Best of Breakbulk 2024

BEST OF 2024

Best of Breakbulk Magazine 2024

THE BIG 8

The industry’s most-read stories of the year.

Read and download complete issues at https://breakbulk.com/page/magazine

94 1 86 Global

Embracing the Rush of Global Project Logistics

Featuring Cyril Varguese, Global Logistics Director, Fluor

2 91 Asia

JGC’s Koichi Kaizu: The Master of Modularization Featuring Koichi Kaizu, Logistics Subject Matter Expert, JGC Corporation

3 94 Global

Semi-subs: The Mega Vessels Made for Modules

Featuring Edward Talbot, Managing Director, Roll Group USA; Peter Hansen, President, COSCO Heavy Transport; Ben van der Hoeven, Director Module Logistics, Fluor

4 98 Europe

Beating a Path to Poland

Featuring Mariusz Rutowicz, Country Manager for Poland, deugro; Jakub Walasek, Director UTC Poland, UTC Overseas, Inc.; Nils de Baar, President, Vestas Northern & Central Europe; Łukasz Chwalczuk, President, Polish Heavy Transport Association and board Member, ESTA

5 98 Europe

Ukraine: Trade Continues

Featuring Oksana Antipa, Branch Manager, Synex Logistics Group; Dmytro Prosvirin, Commercial Director, Antonov; Oleg Kozel, Negabarit

By Breakbulk Staff

98 6 94 Global

Insurance Risks and Rewards

Featuring Captain Rahul Khanna, Global Head, Allianz Commercial Marine Risk Consulting; Tom Hughes, Head of Marine, AXA Australia, Jarek Klimczak, Senior Risk Consultant, AXA Marine; Captain Jia Hong Liu, Master Mariner/Technical Manager, Skuld (Far East)

7 107 Asia

Japan: A Market Poised for Growth

Featuring Peter Roland, Managing Director Japan, BBC Chartering; Masahiko Uchiyama, Managing Director - Japan, JSI Alliance; Marc Willim, Global Head of Chartering, AAL Shipping; Yuko Kimura, Managing Director Japan, AAL Shipping

By Thomas Timlen

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8 110 Americas

AI and the Art of Transport Engineering

Thought Leader

By Ritesh Nair, Project Logistics Management - Ops & Global Sales, Rhenus Project Logistics USA 3 Breakbulk Magazine

Issue 6 2024

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1

Africa

Global

EMBRACING Fluor’s Cyril Varghese on the Joy of Finding Solutions in a Complex Business

By Luke King

G

lobal logistics director Cyril Varghese’s induction in the world of transportation came unexpectedly in 2004, when a friend told how her uncle was working for a shipping company in the Middle East, and looking to hire a salesperson.

Brimming with the confidence that comes with youth, the naval architect, who had just finished his MBA, declared himself a perfect fit for the role, assuring his prospective boss that his background

allowed him to “speak the same language” as the ship buyers.

The only problem? This was deugro, a distinguished German freight forwarding firm – and the role had nothing to do with selling ships.

Nevertheless, Salim Rajan, at that time deugro’s regional vice president for the Middle East, saw potential in the untested Varghese and enrolled him in the deugro Most Promising program – the first time a candidate from India had

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participated in the development scheme for promising young leaders.

An initial posting in Singapore followed, starting an “exciting and steep” learning curve. “I had no experience in freight forwarding, nothing. I didn’t even know what a bill of lading was,” recalls Varghese.

Starting his journey in Singapore, the apprentice forwarder was taken under the wing of David Kwok - then an executive vice president of deugro.

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THE RUSH OF GLOBAL PROJECT LOGISTICS

Varghese remembers: “David took a personal interest in me and for the three months I was there, he would carve out two hours with me every day, explaining concepts and nuances related to the industry. From container types, to ship types, from Incoterms to target client segments, from pricing dynamics to tender management.

“Every time there was a visitor in Singapore, either from an overseas office, or a client who was coming in, he would ask me to join him for all these meetings, as well as exquisite evening meals.

He gave me my first exposure to my professional network - and the dining experiences were a bonus.”

Future Friend and Mentor One of those visitors – and a future friend and mentor – was Klaus Behrmann, then working for deugro in Malaysia. “We met for dinner and immediately connected over some popular hard rock classics,” recalls Varghese. “He told me – ‘You’re going to be my apprentice and I’m going to be your sorcerer, and I will transform you.’” Behrmann would continue mentoring his protégé until he passed away in 2013.

“After three months, I left

Singapore and I had a very basic grounding, at least from a theoretical perspective,” says Varghese.

Subsequent postings were planned for Varghese in Dubai, United Arab Emirates, and then South Africa. But in Dubai, Varghese convinced the management to allow him to focus on generating some revenue before he was moved to the next destination.

“We didn’t have LinkedIn, so there was a lot of focus on building client relationships and client referrals to support the sales drive.”

His first break came when Ahmed Al-Bazz, logistics manager at Petrofac, asked him to ship a 20-foot GP container from Ningbo to Sharjah, and “held his hands all the way through” until the shipment was invoiced.

“I still remember the $20 profit I booked on that shipment – my first shipment,” says Varghese. “Later, he would engage me on many more shipments, especially from the U.S., once he realized that the bachelor was happy to stay late and work with the Houston office to get him an update by the time he got to the office.”

Thrill of the Sale

Varghese started “loving” his sales role and invested heavily in building

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his network. Clients like Siemens, CB&I, ABB, EMAL, Crescent Petroleum, Dragon Oil, Hunt Oil and Alstom kept him busy and learning.

Three months became six years.

“I stayed put in Dubai and handled many very interesting Middle East projects. I was given management responsibility of the Dubai office in 2008 and was proudly running the company’s most profitable office by 2010,” says Varghese.

When industry veteran Steve Drugan, who Varghese considers “one of the greatest project forwarders of all times,” joined deugro, Varghese started getting exposed to a larger scale of opportunities with the bigger EPCs. “I always wanted to experience the complex and competitive landscape of logistics in India so took the opportunity to move there, when deugro opened an office in India.

We did some exceptional shipments for companies like Larsen & Toubro, Reliance and Siemens during my stint.”

In 2012, Varghese returned to the Middle East and joined Kuehne+Nagel Ibrakom, where he handled project shipments for companies like Technip, DNO, Petrofac and Dragon Oil, among many others.

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Fluor, with its joint venture partner JGC Corporation, is delivering multiple aspects of the LNG Canada project, including engineering, procurement, fabrication and delivery of modules. A 11,000 ton dehydration and mercury removal module is pictured doing the last mile over the road in Kitimat, British Columbia.

Credit: Fluor

Beginning of “A Great Run”

During late 2014, Raj Desai, then leading the Supply Chain Commercial Strategies group in Fluor, reached out and asked Varghese to join the company in Houston – the start of what he calls “a great run.”

Varghese initially started with global logistics responsibilities, focusing on a commercial and strategy role for the company.

He says: “For the size of the organization, I was genuinely surprised at the speed at which we were able to bring concepts to fruition; from setting up a container negotiations desk, a chartering desk, a module ocean transport desk, our centralized Logistics Competence Centre in New Delhi, Fluor’s Fabrication Logistics desk, our Supply Chain Summit and the Fluor Supply Chain

Services portfolio – to name a few.

“The Fluor culture, steeped in integrity, mutual respect, along with an environment that allows us to innovate, is an ecosystem that helps us get exceptional talent to work with us.

“The quantum and diversity of the transport solutions we manage, from large LNG, chemical and refinery modules, equipment for the largest mining, advanced technology and life sciences projects, keeps our team intellectually stimulated.”

Fair and Balanced Terms

With his background in project freight forwarding, Varghese is uniquely placed to seek value from his logistics service providers, while “always trying to treat them fairly.”

“There is a tendency to look at logistics cost, however loosely

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calibrated, as a static number,” he says. “People understand that commodity prices change, whether that’s oil, copper, nickel or steel, yet they somehow believe that freight is a fixed number.

“We’ve been working hard to educate stakeholders around the dynamics of freight, encouraging a shift of mindset from lowest unit price to lowest landed cost, with a focus on schedule and treating freight as a commodity that goes through volatility and cycles.

“Nobody gains by keeping freight rates lower than operating costs. It’s important that the market realizes that these are extremely capitalintensive investments that shipping lines, for example, need to make. The returns should be at a respectable level for investments to continue and for the sectors to retain competition.”

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Great Expectations

So what does the Fluor executive expect from his logistics partners?

“A significantly large percentage of the freight forwarders are comfortable pricing for a very welldefined scope,” he says. “So if I send a packing list, they know how to price because they know what the cargo looks like, where it’s coming from, where it’s going and so on, and they can come back with a proposal.

“The problem EPCs have is, when a freight forwarding contract is placed, there are multiple purchase orders for materials and equipment that are still being negotiated. We may not know at that stage where a lot of materials are coming from, the mode of transportation, the stowage factor – there’s potentially a lot of missing information.”

He adds: “A true project forwarder is able to aggregate the intelligence that they’ve gained over multiple years of executing similar work and bring those insights into their pricing, instead of speculating on unit rates.

“For example, when a freight forwarder is pricing for, say, 20,000 tonnes of structural steel or pipe spools, insights around the stowage factor, assumptions on the percentage split between breakbulk and containers, average weight that is typically stowed in a container, optimal bundle, etc, can help build up a landed cost and help the proposal stand out.

“An intentional drive to utilize insights from data may also help them carve out additional scopes that are typically left with other stakeholders, which will help in improving margins, while generating value for the EPC from a landed cost perspective.”

Varghese believes freight forwarders are sitting on a “treasure trove of data based on what they’ve transacted in the past.”

He says: “Meaningful interactions that I enjoy with our partners is when they are aware about the projects that

we are tracking, are able to provide insights at the early stages, bring sector-specific and project-specific solutions to the table and work their way into a top-of-the-mind recall.”

Global Traveler

Away from work, the married fatherof-two enjoys cooking meals with his family – “I try my hand at a range of different global cuisines and different music genres help me unwind.

“I love traveling with my family, interacting with different cultures and savoring diverse cuisines. Every time we make a family trip, whether that’s our recent trips to Japan or Brazil or road trips in the United States, there’s always somebody local from my network, who can share insights

Cyril with his family enjoying Houston.

Credit: Cyril Varghese

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and help with the planning,” he says.

As our conversation draws to a close, Varghese touches on the well-documented challenges faced by the sector in finding – and retaining – the talent of tomorrow.

“When we were growing up in the industry, our generation would have been perfectly OK with working on a documentation role for many years, before you got a chance to do something meaningful or impactful,” he recalls.

“And then you’d probably start with the, let’s say, ‘low impact’ clients and slowly get experience before you meet face-to-face with a VIP client.

But, today, the younger generation needs a little bit more of an instant gratification and recognition – and there’s nothing wrong with that.

Global

“It is for the industry to take cognizance of the fact that the dynamics are different. You cannot expect a youngster to come to an office at nine in the morning, leave at five and just do paperwork for the next 10 years. They want to see the purpose of what they’re doing.”

A Seat at the Table

Varghese expands: “The younger generation needs to have visibility, recognition, appreciation and affirmation. A seat at the table with their senior leadership, visibility in front of peers and clients, continuous opportunities to learn, innovate and challenge, and an organizational willingness to look at learning as a two-way street will assist in retention, once we have talent on board.

“As an industry, we have not socialized the appeal of a career in project freight forwarding, nor have we collectively invested in an infrastructure surrounding training and development for the stakeholders that join the industry. Fluor is currently conceptualizing a number of initiatives to address this gap.”

The logistics veteran’s advice to the younger generation is to “network, to genuinely show interest and to use the tools which are available to build a meaningful network, so that you can help people and also receive help when you need it. Integrity and transparency are key to success, as you build up your subject matter expertise that will propel you into leadership roles.”

“I’VE NEVER HAD A DULL DAY IN MY WORKING LIFE IN TERMS OF CONTENT. EVERY DAY IS DIFFERENT. I GET AN ADRENALINE RUSH WHEN WE’RE ABLE TO UTILIZE OUR ORGANIZATIONAL INTELLIGENCE TO FIND INNOVATIVE SOLUTIONS.”

Varghese says: “During one of our trips to Turkey, Klaus passingly mentioned to me that, when he died, he wanted his ashes to be immersed somewhere in the Mediterranean Sea. After the cremation, I consulted with his wife and daughter and they entrusted me to make the arrangements.

“Not knowing where to start, I called my friend, Dennis Geertz from SAL, who called back shortly confirming that MV Trina was loading in Jebel Ali and was scheduled to discharge in the UK. The family and I met Captain Matthias Pfeiffer and he hosted me and the family on board the ship and told us that he will support us in fulfilling Klaus’ last wishes.”

A few weeks passed and Varghese received a parcel from Capt. Pfeiffer, with a photo book of the ceremony at sea, including handwritten letters to Mrs. Behrmann and a large copy of the captain’s logbook, stating the exact coordinates where the ceremony was conducted.

In his photobook, Capt. Pfeiffer explained how this was a first for him, and that he had to read up on age-old maritime customs for burials at sea.

“In a solemn ceremony, he waited Hour of Need for calm seas, summoned the crew, by Varghese would also like to stress to the ringing the bell nine times (signifying younger generation that the breakbulk the end of one’s shift), after which he industry “runs on personal relationships, officiated a prayer, used sacramental and comes together at the hour of need.” oils for the ceremony and climbed One such example is the passing of down the gangway to respectfully his mentor, Klaus Behrmann, in 2013. immerse the ashes,” says Varghese.

Varghese recalls conversations with “He then recorded the coordinates well-wishers like Fuat Miskavi, another in his logbook and did three rounds project logistics professional, who around the coordinates to form a circle offered to pay for overseas treatment of foam (signifying the circle of life), when Klaus was on his deathbed. before he proceeded to his destination.”

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Varghese admits he still gets “tears and goosebumps” when he sees the photobook.

Creative Logistics Solutions

But what of the future? “The scale of some of the capital investments that we see on the horizon require extremely creative logistics solutions, to the extent that clients agree to design modules that fit our recommended ship types,” says Varghese.

“The diversity of these projects, the focus on global sourcing and modularization will all ensure that logistics will continue its stride from the back-end to the driving seat.

“We are also excited about the interest that our clients are showing in our supply chain services portfolio, where we can utilize our organizational intelligence, global reach, market relationships, volume leverage and data-driven market insights to generate value for our clients.”

Summing up his career to date, Varghese concludes: “I’ve never had a dull day in my working life in terms of content. Every day is different.

There are always new and interesting challenges and opportunities and I get an adrenaline rush when we’re able to utilize our organizational intelligence to find innovative solutions.”

Involved in the project cargo industry since 2007, Luke King is managing editor of Breakbulk. *BGSN member *Breakbulk Exhibitor

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JGC’S KOICHI KAIZU: THE MASTER OF MODULARIZATION Logistics Partners Play Outsized Role in Modularized Projects, Says JGC Specialist

By Damon Evans

A

t JGC Corporation in Japan, freight forwarders and other logistics partners are held in particularly high regard, given their ability to make or break a project’s success.

“Since JGC is engaged in megaprojects, any delays in the shipment of components, heavy equipment and structures can lead to additional project costs amounting to millions

of dollars per day,” said Koichi Kaizu, a logistics subject matter expert for module transportation at JGC, in an exclusive interview for Breakbulk.

“Therefore, robustness and certainty in our logistics execution become critical for overall supply chain management, and the performance of the logistics service provider significantly impacts our logistics execution performance.

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“As a result, we prioritize trust and accountability in our long-term partnerships with logistics companies.

This helps us manage unexpected events, such as the COVID pandemic,” the logistics expert added.

Kaizu is charged with shipping heavy cargoes and equipment to energy projects across the globe, including modules heavier than the steel structure of the Eiffel Tower.

Africa Asia

An advanced design “JI Module” (JGC Integrated Module) weighing 10,000 tons onboard a Cosco semi-submersible vessel.

Credit: JGC

Established in 1928 and headquartered in Yokohama, JGC is a global engineering company that specializes in the design, procurement and construction of large-scale industrial plants and facilities, particularly in the energy transition sector.

It operates in various business fields such as oil and gas, chemicals, renewable energy, life science and infrastructure development and says its biggest market is energy construction projects, including liquefied natural gas (LNG) plants.

Global Operations

The company is working on multiple LNG projects around the world, among them the Shell-led LNG Canada project, one of Canada’s largest-ever energy projects. JGC uses a modular construction approach, where much of the project is built offsite overseas, before being transported and installed at the final location.

The LNG Canada modules, for instance, were fabricated at various yards across the world, including China, Italy and Indonesia - the largest weighing in at more than 9,500 tons.

LNG Canada, a joint venture company encompassing Shell, Petronas, PetroChina, KOGAS, and Mitsubishi, is building an LNG export terminal in Kitimat, British Columbia.

A joint venture between JGC and Fluor is in charge of delivering multiple aspects of the Canadian megaproject,

including engineering, procurement, fabrication and delivery of modules, as well as construction of the project’s infrastructure and utilities, marine structures and LNG storage tanks.

Elsewhere, JGC is currently executing multiple floating LNG (FLNG) plant projects simultaneously.

An FLNG plant is a specialized vessel used for the production, liquefaction, storage and transfer of LNG at sea, with technology that’s often used to tap small-scale offshore gas fields.

JGC is responsible for the engineering, procurement and commissioning work for the FLNG topside, the associated onshore facilities and the management of the overall project.

A Modular Approach

JGC uses a modular construction approach for projects built in remote areas, where there are inevitably labor availability and cost concerns. Indeed, Kaizu believes the greatest challenge for JGC when executing projects is the location of the energy plant site, since the construction site management cost is a significant element.

A logistics partner’s role in a modularized project is especially pronounced, emphasizes Kaizu. “A one-day delay in an individual piece of equipment remains the impact of a delay in one unit of work pack (a group of related tasks) in a conventional project – but in a modularized project, it becomes the impact of a delay in one module.

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“If we consider a module in terms of work pack volume, it is equivalent to several thousand units of work pack volume and, therefore, a delay in a module means a delay in several thousand units of work pack at construction site. As a result, the impact on the site and the entire project is enormous.”

It’s no surprise, then, that Kaizu values reliability and speed as key traits among JGC’s logistics partners. “Mitigation measures are also important – if there is a delay in delivering a shipment to the construction site, for whatever reason, such as a manufacturing delay, then we might be able to choose air freight to recover the schedule.

“However, for modules, we don’t have that transport option, as due to the size and weight, they can only be shipped by sea.”

JGC’s first experience using the modular approach was for the Gorgon LNG development in Australia.

“Since then, we have gained more experience, and we are continually improving the modularization design process,” noted Kaizu. “As a result of the design progress, the module size and weight got larger and heavier than ever before. To transport these giant modules, we need to use very large semi-submersible vessels.”

The company’s modules tend to be fabricated in countries such as China, Indonesia, and Thailand, Kaizu said. “We then transport them to the energy plant construction area. We have completed these types of energy construction projects in Australia, as well as the Arctic area of Russia.”

Seeking Long-Term Partnerships

While JGC does not often seek opportunities to deviate from its well-established logistics partners, business opportunities do exist for new players, said Kaizu.

JGC is said to be “very happy” with its legacy partners deugro, Bolloré and a few other forwarders, though

Asia

it continues to explore potential collaborations with other suppliers.

“We are looking for trusted partners to be added to our future projects, but we also want to be a trusted partner for them too,” said Kaizu.

“In addition to the basics, such as cost, speed, quality, and capability, we are seeking trust and accountability. This is of utmost importance. As we experienced the market volatility and disruption during the pandemic, we need a certain amount of accountability and trust which goes beyond common practice,” stressed Kaizu.

“We feel a strong obligation to retain our reliability, credibility and accountability to our partners,” he added. “We select partners for long-term relationships.”

For its modular energy projects, JGC engages two different types of logistics partners – international freight forwarding companies and module transportation ocean carriers.

“In terms of the freight forwarding company, we expect them to have the capability and ability to manage

materials shipments to various destinations as we execute projects across multiple locations,” said Kaizu.

“Typically, we use four or five fabrication yards for one project.

Therefore, our freight forwarding company needs to manage equipment shipments from our global suppliers to four or five different final destinations, which includes managing import duty exemptions,” he added.

Minimizing Carbon Emissions

JGC is actively involved in various energy projects across the world that are focused on reducing greenhouse gas emissions and advancing sustainable energy solutions. Now, the major energy companies are also looking to their contractors and suppliers, such as JGC, to manage their environmental footprints.

“Reducing emissions is our big homework, as our clients increasingly ask us to demonstrate how we will minimize carbon emissions during the EPC project execution. To respond, we need to develop our

A JGC conventional design module weighing more than 5,000 tons being transported by the Dockwise Forte semi-submersible heavy-lift vessel.

Credit: JGC

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program and we need cooperation from our partners, such as shipping companies,” noted Kaizu.

Looking ahead, Kaizu, who has worked in logistics and shipping at JGC for 20 years, considers the African and North American markets to be the most active for energy projects over the next decade. “In Africa, we expect LNG projects, while in North America, we are exploring ammonia and nuclear power projects, as well as LNG.” Kaizu said long-term energy market trends are difficult to predict, but in the near-term he states “there is a general market understanding that coal plants will disappear very soon.

Next to disappear will be oil refinery and oil-fired power plants.” However, he regards natural gas and LNG to be “sustainable for the next 10 to 20 years, playing a role in the energy transition.”

Damon Evans is a freelance journalist, analyst and consultant, specializing in the energy sector with 20 years of experience. He is based in Singapore. *BGSN member *Breakbulk Exhibitor

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SEMI-SUBS: THE MEGA VESSELS MADE FOR MODULES

Oil & Gas, Renewables Keep Sector’s Largest Ships Busy

By Felicity Landon

S

emi-submersible vessels could be described as the unsung heroes of project cargo and heavy-lift shipping – and in some parts of the industry, there’s scant knowledge of where, and how, semi-subs really come into their own. This is the view of one industry stakeholder to the Breakbulk Editorial Board member who would like to foster a better understanding – and appreciation – of semi-subs.

“It’s a topic that most people in project logistics don’t actually understand very well, or have a lot of expertise in,” he said. “Perhaps they don’t need to understand or use semi-submersibles every day – semisubmersibles are definitely a niche area, and we should recognize their importance as they relate to modular and offshore projects.”

Edward Talbot, USA managing director at Roll Group agreed that “industry can always learn and understand more about the more specialist end of the heavy-lift market.”

Roll Group owns and operates a fleet of “highly adaptable” transport vessels, including semi-submersible, multifunctional vessels and wide deck carriers, which the company says are suited for “a wide variety of situations and circumstances.”

As to when it makes sense to consider a semi-submersible, Talbot says: “It is a case-by-case, project-byproject basis. Project teams should consider not only the cargo and routing, but the entire logistics strategy from vendor to foundation.”

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COSCO Heavy Transport, which operates the world’s largest fleet of semi-submersible heavy-lift vessels, took delivery of the 65,000dwt SP2 vessel Xiang Tai Kou in January.

Measuring 231.10 meters LOA and 46 meters wide, it brought the total COSCO semi-subs fleet to 16, the majority of which are DP2 classed. The largest of the fleet is the 255-meter LOA, 98,000dwt Xin Guang Hua. No other newbuilds are currently planned, said Peter Hansen, president of COSCO Heavy Transport, noting increased demand for semisubmersible heavy-lift vessels as the

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Flexibility Is Key COSCO Heavy Transport operates the world’s largest fleet of semi-submersible, heavy-lift vessels.

Credit: Cosco Shipping

oil and gas market remains strong, while the renewable energy market is adding to client requests.

“We do not see a considerable change in geographical demand, even with the introduction of renewable cargoes,” he noted. However, he reported requirements to perform floatover mating installations of increasingly large topsides, and said COSCO had “built

accordingly to meet market demand.”

Do customers have to be creative or flexible on timing to ensure access to the ships they need in the places they need them? Hansen said: “Demand for vessels is good, so it is wise to plan accordingly, and secure tonnage required for projects as early as possible.”

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From the EPC’s point of view, flexibility is everything. Ben van der Hoeven, director module logistics at Fluor, in the Netherlands, said: “When we develop solutions for our clients, we would advise them on the design of a plant or project – and would already know what kinds of vessels we need, how many and the duration of employment of these vessels. As an EPC we have a big say in finding a match; we can go very big and have fewer shipments or smaller with modules but need more voyages. We are constantly working on finding an optimum there.”

He described COSCO’s X-class as the “workhorse” of the industry, “Simply because you tend to design towards the vessels that are available in the market. For us, from a modular construction perspective, we don’t want to look at the unique, big units of COSCO or Boskalis, we want to look at units where there are sufficient sister ships. That is very important for us.”

One unique vessel on its own is often not regarded as a strategic solution, explained Van der Hoeven. “It could be a solution for the big oil companies, for example when they need to move one large rig or FPSO, but if you have a multi-voyage modular project, you need to be able to use sister vessels. That said, Fluor does have large one-off projects from time to time, that require the services of these top-end-of-the-market, semisubmersible vessels.

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Ben van der Hoeven

“You can plan it, and change ships if needed, without having to change the engineering or design. From the starting point, we like to look at ship types where there are sufficient sister ships or technically equivalent ships and we would design a project in a somewhat strategic, conservative way to make sure we would not be without tonnage.”

COSCO says its vessels have been designed in close consultation with leading offshore, oil and drilling companies in order to incorporate the latest developments in the industry and “to provide the safest, fastest and most reliable transports and installations within the semi-submersible market.”

Van der Hoeven, who previously held commercial positions with Damen Shipyards, Boskalis (Dockwise) and RollDock, said: “We have active dialogues ongoing with the shipowners, who also approach us and say – hey, we are thinking about a newbuilding, what would you like us to build? The question from time to time passes my desk and then I will have an opinion.

“I would be happy if there was more tonnage of this and that in the market – that would make me smile, but that is not necessarily the same thing as would make the shipowners smile. Owners like to have a differentiating factor on their vessels, I like to have sister vessels. But in general, there are usually good discussions ongoing over a cup of coffee.”

“A FEW SHIPOWNERS, WITH THE RIGHT COMMERCIAL AND STRATEGIC VISION AND THE FINANCIAL ROBUSTNESS TO DO IT, ARE NOW STEPPING FORWARD TO INITIATE NEW BUILDING” - BEN VAN DER HOEVEN Growing Environmental Awareness

As for innovation, Van der Hoeven points to size, capacity and, to some extent, speed – but more sustained speed. There is also increasing awareness of a project’s CO2 footprint, and therefore questions around fuels.

An EPC is likely not in a position to reject ships that burn fossil fuel. “But if you have a vessel that can burn cleaner fuels, you may get some brownie points that just may tip the balance regarding the award of a contract.

“We would certainly say to the shipowner, it helps if you come up with solutions that supports Fluor to deliver solutions for our clients that demonstrate efforts to reduce the environmental footprint of a project.”

The pressure to adopt clean fuels will build - “and it has to,” he said.

However, semi-subs are exceptionally strongly built, and they are built to last.

“There are some older vessels still around and still in excellent shape.”

Hansen noted that the COSCO Shipping group, with its total fleet of more than 1,400 vessels, is spending considerable resources in evaluating alternative fuel sources. “Our parent company, COSCO Shipping Specialized, recently put two LNG dual-fuel powered ro-ro vessels into service,” he said.

The market is fairly quiet for large modular projects at present, according

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to Van der Hoeven. There has been a tendency towards projects with smaller modules, but he predicted that the larger modules “will come again.

Although fossil fuels and traditional chemicals may be in a mature phase on their S-curve, they will continue to form the lion share of our industry.

“Many of the renewables and sustainable projects, recycling and upcycling projects, are still at the beginning of their S-curve and time will tell whether large-scale growth towards more mature business will lead to more and larger modules being shipped.”

Global Developments

There have been unexpected knocks – for example, the delay (or extended timescales) on projects in the Middle East, where operators were gearing up for huge demand and newbuilds were being considered to serve this, and the impact of Russia’s invasion of Ukraine, pushing back key energy projects.

“Nobody expected that we would have the war in Ukraine. If that wasn’t there, there might have been further developments in the Russian Arctic,” said Van der Hoeven. “Global developments, including present tensions in the Middle East, impact shipping needs and also the supply situation; it’s a fine balance of supply and demand and the scales can be

Global

tipped very quickly, so there is a reluctance to build new ships too intensively.

“In the minds of shipowners, it hasn’t been too long since we saw a market with an over-supply of deck carrier tonnage, causing a doldrums period of several years with prolonged idling of vessels. A few shipowners, with the right commercial and strategic vision and the financial robustness to do it, are now stepping forward to initiate new building. A prime example is BigLift Shipping/CY Logistics, whose new ballastable module carriers will soon enter service.”

Van der Hoeven says there is more demand for flat deck carrier tonnage in general, though “whether that is going to be semi-submersibles remains to be seen. It depends highly on the location of projects. At the moment, many of the semi-submersibles are engaged in

the renewables industry. If we separate out that part, we are still in need of potential semi-submersibles if the location of a project requires.”

Hence, he said, there is room for some semi-sub newbuilds. He pointed to Canada and Australia as key areas, due to their large tidal variation.

“Semi-submersibles have much bigger ballasting capabilities than other vessels. In certain locations we need that – where the tidal variation is so big that you do need ships with significant ballast capability.”

Some of the ballastable module carriers, however, also have high spec ballast systems to offer similar performance as the semi submersibles, Van der Hoeven noted.

Semi-submersibles have another big advantage, he added – they can be used in conjunction with piggyback systems, carrying barges that are loaded with modules. “There are applications of

Roll Group owns a fleet of adaptable transport vessels, including semi-submersibles and wide deck carriers.

Credit: Roll Group

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semi-submersibles in the market where a barge is the solution for the last mile – drop it off in deep water and the last mile or upriver stretch can be done by barge.”

Another reason to consider piggyback concepts is a possible reduction of the high day rates commanded by semi-submersibles by pre-loading barges and following up with a relatively straight forward barge float-on operation, the Fluor executive said.

“This can avoid having to develop a full-depth material offload facility, with the barge able to be pushed into a shallow material-receiving facility,” Van der Hoeven concluded.

Felicity Landon is an award-winning freelance journalist specializing in the ports, shipping, transport and logistics sectors.

*Breakbulk Exhibitor * BGSN member

4

Europe

BEATING A PATH TO POLAND

By Luke King

Wind Energy, Nuclear Prospects and Infrastructure Upgrades Attract Logistics Companies to Central European Nation

I

n the next two years, a new €250 million offshore wind terminal will open in Gdańsk, underscoring Poland’s commitment to energy transition and indicative of a focus on renewable power that is generating substantial business for the project forwarding community.

The central European nation is enjoying an unprecedented period of growth. Unemployment has fallen below 5% for the first time since 1990, when Poland was beginning its post-communist transformation, while GDP per capita may overtake that of the United Kingdom by 2030, according to the World Bank.

Freight forwarders have been quick to seize the opportunity, evidenced by a steady stream of new office announcements in Poland from the logistics sector in the last 12 months.

Among those with new Polish operations is deugro, the Germanheadquartered project cargo specialist, which opened an office in Gdynia, a port city a few kilometers north of Gdańsk on the Baltic Sea coast, in October last year.

Mariusz Rutowicz, country manager for Poland, explained the motivation to Breakbulk, citing deugro’s “long history in successfully completed projects in Poland.”

He said: “Poland is at another very important threshold of infrastructure development. “Our current government has implemented several huge investment programs that require specialized service including in the field of logistics.

“Many logistics companies are currently investing in Poland to keep up with the development of global

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connections and strengthen the supply network.”

Infrastructure upgrades, including road, rail and port facilities, have also enhanced Poland’s logistics capabilities, Rutowicz said. He pointed to major projects at Gdańsk, Szczecin / Świnoujście and Gdynia Mariusz Rutowicz

Europe

DSV transported a petrochemical column wash tower weighing 850 tons from Gdańsk to Płock, in what it claims is the largest shipment ever to move on the Polish rivers.

port – and will facilitate the installation and servicing of wind turbines in the Baltic Sea as part of Poland’s plans Credit: DSV Poland to generate up to 51% of electricity from renewables by 2040.

The total cost of the project is €253 million, with the balance financed by the beneficiary, Istrana, which will build the terminal. It is expected to be operational in 2026 and will operate under a lease between Istrana and the port authority ZMPG until 2055.

Separately, renewable energy manufacturer Vestas announced “The war in Ukraine will end one plans to build a new offshore nacelle day and the country will need to be and assembly factory in Szczecin rebuilt. Poland is the closest in terms to meet “rapid offshore growth.” of history and culture to Ukraine so a The Szczecin facility will assemble lot of business will be done this way.” nacelles and hubs for Vestas’ flagship offshore wind turbine, the V236-15.0 Renewables a Major Driver MW, and is expected to create 700 Rutowicz said that substantial direct jobs when it starts operations in investments in renewable energy, 2025. “The factory will support domestic particularly wind and solar power, and global demand and will play a crucial was a “major driver” for the significant role in supporting Poland’s offshore wind growth in the Polish heavy-lift market. market and industry,” the company said.

Such investments are leading to In January 2024, Vestas revealed “increased demand for project cargo and plans to build a second factory in ports, plus new terminals at Baltic specialized logistics services, creating Szczecin, this time a blade factory, Hub – all of which are “making opportunities for logistics providers located at a site in northern Szczecin, the country more accessible and to support the transport of large and close to the nacelle and assembly efficient for logistics operations.” complex components,” he said. factory. It is expected to come Intervention by the state has also “Szczecin, as the location for the new online a year later, in 2026, adding been encouraging, Rutowicz added. factories of wind turbine components, more than 1,000 direct roles.

“The Polish government has been holds strategic importance due to its “Poland is transforming its energy supportive of business investments, proximity to the Baltic Sea, which is system and is a promising wind offering incentives and creating a emerging as one of the main areas energy market with good conditions favorable regulatory environment for for offshore projects in Europe.” both onshore and offshore,” said foreign companies. This includes tax Another recent development was Nils de Baar, president of Vestas incentives, grants and streamlined the European Commission’s approval Northern & Central Europe. administrative processes.” (under EU “state aid” regulations) “Poland has a highly skilled labor UTC Overseas – a global forwarder earlier this summer for Poland to invest force and growing wind industry that that opened a Gdańsk office earlier this €194 million in the aforementioned can become an offshore hub for the year – offered some additional reasons new offshore wind terminal.

Baltic Region – and the rest of Europe.” for the company’s foray into Poland.

“After years of delays, there is a green “Decarbonization has an enormous light from the European Commission “Highly Significant” influence,” said Jakub Walasek, for the construction of a terminal Nuclear Announcement director of UTC’s Poland office. in Gdańsk for Polish wind farms on Poland’s plans to start building its “It involves building new lowthe Baltic Sea,” wrote Jan Szyszko, first nuclear power plant in 2026, in emission power plants, mostly deputy minister of funds and regional partnership with Bechtel, are well gas-powered. Additionally, the policy, in a July social media post. publicized, but the government’s exchange of old coal-fired plants to The terminal will be located at recent approval of 24 small modular gas-powered plants is a big thing.

Baltic Hub – Poland’s largest container reactors (SMRs) is described as Jakub Walasek

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Europe UTC Overseas handled three oversized LPG storage tanks, each weighing 385 tons, which were loaded onto a barge using SPMT trailers, before reaching their final destination in Poland.

Credit: UTC Overseas

“highly significant for project forwarders” by deugro’s Rutowicz.

“Future investment in these reactors represent a substantial logistical undertaking, involving the transportation of large, complex, and sensitive components,” he said.

“The opportunities for project forwarders are considerable, including the need for specialized transport solutions, handling equipment and expertise in managing oversized loads and hazardous materials.

“Moreover, the construction of these reactors will likely span several years, providing long-term projects and steady demand for logistics services. Project forwarders can also benefit from partnerships with reactor manufacturers, construction firms and other stakeholders.

“Overall, the SMR projects present a unique chance to demonstrate logistical capabilities, innovate in transport Łukasz Chwalczuk

methodologies and contribute to Poland’s energy transition, positioning project forwarders as critical players in this sector.”

The Polish government says building the SMRs across six sites by 2030 will help accelerate the phasing out of coal as well as ensure stable power supplies as the country reduces its use of fossil fuels.

Challenges, as Well as Opportunities

Lawyer Łukasz Chwalczuk, also president of the Polish Heavy Transport Association and a board member of ESTA, says his firm has assisted a number of international project forwarders to establish Polish operations with a view to exploiting the “huge opportunity” he sees in his home country.

Despite the strong prospects, Chwalczuk described a number of issues that were hindering heavy cargo operations in Poland. “Before the war in Ukraine, 70% of drivers in Polish trucking companies were Ukrainians and many of them have returned home to fight, so there is a big gap to fill there.”

Aside from a driver shortage, Chwalczuk bemoaned a lack of digitalization in the heavy haul process.

“Road permits are still printed on paper so, for the last two or three years, our association has been putting a lot of effort and money to try and introduce digital permits for heavy transport.

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“Some of our small neighboring countries already have a digital system and Poland is, from my knowledge, one of the last to still be on paper, and rather behind – so we need that to change.”

Walasek from UTC added that difficulties arose due to aging infrastructure that is not always well maintained. “Sometimes, even new bridges suffer from a lack of documentation and construction problems. Other than that, the weather in Poland is very unreliable, so if you plan to transport any heavy items on the river, you can be lucky or very unlucky.”

Notwithstanding the difficulties, logistics companies continue to tread a path to Poland in search of business that is currently hard to come by elsewhere in Europe, said Chwalczuk.

“Germany was a very big market for heavy transport for many years, but for the last year or two it became super difficult to find good contracts.

In terms of the Polish heavy transport market, we see many, many jobs.

“Poland is building a lot of highways, express roads, the infrastructure sector is looking good. There are rail projects too, and huge money is being spent.”

Involved in the project cargo industry since 2007, Luke King is managing editor of Breakbulk. *Breakbulk Exhibitor * BGSN member

5

Europe

UKRAINE: TRADE CONTINUES

Ukraine War Rebuilding Must Wait but Project Cargo Remains Busy

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orwarders and breakbulk specialists report a roaring trade in both imports and exports for Ukraine, despite Russia’s invasion more than two years ago. Breakbulk spoke to Oksana Antipa, a Ukrainian national who fled when the war started and has recently joined Synex Logistics Group. A former key account executive for DB Schenker in Kyiv, she is now based in Gdynia as Synex branch manager for Poland.

“Ukraine is a huge country and the war means there’s massive demand for a long list of materials,” Antipa says. “Buildings are being re-built, factories are still operating, agriculture continues, so there’s constant demand for raw materials.

“Life is going on, universities are working, children are going to school and people are trying to live a normal life. But the buses, trains and trams were ruined, so I get a lot of requests regarding this type of cargo, including brand new electric buses from China.”

In addition, Antipa says “huge volumes” of stainless steel rounds are being imported to Polish and Romanian ports, bound for

By Breakbulk Staff

Ukraine. Baltic Hub Container Terminal is a facility of choice for smaller shipments coming in on container vessels, while breakbulk ships usually call at Port Gdynia.

Ukraine’s exports, on the other hand, also remain strong, according to Antipa. These include more routine items such as grain, timber, lumber, honey, sunflower oil, fruit, vegetables and finished steel products, but also cargoes unique to Ukraine. “For example, Ukraine manufactures very interesting Sherp utility task vehicles that can be driven on the mountains and go in the water – they are very unusual and are in demand in the USA, in Canada and worldwide.”

Antipa adds: “Nevertheless our primary task at the moment is imports, helping to get all the materials needed into Ukraine. We are working closely with our partner Dealex Transport in Ukraine, we support each other and have built a very good setup. Ukrainian freight forwarding companies are now asking for help, because we have the

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warehouses, special rates, special contracts for freight, and knowledge of the Romanian and Polish ports.”

While Odessa port remains officially closed to maritime traffic, Antipa says a “special corridor for small breakbulk vessels” exists to facilitate the import of critical cargoes such as building materials and stainless steel. “After the war, enormous projects will naturally come – not only rebuilding of houses, but relocation of factories, electricity projects and there will be even greater demand for equipment.”

Industry Recovery

Ongoing closure of Ukraine’s airspace means heavy-lift carrier Antonov Airlines is unable to carry out domestic operations, though it says it has “partially relocated” the airline to Germany, thanks to established relations with Leipzig/Halle airport.

“There is also a base for operational work and aircraft maintenance,” says Dmytro Prosvirin, commercial director at Antonov. “In this way, we are able to continue working on international air routes,

Europe

Antonov has “partially relocated” to Germany, thanks to established relations with Leipzig/Halle airport.

Credit: Antonov

meeting the demand in the market of extra-heavy and oversized cargo.

Five aircraft of the An-124-100 type make flights all over the world, except for areas where flights are restricted for security reasons.

“Part of the flights are carried out in the interests of Ukraine while the remaining shipments are project cargo, including satellites, turbines, gas and oil production equipment and generators, general cargo and missions under the Nato Salis program.”

The carrier’s base at Gostomel airport on the outskirts of Kyiv suffered significant damage, though Prosvirin reports that repair works are underway. “Plans are being developed for the restoration and development of the airport after the end of hostilities in Ukraine,” he adds. Turkish engineering firm

Mabtec, for instance, intends to build a logistics and transportation hub at Gostomel, once Ukraine’s airspace is operational again.

In general, Antonov sees a recovery of logistics activity following the Covid-19 pandemic,

with particularly strong demand from the industrial and energy sectors.

“It is worth noting the increased interest from companies in the aerospace industry over the past 20 years, and we predict a further increase in the number of orders in this industry,” concludes Prosvirin.

Dmytro Prosvirin

Motoring On

From his office in Kovel, a city in north-west Ukraine close to the Polish border, the owner of heavy transport company Negabarit Service tells Breakbulk that a wide-scale rebuilding effort is still a distant prospect.

“At the moment, Ukraine is maintaining its state more than rebuilding, especially considering the destruction of energy facilities, ports and infrastructure, houses and roads,” says Oleg Kozel.

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Europe

Despite the war, Ukrainian heavy hauler Negabarit Service has invested more than €12 million in new equipment.

Credit: Negabarit Service

Notwithstanding the war, Negabarit is busy and has continued to invest in equipment. Established in 2002, the family firm has more than 150 trucks and more than 180 trailers in its fleet.

“Our company is involved in the delivery of construction equipment and energy equipment for infrastructure facilities,” Kozel explains. “We deliver a lot of different vehicles, including buses, trams, trolleybuses, trucks for cities, especially in frontline areas.

“Despite the difficult times and the war, several factories were also built in Ukraine, so we are involved in the transportation of equipment from the ports of Romania, Poland, Germany, and Belgium. Of course, we also transport a lot of humanitarian

equipment to support cities and towns with critical infrastructure.”

Like many Ukrainian companies, Negabarit has been affected by personnel shortages. “Many workers went to war from the beginning of the invasion, including our logistics manager Ivan Trofimuk, who participated in the Breakbulk exhibition in 2021 in Bremen, as well as many drivers and other workers,” the company director says.

“Of course, it affects our work when professional people leave us for a while, but we encourage and support these people in every way.

The risk that some of our employees will join the army is always present, but we are quite positive about it and are ready to adapt to such conditions.

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Despite all the risks, our company invested more than 12 million euros in new equipment during the war.”

Turning to future opportunities, when the war finally ends, Kozel says: “As everyone knows, our country did not have high-quality road infrastructure or bridges to begin with, so this will require significant updating. We should also not forget about green energy – we have a large country, so this is a promising direction.

“Even during the war, Ukraine was able to survive without Russian gas and oil and significantly develop the extraction of its minerals, therefore this market is also quite promising.” *Exhibitor at Breakbulk Europe Register at: europe.breakbulk.com

6

Global

AND REWARDS Train, Maintain, Standardize and Heed Advice, Breakbulk Sector Told

Credit: Shutterstock

By Iain MacIntyre

A

commitment to crew training, maintenance and technology, standardizing where possible and following insurers’ bestpractice safety advice are among key recommendations to reducing breakbulk shipping sector risk in an environment of ever-rising insurance premiums.

The industry by its very nature of being predicated on non-standardized cargoes comes with higher, inherent risks than other modes. This is evidenced by Captain Rahul Khanna, global head of Allianz Commercial Marine Risk Consulting, who observed there were 311 breakbulk/general cargo vessel losses in the past decade – “the highest in all categories [of ships].”

“The second category is fishing vessels with 117 ships lost in the same period,” he said. “In my experience, standards of safety on breakbulk ships do not match up to other specialized

Captain Rahul Khanna

segments like tankers. Having said that, within this segment there are ships like the heavy-lift vessels which perform a lot better and appear to have better safety standards.”

Khanna believed investment in crew training is the most effective measure to mitigate risks in the sector. “Welltrained crew can be the best defense against incidents and accidents.

Machinery damage/breakdown is the top cause out of the 3,032 incidents recorded in 2022, hence having a robust, planned maintenance program is key to avoiding these incidents.”

Too often, he said, maintenance budgets are squeezed during a downturn in freight rates, while a large number of cargo damage

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Global

“Breakbulk cargoes typically include items that cannot fit into standard-sized containers due to their size, weight, or nature, such as heavy machinery, large construction equipment and oversized items,” he said. “Often exposed to the elements, there is the heightened risk of these goods being lost, stolen or damaged claims from breakbulk ships are the during transit due to contact with result of not following best practice other packages. The lack of uniform in cargo stowage and securing. storage conditions also makes “Today, technology can greatly assist breakbulk transportation less secure in cost-effective implementation of than containerized shipping methods.” the above recommendations and ship Additionally, human error adds to the operators should consider investing in challenges of breakbulk transportation. proven tech to mitigate risks from the “Although it may not require a crane bridge to the engine room,” he said. for unloading, it often involves a great To help guide such endeavors, Allianz deal of manual labor. Consequently, the regularly publishes risk bulletins and unloading process at a port can incur white papers on emerging and trending higher costs, adding another aspect risks to share knowledge and experience for our insureds to consider when with shipowners and operators. tallying their final shipping expenses.”

“Some of these are applicable to all Hughes noted that with the segments of shipping but some are loading and unloading of breakbulk targeted at breakbulk shipping. P&I cargo typically falling under the clubs are also very active in providing responsibility of ports and largely advisory information to shipping. It is being a mechanized process, the main rather difficult to measure the uptake of challenge is managing the heightened such advice, but during client visits we resource requirement at terminals. often pass on such material and discuss “This method tends to need more the benefits of following through.” dock space, given that multiple vessels may transport diverse Odd Shapes and Sizes loads of breakbulk cargo,” he said.

The absence of standardization “Some argue that the absence of in breakbulk transportation has standardization in the breakbulk sector “always posed security challenges,” has impeded the widespread adoption according to AXA Australia Head of sustainable practices. Nevertheless, of Marine Tom Hughes. there is a noticeable shift towards collaborative initiatives aimed at Tom Hughes establishing universal standards and best practices as all stakeholders strive for a greener future.”

In response to an increasing demand for sustainability, breakbulk shipping is evolving, with shipping companies actively exploring greener technologies such as alternative fuels and more energy-efficient vessels.

Efforts are also underway to minimize carbon emissions, cut down on waste and promote eco-friendly practices within the industry, he added.

Region: Global Problem: General cargo vessels post the highest losses of any ship category Solution: Crew training and technology could help bring down the number of incidents

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Non-critical Concern

While predicting the breakbulk shipping sector is poised for substantial growth to support various projects globally, given the anticipated expansion in the renewable energy sector, Hughes issued a note of caution.

“The transportation of critical items such as generators, wind turbines, solar panels and other renewable energy equipment present unique opportunities for breakbulk shipping companies.

However, there is a growing concern about the complacency in shipping what could be termed as non-critical project cargoes. Unlike critical items, these may not expose the project to significant financial losses if their timely delivery is delayed, as replacement items or parts are typically more readily available.”

In recent years the sector has seen widespread parts shortages, port congestion challenges and inadequate supply chain management. “Additionally, these non-critical items can still be of high value, oversized or sensitive in nature, demanding the right level of care and attention to ensure they reach their destination in good condition,” he said.

AXA Marine Senior Risk Consultant Jarek Klimczak said that, despite the conservative nature of the shipping industry and “old-fashioned maritime laws,” external factors and technology are driving positive changes in breakbulk transportation.

These include: • Supply chain traceability gaining importance and addressing concerns about product safety, sustainability and ethical sourcing. “Regulatory obligations require companies to conduct due diligence on their supply chains, identifying and addressing human rights and environmental risks,” he said.

• Increasing technology integration in breakbulk operations, including the adoption of real-time visibility sensors. “This enables better route planning based on forecasted weather and port congestions, and understating asset aggregation in areas prone to natural disasters.”

Global

Credit: Shutterstock

FASTER TIMES TO MARKET New Zealand insurers rarely become involved with international shipowners’ liability policies, which are “written almost exclusively outside” of New Zealand, observed one local insurer.

“Regarding accidents on foreignflagged ships in New Zealand ports, New Zealand is considered an outlier compared to the civil and criminal laws that apply in ports overseas,” said the contact, who requested not to be named.

“New Zealand has an Accident Compensation Corporation (ACC) which is the Crown entity responsible for administering the country’s no-fault accidental injury compensation scheme.

“New Zealand is a signatory to the Limitation of Liability for Maritime Claims (LLMC 1996) Convention and its protocols, so if ACC did not apply then the shipowner could try to limit their liability based on the ships’ capacity (gross tonnage), as would happen in any other signatory country.”

The insurer noted that in New

• Increasing data analytics.

“Although still slowly employed in breakbulk, using historical data to identify risks and optimize operations improves efficiency and safety.”

• Operators in breakbulk shipping focusing on improving packaging and handling techniques for heavy or oversized items, “minimizing the risk of damage during loading, unloading and transportation.”

Zealand, chartered breakbulk has historically provided much faster transit times to market, “which is a primary consideration for perishable cargo.”

“The great attraction of refrigerated breakbulk for New Zealand cargo shippers is that charters can go directly to market, and unload on specialized wharves with adjacent cool storage for immediate inland distribution.

“However, breakbulk does also present some issues for cargo insurers. For example, while the chartered refrigerated vessels are smaller than containerships, there is greater concentration of financial value when the entire load belongs to one or two exporters.”

Additionally, there are not a lot of refrigerated ships available for charter for New Zealand breakbulk export cargo. “Those which are, are old and the number of issues that can affect the refrigeration are increasing; new ones are expensive and complex to build.”

Plethora of Advice

Klimczak believed the marine insurance sector is “uniquely positioned” to offer comprehensive advice.

“With access to historical claims data, insurers can conduct thorough risk assessments. They can identify patterns and trends related to specific types of incidents, helping them understand and quantify risks

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associated with different aspects of the marine industry,” he said.

By analyzing past claims data, insurers can develop effective lossprevention strategies and can provide clients with recommendations on how to minimize the likelihood of events occurring, thereby reducing the overall frequency and severity of claims.

Skuld (Far East) master mariner/ technical manager Captain Jia Hong Liu, describing breakbulk shipping as “by far the most important form of maritime transport in the world,” said that the industry can reduce risks by maintaining high standards of ship and terminal management. To this end, he praised P&I clubs for the regular advice they provide to help guide safety practices in the industry.

As to whether some breakbulk carriers might be underinsuring to reduce costs in the current market environment, Liu said possibly, noting that it usually happens with hull insurance for ships.

AXA’s Hughes added that, exacerbated by rising inflation, underinsurance is an issue that insurers will be “tracking closely over the coming months and years.”

“The unique cargo handling requirements associated with breakbulk shipping have certainly raised costs, however, it is difficult to determine the extent to which this may have led to underinsurance in the marine industry,” he said.

“Ultimately, we don’t want to see a trend in rising claims severity where high-valued cargoes have been significantly underinsured. Similarly, there should be consideration for regularly reviewing policy limits, particularly multi-year project insurance policies, which may need to be adjusted to reflect rising insured values.”

Iain MacIntyre is a New Zealand-based, awardwinning journalist, with lengthy experience writing in the global shipping scene.

7

JAPAN:

Asia

Credit: JSI Alliance

By Thomas Timlen

A MARKET POISED FOR GROWTH Offshore Wind and LNG Projects Driving Demand for Heavy-Lift Shipping

F

actors including wage growth, consumer spending and a weak yen are, in the second half of 2024, expected to deliver GDP growth for Japan - an increasingly attractive market for those providing heavylift and project cargo transportation services.

In February, Swire Shipping returned to Japan - a market Swire first served as long ago as 1867 - with a new branch office in Tokyo. The carrier cited the “vast potential of the Japanese market” and said it was integrating its Westwood brand to create “a unified front for its services in Japan, North America, South Korea and China.”

Swire provides specialist shipping services to the global project logistics market under its Swire Projects banner, providing customer solutions

for project, heavy-lift, refrigerated, breakbulk and mini bulk cargoes.

“In Japan, there is significant demand for heavy-lift and project cargo transportation services in various sectors,” Peter Roland, BBC Chartering’s managing director in Japan, told Breakbulk. “One notable area is the renewable energy sector, particularly with the construction of wind farms and solar power plants. These projects often require the transportation of large wind turbine components, such as blades, towers, and nacelles, as well as solar panels and related equipment.

“Additionally, infrastructure projects such as bridge construction, building renovations, and industrial plant expansions also require the movement of heavy machinery, steel structures, and oversized components.”

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Roland is not alone in pointing towards renewables. “In order to ensure energy security, reduce greenhouse gas emissions and combat climate change, onshore and small-scale offshore wind power projects are being Peter Roland

Asia

developed, and there is a growing demand for heavy-lift and project cargo transportation services to import equipment such as turbines, blades, and towers for these projects,” said Masahiko​ Uchiyama, JSI Alliance’s managing director for Japan.

“Due to the demand for wind powerrelated equipment, the number of our ships calling at Japanese ports for imports has exceeded the number of exports in recent years. This trend is likely to continue for the time being as the Japanese government strives to achieve its greenhouse gas reduction target of a 46% reduction by fiscal year 2030 compared to fiscal year 2013.”

Existing government programs appear to be buttressing the demand generated by the energy sector, as Marc Willim, AAL Shipping’s global head of chartering, explained to Breakbulk. “While the Japanese market has been quiet on the export side, import projects have been steady. Almost all import projects have been wind energy-related.

“As part of the Japanese government’s 6th Strategic Energy Plan, approved in October 2021, it aims to increase the share of renewables in its energy mix to 36 to 38% by 2030, up from 20% in 2021. Wind power currently accounts for around 1% of the energy mix and will therefore need to be scaled up, both onshore and offshore, providing significant opportunity for related cargoes.”

Marc Willim

Government’s Ambitious Target

require heavy modules, gas turbines, stators, and pipe racks, which will Uchiyama pointed to the Japanese all require expert premium heavygovernment’s ambitious target of lift handling and transportation.” introducing 45GW of offshore wind There are pros and cons regarding power by 2040. “This will create the strength of a national currency. a huge demand for heavy-lift and A Deloitte report pointed out that project cargo services to transport the silver lining of a weak yen is the foundations, turbines, etc. for the strength it provides to Japan’s Japan’s offshore wind power projects.” international trade position. This Another driver for project cargo has helped with some exports, with transportation demand is further related growth seen across several expansion in the LNG sector, which goods categories. Transportation has been impacted by conflicts far equipment has been the largest source from Japan. “We also see high demand of export strength, with exports up from LNG projects,” says Uchiyama.

20.1% from a year ago in February. Yet, “There was already steady demand but as Willim pointed out, for the heavyfurther demand has been generated lift and project cargo sector, there by strengthening energy security and is still more business with imports. managing geopolitical risks in the Roland shares these sentiments. wake of the Russia-Ukraine conflict.

“The nature of Japanese exports “Although there are uncertainties in transportation equipment often such as the U.S. presidential election, includes large-scale machinery, demand for energy remains strong and, automotive components, and electrical as a result, demand for heavy-lift and machinery. While some of these project cargo transportation services exports may require heavy-lift and for new projects is also expected project cargo transportation services, to remain high for coming years.” the majority are likely transported In turn, related regional using standard shipping methods. developments can draw in Japanese “However, as Japan continues know-how as Yuko Kimura, AAL to innovate in technology and Shipping Japan’s managing director, manufacturing, there may be an explains. “There are several projects increase in the export of specialized in the pipeline that will call on Japan’s equipment that necessitates expertise, including power plants in the use of heavy-lift and project Southeast and North Asia, as well as cargo transportation.”

LNG plant and hydrogen projects in Uchiyama notes similar imbalances.

Oceania. These types of projects will “Unfortunately, the recent number of heavy units which are exporting from Japan are much less compared Yuko Kimura to the past. I sincerely hope that the weak yen and unchanging technical capabilities bring manufacturing back to Japan, as this will contribute towards to the transmission of technology by the manufacturer as well as maintaining high technical capabilities of port workers.”

Unique Inventory

He recognizes that Japan has its own unique inventory of heavy-lift and project cargo transportation assets,

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Africa

and remains hopeful. “With over sixty versatile heavy-lift vessels and semisubmersible deck carriers as well as advanced engineering capabilities, at JSI we are confident that we can contribute towards further boosting project transportation in Japan.”

Meanwhile, Willim sees some potential for opportunities with imports. “In general, the Japanese market has been quite slow for project and heavy-lift cargoes in recent years.

Exports have been down and instead we see Japan buying and shipping from markets like South Korea, China and Vietnam. Under this guise, we have seen some involvement in projects in the U.S., shipping from other locations also in Southeast Asia for instance.”

Beyond the energy sector, Japan continues to pursue a variety of infrastructure projects. According to GlobalData’s construction projects database, the five largest construction projects initiated in Japan during Q1 2024 were the Toranomon 1-Chome East District Urban Redevelopment; the Kikuchi Power Semiconductor Manufacturing Facility; the ACC-1 Cable System; the AirTrunk OSK1 Data Center; and the Dogenzaka 2-Chome South District Type One Urban Redevelopment. But how much demand is generated by these initiatives?

“Typically, these kinds of infrastructure projects are served domestically,” says Willim. “Japan has the capability of manufacturing and supplying a large portion of materials and equipment for these projects with almost no import cargo requirements, and so the need for premium heavy transport vessels to support those developments is somewhat limited.”

Adds Kimura: “Within that limited import scope, these construction projects may require steel from China to be shipped to Japan.

However, to date, most of these cargoes have been carried by smaller Chinese or Japanese vessels.”

BBC’s Roland holds a similar view.

“The construction projects listed will

AAL Brisbane loading a transformer in Yokohama. Credit: AAL Shipping

likely generate an increase in demand for project cargo transportation services. However, they are not specifically on our watch list.

For instance, the Kikuchi Power Semiconductor Manufacturing Facility project would involve transporting large machinery and equipment for semiconductor production.

Our company has been involved in such projects, providing logistics support for the transportation of oversized equipment and components using specialized trailers, cranes and handling equipment.”

Deloitte’s analysts expect that the yen will likely strengthen later this year if the U.S. central bank fully adopts a softer approach as expected, but it is unlikely to snap back to its pre-pandemic value any time soon. This should prevent international trade from turning into much of a headwind this year.

Forward-looking optimism is shared by Roland. “As the country transitions towards cleaner energy sources, there will be a growing need to transport oversized components for wind, solar, and hydrogen energy projects. Additionally, advancements in technology and manufacturing may lead to the export of more specialized

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equipment, further driving demand for project cargo transportation services.”

“Looking ahead, upcoming infrastructure projects such as high-speed rail expansions, port developments, and urban redevelopment initiatives are expected to sustain or enhance demand for heavy-lift and project cargo transportation services in Japan,” he adds. “Additionally, projects related to the decommissioning of nuclear power plants and the construction of new energy facilities, such as hydrogen production plants, are also likely to require specialized transportation solutions.”

In view of Japan’s expansion of offshore wind generation, LNG projects and cautious optimism expressed by industry stakeholders, it appears that there will be a sustained demand for heavy-lift and project cargo transportation services for the remainder of 2024 and well into next year.

Thomas Timlen is a Singapore-based analyst, researcher, writer and spokesperson with 31 years of experience addressing the regulatory and operational issues that impact all sectors of the maritime industry. * Breakbulk Exhibitor

8

Thought Leader

By Ritesh Nair, Rhenus Project Logistics USA

AI AND THE ART

OF TRANSPORT ENGINEERING Technology Is Coming of Age, Says Project Logistics Expert

D

evelopments in robotics have come a long way since Karel Čapek conceived Rossum’s Universal Robot in his 1920 play and flirted with the idea of the artificial worker.

As the father of all thinking robots, “Freddy” would be proud of the outstanding progress his descendants have made since researchers at the AI Department of the University of Edinburgh christened him in the early 1970s.

AI is a tool of human creation which, if managed well, can be of great benefit to humankind.

While AI is still in its infancy, the more it is used, the better it will get. The middle part of the 2020s will be looked back upon as a defining moment in history that changed the way we did things. The field of supply chain, specifically project logistics, is no exception.

The advantages of AI in project logistics are many, but one of the most impactful areas is in the field of product design and transport engineering. Having AI collate data on project site location route information, bridges along the route, port capabilities and regional geopolitical news, etc. - can yield not only the optimum route, but also where to manufacture and the best mode of transport to get it to the project site.

potential tariff changes or route closures, weather events, strike and delay, or even the likelihood of negative public attitudes to human rights in the source location.

Such an analysis would go far beyond conventional considerations of choosing which carrier has the most ideal ship or aircraft to carry the shipment.

Bigger organizations can be expected to invest and make Ritesh Nair proprietary developments to optimize Companies have already developed their service offerings and even programs to help streamline possibly experiment a tier-based, workflow processes in operations fee-supported service for AIand warehousing, or provide route enabled service or analysis. Small to optimization based on live traffic medium organizations that do not patterns, or better support inventory have the capital, or are risk-averse, management based on order-in-hand will depend on SaaS providers for and expected seasonal demand. off-the-shelf offerings, which could give them a level playing field with Aiding Procurement the competition in their space.

Decisions Rhenus’ Automation division is Let’s consider a scenario where already pioneering Robotic Process an engineering, procurement and Automation (RPA), benefiting clients construction (EPC) contractor is with increased productivity, reduced deciding whether to procure from costs and better efficiency. Rhenus Europe, India or China for a project Automation is taking advantage in the Midwestern United States. of generative AI, partnering In this case, AI could be instructed with IBM. We will expand its use to model the risks, pros and cons across businesses on need-based of purchasing from each area, with situations that align with our overall parameters set as wide as was strategy. We do so based on the deemed necessary. Along with conviction that it is only a matter of production costs or physical routing time before AI becomes an integral issues, considerations could include part of all business models: industries

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Thought Leader

Credit: Shutterstock

will have to learn how to adapt. Those who do not will be left behind.

With AI, Rhenus has the opportunity to be a predictive Logistics Solutions Provider (pLSP) where we can utilize our in-depth analysis of past client requirements and current market trends to help proactively prepare for potential challenges in the predictable future.

Changing Engineering Roles

One thing is for sure, from its code-to-image infancy, AI has already advanced to pre-teenage years of exploring text-to-design concepts. Already happening to an extent, in time, engineers will refine their ability to conceptualize so that AI can generate complete product designs based on data fed to the model, with final tweaking taking place on a review basis.

There will be birth and growing pains. These include risks to privacy – a major concern – and the risk that shared data is vulnerable to cyber attack. Over-reliance on AI could affect the flexibility of a business to cater to its customers, while multi-skilled workers will need to “upskill” continuously to stay relevant. As much as AI will be a tool to assist operations, it will also review performance.

AI has also already interviewed and hired a human employee.

The impetus to overcome these challenges appears unstoppable.

While AI may not yet be ready to override safety considerations, experiments are underway to use it in areas where margins for error are at issue - such as in quality control, forward planning, demand forecasts, etc.

In the supply chain, parallels

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can be drawn with identifying tolerance level to g-forces, for example, where the sum total of various calculations that ensure staying within tolerance limits is considered one key to the “art” of transport engineering. Today, it is a task that AI could easily take over.

In such a scenario, transport engineering jobs would also be likely to take on more of an editorial role - where the final results of AI are tweaked to requirements specific for the product or the project transport. Other job profiles in logistics will also be redefined as AI matures to every-day use.

We have seen just a glimpse of what AI can do.

Ritesh Nair is Vice President of New York Operations - Global Sales Director Projects, Rhenus Project Logistics USA. *Breakbulk Exhibitor