first out of the gate for the new reality in Latin America,” said Kirk Peter Schechter Sherr, president of Clearview Strategy Group, a Washington-based advisory firm for the Latin American energy sector. These elections were the first to judge a voting population’s response Kirk Sherr to a new governing style that doesn’t rely on high commodity prices and is more adjusted to global realities. It’s not just the future of Argentina that’s at stake because of overdependence on the prices of soybeans, sugar, corn and other commodities. “If we look at Peru and Chile, it’s mining; in Venezuela, it’s oil and gas; in Bolivia, it’s oil and gas with a little mining; in Brazil it’s oil and gas, soybeans, sugar,” Sherr said. All of them rode the wave

NOVEMBER/DECEMBER 2015

emerging markets

Mauricio Macri heralds a new era for Argentine politics. / Credit: Mauricio Macri

of high commodity prices that basically allowed the state to grow in many different ways, allowing state companies to gain wealth and power.

Facing a New Reality

Argentina is the first country in the region to have an election under this new reality. During the middle of 2014, many Argentines initially thought that the downturn in oil prices would be shortlived, but that’s not turning out to be the case. “In fact, given the way the Chinese economy has evolved,” Sherr noted,

ARGENTINA COMPETITIVENESS INDEX Competitiveness ranking slipped in recent years. Scoring is on a scale of 1 (low) to 7 (high). 4.1

“global growth prospects are worse today than they were a year ago. There’s no near-term exit from a broad-based lowcommodity-priced market world. That’s the world that Argentina inhabits.” The Argentine population realized that prospects were not good under “Kirchnerism,” a political era that began with the late President Nestor Kirchner in 2003 and terminated with the outgoing regime of Cristina Fernandez de Kirchner, his widow. From the Argentine perspective, noted Sherr, “we have all these commodities, but we can’t make any money selling them. And we’ve given up industrialization, moved back in education policies, and moved back in infrastructure international trade. Those were [once] comfortable areas because high commodity prices allowed the government to grow, corruption to grow, and everybody to get a piece. That’s not the case now.”

In many respects the new era will have many elements in common with the much-maligned Washington Consensus, a set of 10 economic policy prescriptions that were the standard reform package prescribed for troubled developed economies by institutions such as the International Monetary Fund, the World Bank, and the U.S. Treasury Department. Over the past decade, ever since the election of Nestor Kirchner, Argentina and its allies in the region have moved away from the 1990s Washington Consensus, which called for the deregulation of international trade, fiscal responsibility, and privatization of state enterprises. Now, Macri has promised to completely overhaul the Argentine government’s macroeconomic policies, emphasizing that the Kirchner-era capital controls were “a mistake.” His first moves in office will include bringing new leadership to the Central Bank and restructuring INDEC, the national statistics office, so that “people can actually know what’s going on” in Argentina’s economy, explained Monica de Bolle, senior fellow at the Peterson Institute for International Economics in Washington. Macri also plans to lift capital controls, which would lead to a large devaluation of the peso, “especially if he did it in one shot,” said de Bolle. However, she argued Monica de Bolle that it is going to be very difficult for Macri to run Argentina because he is proposing a number of major changes that will irritate his opposition, which won 48 percent of the votes. That said, just days after his electoral victory, Macri announced a series of bold

4.0

LOGISTICS PERFORMANCE INDEX Standards have flatlined or slipped across the board. 1=low; 5=high.

3.9

3.8

3.7

‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 Source: World Economic Forum 50 BREAKBULK MAGAZINE www.breakbulk.com

Overall Competence and quality of logistics services Efficiency of customs clearance process Quality of trade and transport-related infrastructure

2007

2010

3.0 3.0 2.7 2.8

2012

3.1 3.0 2.6 2.8

2014

3.1 3.0 3.0 2.9 2.5 2.5 2.9 2.8

Source: World Economic Forum NOVEMBER/DECEMBER 2015

emerging markets

TAKING THE BULL BY THE HORNS Economists and policy analysts believe that Argentina’s new probusiness government will face major challenges in order to unleash its potential as an industrial power and as a magnet for trade in breakbulk and other industrial goods. Those reforms include: TAKING CONTROL OF INFLATION

Argentina’s 2016 budget estimates are an estimated GDP growth rate of 2.3 percent for 2015 and 3 percent for 2016, and a CPI inflation rate of 15.4 percent and 14.5 percent, respectively, according to Axel Kicillof, Argentina’s minister of economy and public finance. However, the International Monetary Fund projects even higher inflation in both years: 18.6 percent in 2015 and 23.2 percent in 2016. Those are the second-worst numbers in Latin America, surpassed only by Venezuela, which is projected by the IMF to reach 96.8 percent in 2015 and 83.7 percent in 2016. ESTABLISHING CREDIBLE ECONOMIC METRICS The country will have to

establish a credible mechanism for measuring its key economic indicators. Almost no one, apart from the government’s own statisticians, trusts the official numbers regarding inflation, poverty, growth or unemployment, produced by Argentina’s National Institute of Statistics, or INDEC. The controversy about INDEC has continued for several years, and will continue to challenge the incoming president. “Our deputies have submitted a bill for the consolidation of public

Credit: Shutterstock 52 BREAKBULK MAGAZINE www.breakbulk.com

statistics, which shouldn’t be subject to party manipulation, but instead managed by an autonomous institute that makes them available to people and researchers,“ said Michael Braun, CEO of Fundacion Pensar, an affiliate of the PRO party, which led President Mauricio Macri‘s campaign. The dilemma is whether the new president should review the numbers retroactively, or start with a clean slate. STABILIZING THE EXCHANGE RATE

Some analysts believe that the currency exchange controls installed in 2011 should be stopped in order to stabilize foreign exchange policy. According to the Argentine futures market, the official dollar will close at 9.29 pesos by the end of the year. Currently, the official rate is about 8 pesos. RETURNING TO THE INTERNATIONAL DEBT MARKET In a first step to return

to international credit markets, Argentina reached an agreement in 2014 to resume repayment of its US$9.7 billion debt. However, the U.S. Supreme Court’s rejection of Argentina’s appeal in its battle with holdout hedge funds means that Argentina will be forced to pay at least US$1.3 billion to its creditors. Thanks to some US$15 billion invested in the Vaca Muerta oil field, and an estimated US$3.86 billion invested in mining projects in 2014, Argentina ranked fourth among the world’s most popular emerging markets in the latest Frontier Markets Index, behind only Nigeria, Kenya and Vietnam.

new appointments that quickly won favor with Argentina’s business community. For the critical post of Finance Minister, Macri appointed Alfonso Prat-Gay, who served as president of Argentina’s Central Bank from 2002 to 2004. Although Prat-Gay was lauded as Central Bank Governor of the Year by Euromoney for having reduced inflation from 40 percent to 5 percent while maintaining economic growth at 8 percent, Prat-Gay was abruptly ousted by Nestor Kirchner in 2004. Returning to public office, Prat-Gay has announced that the Macri administration will move “as soon as possible” to unravel its complex system of currency controls. Macri also announced that his new president of the Central Bank will be another internationalist: Federico Sturzenegger, an economist who earned his Ph.D. at the Massachusetts Institute of Technology. And in a move that pleased foreign suppliers of capital and equipment for the energy sector, Macri appointed Juan José Aranguren, longtime CEO of Shell Argentina, as his new minister of energy.

Political Entanglements

Despite such distinguished appointments, Argentina will continue to be deeply divided. One-half of the population remains loyal to the pro-labor Peronists, the party Macri defeated, said Mauro Guillen, a professor of international management at the University of Pennsylvania. The other half he characterizes as more cosmopolitan, more export-oriented, more competitive and better educated. Mauro Guillen “In Argentina, you have this pendulum depending on the circumstances, swinging between the Peronists, who are more inward looking and populist, and the other half, who are more conservative, more pro-business and also more internationalist,” Guillen said. Overall he was not very optimistic about the prospects for Argentina, because he said that in Argentina, history repeats itself. “It’s like a Greek NOVEMBER/DECEMBER 2015

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emerging markets

drama. Macri was a mayor, and is someone who clearly knows how to run a business. But running a country is a very different thing. The problem is that from now on, the Peronists are going to do whatever it takes to make the Macri presidency end in a bad way. And if they can get rid of him earlier in his term, so much the better.” Many business people and professionals in Argentina are happy that the Peronists are not occupying the presidency any more, added Guillen. “What I remind them is that the Peronists are not going away. They still have considerable power. We’re just going to go through another cycle; Argentina doesn’t seem to be able to break out of this situation. Let’s hope that this will not end like Alfonsin’s presidency with hyperinflation. Or like de la Rua’s presidency, with default [in 2001].” That said, if Macri were able to forge

54 BREAKBULK MAGAZINE www.breakbulk.com

ARGENTINE STEEL EXPORTS Steel is no longer a cash cow. 2000

1500

1000

500

of the science and technology minister of Cristina Fernandez’s government to the same post in his new administration. Guillen believed that controlling inflation – which is running at 30 percent to 40 percent – should be No. 1 on Macri’s list of priorities. Unless he gets inflation under control, everything else will fall apart. “You cannot run an economy with 40 percent inflation,” he said.

Hopes of a Revival

‘95 ‘00 ‘05 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 *in thousand tons / 2015 figure is Jan.-Aug. Source: The Argentine Steel Chamber

an alliance with the moderate Peronists, he might be able to survive and implement his reforms. He has already made one such gesture with the reappointment

If there is a silver lining for Argentina, it is the prospect that the energy sector could be on the verge of a major revival if the Macri administration resolves some longstanding feuds with foreign debt holders. The good news, said Sherr, is that even in the darkest times in the last few years of Kirchner’s political policies, foreign oil and gas companies have been keen to get into the Vaca Muerta

NOVEMBER/DECEMBER 2015

geological formation, containing major deposits of shale oil and shale gas, in the Neuquén Basin in Argentina. Total, Exxon and Chevron have all gone into the region. “If they’ve been keen on the geological and developmental capacities of those shale deposits, they should be really keen to go in [now] under a better government,” Sherr said. “Argentina under a Macri government should have much more success than a Kirchner government in attracting companies and broadly attracting investment, not just in the energy sector. That presupposes that they come to terms with the outstanding debt obligation holders, mainly Elliott Associates, which are now tangled up in the courts with various judgments outstanding against Argentina, forcing them to pay.” The appointment of former Shell Argentina head Aranguren as Macri’s energy minister will further strengthen personal ties between the private sector and the new administration. The Argentine economy, of all the economies that went on a downswing based on commodities, is one of the best poised to take advantage of cheap energy internally, in terms of the potential to return a more industrialized economy. That’s because Argentina has a well-educated population, industrial processes and capacity that is underutilized, and very broad infrastructure around natural gas. The components are there to allow them to return to industrial exports. Macri’s ascension will likely have a major impact on the way Argentina views international trade blocs and treaties. For many years, Argentina has been a member of Mercosur, the South American trade bloc that comprises Argentina, Bolivia, Brazil, Uruguay, Paraguay and Venezuela. Two of those five nations, Argentina and Venezuela, have been in dire straits. On the one hand, Macri has vowed to pressure Venezuela to leave Mercosur until it holds free elections. On the other, he has called for stronger ties with the Pacific Alliance, a trade group whose four member states – Chile, Colombia, Mexico and Peru – all border on the Pacific Ocean, and all belong to the 12-nation Trans-Pacific Partnership.

If Macri manages to consolidate power, Argentina is expected to reject the protectionism of the Kirchner administrations in favor of the neo-liberal free trade and investment policies pursued by the members of the Trans-

Pacific Partnership. In such a case, Argentine imports of breakbulk, project cargo and other non-containerized cargo will likely soar, along with the country’s two-way trade in containerized goods. BB

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14-03-14 12:33

education

CRUNCH TIME Industry Faces Skills, Talent Shortfall

he industry is on a recruitment collision course, and unless training takes center stage there will be no avoiding it. Talent is not being managed, say specialist recruiters, and it is not being created ahead of demand. “The current pool in the ports and heavy-lift/breakbulk sector is aging, and there is not enough young and upcoming talent coming through the rank,” said Andrew Feakins, managing director of Impact People Strategies, a global recruitment specialist that focuses on the port, shipping, freight and logistics sectors. “Ultimately there will be a shortfall of people and that is going to cause a talent war.”

Technical and operational knowledge for heavy-lifts is not something that can be learnt overnight. / Credit: Dave R 56 BREAKBULK MAGAZINE www.breakbulk.com

NOVEMBER/DECEMBER 2015

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education

There is a serious lack of local talent in places like Singapore. / Credit: Carly Fields

Andrew Feakins

Heidi Heseltine

Emerging markets will exacerbate this as projects spring up in more remote and far-flung places, leading to port developments in these areas that call for very specific skills sets. Natural skills are usually not available in these regions, forcing recruiters to dip into the already

pressurized talent pool in the traditional markets to find the necessary skills. But moving talent from the developed world to emerging markets simply serves to widen the gap. Feakins said there needs to be a backfilling of these people from somewhere, otherwise the talent is simply being thinned out and spread across the world. This trend also puts significant pressure on companies to hold onto talent. Halcyon Recruitment Managing Director Heidi Heseltine said the U.S. and the UK in particular are facing a genuine crisis in the market with a shortage of recruits that could lead to a major shortfall as those with in-depth experience begin to retire. “The pioneers in this segment are the

people nearing retirement, which leaves a lot of fresh bloods with a gap of 10 to 15 years in experience,” she said. “There is a dearth of talent in the age group of 45 to 55 and one can blame the global financial crisis in 1989 for this, as not many people wanted to pursue their career in the breakbulk segment. Also the good markets in 2004 to 2008 saw a lot of highly skilled professionals within the industry move to the conventional dry market as there was more money to be made at the time.” Heseltine said the profile tended to be those under 35 and more than 55, with very few between these ages entering the market. “Succession planning does not look at more than two years’ time, which is insufficient to really plan for those

This story is the first in a continuing series looking at education and recruitment in the breakbulk, heavy-lift and project cargo industry. Breakbulk recognizes the importance of engaging and developing talent for this highly complex and rewarding industry. Framing the issue here for further coverage, we will next explore the industry’s perspective of finding and nurturing the next generation.

58 BREAKBULK MAGAZINE www.breakbulk.com

NOVEMBER/DECEMBER 2015

education

nearing retirement. Equally, with the dry markets being depressed for so long, many in the medium range were young enough to switch sectors, taking their transferrable skills to a better market. The multipurpose side especially had lots of early 20 year olds hitting the market from around 2008, with a hole in the market for those with 10 to 15 years’ experience.”

Training Oriented Approach

The situation is being compounded by the lack of training taking place. Matt Fuhrman, Core Group Resources managing director, said there was a definite need for more heavy-lifting trainee options for younger professionals to get into the business. Core Group Resources specializes in recruitment for the maritime, offshore drilling, subsea engineering and oil and gas sectors. “It is a very small and closed industry that is more focused on the ‘who-you-know’ sphere than actually having proper trainee programs to support industry growth in place,” Fuhrman explained. “For the particular niche of heavy-lifting and the art

of experience that comes with this we are facing real skills shortages. There are no schools that teach the art of pure heavylifting and stability calculations as it is always been taught on the job.” Most vacancies Matt Fuhrman being advised by specialist recruitment agencies require skilled employees, so the lack of specific training on offer further reduces the pool of available talent. Spinnaker Global Chairman Phil Parry agreed with Phil Parry Fuhrman that there is a lack of focus on training in the breakbulk sector at present; rarely are jobs advertised with the option of learning on the job. There’s also concerns about a looming hole in terms of expertise when the

aging workforce leaves – a process that is happening much faster than was ever anticipated as more and more people are opting to take early retirement due to the low market rates. “In Germany there is a steady supply of new entrants due to traditional apprenticeship schemes and the general population being well up to date on the maritime sector and the view of it being a stable career, but in most other regions globally there is complete lack of awareness,” Heseltine said. “The next generation of managers could be missing.” Corporate organizations need to take a more proactive view as to how they will identify young and upcoming talent to ensure they maintain a skills base within the company. This could include partnering with universities and colleges to change the course of direction. “The corporate world will have to start sharing their needs with academic institutions to ensure that curriculums are providing the training for the skills that the market wants and needs,” Feakins said. “Companies also need to create more positions for young graduates on

A special barge allows a load to clear bridges on the Danube. Unlike most parts of the world, Germany has a steady supply of entrants into the breakbulk industry, thanks to its apprenticeship programs and a general awareness of the maritime business. / Credit: Van der Vlist 60 BREAKBULK MAGAZINE www.breakbulk.com

NOVEMBER/DECEMBER 2015

a regular basis. All of this combined will result in these academic institutions naturally drawing more students and then equipping them with the right skills set.” Professor Jan Havenga, Centre for Supply Chain Management director at the department of Logistics at the University of Stellenbosch in South Africa, said globally the field of logistics has gained popularity in recent years, but scientific work in logistics still falls behind pure economics, natural sciences and physical science. “This might seem like a pure academic argument but the shortage, for instance, of top-rated academic journals makes it harder for the science to develop faster with a knock-on effect on teaching,” he explained. “Make no mistake the field is producing worldclass scientists at the moment, but I wish there was more.” Take this into the niche markets of logistics and it becomes inevitable that schools are challenged to produce the necessary talent for the job market. “Schools the world over are addressing the skills challenge by improving research and curricula,” said Havenga. “We are also seeing industry and academic institutions working closer together. The effort of course has to be made by both sides. We will only affect change if both industry and schools set about changing the current landscape.” Companies in the breakbulk space could commit to hiring a certain number of trainees every year to bridge the academia-employment gap. Breakbulk Events & Media provides industry education and training at its international events for those in the industry and those pursuing a heavy-lift and project cargo career. Through Education Days, local transportation, logistics, supply chain and procurement degree students meet breakbulk and project cargo officials and participate in training and benefit from career guidance. Breakbulk Events also provides workshops on heavy-lift land and barge or ocean transport, an ISO-accredited non-technical course for project forwarders, and a course from the shippers’ perspective for EPCs, cargo owners and forwarders.

Education at Breakbulk Americas 2015.

Managing Demand

The pressure on recruitment companies to deliver skilled workers has increased twofold over the past few years with demand for both technical and commercial skills. The market perception is that a breakbulk professional can easily handle general conventional dry bulk vessels whereas the opposite is not true, Heseltine said. In addition to standard “replacement” roles, demand is coming from the new ventures that are being set up the world over. For example, over the past 12 months Halcyon Recruitment had seen comparative growth in demand within the breakbulk sector in Asia. “There remains a serious lack of talent in Southeast Asia as the majority of the ship owners in this segment are primarily Europe-based and there are a lot of expatriates in senior positions in the Asian offices of these companies. As a result, there is a lack of local talent in this sector. The same can be applied to Africa,” she said. However, there is very little growth within this sector in Europe and with a projected growth of 3 percent to 5 percent anticipated in the sector, there is a need to differentiate and focus on heavylift skills in particular, she added. Parry explained that the demand for

market knowledge and contacts often made it even more difficult to find the required talent corporates were looking for. “It’s not just ‘what you know’ but who,” he said. While a candidate may be a high flier in the logistics sector, it’s a different story in the breakbulk and heavy-lift sectors, as there is a need to know the right people and to have very clear understanding of customer need. “It is increasingly more difficult to find sector-specifics skills,” Parry said. “The same goes for finding those people who are able to design and specify project solutions. There is a high demand for these people and the reality is that there is a limited supply.” Unfortunately, succession planning has never been high on the agenda of breakbulk and heavy-lift companies, despite there being a pressing need to develop knowledge and experience and to tutor and mentor young blood. Parry said: “Generally across the shipping and logistics industry there is a success planning problem so it is not just specific to breakbulk, but the projects market is a sector in which experience counts. Having put together solutions for projects in the past naturally imbues people with an intuitive ability.” Simply put, when people retire they take the knowledge with them. Thus the www.breakbulk.com BREAKBULK MAGAZINE 61

education

Mapping Out the Future

industry is going to have to invest time and energy in identifying the right people, training them and then allowing them to work alongside experienced colleagues. “This kind of long-term planning is something the shipping industry is notoriously bad at,” said Parry, “driven as we often are by tight margins and freight rates.” With the heavy-lift market tending to trail overall global economic growth, the outlook for 2016 looks bleak. This insecurity in the business has been a driver for losing talent. This is compounded by the small size of the market, which makes it difficult to retain experienced individuals, especially where reputations are well known and key employees are then headhunted. “There is a limited pool of candidates to draw from with not a lot of new talent entering the sector, given its depressed state over the past few years,” Heseltine said.

LOCAL KNOWLEDGE

Ensuring you have the correct in-depth technical and operational knowledge in place of what a heavy-lift/ project cargo vessel can carry and to which ports, through which canals it can move and so forth is not something that can be learned overnight. Therefore there is a need to introduce leadership training to the high performers for effective management of businesses going forward, said Heseltine. Those already within the market are predominantly well-trained, but there is very limited training provided for existing employees, whether directly relevant training or for leadership, management or financial roles. Heseltine said that a renewed effort is required by industry at large on creating talent. Across the board, recruitment specialists strongly suggested that apprenticeship schemes be re-intro-

// Employing Nationals Can Make, Break a Project

AFRICA’S HIGH UNEMPLOYMENT PROBLEM Lack of training means local talent pool is limited.

0-5*

5-10

10-15

15-20

20-25

duced. But this would only fix one part of the problem; retaining skilled workers is just as important. “There is a higher expectation for fresh challenges and development opportunities with the younger generation and so retention will become more difficult for industry rather than merely paying higher salaries,” explained Heseltine. “Those with apprenticeship-style training will be very attractive to other companies who then benefit from not investing the time or effort in creating the talent.” Tough times lie ahead, concluded Feakins. If the number of projects continues to grow, the squeeze on the volume of people out there will continue to increase. “The time to act is now. Organizations need to take very sensible approaches to their recruitment strategies or deal with the very real consequences of a talent war. It is time to think out of the box and broaden the mindset around talent.” BB

>25

* percent unemployment / Source: ILO 62 BREAKBULK MAGAZINE www.breakbulk.com

Visit the Niger Delta and it’s hard to imagine that billions of dollars have been made here. Most people live in extreme poverty with little or no access to even the most basic of services. For these communities the wealth of their land has been elusive. But this is not an exceptional tale: this represents a typical African theme. For decades the continent’s resources have been extracted only to benefit somewhere and someone else in the world, offering no gains for locals. There are those who would even argue that resources have been more of a curse than a blessing in Africa, because instead of creating prosperity it has undermined inclusive economic growth, driven corruption, caused wars and civil unrest, and wreaked environmental havoc. Poverty remains the order of the day with at least 414 million people living on less than US$1.25 a day. According to the World Bank, this translates to 48.5 percent of the continent’s total population.

“Africans have realized that development is passing them by and a different approach is required to see more local beneficiation,” explained Duncan Bonnett, a director with Johannesburg headquarter African consulting firm, Whitehouse & Associates. The only way Africa will affect any change is through local content legislation, however, this remains a highly contentious subject with multinationals and other corporates insisting that the necessary skills pool just does not exist in Africa to make these laws practical. “Local content is here to stay. Africa cannot allow that skills simply be parachuted in and out as and when they are needed,” Bonnett said. Local content dictates that locally produced materials, personnel, financing, goods and/or services be employed in projects throughout the continent, however the exact demand differs from country to country. It’s not as simple as forcing companies to employ a prescribed number of locals. There is no faulting the ultimate goal of local content, said OritsematoNOVEMBER/DECEMBER 2015

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san Edodo-Emore, managing partner with Nigeria law firm, Oritsematosan Edodo, Thorpe & Associates. “Local content is geared towards ensuring African countries become self-reliant in those aspects of their economies where they had depended almost totally on foreign know-how in the past,” she said. “But there are many examples where the requirements are just not practical or possible. In Uganda, for instance, the Petroleum Act of 2013 requires 48 percent equity participation by indigenes. In practice companies just cannot meet this target as there are just no locals willing or able to take up this challenge.” In Angola, a foreign national can only be employed in the local oil industry with the express permission of the ministry of petroleum resources. Foreigners are also only employed once it has been shown that no qualified

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Angolan is available to fill a particular vacancy. In Tanzania, where a foreign national is employed, a succession plan must be submitted along with any application for work permits. Nigeria has similar provisions, although it has taken its legislation one step further making it mandatory that only Nigerians are employed in the junior and intermediate segments of the oil industry’s labor force. Expatriate positions are restricted to only 5 percent of the management positions of any particular project. “Building up the skilled local manpower to take charge of these specialized areas will take time and is quite challenging,” said Edodo-Emore. Which is why several countries have included clauses in their local content legislation mandating international companies to train local workforces. Sonal Sejpal, a director with Anjar-

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walla & Khanna in Kenya, said local content must be implemented through a phased approach to have a chance of succeeding. “It is about building local capacity steadily with minimal interruption or onerous requirements being placed on contractors.” She said it was imperative for companies operating in Africa to come to terms and clearly understand the local content legislation in any given jurisdiction. Governments also needed to see the bigger picture of what they were trying to achieve rather than just having an immediate impact on local communities. “Global experience demonstrates that reliance on local content beyond the existing capacity of local industry or the absorptive capacity of particular assets can result in greater costs, lower government revenues and lessen competition,” she said.

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W W W .S C M L IN E S .C O M 64 BREAKBULK MAGAZINE www.breakbulk.com

NOVEMBER/DECEMBER 2015

Delays and Overruns

At the same time heavy reliance on local content is often associated with project delays and cost overruns. In Kenya, a country still at the exploration stage of its oil and gas sector, calls for local equity ownership are problematic as few Kenyans have access to the kind of financial resources necessary. “At this stage the contractors bear all the risk and incur expenditure without drawing any income from their operations. It is also difficult to see the benefit local ownership will have at this stage of the cycle,” said Seipal. “Requiring contractors to give preference to local goods or services, if available, makes more sense.” Sejpal added that it was imperative that countries ensured that local content legislation be alive to the existing realities in any particular country taking

into account the availability of skilled local manpower, local capital requirement, and the country’s position in its production cycle. “Further, countries need to endeavor to remain commercially attractive to investors and competitive with other jurisdictions,” she said. It was, however, commonly accepted that without the necessary legislation no change would be effected in Africa. That said, it was crucial that governments implement legislation that can be adhered to and that does not create scenarios and situations that are impossible to meet. “If the local content requirements are too stringent, contractors may adopt a strategy of farming in the explorations stage then farming out soon thereafter, which would not benefit the industry in the long run,” Sejpal said. “Contractors should be incentiv-

ized to adhere and go beyond the minimum local requirements provided in the law.” With the penalties of non-compliance ranging from heavy fines to even jail terms local content has become the one area where companies are less inclined to take risks. Kenya imposes a penalty of about US$11,000 while Nigeria imposes a fine of 5 percent of the project sum for each project in which there is a contravention. Companies also face the risk of projects being cancelled or tenders declined. “There is no quick fix to this,” Bonnett said. “As a continent, as countries, we are simply going to have to work our way through this. The same goes for companies. Those that are willing to embrace the change and work with governments will ultimately be the front runners in the end.” BB

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www.breakbulk.com BREAKBULK MAGAZINE 65

BUYERS’ GUIDE | 2016 SPECIAL ADVERTISING SECTION

2016

BUYERS’ GUIDE

66 BREAKBULK MAGAZINE www.breakbulk.com

NOVEMBER-DECEMBER 2015

BUYERS’ GUIDE | 2016 SPECIAL ADVERTISING SECTION

MANAGING DIRECTOR Alli McEntyre +353.21.470.9595 amcentyre@breakbulk.com

ACCOUNT MANAGER Kathleen Pinson +1.678.954.0552 kpinson@breakbulk.com

EDITORIAL DIRECTOR Gary Burrows

NEWS EDITOR Carly Fields

DESIGNER Catherine Dorrough

HEADQUARTERS Clifton House Lower Fitzwilliam Street Dublin 2 Ireland

contents 67 PORT OF MOBILE / ALABAMA STATE SEAPORT ALLIANCE

74 FEDNAV

81 MARTIN BENCHER GROUP

68 HANSA HEAVY LIFT

75 PORT OF LONGVIEW

82 ZEELAND

76 GAC

83 HYUNDAI

77 BAHRI GENERAL CARGO

84 LIEBHERR

78 AAL

85 NORDANA

79 GLOBAL PROJECT LOGISTICS NETWORK

86 RH SHIPPING

69 HÖEGH AUTOLINERS 70 KOG TRANSPORT 71 NYK BULK & PROJECTS 72 JAXPORT 73 T HE NORTHWEST SEAPORT ALLIANCE

80 WWL

PORT OF MOBILE / ALABAMA STATE PORT AUTHORITY The Port of Mobile is one of the nation’s largest seaports in overall cargo volume handling more than 55 million tons of cargo annually. Located on the northern Gulf of Mexico, the full service, public seaport terminals are owned by the Alabama State Port Authority handling containerized, breakbulk, dry and liquid bulk, frozen poultry, and oversized/heavy lift cargoes. Since 2000, the Port Authority has invested over $700 million in port improvements, including a $300 million container terminal (APM Terminals Mobile); a $120 million expansion program at McDuffie Coal Terminal; a $110 million steel handing facility; a $33 million turning basin serving Post-Panamax and Cape Class vessels; a $26 million rail ferry terminal; a $36 million state-of-the-art steel coil handling facility served by rail, truck, barge and a 40 ft. draft ship dock. In 2016, the Port Authority will

complete Phase One of a $36 million intermodal container transfer facility (ICTF) providing containerized cargo shippers via the Port of Mobile and five Class I railroads expanded market access into the Southeast, Midwest, and the Ohio and Tennessee River valleys. This investment complements the recent announcement by APM Terminals of $40 Million in yard and equipment improvements, including the addition of two Super Post Panamax cranes. Also on the horizon is a planned automobile (RO/RO) terminal and an intermodal logistics park. The Alabama State Port Authority’s terminals connect to two interstate systems (I-10 and I-65) and five 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 coupled with a strong labor market and community-state-federal support make the Port of Mobile one of the nation’s fastest growing ports. For more information, log on to www.asdd.com.

www.breakbulk.com BREAKBULK MAGAZINE 67

BUYERS’ GUIDE | 2016 SPECIAL ADVERTISING SECTION

SUPER HEAVY LIFT AND PROJECT CARGO SPECIALIST

HANSA HEAVY LIFT KEY HIGHLIGHTS One of the

biggest

heavy lift fleets in the world.

In-house team of specialist engineers and naval architects On-board cranes capable of lifting up to

1,400 metric tons. Our

six-step process

will ensure your cargo is delivered safely and on-time.

We will continue to focus our capabilities in the offshore and T&I business to build on the growing opportunities in these sectors. – ROGER ILIFFE, CHIEF EXECUTIVE OFFICER (CEO), HANSA HEAVY LIFT

HANSA HEAVY LIFT’s young fleet of vessels specially adapted to deal with any sized cargo, no matter the challenge HANSA HEAVY LIFT is a global tramp carrier specializing in the transportation of super heavy lift, heavy lift and project cargoes, with a growing focus on the offshore and Transport and Installation (T&I) markets. The company’s vessels are equipped with cranes capable of lifting up to 1,400 metric tons, the company offers customized transport solutions through its inhouse team of engineers and regional office structure. “Our vessels have been adapted in order to carry out increasingly complex demands from our clients, to help us meet any challenge,” said Roger Iliffe, Chief Executive Officer (CEO), HANSA HEAVY LIFT. “We have an in-house team of highly skilled engineers and naval architects with shipyard, offshore and installation backgrounds, which gives us the independence needed to handle these projects internally without any assistance from third parties. In-house engineering expertise is essential and having vessels with flexible stowage and up-to-date equipment is also a must.” The company operates one of the biggest heavy lift fleets in the world, with 19 multipurpose heavy lift vessels complying with the most up-to-date operational and equipment standards.

68 BREAKBULK MAGAZINE www.breakbulk.com

HANSA HEAVY LIFT is increasing its focus on the offshore and Transport and Installation (T&I) markets, having recently conducted an underwater delivery of a Mid Water Arch Assembly by performing a wet handshake. The operation took place at Cluster 7 Field in India for Oil and Natural Gas Corporation (ONGC).

Each ship carries a large variety of certified lifting beams, spreaders, grommets, shackles, load spreading platforms, Yokohama fenders and lashing equipment in order to ensure vessels of each class are interchangeable and be prepared for any job at any time. HANSA HEAVY LIFT’s six step process will ensure your cargo is delivered safely and on-time. HANSA HEAVY LIFT’s vessels hold one of the highest ice-class, E3 equivalent to Finnish-Swedish 1A and are compliant with the Offshore Vessel Inspection Database (OVID). This means the vessels can travel without an icebreaker in first year ice up to one meter thick. The shipping line has significant experience of the Northern Sea Route saving customers’ valuable time and cost, reducing fuel consump-

tion and eliminating the risk of piracy. The carrier recently became one of only nine shipping companies in the world to be recognised with a DNV GL Excellence - Five Stars Award for the high quality of its management systems. The award was given for the quality of its management systems including ISO 9001 (Quality), ISO 14001 (Environment), BS OHSAS 18001 (Health and Safety) and ISM (International Safety Management) / ISPS (International Ship and Port Facility Security) Code.

HEADQUARTERS HANSA HEAVY LIFT GmbH Oberbaumbruecke 1 20457 Hamburg Phone: +49 40 325 325 0 E-mail: info@hansaheavylift.com NOVEMBER-DECEMBER 2015

BUYERS’ GUIDE | 2016 SPECIAL ADVERTISING SECTION

HÖEGH AUTOLINERS – WHEN QUALITY MATTERS Höegh Autoliners is a leading global provider of RoRo transportation services, carrying close to two million standard car units annually worldwide. With over 85 years of experience, our company culture is built on sustainability, professionalism and a constant search for new solutions that can further improve the services to our customers. The company operates around 50 PCTCs (Pure Car and Truck Carriers) in global trade systems and makes about 3 000 port calls annually.

GLOBAL STRENGTH WITH PERSONAL SERVICE Höegh Autoliners’ focus is always towards our customers and we consciously position ourselves as close to our primary market as possible. As a result, we operate through 20 local offices along with dedicated agents around the world that offer our customers professional local competence and knowledge. We believe in personal service and that it secures a close understanding of your cargo’s specific requirements. Beside each sales and customer service representative, we have a team of cargo handling experts that plan the transportation of your cargo. In addition, we continually develop our services to support customers with short sea networks and terminals, as well as doorto-door solutions for OEM customers. FLEXIBLE AND MODERN FLEET Our vessels are designed for maximum flexibility in order to cater for a wide variety of rolling and non-rolling cargo. In 2015, Höegh started to take delivery of our new state-of-the-art New Horizon class vessels. These are some of the world’s largest PCTCs. The vessels have a carrying capacity of 8 500 car equivalent units and their wider internal ramps offer safer and more efficient operation. These vessels offer up to 6.5 metres of free deck height, 12 metres of ramp width and capacity to take cargo weighing up to 250 tonnes. The Horizon vessels are designed to

minimise the impact on the environment with CO2 emissions per car transported estimated to become 50 per cent lower than on standard car carriers.

PROFESSIONAL OPERATION High and heavy and breakbulk cargo require flexible cargo handling equipment that we provide. Our professional cargo operation team will find the most suitable equipment and way of handling your cargo safely on board our vessels. Secure and safe transportation of your cargo to its destination is a key priority for us at Höegh Autoliners. During sailing, our experienced crew are continually monitoring all cargo to ensure that it stays safe during the entire journey. Our crew train at reputable institutions, always focusing on quality and safety. Höegh Autoliners provides continuous training and education to our cargo handling personnel and crew. This is vital to ensure that they are up-to-date with the latest developments in cargo handling operations. Our professional cargo handling team will also, when required, be involved in the pre-shipment phase and support you in the preparation of your cargo.

Höegh Autoliners only work with high quality port service providers whom we regularly review and follow up to ensure that they are always up to our high standards.

ENVIRONMENT Höegh Autoliners is committed to economic growth, social responsibility and minimising our impact on the environment. We believe in the value of sustainable development and continually work towards enhancing our performance and utilizing the most energy efficient solutions at all times. Höegh Autoliners is ISO 9001 certified and our ship management is ISO 14001 certified.

HÖEGH AUTOLINERS AS Drammensveien 134, NO-0212 Oslo, Norway Tel: +47 21 03 90 00 E-mail: hoeghautoliners@hoegh.com www.hoeghautoliners.com www.breakbulk.com BREAKBULK MAGAZINE 69

BUYERS’ GUIDE | 2016 SPECIAL ADVERTISING SECTION

BIG ENOUGH TO HANDLE. SMALL ENOUGH TO CARE.

a member of the Rhenus Group Project Control Centers USA: KOG TRANSPORT, INC. 299 Broadway, Suite 1815 New York, NY 10007 Contact: Colin D’Abreo Telephone: + 1 212 346 9800 Telefax: + 1 212 748 6133 Email: cdabreo@kogusa.com

SWITZERLAND:

KOG TRANSPORT, AG Zugerstrasse 1 CH-6330 Cham, Switzerland Contact: Roger Kündig Telephone: + 41 (0) 41 784 2356 Telefax: + 41 (0) 41 781 1530 Email: rkuendig@kogzug.ch

A true project logistics partner. Providing tailor-made solutions for specialized transport needs. Over 30 years of successfully providing feasible solutions to complex transport challenges. KOG Transport, a member of the Rhenus Group, is presently involved in 2 Major Oil & Gas projects in Baytown / Mont Belvieu near Houston. Along with KOG offices in Japan, Switzerland and USA arranged for deliveries of over 50 Heavy Lifts ranging from 100MT units to 840MT unit weights. This involved the coordination of various methods such as Ocean Transportation from foreign ports, local barging in Houston, constructing and building jumper bridges as well as temporary bridges over canals, negotiating freeway closures and specialized heavy haul from the port and barge landings to the various job sites. Our teams have worked round the clock to make these projects a success. We organize and supervise projects from feasibility studies to completion, including route surveys and special transport of heavy lift and oversized cargoes. Whether it be projects, cross trade shipments or one-off deliveries - over water, air, land or rail - KOG Transport

is equipped to handle them. Regular air freight to onboard couriers, from simple LCL shipments to renting an entire bay on container ships or being the first to manage a project involving barging a 2700MT unit on barges over high seas – twice - we have done them all. We are members of C-TPAT program, FCPA compliant and certified with ISO9001, ISO-14001 and OSHAS-18001. Licensed FIATA and IATA agents, we are equipped to handle DGR and Radioactive goods. We have our own offices in over 17 countries and are represented by an exclusive agency network worldwide. Since the beginning of 2015, KOG Transport is a part of the Rhenus Group and has access to a general logistic network of over 350 branches in over 40 countries.

Please contact your nearest project control center for a personalized service. Cham, Switzerland – for EMEA (Europe, Middle East and Africa) region. New York, USA – for AMERICAS (North and South America) region. Japan, Tokyo – for APAC (Asia Pacific) region.

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

70 BREAKBULK MAGAZINE www.breakbulk.com

NOVEMBER-DECEMBER 2015

BUYERS’ GUIDE | 2016 SPECIAL ADVERTISING SECTION

YOUR RELIABLE CARRIER FOR PROJECT CARGO AND BULK PRODUCTS TOKYO OFFICE Tel: +81-3284-6702 Email:NBP_GMO@nykgroup.com

NYK Bulk & Projects Carriers Ltd., a wholly owned subsidiary of Nippon Yusen Kaisha (NYK), Japan’s largest shipping company, is one of the world’s leading ocean carriers of project cargo, heavy lift cargo, steel products, and bulk cargo. Established on 1 October 2013 through the merger of NYK-Hinode Line Ltd. and NYK Global Bulk Corporation, the company’s roots extend back over 100 years to November 1912. We serve overseas markets through our global offices, which work in tandem with the worldwide network of the NYK Group and a number of agencies to meet all your ocean transportation needs.

SERVICES WORLDWIDE We provide regular semi-liner services at locations worldwide, including Americas, Europe, the Mediterranean Sea, Africa, Southeast Asia, India, the Middle East, and the South Pacific. In addition, we offer ondemand services dedicated to big/heavy lot

and multi-destination transportation, as well as modularized cargo transportation and dry bulk services.

OUR MARITIME KNOW-HOW We handle heavy and lengthy project cargo such as that for LNG facilities, power plants, windmills, and oil refineries. We coordinate closely with our customers to create transport scenarios, from preloading to delivery for safe, attentive, and reliable services by taking advantage of our maritime know-how. We are committed to HSEQ (Health, Safety, Environment, and Quality) management, and our key vessels and divisions are all ISO9001/14001 and OHSAS18001 certified. “Flexibility” is our strength. Our worldwide sales office remains ready and willing to provide support to meet the individual needs of our customers. Please contact one of our offices for more information or to simply ask a question.

HOUSTON OFFICE Tel: +1-713-961-9136 Email:Stephen.Garifalos@nykbulk.com Junya.inoue@nykbulk.com

HAMBURG OFFICE Tel: +49-(0-)4-40-33-400-1561 / 1564 Email: ops.semiliner@ne.nykline.com

SINGAPORE OFFICE Tel:+65-6290-8780 Email: mitsutaka.imura@nykgroup.com

DALIAN OFFICE Tel:+86-411-82798956 Email: jun_takeda@cn.nykline.com

Bringing Value to Life, Carrying Dreams for Tomorrow

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BUYERS’ GUIDE | 2016 SPECIAL ADVERTISING SECTION

OUT OF THE BOX:

JAXPORT MANAGES COMPLEX SHIPMENTS WITH EASE Located in Northeast Florida, in the heart of the South Atlantic, JAXPORT offers worldwide breakbulk, heavy lift and project cargo service from dozens of ocean carriers. Situated at the crossroads of the nation’s rail and highway network, JAXPORT terminals are serviced by I-10, I-95 and I-75, and the city has 36 daily train departures via CSX, Norfolk Southern, and Florida East Coast Railway.

BREAKBULK CARGO JAXPORT has decades of experience handling fertilizer, metals, forest products, perishables and other breakbulk. The port boasts more than 1 million square feet of on-dock warehousing storage and more than 3 million cubic feet of on-dock refrigerated space, with millions of square feet of additional space are located within minutes of port terminals. JAXPORT’s equal balance of imports and exports provides backhaul opportunities for importers saving money and maximizing transportation costs. HEAVY LIFT AND PROJECT CARGO The recently rebuilt heavy lift cargo berth at JAXPORT’s Blount Island Marine Terminal ranks as one of the nation’s highest weight-bearing capacity docks, offering up to 1,800 pounds per square foot of load capacity and rail capability up to 78 kips per axle. JAXPORT has the highest and widest cargo clearance available 72 BREAKBULK MAGAZINE www.breakbulk.com

for port access by rail on CSX’s national system: 20 feet high and 13 feet wide. Northeast Florida’s skilled workforce offers a variety of labor options, including highly trained master riggers specializing in heavy lift and project cargo.

INVESTING IN THE FUTURE A wide-ranging effort is underway to enhance infrastructure at Blount Island and Talleyrand terminals. Upgrades to wharves, on-dock rail and terminal pavement areas are under construction. These capital improvements – made possible by $100 million in federal and state funds – enable

JAXPORT to continue to build the port of the future. The Florida Department of Transportation, nationally recognized for its innovative programs, has invested more than $1.2 billion in JAXPORT and the region during the past five years, and has pledged an additional $1 billion to local infrastructure projects.

CUSTOMIZED SHIPPING SOLUTIONS JAXPORT’s dedicated sales team and port partners offer customized shipping solutions tailored to the efficient handling of breakbulk, heavy lift and project cargo. Learn more at JAXPORT.com/ cargo. NOVEMBER-DECEMBER 2015

BUYERS’ GUIDE | 2016 SPECIAL ADVERTISING SECTION

THE NORTHWEST SEAPORT ALLIANCE – GATEWAY TO SOLUTIONS FOR YOUR BREAKBULK AND RO/RO SHIPPING NEEDS

If you ship it, we can handle it. Breakbulk or project; high-wide-and-heavy, ro-ro/lo-lo, or non-wheeled. And we have a proven record of success moving all types of cargo with precision and speed. Northwest Seaport Alliance terminal facilities, carriers and ports of call provide unlimited options and flexibility to suit your unique supply chain needs. And our commitment to working hand-in-hand with breakbulk customers to provide cost-effective, innovative shipping solutions is unparalleled in the industry. At the end of the day, it’s all about helping you, the shipper, get the job done.

MAKE OUR COMPETITIVE ADVANTAGES YOURS:

Better connections: We

are the closest U.S. port to China and Northeast Asia. Seven of the world’s leading breakbulk and auto/ro-ro carriers offer regular service between Northwest Seaport Alliance harbors and major ports of call in Asia, Europe and Oceania - and via transshipment to anywhere in the world. Other carriers call on inducement.

Breakbulk handling expertise: Our labor is

highly-skilled and experienced, with specialized training for damage-free and secure handling of all types of breakbulk and ro-ro cargo;

ABOUT THE NORTHWEST SEAPORT ALLIANCE

Superior intermodal service: Convenient on-

dock rail is available at EB-1, our primary breakbulk terminal, with near-dock access at Terminal 7. BNSF Railway and Union Pacific Railroad both provide regularly scheduled transcontinental rail service to agricultural and industrial markets in the Midwest, and via interline connections throughout the U.S. Our facilities are adjacent to the railroad mainline to save additional time and money for your rail shipments

Convenient location: Our

terminals are located within minutes of interstate highways for over-the-road shipments. A heavy-haul corridor in the Tacoma harbor helps expedite movement of overweight freight within the Port Industrial Area.

Strategic hub for Alaska projects: We are the closest U.S. port to the Alaska

market. Jones Act carriers Matson, Totem Ocean Trailer Express (TOTE) and Alaska Marine Lines offer regular weekly container service to key Alaska population centers; barge service to remote locations in Alaska and the Arctic from the Seattle harbor. Carlile Transportation and Lynden, leaders in providing shipping solutions for the Alaska market operate terminals in the Puget Sound. And our available land for project cargo staging and handling, and experience with energy, forestry and mining equipment make us a natural choice for Arctic resource development projects.

THE NORTHWEST SEAPORT ALLIANCE PO Box 2985 Tacoma, WA 98401-2985 Phone: 800-657-9808 URL: www.nwseaportalliance.com

The Northwest Seaport Alliance brings together two of the premier harbor facilities in North America (Ports of Seattle and Tacoma, Washington State, USA) to form a single, integrated gateway for marine cargo. The Alliance, effective August 2015, unifies management of marine cargo facilities, thereby strengthening the gateway and attracting more marine cargo and jobs for the Puget Sound region. The alliance is a port development authority governed by the two ports as equal members, with each port acting through its elected commissioners.

For more information: Call our breakbulk specialists at 253-592-6792 or go to www.nwseaportalliance.com to learn more about how we can help with your breakbulk shipping needs. Submit a Request for Quote to https://www.nwseaportalliance. com/operations/breakbulk-quote

www.breakbulk.com BREAKBULK MAGAZINE 73

FMT

FALLine

Fednav Direct

Fednav Limited, headquartered in Montreal, is a privately owned shipping company and the largest dry bulk shipping group in Canada. Together with its associated companies, it engages in several areas of transportation: ship owning; ship chartering for short- and long-term periods; marine transportation of bulk and breakbulk cargoes worldwide, including the Canadian Arctic; ice navigation services; stevedoring at terminals owned and operated by Fednav; and providing logistics services including warehousing and ground transportation. Fednav International Ltd., or FIL, a wholly owned subsidiary of Fednav Limited, is the company’s freight arm. As well as being a leader trading in and out of the St. Lawrence River and the Great Lakes, where it is the largest deep-sea operator, FIL also services worldwide trade routes with its fleet of about 85 bulk carriers consisting of icebreaking Handysize, Supramax, and Panamax vessels with two Ultramax newbuildings to be delivered in 2016. Transporting approximately 25 million tonnes of cargo per year, the combination of longand short-term charters, including vessels of which 51 are owned—with another 10 on delivery—allows FIL to ensure reliable service for its customers while maintaining operational flexibility. Federal Atlantic Lakes Line, or FALLine, a division of FIL created 55 years ago, operates a steel and general cargo liner service from ports in Western Europe to ports

in the St. Lawrence River and the Great Lakes, offering over 40 sailings yearly. Federal Marine Terminals is a fully owned subsidiary of Fednav Limited. FMT operates 12 terminals on the US East and Gulf coasts and in the Great Lakes, providing bulk and general cargo handling and warehousing services to customers worldwide. This year marked FMT’s 50 th anniversary of operation. Fednav Direct offers comprehensive on-carriage transportation management solutions including warehousing and just-in-time delivery. Enfotec Technical Services Inc., a subsidiary of Fednav Limited, specializes in providing ice analysis and vessel routing services for ships operating in ice-covered waters. The core of the company’s business is IceNavTM , a proprietary shipboard computerized ice navigation system providing client ships with near- real-time satellite images, charts, and forecasts of ice conditions. The subsidiary also specializes in environmental impact assessments and accessibility studies for marine operations through ice-covered waters. Fednav Limited directly employs 280 office staff worldwide—150 in its Montreal headquarters and about 2,000 personnel under contract on its owned vessels and in its terminals. The company also maintains commercial offices in Antwerp, Barbados, Charlotte, Hamburg, London, Rio de Janeiro, Singapore, St. John’s, and Tokyo.

www.fednav.com

WORKING ADVANTAGES

The Port of Longview is the first full-service operating port with strategic transportation connections on the deep draft Columbia River.

FASTER

CLOSER

2 Liebherr Mobile Harbor Cranes, 45 MTs Reach Stackers, multiple heavylift forklifts and trailer options all work together to keep your cargo on the move

5,000 miles and 20 days closer to Asia than gulf coast ports; 5 miles to Interstate-5; located at Columbia River Mile 66

SMARTER

BETTER Served by Union Pacific and BNSF; Industrial Rail Corridor for direct access off mainline and 1,500 contiguous feet of on-dock rail

70 acres of open storage adjacent to berths; 25 acres of Foreign Trade Zone available; long-term storage options and a superior labor force

LEARN MORE AT PORTOFLONGVIEW.COM

PORTOFLONGVIEW.COM

T. 360-425-3305 F. 360-425-8650

10 PORT WAY, LONGVIEW, WASHINGTON 98632

BUYERS’ GUIDE | 2016 SPECIAL ADVERTISING SECTION

GAC – A WORLD LEADER

GAC GROUP CORPORATE HQ Jebel Ali Free Zone PO Box 18006 Dubai United Arab Emirates Tel: +971 4 881 1411 Fax: +971 4 881 1511 Email: hq@gac.com Web: www.gac.com

GAC is one of the world’s leading providers of integrated shipping, logistics and marine services with over 9,000 employees in more than 300 offices worldwide. It provides a complete range of shipping and logistics services to a diverse clientele, including many seeking support for project cargo and heavy lift shipments, helping them achieve their strategic goals. Since the early 1970s, GAC has been a leader in moving project cargoes from source to destination. We support major project undertakings by combining our shipping, logistics and marine divisions, providing services that include: ite survey / feasibility studies (routes, • Sweather, political climate) ull / part charter parties (air • Fcharters, time/ voyage charters) ulti-modal transport (rail, tug & barge, • Mheavy lift) pecial equipment transport (flat racks, • Sopen tops, platforms, tween deck solutions)

reduces risk and cost, providing transparency in handling and peace of mind throughout the project move. GAC’s global reach provides security through one company control, ensuring strict HSSE, Quality and Compliance implementation throughout the project life. Commitment, flexibility and experience are central to the GAC approach on every project, whether it be a single shipment or the execution of a global EPC contract. To learn more about how GAC can help with your project cargo or heavy lift shipments, contact us at project.logistics@gac.com In 2016, GAC celebrates 60 years since the establishment of its first office, in Kuwait. Since those early days, the Group has grown both geographically and in terms of the range of integrated services it offers its customers around the world. Times have changed, so has GAC, but some things are constant. The commitment to excellence and ethical business practices that were at the heart of the Group’s foundation remain just as strong today as they did back in 1956. For more about GAC, go to www.gac.com.

reight negotiation (COA negotiation, • Flong term rate validities) dministrative support (customs clear• Aance, trade documentation) n-house flexible IT solutions and track• Iing and tracing GAC Marine’s barges and landing craft are ideally suited for transporting project cargo in hard-to-reach areas with infrastructure limitations. GAC also provide ballastable barges to receive cargo on direct delivery basis for on-carriage to final destination. This unique combination of shipping, logistics and marine capability within GAC

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NOVEMBER-DECEMBER 2015

BUYERS’ GUIDE | 2016 SPECIAL ADVERTISING SECTION

BAHRI GENERAL CARGO As a pioneer unit of Bahri, The National Shipping Company of Saudi Arabia with more than 35 years history, Bahri General Cargo is one of the very few marine transportation companies offering a full liner service between North America and the Middle East. The company operates six modern multipurpose vessels – four connecting the United States, the Kingdom of Saudi Arabia and major ports in the Gulf, Indian SubContinent and Mediterranean and two vessels connecting Europe to the Kingdom of Saudi Arabia and key ports in the Gulf and Mediterranean. Bahri General Cargo views itself as a niche carrier focusing on optimal cargo mix while specializing in underdeck storage capability. The General Cargo sector also manages a container service yard facility at Jeddah Islamic port in Saudi Arabia to handle its containers, and has invested in a new IT system to integrate ports, agents and offices to provide superior customer services. A vast network of offices and agents located around the globe facilitates the variety of services Bahri General Cargo provides its clients. The National Shipping Company of Saudi Arabia (Bahri), was formed by a Royal Decree in the year 1978 as a public company with 22.5% ownership held by the Public Investment Fund “PIF” of the Saudi Government, 20% by Saudi Aramco Development Company, and the remainder widely held in public shares by Saudi nationals. Bahri has grown from a small shipping firm operating multipurpose vessels into one of the biggest shipping conglomerates in the world and occupies a pre-eminent position among its industry peers at national, regional and international levels in all sectors of its business operations. Marching past its 35-year mark, the Kingdom of Saudi Arabia’s first national carrier has generated a strong VIP customer base. During the course of its diversification, the company’s services have been expanded to include trans-

portation of general cargo, crude oil, chemical, liquefied petroleum gas and dry bulk. Having initially begun its operations strictly for transporting general cargo and containers, Bahri, with its extensive track record, has garnered a reputation for providing a superior level of service to customers in all sectors. Bahri owns and operates 32 VLCCs, including one VLCC designated as floating storage unit, 4 MRs and 1 Aframax, all compliant with international standards. A contract with Hyundai Samho Heavy Industries (HSHI) has been signed to build 10 VLCCs which will be delivered between 2017 and 2018. In addition, two Korean 2010-built VLCCs were recently acquired and will be in operation by spring 2016. In its desire to expand further, Bahri established a new business unit, Bahri Gas & Marine Services, which is responsible for exploring investment opportunities in the offshore industry. This business unit also manages and develops the company’s LPG investment through its 30.3% share in partner Petredec, the largest independent LPG trading and shipping company in the world. Bahri also owns a fleet of 26 chemical carriers through Bahri

Chemicals, a subsidiary established in partnership with SABIC, which has become one of the largest chemical transporters in the world and 5 dry-bulk carriers operated by Bahri Dry Bulk (BDB), a subsidiary of Bahri, established in partnership with ARASCO. The company also owns a ship management unit “Mideast” which is responsible for managing the Bahri fleet.

www.breakbulk.com BREAKBULK MAGAZINE 77

BUYERS’ GUIDE | 2016 SPECIAL ADVERTISING SECTION

AAL. POWERED BY PARTNERSHIPS.

CONTACT DETAILS AAL Head Office 9 Temasek Boulevard #20-01 Suntec Tower 2 Singapore 038989 T: +65 6248 3600 F: +65 6334 2622 E: sales.sg@aalshipping.com Website: www.aalshipping.com

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Founded in 1995 and headquartered in Singapore, AAL is a leading global ocean transport operator, serving the breakbulk, heavy lift and project cargo industry. A member of Schoeller Holdings – a prestigious maritime group, comprising of a number of complimentary companies from all sectors of the shipping industry – we have grown into one of the world’s largest multipurpose operators. We proudly serve the transportation needs of the most dynamic and demanding industries like renewable energy, oil & gas, mining, forestry, leisure, agriculture and construction – and our vision is to be the best at what we do and create sustainable growth and an unparalleled reputation, built on trust and service. Our unique shipping service has two complementary divisions. A ‘Liner Services’ division offers reliability and schedule integrity, with regular sailings between Asia, Oceania and North America. Our ‘Tramp & Projects’ division provides tailor-made transport solutions for all types of dry cargo between any compass point – as well as fixed route sailings from Asia to all continents. AAL’s expanding infrastructure and network of representative offices and agencies stretches from Asia and Oceania to Middle East, Europe and the

Americas. With our award-winning team of multinational and multilingual professionals on land and sea, we swiftly and effectively address around-the-clock demands of a global customer base. Our operating fleet of modern multipurpose and heavy lift vessels is the market’s youngest. It comprises of owned, chartered-in and additional tonnage through a major cooperation with Peter Döhle, undertaken to add valuable capacity to our growing Tramp & Projects division. Today, our fleet boasts 7 classes of multipurpose vessel, ranging from 12,000 to 31,000 dwt. Each vessel is designed and equipped to load and accommodate a huge variety of cargo types - from heavy lift and project cargo, to breakbulk and unitised cargo and dry bulk. Coupled with our Technical and Operations Teams’ know-how and customer-centric philosophy, we deliver cargo handling and transport solutions of the highest standard in safety and efficiency. Building long-term and trustworthy relationships with customers, vendors and stakeholders is the energy that drives us to excel at every level of our shipping service and the ambition that powers our business to further growth and new horizons. AAL. Powered by partnerships.

NOVEMBER-DECEMBER 2015

BUYERS’ GUIDE | 2016 SPECIAL ADVERTISING SECTION

GLOBAL PROJECT LOGISTICS NETWORK Global Project Logistics Network (GPLN) was established in 2004 and is an international group of independent companies specializing in logistics for entire large scale projects or focusing on transport of heavy or oversized cargoes. The primary aim of GPLN is to provide small and medium enterprises (SME’s) in this very specialized field a platform to compete globally. GPLN offers the SME’s a worldwide network of likewise minded project logistics experts and GPLN members can thus propose their customers door to door solutions with a global coverage of heavy and oversized cargo transportation experts that execute any job at the highest technical level possible. GPLN members are specially trained in various areas including heavy lift and oversized cargo transportation by sea, air and overland, crane operations, rigging, machinery installation and many others. Our members are also able to provide special equipment, ranging from heavy lift geared vessel to barges and landing crafts, multi-axle hydraulic trailers, low bed trailers, all types of cranes, barges, landing crafts, etc. GPLN members service virtually all large industries starting from oil & gas to energy, mining, petrochemical, infrastructure, construction, steel, cement, pulp & paper and many others. GPLN is steadily improving the technical know-how of their members and the industry at large. In this respect,

GPLN organizes the well-known Heavy Transport and Lifting Course which is the most recognized Heavy Lift Technical Training Course in the world. Attendees learn how to handle heavy equipment with cranes, on vehicles, in ships and on barges with all its specific technical details. GPLN provides also technical assistance to their members for technical drawings, method statements and truck / container loading programs. This service is made available by industry professionals who have long-term experience and can assist GPLN members for difficult and complex tasks. GPLN’s newsletter is issued bimonthly and made for the GPLN members, sponsors and their customers. The majority of the articles covered are the success stories of great moves by GPLN members and sponsors. The newsletter is distributed by mail and at industry events to about 80,000 decision makers globally of companies that are using project logistics services. GPLN has recorded its history through photos on the GPLN Facebook page with over 10,000 pictures, making it one of the largest heavy haulage and lifting online photo bank. The GPLN Facebook page is a great sales tool for the GPLN members to show their capability. GPLN Membership is still available in selected markets. For more information please contact:

GLOBAL PROJECT LOGISTICS NETWORK (GPLN) Email: info@gpln.net Website: www.gpln.net Newsletter: h ttp://www.gpln.net/ newsletters.html Facebook: w ww.facebook.com/ GPLN.HeavyTransports

www.breakbulk.com BREAKBULK MAGAZINE 79

BUYERS’ GUIDE | 2016 SPECIAL ADVERTISING SECTION

WALLENIUS WILHELMSEN LOGISTICS With cutting edge vessels, tailored equipment and custom solutions, RoRo is a safer,smarter way to transport your products. Especially with our experienced engineers managing the move. Whether long, tall or heavy, our vessels are designed to offer customers an extensive range of possibilities in transporting unique breakbulk products with specifications of up to 400 tons in weight, 11 meters in width, 6 meters in height and 50 meters in length. Breakbulk products are moved from landbased equipment onto

For more details, please visit www.2wglobal.com.

CREATING VALUE AT EVERY POINT OF TRANSFER

WWL’s own wheeled equipment, with little or no lifting before being gently rolled onto WWL’s vessels. Once secured onboard, the product is shielded from the elements in stable conditions, remaining on the handling equipment for the entire sea voyage until discharged at the final port of destination. Shipping breakbulk products with WWL means inside stowage, time savings, reduced handling and stowage risks, and increased flexibility through regular sailing patterns.

When a long, tall or heavy product is delivered by WWL, it’s not just another handover. It’s the last in a series of tailor-made solutions designed to perfection. It’s about providing the right vessels and specially designed equipment to enable smooth transitions between land and ocean. And it’s about combining decades’ worth of handling expertise with a truly global network. Whether you need reliable shipping from A to B or door-to-door solutions, we work with you to create value at every handover. Through this approach we help our customers reduce transport risks and increase delivery precision. Find out more about how we can create value together at bit.ly/WWLcases

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NOVEMBER-DECEMBER 2015

BUYERS’ GUIDE | 2016 SPECIAL ADVERTISING SECTION

MARTIN BENCHER GROUP

THE EXPERT IN HANDLING YOUR HEAVY AND OVERSIZED CARGO WORLDWIDE Martin Bencher Group is a Scandinavian based shipping and freight forwarding company. We transport all kinds of cargo - and specialize in the handling of projects and oversized/ heavy cargo from many different industries. From paper mills, power plants, and oil and gas projects to wind turbines and luxury yachts, Martin Bencher Group can handle the transportation. Martin Bencher Group is involved in project shipments all over the world. The majority of the cargo we handle is shipped on container- and heavylift vessels, but from time to time the cargo is urgent and airfreight services are needed. All Martin Bencher offices have the necessary expertise and know-how to handle both seafreight and airfreight shipments. With headoffice in Aarhus, Denmark, the Group has its own network of twentythree local offices in eighteen countries around the world and a strong network of trusted partners in most other strategically important locations. Our +120 employees are ready to create competitive solutions tailored to your needs. Martin Bencher Group services:

INLAND SERVICES Multimodal delivery – air, sea, road, rail | Route survey | Loading and discharge planning | Transport permits. PORT AND AGENCY SERVICES Port captain services | Port protecting agency services.

CARGO HANDLING AND TECHNICAL SERVICES Packaging, lashing, cradles and lifting – technical advice | Floating cranes, low loaders, lifting and handling equipment | SOC sourcing – GP / FR / OT containers | Stuffing / Stripping of containers | Cargo consolidation | Load planning | Cargo readiness follow-up / Loading survey / Discharging survey.

www.breakbulk.com BREAKBULK MAGAZINE 81

BUYERS’ GUIDE | 2016 SPECIAL ADVERTISING SECTION

ZEELAND SEAPORTS

YOUR NUMBER ONE PORT FOR OFFSHORE PROJECT CARGO

Zeeland Seaports Schelpenpad 2, Harbour no 1151 P.O. Box 132 Terneuzen Netherlands T +31 115 647400 www.zeelandseaports.com port@zeelandseaports.com

The North Sea is an ideal location for the generation of wind energy. The wind is favourable and thanks to the shallow water depth it is relatively easy to build large wind farms here. Not surprisingly, quite a few offshore wind projects are planned; projects that require a lot of materials that need to be shipped in by sea. The port of Vlissingen, as part of Zeeland Seaports, is an ideal home base for delivery. And not just for wind-energy projects, but also for oil and gas production activities. Our location is one of our strong points. The ports are close to the North Sea and are favourably located in relation to the Netherlands, Belgium, the north of France, the United Kingdom and even Germany and Denmark. In the waters offshore of these countries, major wind farms will be developed over the coming years. In addition, our ports are easily accessible. Large installation vessels can navigate freely, unencumbered by locks or bridges. This is important because what is true anywhere, is true for this branch especially: time is money. For the transport of heavy loads, special ships are needed, which can only carry limited amounts of cargo each time. Therefore, speedy handling is of the utmost importance. Space is another advantage of the Vlissingen location. Many wind generator

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parts are manufactured in the hinterland, for example in Limburg. These companies often look to us specifically for the temporary storage of items including monopiles and transition pieces. Companies such as BOW Terminals and Verbrugge Terminals are offering the space and facilities needed for efficient trans-shipment to the wind farm projects. This is not all that these ports have to offer. Hoondert and VDS, for example, are specialised in large steel construction work; Heerema builds jackets and transformer topsides, Mammoet is a heavy lift and transport specialist, and Multraship provide towage and lifting services. These companies are only a small example of what is on offer, there are many other companies providing vital services. In short, we have everything needed to facilitate the building of offshore energy projects. More than 20 projects have already proven that Vlissingen is a successful home base for the offshore wind industry. It is an image that Zeeland Seaports wants to maintain and reinforce. It is a branch with a future. Today, the wind farms are being built. This will involve many shipping movements and extra jobs – specifically in in construction and assembly work in the future. These wind farms will all need O&M bases. Again, this will involve more jobs in construction and logistics.

NOVEMBER-DECEMBER 2015

BUYERS’ GUIDE | 2016 SPECIAL ADVERTISING SECTION

HYUNDAI FORKLIFT’S 250D-9 DIESEL LIFT TRUCK DELIVERS MUSCLE AND PERFORMANCE FOR HEAVY-DUTY APPLICATIONS A leader in the lift truck market, Hyundai Forklift manufactures a full line of material handling solutions. Backed by Hyundai Heavy Industries, the world’s leading shipbuilder and a global corporation, the company has expanded its lift truck product line in North America in recent years. All Hyundai forklift models are backed by a standard threeyear/4,000-hour total truck warranty. With its North American headquarters and parts depot located in Norcross, Ga., Hyundai Forklift is a full-line supplier of forklifts, including diesel, electric- and LPpowered models, from 2,200 to 55,000 lb (997 to 24,947 kg) capacity. The company is committed to offering innovative equipment solutions, great parts availability, quick delivery and timely technical support to its dealers and their customers. Hyundai Forklift has a dealer network of more than 150 dealer and branch locations throughout the United States and Canada.

9-SERIES DIESEL FORKLIFT TRUCKS Hyundai Forklift’s high-performance, fuel-efficient 9-Series diesel forklift trucks, with models ranging from 3,000 to 55,000 lb. capacities, are designed to move large, heavy loads of materials such as containers, timber, lumber, and concrete and steel products. The Hyundai 9-Series diesel line offers durability through a heavy-duty single-unit frame, superior cooling system, full automatic transmission and a spilt-type drive axle, with hydraulic wet disc brakes standard on all models. HYUNDAI 250D-9 DIESEL TRUCK Engineered for heavy-duty applications and delivering outstanding lifting capacity and superior performance, The Hyundai 250D-9 diesel lift truck is ideally suited for ports and terminals. This durable and dependable machine meets the rigorous demands of Hyundai’s customers.

POWER AND PERFORMANCE The powerful Cummins QSL engine on the Hyundai 250D-9 provides dynamic acceleration, excellent gradeability and optimal travel speed on tough terrains and slopes. Built for power, reliability and economy, the turbo-charged engine meets EPA Tier 4 and EU Stage IV emission regulations. According to operating load, the operator can select from two engine modes by changing the side panel switch. The operator can choose from STD Mode for light-duty operating load, and POWER Mode for heavy-duty or operating on a slope or incline. While the engine is running, idle rpm can be reduced or increased by units of 25 rpm and maintains the previously set rpm when the engine restarts. INCREASED MAST TILTING ANGLE Using the mast tilting angle of 12 degrees forward and 10 degrees backward, the operator can perform loading and unloading jobs safely and rapidly. ROOMY, ERGONOMIC CAB The spacious, ergonomic design of the cab and controls on the Hyundai 250D-9 significantly reduces operator fatigue and improves productivity. Minimal operator effort is required for precise, safe and productive control. The accelerator, brake and inching pedals are optimally positioned for the operator’s convenience. The adjustable steering column and steering handle provides infinite settings to meet the comfort level of any operator. The forklift is equipped with a load weight indicator, displaying the load weight in the LCD color monitor. The load sensor reduces the time to check loaded weight and the alarm alerts the operator when overloaded. With the operator presence sensing

system (OPSS) engaged, all mast and drive movements of the lift truck are inoperable when the operator leaves the seat.

ENHANCED VISIBILITY A rear view camera on the Hyundai 250D-9 provides great rear visibility. The monitor supports four camera channels for greater operator convenience. Front and rear work lamps provide the operator with improved visibility and a safer operating environment. FAST, EASY MAINTENANCE A large engine hood provides easy access to the engine compartment for fast and efficient maintenance. The electric cab tilt system, a standard feature on the Hyundai 250D-9, makes servicing of all power train components quick and easy. An electrically assisted hydraulic actuated cylinder tilts the operator cab to the left side for easy access to the truck components. The air filter is readily accessible for cleaning or replacement. Hyundai’s proprietary Hi-mate remote management system provides operators and dealer service personnel with access to vital service and diagnostic information on the machine from any computer with internet access. The wet disc brake system on the Hyundai 250D-9 diesel lift truck is virtually maintenance free and is fully enclosed to protect from dust and water. For more information about the Hyundai 250D-9 diesel lift truck or other Hyundai Forklift products, please visit www.hceamericas.com, or call 877-509-2254.

www.breakbulk.com BREAKBULK MAGAZINE 83

BUYERS’ GUIDE | 2016 SPECIAL ADVERTISING SECTION

LIEBHERR MARITIME CRANES Liebherr Maritime Cranes is a division of the Liebherr Group which specialises in cargo handling solutions for ports as well as for the shipping and offshore industry. Products include ship to shore cranes, mobile harbour cranes, offshore cranes, ship cranes, rubber tyre and rail mounted gantry cranes, reachstackers and straddle carriers. Liebherr Maritime Cranes covers an extensive range of mobile harbour cranes as well as fixed pedestal and

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rail-mounted cranes, with well over 1300 units delivered to 100 countries worldwide. Their impressive range of application comprises: efficient container handling, • hbighly operations, • theulkhandling • general cargo,of scrap, • and even heavy lifts up to 308 tons • – just by an easy exchange of the

Each mobile harbour crane is available with numerous purpose-planned options for every operating task, size of vessel and type of freight. Moreover, Liebherr specialises in highly immersive simulation-based crane operator training.

lifting attachment.

NOVEMBER-DECEMBER 2015

BUYERS’ GUIDE | 2016 SPECIAL ADVERTISING SECTION

NORDANA ADVANCING TO MEET CHANGING DEMANDS Nordana 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 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 swallow-tailed 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 www.breakbulk.com BREAKBULK MAGAZINE 85

BUYERS’ GUIDE | 2016 SPECIAL ADVERTISING SECTION

R.H. SHIPPING

CONTACT US: Mexico City: +52 (55) 5010 3100. Houston, Texas: +1 (832) 514 2666. Web Page: en.rh-shipping.com Email: projects@rh-shipping.com

INDUSTRIES SERVED:

• • • • • • • • • •

Aerospace Automotive Consumer & retail Energy Pharma and Chemicals Fashion Manufacturing Oil & gas Perishables Technology

At R.H. Shipping, we think big, and our biggest project is customer satisfaction. Precision in each loading and unloading of oversized and heavy equipment is the key in all of our project cargo export, import or domestic operations. We are a proactive expert team in designing and managing your project cargo solutions. Our Ground, Air, Ocean Freight and Customs Service Providers are specialized for your oversized and/or overweight cargo. R.H. Shipping develops solutions and layouts for disassembling, transporting and reassembling plants, offshore platforms, oil pipelines and more. R.H Shipping will offer you preferential conditions for your export, import and domestic transportation for project cargo in any desired type of unit, offering you:

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Transfers • DComestic Brokerage • Oustoms cean Service: chartering, RO/RO, • break bulk, heavy lift, project cargoes Service • ICnland raning • Integrated Door-to-Door Services • Hazardous Cargo Handling • Packing • 24/7 Service • Our inland service includes specialized equipment for heavy lift, road trucks and trailers, flat beds and drop decks, stretch and lowboy trailers, logistic and storage vans, Holland dollies, and dual lane transportation. No matter the size, weight, or commodity, our Projects Team will always provide you the best solution around the world.

NOVEMBER-DECEMBER 2015

carrier profile

RIGHTING THE SHIP

Germany’s Rickmers-Linie Reverses Its Fortunes

t’s no secret that German heavy-lift specialist Rickmers-Linie has had a rocky ride. Four years of red ink on the balance sheet left the carrier in a feeble position in an unforgiving market. Parent Rickmers Group demanded decisive action, which was offered up in the form of a comprehensive restructuring focused on ships, costs and service structures. The results were transformative. At the end of the first half 2015, RickmersLinie posted earnings before interest, taxes, amortization and depreciation, or EBITDA, of ¤2.9 million, a vast improvement on the ¤12.1 million loss logged after the first half of 2014. The rapid turnaround surprised many, not least parent Rickmers Group, which commented that the return to profitability had happened “sooner than expected.” As a 10-year veteran of the company, Ulrich Ulrichs has lived through the carrier’s fall from grace, and one year ago took on the challenge of turning around 88 BREAKBULK MAGAZINE www.breakbulk.com

those fortunes when he stepped up to the position of chief executive. He focused on the loss-making backhaul legs, streamlining systems and restructuring the organization. The end result is that Rickmers-Linie now maintains a core fleet of nine 30,000 deadweight multipurpose heavy-lift vessels with onboard cranes, down from the 11 on the books by the end of December 2014. Additional vessels can be contracted under voyage or short-term time charter agreements to flexibly expand freight capacity if and when required. Now, the focus is demand led: find the cargo, then find the ship. Speaking to Breakbulk, Ulrichs admitted that previously the line had too many long-term ships and ultimately too much tonnage to fill. “Now, we have a reasonably lean operation and we have a good mix of owned and chartered tonnage, long and short term, so on paper we don’t have the exposure that we had before,” he

By Carly Fields

said. “We just have to be cost aware and continue to forecast on costs. That said, overhead costs are not everything; you also need the right people who can chase the right cargoes and get the right ship at the right time. “We have people that think cargo first, ship second, and then we have the liner guys who make sure that long term the liner ships are filled properly. You have both kinds of mentality in Ulrich Ulrichs our organization now, which you didn’t have in the past.” The first half of the year made an impressive mark on the financials, buoyed by lower bunker prices that fell faster than freight rates. While the second half of the year may not be as giving, Ulrichs still expects a positive year overall. NOVEMBER/DECEMBER 2015

Experience the Progress.

mobile.harbour.crane@liebherr.com facebook.com/LiebherrMaritime www.liebherr.com

The Group

carrier profile

“I’m not too concerned going forward,” he said. “We expect a flat market, and if we manage to keep our head above water and make a small profit that will be a success for us. We would then be perhaps one of the few carriers not losing money, and after five years of losses that was our main target.”

Oil Prices

The lower bunker prices are, of course, a sign of a bigger problem for the sector: that of depressed oil prices and the effect that has on oil and gas infrastructure development. Long term, sub-US$50-per-barrel oil prices are too low to be healthy for the heavy-lift and project cargo industry. “Some people say that big investments will only start at over US$90 per barrel, but I think that is a little high,” said Ulrichs. “I think that carriers and customers could live with something around US$70 per barrel, which is not too extreme. We have already seen the effects of the low oil prices on our sector with project delays.” That’s not to say that Rickmers-Linie has lost cargoes as a direct result of lower oil prices; instead it has seen tonnage that would ordinarily have been kept busy with oil and gas work seeping into its

trades looking for alternative work. “We’d like that tonnage to be employed elsewhere so that they stay out of our way,” he said. The state of the market for containerships and bulk carriers also has a bearing on the sector’s fortunes. A predicted flat outlook for the next two years is partly premised on the dire position of these two segments. “This sector is a follower rather than a leader. If containerships and bulk carriers aren’t doing well I don’t think that we can be immune to that and remain in a healthy place,” said Ulrichs. “Most container carriers are bleeding and the bulk is even worse, so where is this going to go? Some of the cargoes that the multipurpose fleet has to carry on backhaul trades are cargoes that can disappear into a container or a bulk carrier. “Since the outlook for these two sectors is not too bright for the next few years I don’t think we will be seeing 2007 or 2008 coming back any time soon. So we are preparing ourselves to have a flat market for the next two years.” That said, Ulrichs remain confident that, despite the bad market, the line’s future is secure. Indeed, there are early discussions taking place about the timing

FIRST HALF 2015 FINANCIALS Rickmers-Linie has made a remarkable recovery.

1H 2014

1H 2015

Total revenues* 93,102 89,081 Earnings before tax on income -12,391 2,632 EBITDA -12,116 2,850 Assets 47,050 41,397 Liabilities 31,992 24,042 Cashflow from operating activities -11,861 -1,202 Cashflow from investing activities -3,899 5,653 Cashflow from financing activities 15,365 -4,951 *In €1,000 Source: Rickmers-Linie

of a fleet renewal program to improve its age profile in the coming years. Today, the average age of the line’s owned fleet is 11 years; the plan is for new ships to start being delivered in 2018-19, meaning an order will need to be placed sometime next year. It’s not a mad rush to get orders urgently signed and sealed, but rather a considered plan to prepare for long-term fleet renewal. A few options are said to be already on the drawing board. BB

Three rail-mounted cranes manufactured by Kirow AG are loaded onto the Rickmers Jakarta. The shipment was bound for Xingang, China, as part of a larger project scheduled to transport 16 railway cranes to China.

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cargo trends

CATTLE DRIVE Changing Global Diets Propel Livestock Demand By Mark Willis

s recently as 50 years ago, the sight of cattle being driven through Dublin, Ireland, to markets in the north of the city was still a common occurrence. After subsequent purchase by British cattle dealers, many of the livestock were later destined for live transport by rail to Dublin port and shipment across the Irish Sea to England, Wales and Scotland. While no longer seen on the streets of the Irish capital city, the overseas sale of live cattle, and to a lesser extent sheep and pigs, remains an important component of the booming Irish domestic agricultural sector. It is also representative of a wider expansion in global sales of live agricultural animals and an increase in their breakbulk transportation. According to Ireland’s state agricultural agency, Bord Bia, 237,000 live cattle with an estimated value of €172 million were exported in 2014 to the UK, continental Europe, and non-EU countries by Irish farmers, making Ireland by some margin the largest EU Joe Burke exporter of live cattle. Joe Burke, Bord Bia beef and livestock manager, outlined how despite a proportional reduction in sale volumes and value, the export of live animals to predominantly European markets remains a significant feature of Ireland’s agri-foods sector. “In general, it would be less costly to export meat in processed form than as live animals. However, many of these (European) countries prefer to import 92 BREAKBULK MAGAZINE www.breakbulk.com

the young cattle to finish them using their own feeding systems, in order to meet their own market requirements,” Burke said. “Live exports remain an important source of competition to the meat processing sector, and an alternative outlet for different categories of stock,” he added. While Ireland remains the most significant European exporter of both live and processed cattle, the volume of its overseas sales pales in comparison with the world’s largest exporting countries, the U.S., Brazil, Uruguay and Australia. Notwithstanding concerns over the impact of long distance travel on animal welfare, and technological advancements that have rendered meat processing increasingly profitable, the expansion in global trade, urbanization and disposable incomes throughout developing countries have led to a profound increase in demand for live meat over the last 20 years.

Rising Meat Demand

In line with rising demand for fresh meat, global breakbulk trade in live agricultural animals has risen exponentially. According to data from the United Nations Conference on Trade and Development, the global value of livestock trade across national borders stood at US$4.7 billion in 2014, a more than 80 percent increase in the last 20 years. Consistent with rising demand and supply of many other primary commodities during the same period, expansion of international trade of live agricultural animals – in particular cattle, pigs and sheep – is linked to the spectacular growth of the Asian ‘tiger’ economies, most notably China. Driven by the reduction in tariff

and non-tariff barriers to global trade, economic liberalization and surging cross-border investment flows, the accompanying rise in per capita incomes and creation of a massive new middle class equipped with new disposable incomes has seen a wholesale change in dietary habits in many parts of the developing world. In particular, consumption of “fresh” red meat, which has been traditionally associated with protein-based diets in richer Western countries, has spread to poorer regions of the world. Data from the Organization for Economic Cooperation and Development highlights an increase of more than 30 percent per capita in consumption of beef within poorer developing economies from 1990-2015. With rapid population growth, the volume of total developing country consumption of beef has almost doubled to more than 39 billion tons (carcass weight equivalent) during the same period. Over the last decade, this change in dietary habits and growth in demand for red meat has also driven and shaped the development of new global supply chains

GLOBAL CONSUMPTION OF BEEF AND VEAL Appetites for red meat have increased. 70,000

65,000

60,000

55,000

‘95

‘00

‘05

‘10

‘15

* In carcass weight equivalent Note: 2014-15 are forecasts Source: OECD NOVEMBER/DECEMBER 2015

The livestock carrier Ocean Drover docks at Fremantle Ports, Australia. / Credit: Andrew N Priest via Flickr

and trading routes of live animal sales, the transport of which remains dominated by the shipping industry, despite rising animal welfare concerns. With its strategic location close to new markets and its status as the world’s largest cattle exporter, Australia has been the principal beneficiary of increased Asian red meat consumption, with major shipping routes servicing Southeast Asian markets in Indonesia, Malaysia, Thailand and Vietnam, as well as China and Japan. The spread of infectious diseases, such as Mad Cow Disease, or BSE, in Europe during the 1990s also benefited Australia, with reduced demand for EU-produced beef allowing Australian farmers to increase supply and market share of live animals to regions such as the Middle East, which was previously serviced by closer EU markets.

Major South American agricultural economies, notably Brazil and Uruguay, have also seen a rise in trade of fresh beef exports to the Middle East, Asia and Africa. While still a major exporter of processed meat, New Zealand farmers’ overseas sales of live animals was severely curtailed by the government in 2007, following widespread animal welfare concerns. It is a development that has also benefited its larger neighbor and South American producers. Given the length of distances traveled and duration of shipment times, as well as increased animal welfare concerns, the regulatory environment governing transportation of live breakbulk cargoes is closely monitored by national authorities from producer countries. David Allaert, commercial manager at Livestock Express, a branch of

the larger Vroon shipping company and the world’s largest independent seaborne livestock carrier, described how national authorities, most notably within the major developed world producers, have tightened regulations during recent years. “The regulations for ship owners, operators and managers have become more stringent over the years, which we are very supportive of. Safety of the crew, the vessel and the cargo is of utmost importance and animal welfare always deserves top priority,” he said. “Australian Maritime Safety Authority (AMSA) rules are by far the most comprehensive and stringent regarding the transport of livestock by sea. They stipulate, inter alia, the safety and structural as well as the typical livestock transport related requirements,” Allaert said. www.breakbulk.com BREAKBULK MAGAZINE 93

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LIVESTOCK TRADE BY IMPORTS Developing countries drive livestock demand. 4000 3500 3000

developing economies developed economies

2500 2000 1500 1000 500 0

‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 * US$ millions at current prices and exchange rates / Source: UNCTAD

Before gaining permission to load, livestock ships are thoroughly inspected by the competent authorities, and ships are subject to regular interim checks. They can instantly lose their license if they no longer meet the requirements. The tight regulatory system employed by authorities in countries such as Ireland and Australia includes monitoring the design of animal storage pens, alleyways, livestock walkways, ventilation, drainage, and lighting. AMSA regulations also stipulate that animals can move around freely while in storage pens, with access to feed and water supplies.

While there has been a general movement towards tighter regulatory oversight in recent years, there nevertheless remains divergence in standards in different parts of the global economy. Laws enforced by South American exporters governing shipment of live cargo remain considerably less stringent than is the case in Ireland, New Zealand and Australia.

Positive Asian-driven Outlook

The outlook for live animal transportation is positive with demand for fresh beef from emerging middle classes likely

COWS TAKE FLIGHTS While maritime shipment and road trucks are the most common form of live cargo transportation, agricultural livestock are also exported across national borders by plane. One example relates to the transportation of 356 Guzerá cattle from Rio Grande do Norte, Brazil, to Senegal in West Africa by AIB International, a member of the global logistics network, X2 Projects. Transported in two chartered 747700 aircraft and stored in custom-made crates during the transatlantic voyage, the Brazilian cattle were specifically chosen for their capacity to adapt to the Senegalese climate, as well as their 94 BREAKBULK MAGAZINE www.breakbulk.com

durability. The air shipment was also representative of wider efforts by the West African country to develop a sustainable, domestic dairy industry. According to X2 Projects: “With the objective of improving the genetic dairy bovine in African countries, AIB International piloted the shipments of live animals with a total weight of 160,000 kilograms of which most female bovines were pregnant.” AIB Internacional CEO Cristiano Lima outlined how his firm is in negotiations with five countries for further cattle transportation contracts delivering up to 5,000 animals by sea and air during late 2015 and early 2016.

to remain the principal driver of crossborder trade. A gradual diversification away from pork consumption towards beef in some Asian countries will further support breakbulk livestock trade, combined with expectations of rapid growth of African beef consumption over the next decade. According to OECD forecasts, developing countries will account for a more than 10 percent increase in global beef consumption over the next decade, with Western consumption set to stagnate. Alongside rising aggregate demand, the OECD expects that low animal feed costs should also continue to support meat prices, which may increase the profitability of live animal exportation, not least as developing countries gradually seek to stimulate domestic farming sectors with imported animals. Following a decade of negotiations, a trade agreement struck between Australia and China in 2014 is anticipated to lead to a surge in exports to the Asian economic powerhouse, with the Canberra-based government forecasting live cattle exports of up to AS$2 billion (US$1.5 billion) per year. The Chinese deal is particularly important for Australian farmers in light of the recent decision by Indonesia’s government to restrict imports in an effort to stimulate the domestic agricultural sector and beef production. Large shipments of live animals, including sheep as well as cattle, are not expected to take place until 2016. However, the first air shipment of cattle from Australia to China took place in October 2015, with 150 animals transported by a Boeing 747 cargo plan to central China. Livestock Express’ Allaert added that there was potential for a pickup of Iran-destined exports following the recent deal struck with the U.S. and EU to reduce Western sanctions in response to Tehran’s agreement to abandon its nuclear program. “The recent softening of relations with Iran can also result in the opening up of the livestock trade from many countries of origin to Iran. Should the political and economic situation in various Middle Eastern and North African countries become more stable, this will also be to the benefit of the livestock trade,” he said. BB NOVEMBER/DECEMBER 2015

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case study

INLAND INNOVATION River Transport Option Offers Congestion Relief PALLET SHUTTLE BARGE AREAS OF OPERATION

NETHERLANDS BELGIUM FRANCE (NORTHERN)

LUXEMBOURG

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By Mary Shacklett

isillusioned by conventional inland waterway transport, Belgium-based Blue Line Logistics believed that there must be a more effective system for transporting palletized and bagged goods. Its goal was to find an efficient and flexible logistical model, similar to road haulage, which could be applied to inland navigation. Last year, after three years of intensive research and development, the company launched its pallet shuttle barge, or PSB. This year saw the launch of its second unit as it looked to expand its concept. The company believes that its new PSB concept can become an impactful alternative to the everyday road conges-

tion that confronts truckers and those that choose to ship by truck. As an added benefit, the inland waterway infrastructure they aim to exploit already exists. “We saw the opportunity, and we began working on the pallet shuffle barge idea back in 2011,” said Antoon Van Coillie of Blue Line Logistics. “In the Benelux area, we were confronted with mobility problems on the road like traffic jams – so we began by analyzing what types of goods are mainly transported by trucks over roadways and that could potentially be transported by PSBs.” Palletized and bagged goods were the major items that van Coillie and his colleagues observed being transported by truck. “We knew that inland navigation logistics have traditionally operated for bulk liquids and containers, and not for goods on pallets or in big bags, which NOVEMBER-DECEMBER 2015

PALLET SHUFFLE BARGE DETAILS

CHARACTERISTICS ■■

Modular steel construction

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0 meters long, 6.6 meters wide, 5 maximum draft of 2.2 meters

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esign focused on simple and fast D maintenance or part replacement

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onfigurable for the requirements of C specific loads

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andling equipment can be customized H to cargo

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ach barge is manned by one full-time E employee with no living quarters or onboard accommodations needed

Zulu 02 on its maiden trip with cement in bags. / Credit: Blue Line Logistics

are the main types of goods transported by truck over the roadways,” said van Coillie. “We have now two PSBs in operation and they are performing well,” he said. “We are still at a stage where we have too many ‘empty cargo’ trips that are needed to bring the barges back to their original load points for shipments, but we are beginning to fill this return trip capacity as new clients join the system and want to ship goods in the other direction.” Van Coillie estimated the company will break even on its PSB investment this year. He added that the PSB concept is gaining traction in the minds of shippers as a feasible short- and medium-haul transport alternative to trucks for goods in bags and on pallets. The initial areas that Blue Line’s PSBs serve are the Benelux countries of Belgium, Luxembourg and the Netherlands, as well as northern France. According to an annual traffic scorecard compiled by INRIX, a traffic analytics firm, Brussels, Belgium, is the most congested traffic center in the world. Antwerp, Belgium, ranks second; Paris ranks sixth; and Rotterdam, Netherlands, is eighth. So four of the world’s top 10 most congested traffic sites are in Blue Line’s immediate PSB service area.

Palletable Solution

“We have been using Blue Line Logistics PSBs since August 2014,” said Kristoff DeCroos, president of the Koramic brick and roof tile brand of Wienerberger, a global provider of building materials and solutions. “Blue Line Logistics’ very first navigations were with our ceramic clay brick products. We have found that one of the advantages of PSB transport for our palletized products is the ability to transport smaller loads of up to 300 tons that the traditional vessels can’t do, but which are still 10 times the size of a traditional truckload.” Koramic has a three-stage vision in place for the inland water transport of its materials: bulk transport, container transport, and the evolutionary stage of PSB transport, which would ship goods on the inland waterways, with coaster vessels used to shuttle goods between Belgium and the UK over the channel. Koramic sees building materials and fast-moving consumer goods as items that are optimally suited for PSB transport because most of the time, these items are packed on pallets. The flow of these palletized goods is also highly predictable, and inland water access offers ready routes into the metropolitan areas where the goods are sold. “The onboard crane on the PSB also

LOAD ■■

argo platform is 210 square meters, C with a height of 4 meters (due to height restrictions)

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98 EuroPallets can be accommodated 1 on one layer

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Maximum tonnage is 300 tons

ENGINES AND PROPULSION ■■

ses diesel or other hybrid propulsion, U driving hydraulic power

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Carries one shuttle motor (250 HP)

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Has two horizontal bowthrusters

WEATHER PROTECTION ■■

Hood

CRANE ■■

as onboard crane to load and unload H independently

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Crane capacity is 2 tons at 10 meters

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Radio-controlled crane operation

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PALLET SHUFFLE BARGE DETAILS (CONTINUED)

REDUCED NEED FOR QUAYSIDE EQUIPMENT ■■

PSB can berth unassisted

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PSB has spudholes

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Cargo is forklift-sized

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Control and Steering:

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Joystick, automatic pilot AIS en/of GPS

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Depth control and optional radar

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se of bar coding and radio frequency U identification (RFID)

RUNS SHORT AND MEDIUM DISTANCE ROUTES THROUGH THESE NETWORK HUBS ■■

elgium-large cities (Antwerp, Brussels, B Charleroi, gentm Hassell, Kortrijk, Luik, Mons, Namen)

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elgium-regional hubs (Aalst, Andenne, B Brugge, Genk, La Louviere, Leuven, Oostende, Rumst, Tessenderlo, Tournia, Vilvoorde, Wevelgem, Wielsbeke, Zeebruge)

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etherlands-Amsterdam-Zaanstad N (Aalsmeer, Aklmaar, Beverwijk, Den Helder, Greenport, Hoorn, Ijmuiden, Purnerend), Breda, Bergen op Zoom, Nengelo, Kampen, Nijmegen, Rotterdam, venlo, Utrecht

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Northern France-Lille, Valenciennes

FEATURES ■■

tocking of goods on deck, resulting S in an easier and faster loading and unloading in a safer manner, with less cargo damage

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bility to adjust carrying capacity to A shipper’s needs (i.e., size, type of goods, frequency)

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ffers both fixed route and flexible O route planning for both complete and consolidated loads

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an operate independently of quay C infrastructure

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Operates on a 24/7 basis

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Loading bags with cement for Satic Minera in Tournai for Brussels area. / Credit: Blue Line Logistics

enables us to independently load and unload goods, without having to rely on port or third-party resources during the loading and unloading process,” DeCroos said. “Also, the storage on PSB platforms is mostly only one pallet layer high, with a maximum of two pallet layers. Because of this, there is less breakage compared to the breakage you encounter when pallets are stacked three pallets high upon each other in a traditional ship.” For shippers with palletized goods, PSBs offer an advantage from traditional inland navigation inland vessels in that goods are carried on deck, and not in the hold. Loading and unloading processes are short, and can be adapted to the specific requirements of the shipper. These barges are also smaller in size than other inland shipping vessels, so they have potentially lower operating costs. The PSB barges are able to operate in an intermodal transport model with trucks that pick up cargo at upstream or downstream ports, and then transport goods to their final destinations without the hassle of all-road traffic and the congestion that it brings. “We are convinced that such a model will

increasingly attract goods shipments, and this is why we are an active agent in the intermodal transport shift,” said Blue Line’s van Coillie. The barges can also exploit the underused waterways infrastructure that already exists. When this inland waterways infrastructure is compared with overused land routes and their accompanying road taxes, the value proposition for shippers begins to emerge. Inland ports are also likely to reap the benefits of PSB transport because the use of PSBs to ship traditionally truckbound goods, like building materials or foods and beverages, also expands inland waterway transport opportunities in areas that are underexploited.

Front-end Costs

In the early going, though, significant costs savings are a work in progress. “We are not yet saving the time and money that we would like to save by using PSBs over trucks,” acknowledged Koramic’s DeCroos. “To use PSBs, an investment in infrastructure is required, specifically the creation of concrete, stone, or metal quays on the water for loading and unloading ships. There is NOVEMBER-DECEMBER 2015

Ben Weyts, Minister for Mobility of the Flemish Region, officially commissions Zulu 02. Credit: Blue Line Logistics

also the cost of bringing over the pallets to the quay for loading – but all new practices require a startup investment and one should be prepared to pay an extra cost in the early stage and hope for a positive development that ultimately

results in gains in efficiencies and cost reductions.” DeCroos recognizes the potential of a multimodal medium and short-haul strategy. “In our case, we ship raw and bulk materials by larger-sized boats and also by truck,” he said. “For our local distribution of palletized finished products in Belgium, we use trucks, but we have begun to use pallet shuffle barges in order to create a moderate modal shift from truck to PSB for some of these local flows.” The inclusion of PSBs into local transport schemes gives companies such as Koramic additional flexibility and options when unforeseen logistics needs arise, and Van Coillie sees other industries following suit. “Some of our major interest now is coming from building material businesses, because their distribution points are situated traditionally along water-

ways, and their goods are heavy,” he said. “The lot size of goods transported by PSB also fits with these customers’ needs. After this, there is interest from the beverage companies and the city distribution systems. In the future, we expect food and produce companies to also utilize the PSB service.” As the PSB service gets underway, the immediate goal is to offer the same shipping costs as trucks, but to add greater efficiency to overall logistics because traffic jams – and the resulting uncertainty of shipment delivery times that shipping by truck brings – are reduced. The PSBs are a turnkey operation that can easily be customized to the types of cargo being carried. And Blue Line Logistics is a one-stop shop, with no agent or other actors involved in the PSB transportation process. It loads and unloads cargo, and also handles the associated insurance and documentation for the transport.

OUR

CONNECTIONS RUN DEEP

In New Orleans, we’re known for letting the good times roll. But to our customers, our connectivity is 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 on-dock rail and ship-to-barge services. You can count on us to exceed your cargo handling expectations — and you’ll love our Big Easy hospitality.

portno.com

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case study

DeCroos acknowledges the investment costs and learning curve involved in setting up the PSB concept. “We are willing to deal with that. However, what we ultimately expect to see is a reduction in our costs that is enabled by being able to ship more volume, to better utilize resources, to reap the benefits of new PSB technology that will be introduced in the future and to gain in overall efficiency as the initial learning curve is mastered.” As Blue Line gets a foothold on the inland waterways of Belgium and the Netherlands, it is also considering plans to expand to Berlin and Paris, both of which have strong inland waterways that could use the service. “We are expecting to grow our fleet and are looking at Paris and Berlin, but we are also aware that there are many other areas that offer opportunities for PSBs,” said van Coillie. BB

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ZULU 01 on trials in 2014. / Credit: Blue Line Logistics

NOVEMBER-DECEMBER 2015

thought leaders

CUT FROM A DIFFERENT CLOTH Not All Forwarders Are The Same

“The forwarder speaks a very different language to the buyer and as such much can get lost in translation.”

here is a common misconception within the marketplace regarding freight forwarders and the movement of freight for a time critical job or a major project, that all forwarders are the same. What seems to be the norm in many circumstances is that the buyer simply goes to the telephone book and chooses from the myriad of freight forwarders within the book, or they know someone who knows someone who knows a great person and he or she is a freight forwarder. Choosing this way is fraught with inherent danger, and can in many cases cost the buyer either a great deal of money or in some cases the buyer’s job. The perils for poor selection and due diligence by the buyer for freight forwarding services can result in budget blowouts, customs delays and transport delays. There are many rules and regulations concerning transportation, all of which have been tested in courts over hundreds of years since transport contracts were devised. The toughest of these rules are shipping regulations as they pertain to cargo ranging from a container to an entire shipload. The same can also be said for aviation and road/rail transport. The buyer needs to understand all the regulations and know exactly what he is getting for his money. The forwarder speaks a very different language to the buyer and as such much can get lost in translation. Remember not all forwarders are the same, many specialize in general cargo and only a

By Peter Townley

small number handle larger project cargo. Both have their own rules and regulations and both want to facilitate the delivery to the clients’ satisfaction. However, if the guidelines are not clear and not properly explored, this is when issues can arise. There is a very simple process to selecting a freight forwarder in the breakbulk and heavy-lift industries. Following it will stand you and the freight forwarder in good stead and hopefully on a long-term business relationship. Firstly, do your homework regarding the freight forwarder, and then choose three to four forwarders to interview. Meet their teams – including their accounts team – and then trial each one with a critical shipment. If you are satisfied with your selection and the trials have been successful, select the best two. Then, you should plan and exchange ideas on your cargo movements with their teams and establish clear reporting lines regarding the shipments. You also need to agree on finance and payment terms and establish strong ground rules. And last, but not least you should thoroughly read and understand the forwarders’ terms and conditions. In the heat of a heavy-lift or breakbulk move, it’s easy to skip or completely miss these important steps, but it’s a big risk to take long term. BB Peter Townley is director of project cargo sales at Townley Group International Pty Ltd., www.townleygroupinternational.com. www.breakbulk.com BREAKBULK MAGAZINE 101

thought leaders

HERE AND NOW MPV Operators Need To Smell The Coffee

H By Carly Fields

“As another dire year comes to a close with no forecast break in the bad weather tough decisions are going to have to be made.”

oping for “better days” is a fool’s errand; traditional multipurpose vessel operators need to deal with the status quo or else risk going the way of the dinosaurs. Some operators have opted to sit tight and wait for the storm to pass, but as another dire year comes to a close with no forecast break in the bad weather tough decisions are going to have to be made. Bizarrely, MPV carrier start-ups dominated the headlines in 2015, but this head-in-the-sand mentality can’t last. Take a peek at the feeding frenzy of merger and acquisition activity that took place in the container carrier sector as 2015 drew to a close; it’s just a matter of time before other sectors follow suit. After all, it’s not as if boxes are the only cargo suffering from volumes that have fallen off a cliff. Partnerships in the MPV sector are already being forged, the first step to battle lines being drawn. AAL and Peter Döhle; Rickmers-Linie and Swire – joined-up thinking is the order of the day. In the dry bulk carrier sector, five dry bulk carriers formed an alliance this year, bringing together a total of 80 vessels from Bocimar International, C Transport Maritime, Golden Ocean Group, Golden Union Shipping Co, and Star Bulk Carriers Corp. The expectation here is that mergers will

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follow, how else can bleeding ship operators make it through these dark days? The same is going on in the container sector. First partnerships were forged through the failed P3 alliance and its successful offspring 2M. Just one year ago, container carriers were buddying up like it was going out of fashion to take advantage of heavily sought after economies of scale. Cut to today, where CMA CGM and Maersk are courting NOL, and Chinese giants COSCO and China Shipping are merging at the behest of the government. They are unlikely to be the last pairings in that sector. Now it’s a guessing game of which carriers in the MPV sector will make that first move. Consultants are increasingly downbeat about the longed-for revival. As the market rolls towards the end of the year, the 2016 uptick has slipped from view; 2017 “might” see a recovery, but it’s a forecast that is couched with continued uncertainty. Carriers are nipping and tucking where possible, but this streamlining and pruning can only go so far. Alliances will help, but again there’s a limit to how much tonnage can be shuffled onto other services. Decisions also need to be made on scrapping to improve the aging fleet profile. When all is said and done it’s undeniably crunch time for multipurpose operators and it’s going to take more than fancy footwork to fix the issues looming in 2016. BB

NOVEMBER-DECEMBER 2015

thought leaders

A HEAVY LOAD Polish Haulers Penalized For Weight Excess

ince 2012, an amended Road Transport Act has been in force in Poland controlling and imposing penalties on trucks exceeding permissible vehicle dimensions, gross weight or axle load. The limit on drive axle loads has been a particularly significant problem for Poland’s entire transport industry. Back in 2008, haulers moving oversize cargos in Poland bandied together under the umbrella of the Polish Heavy Transport Association to successfully develop long-term permits. Previously, securing a long-term permit for driving a vehicle with a standard permissible gross weight and a length of about 23 meters was a pipedream. Now, applicable permits are issued for combinations measuring up to 30 meters and 60 tons of gross weight. But while appetites for these permits have increased, some short-

comings are now coming to light. In the middle of 2013, one of association’s members received an order to carry 20 tons of goods on pallets. Ukraine was the destination for the journey via the main national road, newly renovated thanks to EU subsidies. The permissible gross weight of the vehicle was 36 tons of a 40-ton limit, however the load on the drive axle amounted to 10.1 tons. Under the amended act, the road in question was registered with a maximum carrying capacity of 10 tons. As the truck exceeded the permissible load by 100 kilograms – a mere 1 percent – the carrier was fined with a penalty of POL5,000 (US$1,260). However, the category I permits previously approved were supposed to allow standard vehicles on local, district and regional roads with a permissible axle load of up to 11.5 tons. Additionally, category IV was

By Łukasz Chwalczuk

“There are often clear misrepresentations as to the actual mass of the cargo and the courts treat haulers as if they were clairvoyants.”

Polish haulers are looking for standardization on weight regulations. / Credit: Panas Transport www.breakbulk.com BREAKBULK MAGAZINE 103

thought leaders

Shippers do not always accurately record cargo weights. / Credit: Peter Star

supposed to increase the permissible axle load to 11.5 tons in case of national roads. Unfortunately, the regulations are not precise enough on the definition of an indivisible load. This means that even if the utmost care is taken during loading and unloading, drivers will not be able to get a permit to allow them to legally drive at the maximum end of the trucks’ cargo capacity as provided for in European regulations. Three years on from the introduction of the regulations and I have come to a conclusion that the courts are extremely restrictive in their approach to haulers’ liability. However, at the same time, the jurisprudence of the same courts when assessing the liability of shippers for overloaded vehicles is unusually lenient and at times almost indulgent. European legislators introduced regulations to allow truck inspections to be conducted by the Inspectorate of Road Transport. However, the courts overturned that decision and the Inspectorate of Road Transport has now directed its attention towards haulers themselves, where it believes it will be able to enforce checks. This allows shippers to continue to 104 BREAKBULK MAGAZINE www.breakbulk.com

go unpunished, leaving the hauler as the scapegoat. There are often clear misrepresentations as to the actual mass of the cargo and the courts treat haulers as if they were clairvoyants. How else can you describe a person who is able to estimate the actual mass of the cargo and contents of a sea container that is sealed by customs?

In Discussions

For more than a year, the Polish Heavy Transport Association has been in talks with authorized legislators, and administrative and control bodies. These talks have resulted in draft amendments to help resolve the current issues, but the approval of these hinges on the official establishment of a new Polish government. Once approved, my hope is that the necessary changes will be efficiently implemented by the courts of law, the Inspectorate of Road Transport, the General Directorate for National Roads and Motorways and carriers. Going forward, through our cooperation with the European association of abnormal road transport and mobile cranes, or ESTA, we have long shared

experience and knowledge. The hope is that this knowledge sharing will spearhead a revolution in the regulations on pilot runs, and the registration of specialized trailers and permits for the passage of special vehicles, neither of which exists today. At the same time, our association seeks to increase the permissible axle load for 11.5- and 12-ton oscillating axles (pendel type), which are increasingly being used by the oversize transport industry. We also plan to clarify the liability of shippers under the latest European Parliament Directive 2015/719, which amends Council Directive 96/53/EC on the maximum authorized dimensions and weight of certain road vehicles within the European Community. We believe that Directive 2015/719 should be applied to international transport, a move that would be a good thing for heavy transport in Poland. BB Łukasz Chwalczuk is president of the Polish Heavy Transport Association, and is chairman and managing lawyer of Law Firm Iuridica, specializing in the field of transport, shipping and compensation law. NOVEMBER/DECEMBER 2015

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SUPPLEMENT

WINTER 2015

AIR TRANSPORT IN ANTARCTICA BARGING THROUGH THE ICE EXPERT ADVICE: WEATHER-PROOF LOGISTICS 2016 INDUSTRY WISH LIST HOLIDAY GIFT GUIDE

breakbulk magazine winter holiday guide 2015

elcome to Breakbulk Magazine’s first Winter Holiday Guide. As the cold weather sets in — at least in many parts of North America, Europe and Asia — our thoughts turn to the men and women responsible for some of our industry’s most challenging projects and cargo transports, made even more difficult by harsh weather conditions. Ice, snow and subzero temperatures call for special consideration in the logistics plan and can affect equipment, people, transportation, schedules and project costs. We spoke with several harsh weather project veterans who share their experiences with you in this guide. You’ll also find out what it’s like on a log carrier battling the elements in the Bering Sea, take a journey on Lake Michigan behind an ice breaker and learn about some of the first big cargo flights landing on the ice in Antarctica. On a lighter note, we’ve gathered some fun and practical gifts selected especially for those in transportation. We’ve got suggestions for business travelers, for guys and gals on job sites around the world and for kids — the future generation of engineers, logisticians and transport specialists. What’s ahead for 2016? We asked members of our VIP Shippers Club to tell us what industry change they’d like to see in the New Year — and we’re all keeping our fingers crossed. Regardless of whether these wishes come true, we will be covering developments as they unfold in our magazine, on our website and at each of our six Breakbulk exhibitions and conferences. We hope you’ll join us at one or more!

Stay warm and best wishes to you and your family, Breakbulk Events & Media

W2 BREAKBULK MAGAZINE

W4 »

The Logistics of Harsh Weather Projects

W10

An Interview with Bill Keyes, Logistics Director, Houston and the Americas, at Fluor

W6 8 Things to Know About

the Winter Window By John Amos, head of Amos Logistics and consultant to Breakbulk Events & Media

W8 A New Frontier:

Air Transport in Antarctica By Georgy Sokolov, Regional Sales Manager, Volga-Dnepr Airlines

W10 Braving the Bering Sea By Takahiro Hiwatashi, NYK Bulk & Projects Carriers Ltd.

W12 Gift Guide For Business Travelers For Guys & Gals on the Jobsite For Kids Who Love Transportation

W21 Top Tips for Seasonal

Supply Chain Management Tuscor Lloyds UK

W22 One Wish for 2016 VIP Shippers Respond

W18 Winter Photo Contest Results And announcing the next photo theme

w16

W20 Navigating Frozen Waters By Chris Teague, Director of Marketing, Barnhart On the Cover: BBC Singapore calls Atka Bay, Antarctica on a supplier mission for the Neumayer research station.

NOVEMBER-DECEMBER 2015

breakbulk magazine winter holiday guide 2015

THE LOGISTICS OF HARSH WEATHER PROJECTS AN INTERVIEW WITH BILL KEYES, LOGISTICS DIRECTOR, HOUSTON AND THE AMERICAS, AT FLUOR

THE TAKEAWAY » A fit-for-purpose solution means

identifying the potential impact of extreme weather on the transportation systems and the workforce.

» To be successful, look back to

your worst case scenario, then plan to mitigate the factors that made the biggest impact on cost and schedule.

» Make clearly understood go/no

» Set realistic timeframes by

planning for contingencies.

» When selecting carriers, forwarders and other service providers, look for recent reputation and experience not just in logistics, but across an organization.

» When choosing a project team,

find people who are collaborative, willing to learn and adventurous.

go criteria during construction.

W4 BREAKBULK MAGAZINE

NOVEMBER-DECEMBER 2015

breakbulk magazine winter holiday guide 2015

rchestrating the logistics of multi-billion projects takes experience, foresight and the ability to handle extreme pressure. Add subfreezing temperatures and unpredictable weather -- you know it’s going to get bad, but not when or how bad -- and you’ve got the ultimate challenge. We talked with Bill Keyes, Logistics Director, Houston and the Americas, at Fluor, who has spent years on these projects to find out what it takes to succeed at logistics planning on projects north of the Arctic Circle. Fluor advocates what it calls a fit-forpurpose solution, which in the case of harsh weather projects means identifying the potential impact of extreme weather on not only the transportation systems but on the workforce. Weather also makes a huge impact on the project’s schedule. “To be successful, you have to look back to your worst case scenario where the weather disrupted the schedule,” Keyes said. “Identify the factors that made the biggest impact on cost and schedule -- then you can say, here’s the worst case but here’s how we’re going to mitigate it.” A logistics director can’t work in a vacuum. Keyes and his team take a collaborative approach, working closely with the construction team to plan for contingencies. “As a logistics provider, it really helps if you take a construction-driven approach to fit their schedule,” Keyes said. “For instance, knowing the average temperature will be around -20 degrees and that you can operate in these conditions, is one thing, but what happens when your modules show up and it’s -55?” Keyes said equipment will operate at temperatures of -20 to -30, but after that you put your equipment at risk because of the associated hydraulics. The special transportation trucks used to move modules are hydraulic-based, as is the lifting equipment -- and hydraulics don’t work well at extremely low temperatures. “It’s important to make go/no go criteria that’s clearly understood,” he said. “Then you’re protecting your equipment, your loads, the personnel who will be operating the equipment and the environment. “The last thing you want to do in these sensitive environments is have hydraulic lines pop and spray hydraulic fluid onto the tundra.” The weather also affects the time it

takes to complete tasks. “If something takes 20 minutes in a normal environment, it will take an hour in a harsh climate,” he said. It’s the logistician’s job to plan in a collaborative mode for the effects of freezing temperatures by setting realistic timeframes and by planning for contingencies when the weather becomes even worse than what’s typical for the area. For Fluor and other engineering companies, modules have been a big factor in mitigating the risks associated with harsh weather jobsites. Keyes said Fluor’s use of its third-generation modules in Canada has resulted in significant cost savings, more control over the schedule and better protection of the environment. “If you can build a module in a controlled environment -- whether it’s the size of a mobile home or a 5-story building -- you reduce the unit’s exposure to the weather, you reduce the impact on equipment and save on the cost transportation and labor, which can be four or five times higher in these harsh environments,” he said.

Choosing Service Providers

As part of his role as logistics director, Keyes and his team select carriers, forwarders and other service providers. Is the selection criteria different for these harsh weather jobs? In a word, yes. Keyes is looking for recent reputation and experience not just in logistics, but across an organization. “When I make a decision it’s in collaboration with the project manager, the purchasing manager -- the full Fluor team,” he said. “If the company under consideration has not worked in harsh cold weather in the last five or six years, there’s probably a lack of expertise there.” In his fit-for-purpose solution he’s looking for not the highest price or the lowest one, but the one that is right for the client and the job with its unique challenges. He’s also looking for how their management team deals with crisis because there will be challenges. “On Alaska’s North Slope everyone thinks summertime is a wonderful season, but you’ve got to deal with a thing called sea ice. It might not blow out,” he said. “That can impact the delivery of major modules and throw off your schedule by a year. So having service providers that will work collaboratively on a problem is what I look for.” “We’re very fortunate with an organization like Breakbulk and the forums it provides to allow us to get to know

BY-THE-NUMBERS:

FLUOR’S COLD WEATHER EXPERIENCE

-55

Temperature, in Fahrenheit, reached on the North Slope of Alaska, where Fluor has extensive experience.

400,000

Number of tons Fluor shipped to job sites in Alaska during construction of the TransAlaskan pipeline.

7,970

Number of miles that Fluor shipped modules (via barge) from Louisiana to the Prudhoe Bay on the northern coast of Alaska for one project.

9,380

Weight, in metric tons, of 5 modules shipped to Alaska for another project.

Weeks it took a barge shipment to travel from Louisiana to Prudhoe Bay, Alaska via the Panama Canal - exactly the available transport window due to ice-locked conditions in the Beaufort Sea.

145,000

Cubic meters of concrete poured on one project, using special cold-weather techniques, when the temperature was -30 degrees Celsius. Facts and figures supplied by Fluor BREAKBULK MAGAZINE W5

breakbulk magazine winter holiday guide 2015

each other before we get to those crisis moments,” Keyes said.

Choosing the Project Team

Keyes also has certain criteria he follows to choose employees for a project team. For a senior leader, he’s looking for experience in client relations and someone who is willing to follow as well as lead. “A lot of times in logistics, we’re the followers,” he said. “We are there to support construction. So I’m looking for someone with a mindset of putting the construction team and the client’s objectives first.” On top of the right outlook, Keyes wants people who are collaborative in nature, willing to learn and have adventurous spirits. “I’m blessed here with the Fluor team because they want to get out on projects versus staying at headquarters.” He draws from an experienced generation that worked on Fluor projects under extreme conditions. “There’s a wealth of talented people out there who understand the conditions of Russia, Canada and Alaska from the ‘70s and ‘80s and if you are willing to learn from those individuals, it can be invaluable,” he said.

Keyes also believes in first-hand experience. In his last project, he had people split between Anchorage and the North Slope. He sent his office personnel in three week stints to work under Arctic veterans so they could understand the harshness and reality of the environment they were supporting. If something happened to an individual in the field, he then had someone on the bench to serve as a replacement with no impact to the schedule.

Facing Adversity

When bad news arrives, Keyes begins by taking take a few minutes to reflect and then goes through a logical process: Evaluate the event, define the problem and identify the challenge that must be tackled. He then brings in the people involved and those that will be impacted, including the construction team and engineers. In what could be a tense situation, Keyes keeps in mind that facts help overcome emotion. Together, the team develops a course of action in three steps: • A plan that’s realistic, but expensive • One that’s realistic, but would impact schedule

• A nd finally, a recommendation that is a balance of the two Preparing for challenges, working collaboratively and keeping a cool head are the keys to success in harsh climate projects north of the Arctic Circle, as well as anywhere in the world. ABOUT BILL KEYES Bill Keyes serves as director of logistics for the Houston office and Americas region for Fluor. Prior to this assignment, he served as a senior logistics manager for Fluor, based in Alaska. In this role, he managed and executed field and international logistics and material management for a project located on the North Slope of Alaska. The project was accessible only by air, an ice road in the winter, and via a short summer barging season. He also had responsibility for aviation (fixed & helicopter), people movement, logistics material services (Alaskan freight forwarding, heavy hauling, material management, base operations and coastal barging), fuel services, and camp operations.

8 THINGS TO KNOW About the Winter Window by John Amos, head of Amos Logistics and consultant to Breakbulk Events & Media On projects being constructed in arctic climates there are protocols for the construction schedule when planning work during the “winter window” which generally is November 1 through the end of March. Harsh or mild winters will affect work that can be accomplished during the window. What can or cannot be done during the winter window? While extremely cold temperatures can impede progress, they can also present opportunities. For instance, nearby rivers and lakes frozen to adequate depths can support SPMTs carrying heavy cargoes. Here are eight things to consider when planning for the winter window:

Superloads can be moved over ice for a short distance depending on the thickness of ice. Barging can be used during other periods of the year.

Hydraulic lifting may not be possible during the winter window.

Concrete in large amounts cannot be poured during the winter window without special techniques.

Trucking may be interrupted during the winter window.

5 6

Work in enclosed buildings can be accomplished.

Temporary buildings may be utilized to maintain specific work during the winter window.

Prolonged or severe weather conditions negatively affects productive work. This can can occur at any time of the year.

During the winter window extra efforts must be taken to protect employee well being.

ABOUT JOHN AMOS Amos is an international logistics and transportation consultant specializing in issues related to planning, operations and regulatory issues. He was employed by Bechtel Corp. for more than 26 years and in his last position was global head of transportation and logistics functions. He is a harsh weather project veteran who worked on the Trans-Alaska Pipeline System project, Syncrude oil extraction project in Fort McMurray, Canada and the Fort Nelson hydroelectric project in Manitoba. W6 BREAKBULK MAGAZINE

NOVEMBER-DECEMBER 2015

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breakbulk magazine winter holiday guide 2015

A NEW FRONTIER:

AIR TRANSPORT IN ANTARCTICA by Georgy Sokolov, Regional Sales Manager, Volga-Dnepr Airlines

Volga-Dnepr Airlines IL-76TD-90VD has made its first landing on an ice airfield in Antarctica, opening up significant opportunities to support exploration projects on the continent. The freighter performed its first landing at the Novolazarevskaya Antarctic Research Station airfield. The airplane was flown by a joint crew led by two honored test pilots of the Russian Federation: Mr. Nikolai Kuimov, Hero of Russia, Chief Pilot, Ilyushin Aviation Complex, and Ruben Yesayan, Hero of Russia, Chief Pilot, GosNII GA. Georgy Sokolov, Volga-Dnepr’s regional sales manager talks about the challenges of expanding operations to Antarctica:

W8 BREAKBULK MAGAZINE

What has prompted VDA to want to fly to Antarctica? We need to constantly look for new customers and markets. Antarctica was the last continent we have not operated to, and we see a lot of potential in going into more remote and less accessible geographies, given our experience and fleet capability. Why is the IL-76 so well-suited to these flights? The modernized IL-76TD-90VD is good due to a combination of benefits – its range, payload and pressurized cargo cabin make it the aircraft of choice. The -90VD version’s more economical and less noisy engines are also very important from an environmental point of view.

What are the current transport and logistics options for companies that need to get cargo to Antarctica? Most cargoes go by sea vessels and/or ice breakers. There are aircraft operations into various points in Antarctica from South Africa, Australia (Tasmania) and Chile/Argentina – basically, all the points where Antarctica is closest to the “mainland”. What projects are going on in Antarctica that will present business opportunities for Volga-Dnepr? All the projects in Antarctica are research scientific projects. Various countries have stations in Antarctica and we see potential to extend the geography of our flights there, including - hopefully - intra-Antarctic flights.

NOVEMBER-DECEMBER 2015

breakbulk magazine winter holiday guide 2015

Do you have any commercial flights planned? Yes, we have signed an agreement to support the air bridge from Cape Town to Novolazarevskaya for the 2015-16 season and have already operated three flights. More are planned. What are the specific challenges of operating a big aircraft there? They are quite similar to all aircraft, not just big ones. Severe weather conditions, relatively undeveloped infrastructure (compared to “ordinary” airports), and landing on ice instead of concrete. We have to monitor the weather very carefully and ensure the runway is well prepared for landing and take-off. Plus, from a regulatory point of view, we had to obtain a number of special permissions and certifications and perform a test flight program. What modifications to the aircraft were required? We had to make our Il-76TD-90VD a “combi aircraft” to carry both passengers and cargo. We also had to obtain all of the necessary approvals from the aircraft manufacturer Ilyushin Design Bureau.

Can you explain the conditions during the test flights? We had to test the PS-90 engines’ capacity to use reverse pull for stopping on ice, measure the landing and take-off distances, work out the optimal operation procedures for landing and take-off and have all that approved by the aircraft manufacturer (Ilyushin Design Bureau) and documented in the addendum to the flight manual. All this has been completed successfully. What are the biggest challenges for the crew? Nothing is impossible for our crews -- they are great professionals -- and I cannot think of many things they can see in Antarctica that they haven’t seen yet. But of course, landing on ice is more challenging than on an ordinary concrete runway, and weather in Antarctica can get bad and change quickly, so, we have to follow stricter flight safety rules. What do customers have to consider when preparing cargo for these conditions? The most challenging part about preparing cargo is that it is flying in the same compartment as the passengers.

GEORGY SOKOLOV So it has to be packed and marked appropriately. We normally load the bulk of the cargo in advance and then the luggage, so by the time the people board the plane, it is fully ready to go. Would it be possible to land a bigger aircraft such as the 124 or 747? Nothing is impossible, but it’s a matter of common and commercial sense. The IL-76 is most suitable for these missions given the existing requirements and limitations.

BREAKBULK MAGAZINE W9

breakbulk magazine winter holiday guide 2015

ONBOARD AN NYK LOG CARRIER by Takahiro Hiwatashi, NYK Bulk & Projects Carriers Ltd.

arrying logs from North America’s west coast to Asia in winter involves a series of specialized operations. NYK Line’s Takahiro Hiwatashi gives us an insider’s look into the process. NYK loads logs at the Port of Vancouver in Canada and the Port of Everett in Washington, U.S. Before loading the heavy-lift cargo, port captains, ship crews, and stevedores carefully discuss the tandem and heeling operation so that the safety of the workers and the ship can be maintained. Two ship’s cranes are used in tandem to lift the logs while ballast water is transferred between the portside tank and the starboard tank to adjust the vessel’s center of gravity during loading. “In winter the winter season, conditions on the quay are so slippery and windy that all workers should carefully carry out each action for achieving safe transpor-

tation,” Hiwatashi said. As the carrier’s 34,000-DWT logger vessels navigate around the Aleutian islands, often encountering heavy weather with winds whipping up to near gale force (Beaufort 7) and heavy snow in the Bering Sea, water from the logs evaporates, causing them to shrink in diameter. To keep the cargo secure, NYK’s Filipino crews, under the command of the boatswain, retighten the deck cargo lashings used to secure the logs. Weather permitting, crew members are on deck three times a day with ratchet wrenches and turnbuckles. Before retightening operations, ships’ crews have a “tool box” meeting for safe measures and ship’s officers carefully maneuver the vessels with pitching, selecting the optimal route to avoid high sea swell and rolling in consideration of the crew’s safety. During operations, the crew works in pairs and cooperates with each other in an

effective and efficient way, often in severe weather conditions with temperatures from 0 to -10 degrees Celsius. When the on-deck work has been completed, the crew logs its report, including lashing conditions and pictures. The reports are submitted daily to NYK until the arrival of the vessel at its ports of discharge -- Hachinohe, Japan; Tianjin, China and others. Weather monitoring systems play a vital role in planning ahead of a heavy weather encounter. “Experience has taught us that you can never be complacent especially when it comes to dealing with heavy weather,” one of NYK’s ship’s captain said. “At sea, weather can change in an instant and preparedness is very important so as not to have incidents and accidents on board.” NYK Bulk & Projects Carriers Ltd., a wholly owned subsidiary of Nippon Yusen Kaisha (NYK Line), Japan’s largest shipping company, is one of the world’s leading ocean carriers of projects cargoes and logs. We proactively coordinate with our customers to generate safe transport scenarios in harsh weather conditions — from preloading planning to delivery.

ABOVE: Photos from the daily report show skilled crews retightening logs on deck three times a day while navigating the Pacific Ocean from North America to Asia.

W10 BREAKBULK MAGAZINE

NOVEMBER-DECEMBER 2015

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W120 BREAKBULK MAGAZINE

NOVEMBER-DECEMBER 2015

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W122 BREAKBULK MAGAZINE

NOVEMBER-DECEMBER 2015

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breakbulk magazine winter holiday guide 2015

PHOTO CONTEST:

WINTER WEATHER We challenged our readers to send us their most striking images of wintertime transport, then go online to vote for their favorite entry. Check out the contestants here, then flip to the Nov/Dec issue of Breakbulk Magazine (page 149) to see who won. 1

1. BARNHART KNOCK-OUT DRUM TRANSPORT Last winter, Barnhart

was hired to move a knock out drum (KO) to a refinery in Ohio. The KO drum, which weighed around 220,000 lbs., was 72 feet long, 18 feet tall and 21 feet wide. The project started at the Port of Catoosa in Oklahoma and was destined for the Port of Toledo in Ohio. Barnhart loaded the drum into a hopper barge until it reached Chicago, where the drum was offloaded. It was then loaded onto a Barnhartowned ABS-certified deck barge for transport to Toledo with Barnhart’s 550-ton crane. That’s where things got icy. The narrow waterway that connects Lake Michigan and Lake Huron was stopped by ice. The straits and parts of the lakes were frozen solid due to the extreme temperatures produced by the polar vortex. A Coast Guard ice breaker was brought in to clear a path though the ice, which could be up to a foot thick. The barge was then escorted through the ice and safely reached its destination at the Port of Toledo. LOCATION: Lake Michigan, USA; SUBMITTED BY: Jeff Latture, Barnhart W18 BREAKBULK MAGAZINE

2. RICKMERS-LINIE: RICKMERS CHENNAI The photo was

taken in Hamburg at the quayside just outside our office building on the shore of River Elbe, which was largely ice covered in late January 2014. The mv RICKMERS CHENNAI, which was on charter to us at that time, had departed from Wallmann Terminal about an hour before and managed to navigate through the ice floes on the river to arrive at this spot in a perfect moment when the sun had just set. LOCATION: Hamburg, Germany; SUBMITTED BY: Marko Stampehl, Rickmers-Linie

3. AAL BRISBANE ARRIVING IN PRINCE RUPERT This photo was taken as our A-Class vessel AAL Brisbane sailed into the picturesque Canadian port of Prince Rupert. LOCATION: Prince Rupert, Canada; SUBMITTED BY: Yianni Pittalis, AAL

NOVEMBER-DECEMBER 2015

breakbulk magazine winter holiday guide 2015

From dusk to dawn, transport of breakbulk, heavy-lift and oversized cargo does not stop. We want to see your images of nighttime transport. Submit your best photos, then go online to vote for your favorite entry. The photo that receives the most votes will be published in the January/February issue of Breakbulk.

Submit high-resolution photos at www.breakbulk.com/breakbulk-magazine-photo-contest. Entries will be posted on www.breakbulk.com. Submission deadline: Jan. 15, 2016 / Voting deadline: Feb. 5, 2016 / The winner will be announced on Feb. 15, 2016.

4. CSL-VASTWIN SPMT TRANSPORT 72 SPMT axle line,

including Tianjie Brand and Dafang Brand. LOCATION: Xinjiang Province, China; SUBMITTED BY: Hong Cui, CSL-VASTWIN (ChinaShipping- Vastwin Project Logistics Co., Ltd.)

5. DUAL LANE BRIDGE BEAM DELIVERY Delivery of steam

turbine rotor from St. John to Pt. Lapreau, New Brunswick. Delivery arranged by Fracht USA and Equipment Express, Canada. LOCATION: New Brunswick, Canada; SUBMITTED BY: Las Moen

6. BBC SINGAPORE CALLS ANTARCTICA The MV “BBC

Singapore” on a supplier mission for the Neumayer research station. LOCATION: Atka Bay, ice port at Antarctica; SUBMITTED BY: Lisa Girgott, BBC Chartering

7. RARE SIGHT AT PORT OF VANCOUVER A ship docked in a rare snowstorm at the Port of Vancouver USA, January 2007. LOCATION: Vancouver, Wash. USA; SUBMITTED BY: Kelly Burns

BREAKBULK MAGAZINE W19

breakbulk magazine winter holiday guide 2015

ICY WATERS CHALLENGE BA by Chris Teague, Director of Marketing, Barnhart

arnhart prides itself on keeping jobs on schedule, but sometimes Mother Nature trumps all our careful planning. Such was the case recently when Barnhart was hired by BP to move a knock out drum (KO) to a refinery in Ohio. The KO drum, which weighed around 110 tons was 72 feet long, 18 feet tall and 21 feet wide. The project started in December at the Port of Catoosa in Oklahoma and would end at the Port of Toledo in Ohio. Barnhart loaded the drum into a hopper barge to be transported by the river system to Chicago. The low profile barge was required to pass under one of W20 BREAKBULK MAGAZINE

the bridges along the route. But since it could only be used for inland waterway transportation, the cargo would have to be transferred to another barge to complete its journey. The barge got to Chicago on New Year’s Day. The KO drum was offloaded and loaded onto an ABS certified Barnhart deck barge for transport to Toledo with a 550 ton DeMag TC 3000 lattice boom crane. That’s where the plan hit a snag. The barge was accompanied by two commercial tugs, but once it reached the Straits of Mackinac, the narrow waterway that connects Lake Michigan and Lake Huron, it was stopped by ice. The straits and parts of the lakes were frozen solid due to the extreme temperatures produced by the polar vortex. To keep shipping channels open, the Coast Guard had brought in ice cutters, heavy ships with thick, reinforced hulls NOVEMBER-DECEMBER 2015

breakbulk magazine winter holiday guide 2015

TOP TIPS FOR SEASONAL SUPPLY CHAIN MANAGEMENT

BARNHART and polar icebreaking bows. The ice cutters clear a track in the ice, which can be up to a foot thick, and escort a ship through the passageway. Ships have to be scheduled, and communication and timing are essential because the track closes and freezes up quickly after the ice cutter goes through. It was a new experience for veteran Barnhart project manager Dan Webb. “This was the first time we’ve had to use ice cutters. It was challenging because it required a lot of coordination with the Coast Guard. We were not the only ship, so we had to wait our turn,” Webb said. Communication with the client was also important as BP was kept apprised of the status of the project. While the delay added a significant amount of time to the original schedule, the barge was escorted through the ice and safely reached the Port of Toledo on January 19.

Storm Abigail was the first named storm of the season, causing disruption across the UK. Severe weather warnings were issued for northern regions with recorded gales of up to 80 mph. Everyone in logistics will remember the winter of 2013/14, and the warnings issued this year for gale force winds and freezing temperatures should ring alarm bells for all involved in UK-based supply chains. The severe flooding of 2013/2014 highlighted just how vulnerable transport networks are to disruption. Some analysts predicted costs of more than £1 billion to the UK economy. Whilst the Government has provided funds for flood defences, experts have said this will not be enough for another severe winter. The result? Road, rail, airport and seaport closures which could bring the UK transportation network to a grinding halt. The risk is real. Here Tuscor Lloyds offers some suggestions for putting together a solid supply chain disruption plan. It can help minimise your risk and keep your business active during difficult weather conditions.

Your Supply Chain Disruption Plan Should Include:

Identify actions to reduce the duration of the disruption

Identify what resources (financial, human, logistical, material) will be required to minimise disruption duration

Plan what triggers will implement the plan (e.g. delivery delayed due to transportation closures)

4 5

Plan for the worst possible scenarios Look at alternative transportation methods and import routes

6 7

Source alternative (back-up) suppliers Understand your demand and work out optimal stock levels (consider how prolonged cold weather could impact spring seasonal sales)

Negotiate with your warehouse / suppliers to increase stock levels

And when weather disruptions strike, keep your customers up to date (social media is a great tool for this)

www.tuscorlloyds.com

ABOVE: This image shows the south-west main-line railway at Dawlish, Devon, suspended in mid-air after the foundations were washed away by the storm of 5 February 2014. / Photograph courtesy Matt Clark, Met Office. BREAKBULK MAGAZINE W21

breakbulk magazine winter holiday guide 2015

One Wish For

20 16 VIP SHIPPERS RESPOND

Continued attention to safety and zero-harm culture.

To have oil prices increase.

– Las Moen, Director, H&OD Logistics, Siemens Energy // United States

– Oil & Gas // Singapore

I would like to see growth in the US flag blue water fleet, something which would require much stronger support for cargo preference enforcement. Secondly, to see much of the older and out-of-date heavy lift fleet depart on one last voyage for the scrap yards! – Lonnie Tiegs, VP Africa Projects, Teras Cargo Transport // United States

Get healthier. The logistics industry, especially the service providers, are hurting right now. When the service providers start going out of business it is not good for the shippers.

In 2015, we implemented a logistics strategy and developed a more reliable partner. We also executed our projects in a safe way. 2016 is coming very soon; I would like to see: 1. more efficiency in transportation 2. healthier, safer logistics 3. more contributors with innovative solutions

– Liang-Li Ma, Logistics // China

– EPC Shipper // United States

The increase of oil prices. – Leandro Brusque, SCM Manager, Subsea 7 // Brazil

NOTE: Recipients were given the option to remain anonymous.

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continued on page W24

NOVEMBER-DECEMBER 2015

breakbulk magazine winter holiday guide 2015

continued from page W22

To see a change by clients toward contractors with a strong safety record, performance, and quality commitment, and away from lump-sum contracts. Clients must consider carefully the value that a contractor brings and ensure that risks are either shared or priced accordingly. – Mike Abbas, Regional Commercial Director, Mammoet // United Arab Emirates

Cost saving shall not mean zero investments. – EPC // Italy

Oil price upturn – Oil & Gas // China

Owners should demolish their older vessels to relieve some of the supply pressure. And in the same vein, they should buy secondhand vessels before

Peace and increase in social welfare. – Sait Eren // Turkey

Shipping market recovery in Y2016 – Wenhua Zhu, Senior Shipping Supervisor, ThyssenKrupp Industrial Solutions China

ordering new ships. – Susan Oatway, Senior Analyst, Drewry // Great Britain

Appointment of competent managers (which means leaders and not only managers) for troubleshooting and strategies. – EPC // Italy

As market conditions continue to be volatile due to the cost of oil, the upcoming presidential election, and unrest around the world due to terrorism, I wish that companies of all sizes, the smallest to the largest, will take a closer look and make an assertive effort to understand the importance and the impact of a sound logistics program. – Gary Karnofel, Sr. Project Logistics Specialist, Saipem America // United States

W24 BREAKBULK MAGAZINE

NOVEMBER-DECEMBER 2015

breakbulk americas 2015

EVENT COVERAGE

Left to right: Phillip Brown, Dennis Mottola, Alex Strogen, Frank Imbruglia, Daniel Fahringer at the Breakbulk Americas Shippers’ Panel.

LOGISTICS PERSPECTIVE

PASSING THE BATON Knowing Where, When to Employ Logistics Help By Lori Musser

utsourcing to the right hands, at the right time, is the key to efficient control of the supply chain, according to logistics professionals from top project cargo original equipment manufacturers and engineering, procurement and construction management companies. Bechtel’s Dennis Mottola said the degree to which his company retains control of a project’s transportation varies by business unit, type of equipment or shipment, capacity to deliver in-house, and cost. “We think we have a robust logistics function in the company, but we do the evaluation of cost and scheduling on a case-by-case basis,” Mottola said during a

panel discussion at Breakbulk Americas. Technip USA’s Frank Imbruglia said an EPC’s decision to hand off logistics management is always dependent on the client and its budget, while Air Products & Chemicals Inc.’s Daniel Fahringer said his company looks closely at vendor capabilities. “The decision of who is best to manage the risk and cost comes into play,” he said. GE Global Operations’ Alex Strogen offered a different perspective. “We have a pretty robust logistics organization from a manpower perspective. We can add a lot of value to projects if we control the logistics. Our clients have found that their experience in managing these projects doesn’t run as deep as ours,” he said. Keeping logistics entirely in-house requires a rare kind of robust internal logistics capacity.

Bechtel’s Mottola said the decision to manage using internal resources, versus outsourcing, should be driven by the anticipated outcome. “Our forwarders are an extension of our logistics department. That is how we see it. If they succeed, we succeed; if they fail, we fail.” Imbruglia explained that beneficial cargo owners, or BCOs, are moving away from cost-reimbursable work toward lump-sum work: “You can outsource a task, but you can’t outsource the control or responsibility. The 3PLs and 4PLs are embedded with you. They live and die with you.” He believed EPCs had an obligation to educate their clients about the value added by having visibility over the supply chain: “Risk can be compounded when you lose control over a carrier. It is about control and cost savings to www.breakbulk.com BREAKBULK MAGAZINE 107

EVENT COVERAGE

breakbulk americas 2015

the client.” Once an EPC proves what it brings to the table, the BCO will be in a better position to decide what should be outsourced. Fahringer added: “We can’t do everything. It is knowing where your strengths are. It is knowing where the 3PLs add value and where we add value.” Project cargo logistics gurus are being asked to stretch conveyance weight, volume and gauge to the limit, but it isn’t always possible to get a bigger ship, widen a turning radius, or clear overhead obstacles. Sometimes, especially if brought into the discussion early on, carriers can provide an innovative transportation solution. GE’s Strogen said the industry routinely mines for insights from ocean carriers and others, even at the conceptual stage. Mottola said service provider input is critical. However, he cautioned, “there is a fine line with prejudicing internal decisions – we must manage logistics decisions delicately.” And sometimes, despite or because of a breadth of input, there is no solution except for the engineers to return to the drawing board and build a retractable, lighter, smaller or subdivided component.

Carrier Selection

Whether logistics are outsourced, carriers have to be selected. Many factors enter into the evaluation. Phillip Brown of global EPC Fluor said the most important element is to try to compare apples with apples. Fahringer added: “We look at past performance, and a price we can work with. We choose the ‘low’ evaluated bidder. They might not be lowest by price – but they provide the best value.” Carriers and other logistics providers typically go through a rigorous vetting process, starting with financial stability. New entrants to the market should come to the table prepared. Brown said: “References and past experience are helpful, but what is your strength? You can’t be good at everything. What can you offer that someone else can’t?” Mottola advised that carriers bring “data, your experiences, your value proposition, the relationships you have with others” and that they know about the EPC’s business. Reducing risk is a critical element of project cargo movement, and is best managed when everyone from the manufacturer to the receiver is on same page.

OUT OF THE BLACK US Oil Output Could Fall 1 Million BPD By Carly Fields

.S. crude oil production has already slipped 120,000 barrel per day month-on-month, but a year-on-year decline of 1 million barrels per day is well within the realms of possibility, a leading energy academic has warned. With oversupply pegged at a maximum of 2 million barrels per day, William Arnold, professor of the practice of energy management at Rice University’s Jones Graduate School of Business, told Breakbulk Americas delegates that “there’s every possibility you will wake up in 108 BREAKBULK MAGAZINE www.breakbulk.com

the morning and everything will have changed.” “This industry is so complex and so dynamic because it’s constantly changing and everything has an impact on something else,” he said. “There’s a tendency to expect prices to stay where they’ve been, but volatility is the norm.” He described the economic curve as “more like an echocardiogram” than a ‘V’ or a ‘W’ shape and warned that it only takes a small shortfall in the supply of a commodity to dramatically increase price. Short term, he said, banks must examine the borrowing basis for some producers as regulators are getting tough on overcommitted developers.

Fahringer explained that because insurance is always required, his company always looks for the most cost-effective way to procure it. Many OEMs do outsource their insurance purchases. However, due to their buying power, companies such as Air Products may be able to buy insurance cheaper than a freight forwarder or an ocean carrier. Another way to reduce risk is to force transparency with extra sets of eyes and ears along the supply chain. Here, marine surveyors can help. GE’s Strogen explained: “When you have 30-odd ships in motion on full charter or part charter, etc., there is an enormous amount of activity. We lean heavily on an elite group of marine surveyors. They are our eyes and ears – they keep us abreast of shipments around the world and look out for our interests and ensure carriers are following what we agreed upon.” To pad their in-house logistical talent with outsourced assistance from 3PLs, 4PLs and others, shippers need to know they can trust the help. This business operates on relationships, the panel agreed, but with logistical talent changing position far more frequently than in the past, the ability to perform will always reign supreme over relationships. BB

“There was so much private equity money available earlier this year and there were investors that were very excited about the shale play. They missed it the first time around, so they were trying to get a second bite of the apple – except that it might have been turning a bit bitter,” Arnold said. “Foreign investors, China in particular, have really slashed their investments in U.S. shale play,” he said. William Arnold Over the longer term, he said there were terms that favored a robust oil industry, although companies in a stronger position may slow production from their sweet spots in anticipation of a rise in oil prices, which could skew the market in the medium term. BB NOVEMBER/DECEMBER 2015

SILVER LINING PLAYBOOK Depressed Oil Prices a ‘Positive Challenge‘ By Carly FIelds

lobal tramp operator Hansa Heavy Lift views current weak oil prices as a “positive challenge” as it offers its services to increasingly cost conscious oil and gas projects. The ship owner has marketed its geared, multipurpose heavy-lift vessels as an alternative to comparatively expensive dynamic positioning, or DP, vessels. Speaking to Breakbulk at Breakbulk Americas in Houston, Joerg Roehl, chief commercial officer and managing director, APAC, said HHL’s fleet offers cost-effective non-DP alternatives. “Right now, everybody says that a healthy oil price level would be $90 per barrel and that would be when oil Joerg Roehl projects kick in again,” Roehl said. “If the price goes well beyond $100 per barrel then that’s a worry because then the general world economy would look for alternatives to oil.” “Certainly at $50 per barrel certain projects are on hold; right now you see the majority of the projects deferred or on hold, but not cancelled. It is with the ongoing projects where the oil and gas industry has to save costs and where we offer an alternative.” Roehl expected a flat 2016 for the oil and gas sector, followed by a slow uptick in 2017 and a more substantive recovery in 2018. While oil and gas continues to be an important sector for HHL, its involvement in general infrastructure projects – including specialized and LNG – and in alternative energy projects helps to protect it from sluggish oil prices. BB

HHL discharges a reactor in New Orleans. / Credit: Hansa Heavy Lift www.breakbulk.com BREAKBULK MAGAZINE 109

breakbulk americas 2015

Credit: AAL

EVENT COVERAGE

COME TOGETHER Flailing Freight Rates Make Pools a Necessity

By Carly Fields

nsustainable freight rates are one of the biggest challenges facing carriers, jeopardizing safety and making cooperation between carriers a necessity, not a luxury. Singapore-based breakbulk, project cargo and heavy-lift carrier AAL Shipping said to Breakbulk that freight rates at alltime lows are “a challenge for operators that will not compromise on maintaining high quality of service in terms of safety, zero harm, equipment, hardware.” 110 BREAKBULK MAGAZINE www.breakbulk.com

Managing Director Kyriacos Panayides said: “We have to maintain the same quality of service but at much lower revenues. Of course, we are looking at every angle of our business, looking at how we can make our operations more efficient and cost-effective in order to avoid the harm of low freight rates.” AAL’s response was to pool ships in a highly publicized joint venture with Peter Döhle. Five months since the announcement, AAL confirmed to Breakbulk that the pair are defining trade lanes and is confident that it has a robust framework in place, ready for the next

strategic partnership. In a conversation at Breakbulk Americas in Houston, Panayides said he anticipates being able to open the pool to other carriers from 2016. “Our doors are open for cooperation for both liner and tramp services,” he said, adding that AAL is in discussions to expand its cooperative ventures, but could not elaborate further. “Pooling of ships is dictated by market conditions and by stakeholders that are pushing for more partnerships. We recognize that operators need to work together,” he said. Looking ahead, Panayides said that while historically low oil prices were stunting projects, he was confident that the need for sector growth remains and will drive projects and cargoes going forward: “New projects have to take place to meet demand; they will come, demand will dictate that.” BB NOVEMBER/DECEMBER 2015

BBAM BOOTH WINNER

TOP ENTERTAINMENT – MOST INTERACTIVE

When your operators train on a Vortex Crane Simulator from CM Labs Simulations, they gain the real-world skills they need to operate port equipment safely and efficiently. That’s because Vortex Simulators deliver the most authentic simulationbased training experience available. The result is real learning and evaluation that translates into on-the-job skills. Vortex Simulators are designed from the ground up to prepare operators for the routine and the unexpected. The built-in learning methodology trains your operators to properly handle machines and loads, and master terminal processing and traffic flow. Simulation for night operations, poor weather conditions, and emergency situations are part of the training. ENSURE SAFE OPERATOR BEHAVIOR

Vortex Simulators provide apprentices with the ability to learn safe lifting practices with many load types, varied weather, and worksite conditions – with no risk to equipment or operations. Experienced operators can also continually refresh their skills to maintain the highest degree of productivity. Each training session collects metrics related to the number of collisions

and spills, loading violations, time spent in rough handling of crane, and more. IMPROVE CREW EFFICIENCY

Over a thousand simulators have been built using the Vortex Platform. They have been proven to increase lifts per hour, and promote operator efficiency and safety. Operators can practice specialized or difficult maneuvers in a safe, controlled environment, as well as fullmission, team-based, multi-machine scenarios. You can also train for new environments and equipment before they come online. TRAIN MORE OPERATORS FASTER

Because you can objectively screen new operators on a Vortex Simulator instead of using real equipment, you can consider more applicants more quickly, and ultimately hire the best possible drivers. Vortex Simulators will then help you accelerate training. You’ll be able to screen applicants for basic skills and hand-eye coordination, and improve both apprentice and experienced operator performance through repetition. You’ll significantly reduce on-the-job training time and reach production targets more quickly.

CONTACT INFO 645 Wellington, #301 Montreal, PQ, Canada +1 514-298-1166 www.cm-labs.ocm/ports info@cm-labs.com

CM LABS SIMULATIONS BY THE NUMBERS

27 countries

where Vortex Training Solutions have been deployed

125 employees

at CM Labs in Canada, France, and Singapore

308th place

on the Deloitte Fast 500 Technology Companies in North America in 2015

1,000+

Vortex simulation installations worldwide www.breakbulk.com BREAKBULK MAGAZINE 111

EVENT COVERAGE

breakbulk americas 2015

BBAM BOOTH WINNER

BEST IN SHOW

CONTACT INFORMATION deugro (USA), Inc. 25211 Grogan’s Mill Road, Suite 465 The Woodlands, TX 77380 United States of America Dominik Stehle, President Phone: +1 281 443 3001 dominik.stehle@deugro.com www.deugro.com

deugro’s success and top performance are thanks to its people and their passion for this challenging industry. – Dominik Stehle, President, deugro (USA), Inc. 112 BREAKBULK MAGAZINE www.breakbulk.com

The deugro Group is an international forwarder specialized in executing turnkey projects and engineering logistics solutions for various industries, with a proven track record in executing large-scale projects under challenging conditions. With an extensive network of 70 company-owned offices, the group offers coverage and project expertise at every major industrial hub. deugro’s turnkey project logistics services also include the transportation of tall, wide, and heavy materials, for which deugro utilizes its highly qualified Transport Engineers. In addition, the company offers Project Consultancy Logistics Management Services to support clients with innovative concepts and strategies during the early stages of a project. In select markets, deugro owns, operates, and maintains its own fleet of prime movers, heavy-duty hydraulic trailers, and staging and installation equipment. deugro’s business activities are further enhanced and complemented by corporate and regional specialized personnel and support functions in the areas of Ocean and Air Chartering, QHSES, Compliance, Export/Import Controls, and IT systems. “What sets deugro apart from the competition – and is also likely one of the

reasons that we have been highly successful – is our dedication to and focus on industrial projects. When it comes to project logistics, our professionals around the world speak the same language, and our lean and almost linear management structure allows us to make quick decisions in response to client needs,” Dominik Stehle, President, deugro (USA), Inc., said. In recent years, deugro has experienced tremendous growth in the United States, where the group is currently executing several large-scale LNG and petrochemical projects. Competing in the marketplace, day in and day out, keeps deugro on top of new developments and emerging market trends, which together provide deugro with a competitive edge and new opportunities. “Over the years, we have been able to attract some of the best logistics professionals in the industry, and these people are key to delivering top-quality service to our valuable clients,” Steve Drugan, Regional Vice President for North America, said. The future strategy in the United States is very clear; the deugro Group wants to continue its success story, grow the business even more, and expand into new business segments. NOVEMBER/DECEMBER 2015

HANSA HEAVY LIFT recently conducted an underwater delivery of a Mid Water Arch Assembly by performing a wet handshake. The operation took place at Cluster 7 Field in India for Oil and Gas Corporation (ONGC).

BBAM BOOTH WINNER

CREATIVE BOOTH DESIGN

HANSA HEAVY LIFT’s young fleet of vessels specially adapted to deal with any sized cargo, no matter the challenge HANSA HEAVY LIFT is a global tramp carrier specializing in the transportation of super heavy lift, heavy lift and project cargoes, with a growing focus on the offshore and Transport and Installation (T&I) markets. “Our vessels have been adapted in order to carry out increasingly complex demands from our clients, to help us meet any challenge,” said Roger Iliffe, Chief Executive Officer (CEO), HANSA HEAVY LIFT. “We have an in-house team of highly skilled engineers and naval architects with shipyard, offshore and installation backgrounds, which gives us the independence needed to handle these projects internally without any assistance from third parties. In-house engineering expertise is essential and having vessels with flexible stowage and up-to-date equipment is also a must.” The company operates one of the biggest heavy lift fleets in the world, with 19 multipurpose heavy lift vessels. Each ship carries a large variety of certified lifting beams, spreaders, grommets, shackles, load spreading

platforms, Yokohama fenders and lashing equipment in order to ensure vessels of each class are interchangeable and be prepared for any job at any time. HANSA HEAVY LIFT’s six step process will ensure your cargo is delivered safely and on-time. HANSA HEAVY LIFT’s vessels hold one of the highest ice-class, E3 equivalent to Finnish-Swedish 1A and are compliant with the Offshore Vessel Inspection Database (OVID). This means the vessels can travel without an icebreaker in first year ice up to one meter thick. The shipping line has significant experience of the Northern Sea Route saving customers’ valuable time and cost, reducing fuel consumption and eliminating the risk of piracy. The carrier recently became one of only nine shipping companies in the world to be recognised with a DNV GL Excellence - Five Stars Award for the high quality of its management systems. The award was given for the quality of its management systems including ISO 9001 (Quality), ISO 14001 (Environment), BS OHSAS 18001 (Health and Safety) and ISM (International Safety Management) / ISPS (International Ship and Port Facility Security) Code.

HEADQUARTERS HANSA HEAVY LIFT GmbH Oberbaumbruecke 1 20457 Hamburg Phone: +49 40 325 325 0 E-mail: info@hansaheavylift.com

HANSA AT-A-GLANCE

n-house team of specialist • Iengineers and naval architects.

six-step process will ensure your • Our cargo is delivered safely and on-time. egional office structure to deal with • Rprojects in real-time anywhere on

•

the globe.

n-board cranes capable of lifting O up to 1,400 metric tons.

SR experience with special trained • Ncrew and master. lexibility to modify vessels for • Fproject requirements, as vessels are

•

owned by HANSA HEAVY LIFT.

ANSA HEAVY LIFT vessels are on H average only 5 years old.

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breakbulk americas 2015

BBAM BOOTH WINNER

MOST EDUCATIONAL – INFORMATIVE

CONTACT INFORMATION deugro (USA), Inc. 650 N Church Ave., Louisville, MS 39339 USA Contact: Don Woodruff, Director of Sales Phone: +1 662 773 3421 dwoodruff@taylorbigred.com www.taylorbigred.com SHOWN ABOVE: Taylor Reachstackers

feature spreaders that have standard lifting eyes on each corner. An optional center eye is also available.

The Breakbulk Industry relies on manufacturers that can provide durable, dependable solutions. 114 BREAKBULK MAGAZINE www.breakbulk.com

Taylor Machine Works, Inc is pleased to announce the introduction of the “X-Series” line of Heavy Duty Lift Trucks. Founded on the principles of “FAITH-VISION-WORK”, and ingrained with 88 years of Heavy Industrial Material Handling experience, Taylor is proud to push forward with the “X-Series”. Taylor strives to meet all of our customer’s demanding industrial needs with over 85 models and lifting capacities that range from 16,000-lbs to 125,000-lbs. The new Taylor “X-Series” Lift Trucks insure that you get the best product for your company. Our customers demand that we continue to build the most rugged, dependable Lift Trucks on the planet, and Taylor has taken the approach that we will not give up performance or durability for questionable potential fuel cost savings. Our trucks have proven to have equal, and in many cases, better fuel consumption than competitors that have chosen to utilize smaller displacement engines. The new Taylor “X-Series” Lift Trucks feature Tier Compliant engines that have retained the powerful low-end torque that our customers have come to expect.

The Breakbulk Industry relies on manufacturers that can provide durable, dependable solutions to heavy lift requirements. Taylor is continually working to exceed customer expectations with lift trucks that have been vetted in the harshest industrial proving grounds. Decades of working in our customers unique sites have given us the experience to plow ahead with lift trucks built to thrive in unreasonably hostile environments. First quarter of 2016 will bring two new Taylor RORO trucks to market. The X-620RR and the X-720RR will have fully Tier compliant engines and feature capacities ranging from 62,000-lbs to 72,000-lbs. These high capacity offerings in small packages will further serve the heaviest RORO needs. Ultimately, it is up to the customer to decide what features are important on their Lift Trucks. We strive to use appropriate technology that brings value while keeping things simple yet rugged! Let us show you how we achieved Tier Compliance without moving toward smaller displacement engines. Taylor Machine Works... Engineering the Ultimate Lift Truck! NOVEMBER/DECEMBER 2015

BBAM BOOTH WINNER

MOST WELCOMING STAFF

Texas Terminals, LP is a full service, non-union Terminal Operator and Stevedoring company, providing expertise on all sectors of Marine Terminal freight handling. Our 65-acre Gulf Coast facility on the Houston ship channel located at Jacinto Port provides clients with a wide variety of professional, value-added services. As the leading facility for the handling of Breakbulk, dry-bulk, project cargo and heavy-lifts in the greater Houston region, Texas Terminals, LP is your ultimate choice for responsive, knowledgeable, efficient and economical solutions to all your cargo handling requirements. Our experienced, knowledgeable staff and state-of-the-art freight handling equipment represent a solid base for safe, efficient operations, enabling our clients to rely on the most professional and economically sound solution in today’s market. Safety is a number-one concern at Texas Terminals LP. Our highly trained and certified safety professionals work diligently to keep all personnel safe and equipment and cargo free of any damages. In addition, each member of the safety/ security team ensures that Texas Ter-

minals follows industry best practices for all required regulations not only meets, but exceeds compliance. Our fully fenced and guarded facility provides the following features: • 65-acre cargo and vessel handling facility with direct access to the Houston Ship Channel • One 650’ft bulk-headed, slip dock with reinforced concrete slab for handling of heavy cargo of up to 400 MT piece weight. Slip dock fully capable to receive and handle Ro-Ro vessels with full stern ramp, with actual draft of 34’ft of water. • One 670’ft bulk-headed, channel dock with reinforced concrete slab for handling of heavy cargo of up to 1,000 MT piece weight. Channel dock fully capable to receive and handle Panamax type size vessels, with actual draft of 40’ft of water. • Approximately 60,000.00 square feet of modern warehouse space • Approximately 25 acres of improved, stabilized marshalling area • Over 8,000 ft. of onsite rail track, linking dock frontage directly to the Port Terminal Railroad Association (PTRA) lines. • United States Customs certified Foreign Trade Zone.

CONTACT INFORMATION 15902 Peninsula Blvd., Houston, TX 77015 USA Contact: Robert Schwarz, General Manager Phone: +1 281 457 3131 Fax: +1 281 457 3232 www.texasterminals.com

TEXAS TERMINALS AT-A-GLANCE

• OSHA compliant • Governed by USCG regulations overnment restricted area/ • Gfacility • 24/7 guarded facility acilities for captain, crew and • Fauthorities including showers,

kitchen and telephone. Fully equipped, dedicated Captain’s office with fax, computer access available during business hours.

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breakbulk americas 2015

(CLOCKWISE FROM UPPER LEFT) William Arnold, a professor at Rice University’s Jones Graduate School of Business, offers an outlook on the oil and gas industry. / Attendees take advantage of the Welcome Reception, sponsored by Port of Houston Authority. / Intels Nigeria Ltd. hosts a VIP Shipper Club reception Wednesday. / Industry executives schedule meetings in Houston around Breakbulk Americas. / Attendees take to the streets for the Breakbulk BUSINESSrun. / Exhibitors benefitted from robust foot traffic throughout the event. / John Roby, director of corporate affairs for the Port of Beaumont (center), talks to students at the Breakbulk Career Fair during Education Day. 116 BREAKBULK MAGAZINE www.breakbulk.com

NOVEMBER/DECEMBER 2015

(CLOCKWISE FROM UPPER LEFT) Breakbulk Americas’ Welcome Reception takes on the feel of a Hollywood premiere. / Sarens’ Mike Hussey delivers a Swim-up Session from the exhibit hall floor. / VIP Shippers and long-time industry executives are the core of Breakbulk’s events. / Retired pitching ace Roger Clements interacts with delegates and exhibitors on Breakbulk Americas’ final day. / Breakbulk Americas delegates connect on multiple levels. / Breakbulk Americas Golf Tournament was sponsored by Schröder Marine and Cooper/T. Smith. / Peter Jessup of Amec Foster Wheeler and John Mika of CB&I (center) represent Procurement Executives Group in an industry outlook from the EPC perspective. www.breakbulk.com BREAKBULK MAGAZINE 117

EVENT COVERAGE

breakbulk middle east 2015

CALL IN THE CAVALRY Logistics Early Involvement a Must, Fluor

The panel discusses the pros and cons of modularization.

By Carly Fields

ogistics providers need to be engaged much earlier in the EPC process to support modularization projects, according to a Fluor Corp. executive. Involvement at the design stage is more necessary than ever, said Fluor’s Jon Dailey, otherwise engineering, procurement and construction companies face higher transportation costs, as well as scheduling and reliability issues. Speaking at Breakbulk Middle East, Dailey, Fluor’s EAME region modularization manager, said, “When we talk about project-specific solutions logistics plays a key role, especially when we look at modularization projects. “Using the traditional model of logistics not being involved until later is unacceptable because you cannot get your design locked down until you get the logistics input. For a project to make the right decisions it is essential that the logistics group is fully involved very early in the process.” In a traditional “stick-built” project, logistics comes at the back of the

chain, and does not get the profile and the priority that it should have in key decision-making, Dailey said. “You work your way to engineering, then procurement, through the vendors and then fabrication is given the problem of getting what you have bought to site in the right sequence,” he said. Switching to a modular approach also gives logistics providers two bites of the apple, as they are needed on two fronts, possibly more depending on the fabrication strategy. “When you go to a modular approach we add additional complexity into that program. We introduce the fabrication yard and that adds the need to deliver inbound freight into the module yard to

OFF THE RAILS Avoiding Gloom in Middle East Rail Boom

ail infrastructure projects are booming in the United Arab Emirates, Saudi Arabia and the rest of the Gulf Cooperation Council, or GCC, but falling oil prices are impacting their viability. 118 BREAKBULK MAGAZINE www.breakbulk.com

That was the assessment during a panel presentation at the inaugural Breakbulk Middle East conference in Abu Dhabi. Teresa Lehovd, head of market intelligence for Hoëgh Autoliners, said she

support the fabrication process as well as transporting complete modules from the fabricators to site,” he said. However, there are negatives to modularization: “It comes with an accelerated engineering and procurement program,” said Dailey. “That’s a challenge for EPC organizations as they need to get that information early to the design teams so they can lock down those modules. What kills a lot of modularization projects is last-minute changes or late arrival of information that requires re-work. You have to lock down on assumptions early in the project, which is why you have to get logistics and other groups engaged early to get the design correct.” BB

was aware of US$250 billion in rail infrastructure projects within the Middle East, led by the GCC at US$119 billion to US$140 billion, Qatar at US$46.6 billion, and U.A.E. at US$27 billion. All of this continues to be a big plus for the breakbulk and heavy-lift industry. However, these projects, which are in different stages of planning and completion, were conceived in an environment where oil prices were about US$100 a barrel. “The GCC is facing a hard reality,” NOVEMBER/DECEMBER 2015

Lehovd said. “There’s a huge demand for capital to pay for projects, and the money has to come from somewhere.” In order to close the funding gap, she said, GCC countries must consider dipping into cash reserves; growing debt through bonds, bank loans and export credit; or public-private partnerships. “The governments must think of more sustainable solutions,” she said. “We cannot ignore the growing rail

sector within the infrastructure market,” agreed Kim Bjerner Rathsack, CEO Logistics for Almajdouie. He noted his company’s long-term role in supporting rail within Saudi Arabia, going back to 1965. Almajdouie, which operates more than 2,000 trucks in Saudi Arabia, has detailed plans to develop its freight role to incorporate the growing rail infrastructure. “We also understand the threats

MISSION POSSIBLE Saudi Market Presents Challenges, Rewards

audi Arabia, like several other Middle Eastern countries, has a reputation for its affinity to do the impossible. Logisticians tasked with delivering on these projects are best advised to understand the intricacies of doing business in the region, according to Corey Henry, senior logistics specialist for CB&I Oil & Gas. Moderating a panel discussion on doing business in Saudi Arabia at Breakbulk Middle East, Henry said there are unique challenges in the country that impact logistics efforts when deliver-

CB&I Oil & Gas’ Corey Henry talks to Breakbulk TV.

ing on projects, especially complex and large ones. “In Saudi Arabia you are not given the opportunity to make mistakes more than once. They will hold up cargo for six months if need be. You will learn the rules very quickly,” he said. “Partnerships are also very important in the country,” he added. “There is a deep level of trust required in this market. Execution of business becomes a lot less painful once that trust is in place. Authorities need to trust that you know their rules and regulations, that you understand the processes, that you are

and opportunities the new build rail system pose to the land transport sector. Therefore, we are geared to provide our clients with valueadded services within the intermodal logistics model,” he concluded. BB Teresa Lehovd

following health and safety regulations, that you are inputting into the Saudi Arabian workforce.” Henry said there was an aggressive track in the kingdom at present to employ Saudi Arabians placing major pressure on companies. ‘Saudiarization’ was challenging, said Stefaan Mestdagh, director of business development, logistics, DHL. “In itself it is a great vision. Countries all over the world are instituting programs to increase their own labor forces, but this is not an easy requirement on business in the region,” he said. “Many of the jobs that are required to be Saudiarized are not wanted by the local people. There is also a real shortage of skilled laborers.” Having a local partner was essential for success in the market, said Douglass Dries, project logistics and materials manager, Jacobs Engineering. “You cannot go and knock on the government agencies’ doors by yourself. You need to build a good relationship with local partners who can do this on your behalf,” he said. But none of the challenges were insurmountable, Henry said. He told delegates that despite the challenges the Saudi Arabian market was one of major opportunity for the logistics sector. “The country has budgeted US$385 billion on roads, airports and energy projects over a five-year period with another US$30 billion worth of contracts under way or at the bidding stage for infrastructure projects,” he said. “An estimated US$6 billion a year will be invested to bolster the water sector over the next two decades and another US$70 billion by 2018 to add 22MW to the nation’s power-generating capacity.” BB www.breakbulk.com BREAKBULK MAGAZINE 119

EVENT COVERAGE

breakbulk middle east 2015

(CLOCKWISE FROM UPPER LEFT) His Excellency Dr. Sultan Ahmed Al Jabel, minister of state in the United Arab Emirates, opens the event. / Breakbulk Events now feature conference suites that open onto the exhibit hall. / Breakbulk Middle East drew 2,000 attendees from around the world. / More than 50 exhibitors and sponsors participated in the inaugural event. / Eduard Gracia of A.T. Kearney Middle East offers insight on post-sanctions Iran. / Opening ceremonies included a tour of the exhibit hall. / Cornelis “Cees” Coppens employs visual aids in his Heavy-lift Technical Workshop on ocean transport.

120 BREAKBULK MAGAZINE www.breakbulk.com

NOVEMBER/DECEMBER 2015

4-7 April 2016 Emperors Palace Johannesburg, South Africa

TRANSPORT IS DIFFERENT IN AFRICA NETWORK WITH REGIONAL EXPERTS With endless logistics opportunities available and Africa being squarely in the middle of the global value chain - you can’t miss Breakbulk Africa 2016.

EXHIBITORS/SPONSORS

Breakbulk Africa 2016 provides networking opportunities that can build regional business relationships plus careeradvancing educational workshops and expert presentations. Our agenda is intensely focused on today’s unique challenges facing project cargo logisticians.

CONTACT Kingsley Ekweariri

Breakbulk Africa 2016 - network with expert logisticians and service providers from around the world. Registration opens soon - SAVE THE DATE!

Targeted exhibition, sponsorship and advertising opportunities are available.

North, West, East Africa Sales

kekweariri@breakbulk.com +353 1 545 8292 Jodi Haigh

Southern Africa Sales

jodi@breakbulk.com +27 83 710 9788

A division of

LEARN MORE AT

www.breakbulk.com/africa »

photo contest

WINNER OF THE NOVEMBER/DECEMBER WINTER WEATHER PHOTO CONTEST:

BARNHART KNOCK-OUT DRUM TRANSPORT LOCATION: Lake Michigan, USA; SUBMITTED BY: Jeff Latture, Barnhart

Last winter, Barnhart was hired to move a knock out drum (KO) to a refinery in Ohio. The KO drum, which weighed around 220,000 lbs., was 72 feet long, 18 feet tall and 21 feet wide. The project started at the Port of Catoosa in Oklahoma and was destined for the Port of Toledo in Ohio. Barnhart loaded the drum into a hopper barge

until it reached Chicago, where the drum was offloaded. It was then loaded onto a Barnhart-owned ABS-certified deck barge for transport to Toledo with Barnhart’s 550-ton crane. That’s where things got icy. The narrow waterway that connects Lake Michigan and Lake Huron was stopped by

ice. The straits and parts of the lakes were frozen solid due to the extreme temperatures produced by the polar vortex. A Coast Guard ice breaker was brought in to clear a path though the ice, which could be up to a foot thick. The barge was then escorted through the ice and safely reached its destination at the Port of Toledo.

NEXT ISSUE:

Breakbulk After Dark

submit photos at www.breakbulk.com/breakbulk-magazine-photo-contest

SUBMISSION DEADLINE: January 15, 2016 VOTING DEADLINE: February 5, 2016

122 BREAKBULK MAGAZINE www.breakbulk.com

NOVEMBER/DECEMBER 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.

PIRACY WEST AFRICA MARITIME SECURITY INCIDENTS There have been 63 incidents from Senegal to Angola through November 2015, with 14 robberies, four thefts, seven hijackings and 24 failed attempts. While efforts to combat piracy off the Horn of Africa have been largely successful, there was a hijacking in November, the first since March.

Total Failed Attacks Hijacking Attempts Theft Robbery

April ‘14 4 May 5 June 6 July 3 August 7 September 5 October 9 November 13 December 9 January ‘15 7 February 6 March 10 April 7 May 12 June 5 July 8 August 5 September 0 October 1 November 2

0 1 5 1 3 1 6 5 2 1 1 0 0 0 0 1 1 0 1 2

3 0 1 1 0 2 1 0 0 2 0 0 3 0 1 1 0 3 3 0 0 7 1 0 5 1 1 2 1 2 1 0 1 4 2 1 4 0 0 5 0 4 3 0 1 2 1 4 3 0 1 0 0 0 0 0 0 0 0 0

Note: “Failed” includes attempted robberies/thefts as well as hijackings. “Hijackings” include kidnappings from vessels.

SOUTHEAST ASIA MARITIME SECURITY INCIDENTS Total attacks dipped into the single digits in November for the first time since September 2014. Attacks are focused primarily on robberies/thefts and there were only three reported for the month.

Total Failed Attacks Attempts Hijacking Theft Robbery

April ‘14 12 1 May 18 11 June 15 2 July 14 5 August 14 6 September 8 2 October 26 7 November 20 9 December 16 7 January ‘15 18 6 February 11 3 March 15 6 April 16 9 May 22 7 June 18 4 July 12 4 August 25 12 September 22 5 October 20 11 November 8 5

4 5 2 1 2 4 3 4 6 2 1 6 1 4 3 3 2 1 4 8 7 0 5 6 1 3 5 2 4 6 2 3 3 2 2 5 1 4 2 2 11 1 3 5 6 0 5 3 2 3 8 1 7 9 0 5 4 0 1 2

Note: “Failed” category is for attempted robberies/thefts, not hijackings. Source: Risk Intelligence, www.riskintelligence.eu

www.breakbulk.com BREAKBULK MAGAZINE 123

bb index

FOREST PRODUCTS: PULP INDEX EUROPE 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. 150 125 100 75 50 25 0

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 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 2010

2011

2012

2013

2014

2015

NORTH AMERICA 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. 200 150 100 50 0

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 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 2010

2011

2012

2013

2014

2015

ASIA 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. 250 200 150 100 50 0

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 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 2010

2011

2012

2013

2014

2015

Source: RISI, www.risi.com

EUROPEAN FREIGHT FORWARDING INDEX The index is based on European forwarders’ actual and expected freight volumes. Values below 50 on the zero-to-100 scale indicate a decline. 100 90 Actual

Forecast

70 60 50 40 30 20 10 0

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 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 2010

2011

2012

2013

2014

2015

Source: Danske Market Equities, www.danskebank.dk 124 BREAKBULK MAGAZINE www.breakbulk.com

NOVEMBER/DECEMBER 2015

WIND POWER

// GLOBAL WIND ENERGY 2014-2019

ANNUAL MARKET FORECAST BY REGION 2014-2019 The wind industry continues to diversify geographically, with significant new activity in Latin America, Africa and Asia outside of China and India.

2014 2015 2016 2017 2018 2019

CUMULATIVE MARKET FORECAST BY REGION 2014-2019 GWEC sees continued dominance by Asia, having surpassed Europe in terms of cumulative installed capacity at the end of 2014.

2014 2015 2016 2017 2018 2019

Europe 12.9 12.5 13.0 13.5 15.0 16.0 North America 7.4 9.0 8.0 8.0 9.0 10.0 Asia 26.0 26.0 27.5 28.0 29.0 29.5 Latin America 3.7 4.0 4.5 5.0 5.5 6.0 Pacific 0.6 0.5 0.5 1.0 1.0 1.0 Middle East / Africa 0.9 1.5 2.0 3.0 3.0 4.0

Europe 134.0 146.5 159.5 173.0 188.0 204.0 North America 78.1 87.1 95.1 103.1 112.1 122.1 Asia 142.0 168.0 195.5 223.5 252.5 282.0 Latin America 8.5 12.5 17.0 22.0 27.5 33.5 Pacific 4.4 4.9 5.4 6.4 7.4 8.4 Middle East / Africa 2.5 4.0 6.0 9.0 12.0 16.0

in gigawatts

FIVE-YEAR FORECAST 2014-2019 GWEC anticipates growth rate flattening, but remaining in double digits through the forecast period.

Cumulative (GW) Cumulative capacity growth rate (%) Annual installed capacity (GW) Annual installed capacity growth rate (%)

2014 2015 2016 2017 2018 2019 369.6 16.00% 51.5 44.20%

423.1 14.50% 53.5 3.90%

478.6 13.10% 55.5 3.70%

537.1 12.20% 58.5 5.40%

599.6 12.20% 62.5 6.80%

666.1 11.60% 66.5 6.40%

Source: Global Wind Energy Council

Credit: Shutterstock

www.breakbulk.com BREAKBULK MAGAZINE 125

opinion

THE LEAPFROG FACTOR By Janet Nodar

Credit: Keith Necaise Photography

Small-scale rooftop solar power arrays and windmills on homes and businesses are making many wonder if underdeveloped Asia and Africa could leapfrog past the fossil fuel era altogether.

There is our relentless hunger for energy, and there is our rapidly overheating planet. Can these two forces co-exist? And what will this mean for the project cargo industry? Particularly when some regions could leap right over the energy-generating methods we take for granted? The International Energy Agency reports that some 1.2 billion people, about 17 percent of the world’s population, are still without electricity. According to the IEA’s latest World Energy Report, this number will decrease to about 800 million by 2030. Making that a reality will take trillions of dollars in energy investment, primarily in India, China, Africa, Southeast Asia and the Middle East. That translates to a lot of project cargo to move, but some might not look like the energy-related cargo of the past. For example, India is expected to be the next booming emerging market, with a burgeoning capacity to gobble up coal, oil – and solar photovoltaic panels. A steep decline in the price of solar pv, a commitment to renewables by the Indian government and Prime Minister Narendra Modi, and solar’s flexibility – which means it can deliver power at the utility level or one rural house and business at a time – have made it key to India’s energy equation. Modi announced at December’s climate summit in Paris that he will lead an international solar energy alliance of 120 countries and entities. Supporting companies include Tata Steel, Areva, Enel and Engie. India’s goal is 175 gigawatts of renewable energy by 2022, and its International Agency for Solar Technologies and Applications plans to share cheap solar technology globally. “Distributed renewables,” or small-scale, individualized rooftop solar power arrays and windmills on homes and businesses, are making many wonder if undeveloped Asia and Africa could leapfrog past the fossil fuel era altogether. Why build massive power plants and lay power lines when individual homes and businesses can supply their own power? Cities, urban and manufacturing centers and massive projects will

126 BREAKBULK MAGAZINE www.breakbulk.com

need utility-scale generation, but many fartherflung regions may never go that route at all. In Bangladesh, 15 million homes without grid access are now solar-powered. The government plans to provide solar-powered electricity to every household in the country by 2021; the program is connecting 50,000 to 60,000 homes every month, according to news reports. Large solar projects also go up quickly. In 12 months, Gigawatt Global, a Dutch company, built a US$23.7-million, 8.5-megawatt solar farm, sufficient to power 15,000 Rwandan homes. A similar project is underway in Burundi, according to the company’s website. Storage issues are the renewable energy sticking point; when this technological barrier is breached, change will come even more rapidly. Remarkably, for the first time since the dawn of the Industrial Revolution, the IEA reports modest signs of “a decoupling in the relationship between carbon emissions and economic activity, until now a very predictable link.” Decarbonization, or reducing carbon emissions per unit of electricity generated, is more than just a catch phrase. Renewables accounted for nearly half of the world’s new power generation capacity in 2014. Coal still accounts for huge percentages of China’s and India’s existing energy infrastructure, but these countries appear determined to change the equation, even as fossil fuels are at rock-bottom prices. They have benefitted enormously from building out coal-based energy, but are also paying a gut-wrenching price in pollution. Massive energy capacity remains to be built on this planet, but the pressure to decarbonize is significant. The leapfrog concept – skipping the fossil fuel step altogether – appears startling at first glance, but makes sense for many undeveloped regions. Will it be important enough to disrupt traditional energy generation? That remains to be seen. But who could have predicted the near-demise of print journalism or the withering of landline telephones? These are significant trends that the project logistics supply chain, always closely tied to energy projects and those who build them, must pay close attention to.

NOVEMBER-DECEMBER 2015

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