Breakbulk Magazine Issue 3/2019

The Publication for the Industrial Project Supply Chain Industry

Issue 3 / 2019

ENERGY VS EMISSIONS Increasing Green Scrutiny Shakes Up Power Mix

TAPPING TIDAL POTENTIAL

BEYOND HYPERLOOP HYPE

‘STEELMAGEDDON’

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IN THIS ISSUE Cover Story

28

16

36

16 ENERGY vs.

EMISSIONS Increasing Green Scrutiny Shakes Up Power Mix

28 CARGO LENS

54 REGIONAL REVIEW

Tidal Potential Waiting to be Tapped

Northern Europe Hopes to Swerve Political Posturing

WASTED WATER WORLD

36 INLAND TRANSPORTATION

LIFE BEYOND BREXIT

BEYOND HYPERLOOP HYPE

64 CASE STUDY

44 CARGO LENS

Complex Move Brings War ‘Veteran’ to New Home

Super-Fast Transport Mode Offers Vast Opportunities

‘STEELMAGEDDON’ LOOMS

TENDER CARE FOR ELDERLY LAUNCH

Price-Crushing Glut Seen Disrupting Metals Market

94

08 EDITORIAL 10 CONVERSATION 26 O PINION 94 PHOTO CONTEST 98 BACK PAGE

BONUS PUBLICATION

DESTINATION BREMEN 2019 4 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 3 / 2019

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IN THIS ISSUE

70

74

78

88

70 PORT FOCUS

TIME FOR TERMINAL RETHINK Hub Strategies Need to Catch Up Trade Changes

74 RULES & REGS

DAMP DATA SQUIB

GDPR Not as Troublesome as Feared

6 BREAKBULK MAGAZINE www.breakbulk.com

78 INSURANCE

MINIMIZING SHIP RISKS Choose the Right Vessel for Project Needs

81 PROFILE

INSPIRED BY DRIVE AND AMBITION

Höegh Autoliners Eyes Middle East Growth Potential

84 RULES & REGS

BREAKING NEW GROUND

Maritime Arbitration Body Expounds Strengths

88 HEARD AT BREAKBULK ASIA

OPTIMISM FOR CHINA PROJECTS Belt Road Initiative Offsets Tariff Troubles

ISSUE 3 / 2019

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EDITORIAL

CHARGING AHEAD Energy’s shifting global markets are at the heart of coverage in this issue of Breakbulk, with the center piece our annual energy review (“Energy vs. Emissions,” page 16).

Veteran energy journalist Amy McLellan notes that, while renewable energy is increasingly playing a role in the world’s growing energy needs, fossil fuels remain a significant part of the mix, despite growing pressure Gary Burrows to reduce emissions on land and sea. McLellan takes a region-by-region approach, exploring opportunities and obstacles in market prospects, particularly highlighting exploration and production in Latin America, burgeoning production and reliance upon liquefied natural gas and growing use of floating LNG for markets such as West Africa.

While the U.S. moves towards becoming a net exporter of oil and natural gas – with the implications of how that might play out globally – there are also shifting renewables trends in Europe and Australia.

On the topic of renewables, Helen Campbell explores the potential for tidal power technology (“Wasted Water World,” page 28). While viable tidal barrage and tidal stream technologies are seen in North America, Brazil, Oceania and throughout Asia, perhaps the greatest potential lies in the UK, China, Japan and France. As projects develop, transport and logistics options will follow, and those companies already excelling at wind technology transport could move to the front of the line.

Along with tidal innovation, we look at the future of hyperloop transport technology moving beyond hype and towards concrete projects (“Beyond 8 BREAKBULK MAGAZINE www.breakbulk.com

Hyperloop Hype,” page 44). Paul Scott Abbott follows an array of innovative companies and what their developments could mean for shipping – and travel – beyond the speed of sound, as well as project cargo’s role in hyperloop’s development.

Turning from projections for futuristic travel, Abbott wades through prospects for the steel industry (page 44). As Bank of America Merrill Lynch forecasts “Steelmageddon” with such certainty it apparently has trademarked the moniker, and with the doomsday view backed by other observers and indicators, a bumpy downhill road appears to be ahead for the steel industry.

Surprisingly, despite the uncertain twists and turns of the UK’s plight under Brexit, it may not mean doom-and-gloom for breakbulk shipping. In fact, even under a “no-deal Brexit,” Kate Jones reports that industry officials see potential upsides, particularly for short-sea shipping in the UK and northern Europe (“Life Beyond Brexit,” page 54). One port official said that Brexit could lead “organizations to re-examine their existing logistics chains and routes.”

A similar assessment comes one year on from implementation of the European Union’s General Data Protection Regulations, or GDPR. David Whitehouse finds the EU’s data protection regulations have not been a disaster, and further have led companies to improve their marketing and customer service practices (“Damp Data Squib,” page 74).

Finally, as the breakbulk, project cargo and heavy-lift industry prepares to gather for Breakbulk Europe, May 21-23, we take a look at host city, Bremen, Germany, with a special supplement, “Destination: Bremen,” included with this issue. This comes following Breakbulk’s announcement that the world’s largest event for the project cargo and breakbulk industry will return to Bremen for a third straight year, May 26-28, 2020.

We look forward to seeing you in Bremen!

EDITORIAL DIRECTOR Gary G. Burrows / +1 904 535 5460 gary.burrows@breakbulk.com NEWS EDITOR Carly Fields carly.fields@breakbulk.com DESIGNER Mark Clubb REPORTERS Paul Scott Abbott Helen Campbell Kate Jones Michael King Amy McLellan David Whitehouse

BREAKBULK EDITORIAL BOARD John Amos Amos Logistics

Ed Bastian

BBC Chartering

Murray Cooper

LV Shipping Group of Cos.

Dennis Devlin Geodis

John Hark

Bertling Project Logistics

Dennis Mottola Bechtel Corp.

William Moyersoen

ArcelorMittal Antwerp Logistics

Albert Pegg

Atlas Breakbulk Alliance

Dirk Visser

Dynamar D.V.

Grant Wattman

Agility Project Logistics

PORTFOLIO DIRECTOR Nick Davison Nick.Davison@ite-exhibitions.com ACCOUNT MANAGER Robert Janusauskas / +66 62 804 6746 robert.janusauskas@breakbulk.com SUBSCRIPTIONS To subscribe, email gary.burrows@breakbulk.com, or call from inside the U.S. +1 904 535 5460 between 8:00 am and 5:00 pm EST. You can also subscribe at www.breakbulk.com/subscribe.

A publication of ITE JV Ltd. The Studios, 2 Kingdom Street Paddington, London W2 6JG, UK

ISSUE 3 / 2019

CONVERSATION

Conversation is a forum of thought leaders, commentaries, letters, editors’ notes and note-worthy social media from Breakbulk’s audience and staff. Join in the conversation – submit your views to gary.burrows@breakbulk.com, or through Breakbulk’s social media channels on LinkedIn, Facebook or Twitter.

We don’t want a surplus, we want balanced trade, so if we export more, we need to import more. We want to increase trade, using our industrial base and improve supply chains for both front haul and back haul trades.”

–Q ixing Lu, deputy director of Shanghai Free Trade Zone Business Committee, explains why China’s ambitious Belt & Road Initiative, or BRI, is a win-win for participating countries.

BEWARE HIDDEN DANGERS When evaluating costs from a project shipment that goes wrong, AIG Insurance China’s Robin Zhang warns that the gravest damages may not be the most obvious.

Introducing AIG’s MLCE Loss Control Service for breakbulk, Zhang, marine loss control manager-China, says indirect costs go beyond regulatory, recovery and clean-up costs; and environmental, financial and customer impacts.

Management time, opportunity costs, impacts on productivity, loss of customers and reputation may never be recovered, he warns.

With MLCE, AIG has a team including experienced engineers that aim to protect a customer to avoid damage, rather than mitigating loss for its insurance customers, he says.

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10 BREAKBULK MAGAZINE www.breakbulk.com

17.04.19 09:49

ISSUE 3 / 2019

Heard at Breakbulk Asia: Read more of our coverage from Breakbulk Asia, starting on page 88.

Six imperatives for breakbulk shipping:

6

1) Growth in good trade will continue, but slower.

2) Specialization benefits movements of high-tech, out-of-gauge cargoes.

3) Regional trades will grow faster.

4) There will be a pivot to Asia: growth and ownership.

5) The need for a flexible, agile fleet.

6) Digital remains critical to internal efficiency and work with customers.

Steve Saxon, partner, and Jeongmin Seong, senior fellow, McKinsey Global Institute, Globalization in Transition: The Future of Trade and Value Chains.

BETTER VISIBILITY NEEDED Breakbulk cargo owners reliant on complex supply chains do not have access to the integrated digital systems they need to ensure cargo visibility, pricing transparency and supply chain optimization, said a representative from chemicals giant BASF. Andrew Zhang, BASF’s regional category manager, logistics procurement Asia-Pacific, says shipper priorities were safety and security; punctual, quality services; and transparent costs.

“For breakbulk it’s impossible for any company to do the full supply chain themselves. You need a ship, handling to load and offload safely, sometimes in adverse weather,” he says. “You have to clear customs, pay taxes and tariffs.

All of this is required.

“No one company can do all this, so this needs integration. Resources need to be integrated by digitialization and ‘informization.’

“In breakbulk at the moment all these systems are separate,” he says.

DRIVING THE GREEN AGENDA The shipping industry must do more to reduce greenhouse gas emissions to help avoid global economic catastrophe, says Saliya Wickramasuriya, senior advisor to the CEO, Hambantota International Port Group, Sri Lanka.

Welcoming new IMO 2020 low-

sulfur fuel rules, he acknowledges shipping as a major emitter of greenhouse gases.

“If we were a country, shipping would be the sixth-largest emitter,” he said.

“This means we have a collective responsibility to reduce it.”

FLUOR’S FABRICATOR GROWTH EPC major Fluor is expanding output at its fabrication facility at Zhuhai, on the South China Sea near Hong Kong, already one of world’s largest.

Miroslav Jakab, China logistics manager, said the 2 million-squaremeter facility can accommodate fabrication of modules weighing more than 50,000 tonnes, and its output will increase from 200,000 to 300,000 tonnes per year.

The yard gives Fluor “direct control

Zhuhai Skidway and Assembly Yard.

over the fabrication of the modules and can optimize the process in terms of safety and flexibility so we can flexibly react to changes in the project life cycle and adjust as needed,” Jakab says.

The yard, a joint venture between Fluor and Offshore Oil Engineering Co. Ltd., serves Asia-Pacific and global clients.

Jakab presented at Breakbulk Asia in Shanghai ( “Building a Project Logistics Team,” page 89).

CREDIT: BUSINESS WIRE

TOEPFER TRANSPORT MULTIPURPOSE SHIPPING TIME CHARTER INDEX

RATE PER DAY

The index is based on a 12,500-deadweight-ton MPP/HL “F-Type” vessel for a six-to 12-month time charter, and represents the monthly assessment from operators, owners and brokers.

$6,956

Mar 2018

$7,185

$7,247

$7,325

$7,216

$7,294

$7,385

$7,499

$7,508

$7,518

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

$7,593

Jan 2019

$7,457

$7,440

Feb

Mar

Source: Toepfer Transport, www.toepfer-transport.com

www.breakbulk.com BREAKBULK MAGAZINE 11

CONVERSATION

Battling Headwinds of Scale

A380’s Demise is Good News for MPVs

T

BY LARS GREINER

he Feb. 14 announcement that Airbus would cease building the A380 once current orders were completed, was a watershed moment in air transport, but also possibly in sea freight as well.

Since starting my career in the early 1990s, the mantra has always been that this is a “numbers game,” so the more units (tonnes or passengers) one can put onto one transport asset, the more economic it will be and costs will come down. This has always ignored the point where economies of scale become diseconomies of scale, where inefficiencies due to size creep in and costs, or opportunity costs, begin to increase again. This is acknowledged by the stopping of production for A380s. More factors than just larger numbers must now be considered.

In designing the A380, Airbus held onto the belief that commuters would prefer flying to major airport “hubs” like Singapore, Tokyo, New York and other big cities, making the twin-deck A380 the ideal choice for airlines.

It would ease congestion in these busy ports, offloading up to 800 passengers a time. At the same time, Boeing concentrated on its 777 and 787 Dreamliner, focusing on comfort, environmental aspects as well as smaller size and increased flexibility. The international market responded positively to these moves.

Bigger is not always better. / CREDIT: FLS / SHUTTERSTOCK

12 BREAKBULK MAGAZINE www.breakbulk.com

PARALLELS WITH SHIPPING

At an annual dinner in Hamburg in February, Hapag-Lloyd CEO Rolf Habben Jansen outlined that as part of the company’s 2023 strategy, it would no longer focus on cost-cutting, but on providing customers with better and tailor-made services. Something very much against what has been the cry of most container lines in recent times, with many trying to force customers onto online platforms. His words, however, resonate more with the Boeing philosophy: more customer focus and more flexibility.

At the same time, even as ports scramble to accommodate the latest round of behemoth container and bulk carriers, most terminal operators acknowledge that they are very close to the maximum size they are willing to accommodate, if not overmatched, and many have seen port congestion moving from the berth to the gate and to outside their facilities.

What does this mean then for the multipurpose sector, which has never subscribed to the “bigger is better” philosophy, other than in terms of crane sizes? Well, lots actually.

First off, this means that ports will need to rethink their strategies. While the large hub ports in most parts of the world are set, there are new opportunities for secondtier ports to look again at their hinterlands and their value propositions to create and accommodate new business. This may well lead to a return to true multipurpose shipping, vessels which accommodate and carry a mixed cargo of bulk, breakbulk and containers.

Secondly, and more directly for the multipurpose industry, over the past years much of the focus on vessel development has been in the efficiencies of oil and gas support vessels and container vessels. However, the need to explore the development of smaller and more flexible vessels could provide the opportunity for the development of a new generation of MPVs, which have been ignored in favor of specialist vessels.

A new generation of environmentally friendly and highly versatile vessels could ISSUE 3 / 2019

well energize and provide input for a rebirth of the MPV fleet. This notion is built on by the growing number of mega-projects with requirements for containers and breakbulk cargoes, as well as the number of small ports that need to be serviced, but are unattractive for container lines. The new CMA CGM order for nine 22,500 20-foot-equivalent ships with “bulbless” bows shows the carrier’s, as with most container lines, commitment to slow steaming of large vessels, opening a gap for smaller, faster vessels for certain cargoes.

All in all, it would seem that those prophesying that all cargo will eventually be containerized were not only wrong, but way

SKIDDING

RIGGING

off, and as we approach the breaking point for the size of containerized vessels. A window is opening for the development of new concepts and vessels in the multipurpose industry.

One can only hope that those in the know and with the means, will seize this opportunity and reinvigorate and recreate the wonderful breakbulk industry and the multipurpose liner trades in a new image. BB Lars Greiner is a shipping and logistics consultant with 27 years’ experience in the industry, specializing in support for large and mega project logistics in remote and difficult areas.

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www.breakbulk.com BREAKBULK MAGAZINE 13

CONVERSATION

Future Career Innovation

Preparing for Tomorrow’s Breakbulk World Today

T

BY MANDAR APTE TECHNIPFMC

echnology is changing the face of industry on an unimaginable level.

Many new job opportunities that have not been studied for are appearing on the horizon. How do you study for something that does not exist?

I put this question to the audience when I moderated a session at Breakbulk Middle East earlier this year. For me, it’s a real pleasure to attend breakbulk and project cargo industry events such as those: they’re a true melting pot of inspiring, talented and dedicated people who help make the sector the success story it is today.

However, our world is changing, and if we don’t get things right in attracting, educating and retaining breakbulk and project cargo talent, we risk jeopardizing the industry that we all know and love.

According to an article published last year

by Forbes, the world is about to head into the Fourth Industrial Revolution (4IR, or Industry 4.0). Today’s breakbulk and project cargo sector are connected by a combination of technologies — collectively referred to as “cyber-physical systems” — which is bringing together physical, digital and biological schools of thought.

Our industry is also being distinguished by breakthroughs in several fields, including robotics, artificial intelligence, nanotechnology, Internet of Things, fifth-generation wireless technology, data manufacturing, quantum computing, industrial IoT, biotechnology, blockchain, 3D printing and fully automated vehicles — fields I’m sure nearly all of which didn’t exist when I became an engineer.

Emerging technologies from sectors such as IoT, AI, big data processing, robotics, 3D printing and wearables have been identified as very important ones in Industry 4.0.

IMPACT ON CAREERS

All of this new technology has implications for careers at a time when the working world is very different from what it used to be. Whereas the previous generation had just one career during their lifetime, today’s statistics show that the average person will change career five to seven times throughout their working life.

14 BREAKBULK MAGAZINE www.breakbulk.com

One of the areas that technology affects is the establishment and elimination of employment opportunities.

We need to prepare tomorrow’s breakbulk and project cargo workforce for uncertainty.

Future industry players need to be adaptable, as it is highly likely that those going through the education system now will end up in jobs that do not currently exist.

We’ve also got to bridge the gap between education and work. With one global employer’s survey finding that many felt graduates lacked multi-level skills and were unprepared for the working world, we must connect employment and education.

Though preparing for uncertainty may seem like a contradiction in terms, there are ways we can help make future industry personnel more ready to tackle the challenges of tomorrow. For example, all the skills viewed as the top 10 job skills are soft ones: • Emotional intelligence.

• Critical thinking.

• Creativity.

• People management.

• Negotiation.

• Coordination with others.

• Complex problem-solving.

• Judgment and decision-making.

• Service orientation.

• Cognitive flexibility.

We can thus help school future industry figures in these attributes right now, whether they’re already employed or still in education.

Students should be treated like future employees. Equip and enable them for rapid global changes so that they’re adaptable when they’re working in the sector.

Our biggest challenge is preparing our workforce for jobs that do not exist today.

That requires looking both within and outside our organizations to ensure that as much preparation as possible is given to our personnel — both present and future. BB Mandar Apte is project manager at TechnipFMC, which offers project services for the energy sector.

ISSUE 3 / 2019

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Through this approach we help our customers reduce transport risks and increase delivery precision.

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COVER STORY

ENERGY vS. EMISSIONS

BY AMY MCLELLAN

Increasing Green Scrutiny Shakes Up Power Mix

T

he world’s production and consumption of energy is changing – and changing fast. Needing more energy to meet the needs of a growing and increasingly prosperous population needs to be squared with the need for far fewer emissions in order to keep a lid on rising global temperatures.

The world has been doing well on the “more energy” front. In 2017 more than 120 million people worldwide gained access to electricity, marking the first time the total number of people without access fell below 1 billion. There is still much more to be done, however: about 80 percent of the world’s population live in countries where average energy consumption is less than 100 gigajoules per head, a measure used by the UN Development Index as an indicator of development and well-being.

The challenge, however, is to produce this additional energy while simultaneously reducing emissions in order to limit warming to “well below 2 degrees Celsius,” the main goal of the 16 BREAKBULK MAGAZINE www.breakbulk.com

2015 Paris Agreement. While progress is being made, most scientists agree the pace of change is far too slow.

Certainly, there is no sign of the world losing its appetite for fossil fuels anytime soon. The International Energy Association’s influential World Energy Report 2018 forecasts that world energy demand is expected to grow by more than 25 percent to 2040, requiring investment of more than US$2 trillion a year. Oil will continue to play a significant role in the global energy system in 2040, although just how significant depends on the speed and scale of the energy transition: scenarios in BP’s Energy Outlook 2019 range from demand of 80 million barrels per day, or bpd, to 130 million bpd.

Gas will increasingly be the fuel of the future: BP’s economists expect it to grow by nearly 50 percent by 2040. And while coal flatlines over most long-term scenarios, it’s worth pointing out that the age of coal is far from over. Coal use in power generation remains a common feature of developing Asia, where the average

age of a coal-fired plant is 12 years, decades short of average lifetimes of about 50 years, suggesting a long tail of coal combustion in years to come.

OIL CAPITAL DISCIPLINE

Oil prices may have recovered from the post-2014 slump, but nobody’s getting carried away. Wood Mackenzie’s price forecast for benchmark Brent crude is US$65 per barrel for 2019 and US$68 for 2020.

Big banks are even more cautious: Goldman Sachs has cut its average price forecast for Brent crude to US$62.50 while HSBC has gone for US$64 for 2019 and US$70 in 2020 and 2021.

Oil companies, too, are still sticking to a policy of continued capital discipline, although analysts worry ISSUE 3 / 2019

this will lead to a future supply crunch.

Wood Mackenzie forecasts that global oil and gas development spend needs to increase by about 20 percent to meet future demand growth. After a low of US$460 billion in 2016, investment is expected to grow to more than US$500 billion in the early 2020s, well short of the 2014 peak of US$750 billion, creating concerns there’s not enough resource renewal to sustain production over the next decade.

For hard pressed supply chains, however, 2019 does look a little brighter. Exploration budgets, yet to recover from 60 percent cuts during the downturn, are being unlocked to replenish reserves. Analysts at Wood Mackenzie expect about 45 to 50 large projects to take final investment decisions this year, up from 40 in 2018.

Much of this development spend will be offshore.

Rystad Energy expects 33 floating production storage and offloading vessels, or FPSOs, to be sanctioned through 2021, 15 of which will be monsters with production capacity in excess of 80,000 bpd.

This is good news for the shipping and heavy transport sector, although companies remain wary of ongoing volatility in an industry characterized by boom-and-bust cycles.

“The oil and gas sector seems to be recovering; however it remains volatile as producers battle with a market that can move from oversupplied to undersupplied in a short period, and to manage the inevitable transition to energy from non-fossil fuel sources,” said Dan Leach, projects team manager at Hemisphere Freight Services. “The recovery does mean there is hope for some sidelined projects to come back online and thus provide opporDan Leach tunities for our industry, but time Hemisphere Freight will tell.”

Services

LATIN AMERICA EXPLORATION HOTSPOT

After a number of tricky years, Brazil is back with a bang and has surpassed Mexico and Venezuela to become Latin America’s biggest producer. Daily output is 2.5 million bpd and could hit 5.5 million bpd by 2027. The country’s pre-salt deposits in the deep waters of the Atlantic Ocean continue to attract international oil companies looking for the billion-barrel finds with the potential to really move the needle. ExxonMobil, for example, has been adding to its footprint in Brazil, where it now holds about 2.3 million net acres. This year it will be acquiring 3D seismic and obtaining permits to kick off exploration drilling in 2020.

Guyana is also primed to shoot up the league table of producing nations. This country of just under 783,000 people could easily become the fourth-largest oil producing nation in Latin America by the next decade, and might even overshoot Venezuela and Mexico if they fail to address ongoing production declines. ExxonMobil made its 10th discovery here in December 2018 when the Pluma-1 well hit oil in the Cretaceous, taking the recoverable resource volume on the Starbroek block to more than 5 billion barrels of oil equivalent. There are still 17 prospects to drill on the block, which has to date yielded an enviable strike rate of 83 percent. It’s shaping up to be a significant development hub, with ExxonMobil envisaging production of 750,000 bpd by 2025.

Elsewhere in Latin America, much has been made of the potential of Argentina’s shale resource to replicate that of the U.S. The unconventional oil and gas resources in Argentina’s Vaca Muerta shale formation are world-class but as yet this is still in the early days. Current production from the Vaca Muerta is 160,000 barrels of oil equivalent per day, or boepd, but could reach almost 900,000 boepd by 2024 if the country can attract US$4 billion of investment a year, according

TOP: ExxonMobil made its 10th discovery in Guyana in December 2018 when the Pluma-1 well hit oil. / CREDIT: STENA ABOVE: Argentina’s Vaca Muerta (dead cow) shale formation is producing 160,000 barrels of oil equivalent per day, or boepd, but could reach almost 900,000 boepd by 2024 with the right investment.

CREDIT: ENRIQUE MARCARIAN/REUTERS/NEWSCOM

to Wood Mackenzie. The key will be the regulatory environment and investment climate to attract investment in acreage, drilling and the associated railroads and pipelines to get the oil to market. www.breakbulk.com BREAKBULK MAGAZINE 17

Novatek has signed a US$2.5 billion construction contract with Italy’s Saipem and Turkey’s Renaissance services company for its giant Arctic LNG 2 project in the Yamal-Nenets autonomous district, north of the Arctic Circle, which is due online in 2022-2023.

CREDIT: MAMMOET

The Hilli Episeyo floating LNG vessel.

CREDIT: GOLAR LNG

AFRICA STEPPING ON THE GAS

Natural gas is the fastestgrowing fossil fuel, set to overtake coal by 2030 to become the secondlargest source of energy after oil.

Much of this growth will be driven

by China’s “blue skies” policy, as consumption there moves from being roughly half that of the European Union today to 75 percent higher by 2040.

Liquefied natural gas, or LNG, is poised for a spending spree, with analysts at Wood Mackenzie expecting spend of US$150 billion to US$200 billion over the next 24 months and a record number of LNG projects set to take final investment decisions this year.

In Africa, where natural gas demand is expected to more than double in the period to 2040, Italian 18 BREAKBULK MAGAZINE www.breakbulk.com

energy giant Eni has signed off on its US$4.7 billion Coral South project offshore Mozambique, which is being produced via a floating LNG vessel and is due onstream in 2021.

Anadarko is expected to take a final investment decision on its Area 1 gas reserves, also in the deep waters of offshore Mozambique, later this year. Unlike Eni, the U.S. company is targeting an onshore LNG facility initially consisting of two LNG trains with total nameplate capacity of 12.88 million tonnes per year. A February 2019 attack by armed gunmen, which left one

contractor dead and six injured, has left the Anadarko construction site in lockdown and may signal that offshore facilities are not only a cheaper and more flexible option for LNG projects, but are also more secure.

Certainly, floating LNG, or FLNG, may prove a useful model for gas development in West Africa, which has long struggled with monetization of its vast and largely untapped gas reserves. Last year Golar LNG proved the concept when it began production offshore Cameroon via the Hilli Episeyo FLNG vessel.

ISSUE 3 / 2019

The BP-led Tortue LNG project, which straddles the maritime boundary of Mauritania and Senegal, has also opted for FLNG. This is a landmark project for both countries, targeting 15 trillion cubic feet, or Tcf, of recoverable resources to create a major new supply hub in the Atlantic Basin. The Fortuna FLNG project in Equatorial Guinea has stalled after its operator, Ophir Energy, failed to raise financing for the project. Sources suggest the government will seek a new investor for the 3.7 Tcf gas block.

African waters continue to yield major gas resources. French energy giant Total recently made a massive gas strike with the Brulpadda-1 well off the coast of South Africa. The company plans to acquire 3D seismic this year, followed by four more wells.

If oil dominated African output in the 20th century, then the 21st century will be all about gas: by 2050, according to PwC, Africa’s oil and gas production is expected to increase by 74 percent, mainly driven by gas production.

the Russian Arctic, developing specially adapted self-propelled modular transporters for the hostile frozen environment.

Activity levels in Asia-Pacific, particularly offshore, have been muted in recent years – other than in China, where offshore drilling is on the up. Finds of note in recent months include an oil find at Mahu in the Junggar basin, with about 100 million tonnes of recoverable oil.

The country is also keen to boost domestic gas production, with CNPC ramping activity at its flagship shale gas play at Chuannan in Southern Sichuan as well are targeting conventional gas plays, such as the Lianhua gas discovery near Beijing.

PILING ON THE BARRELS

The Organization of Petroleum Exporting Countries may be showing admirable restraint in

complying with agreed cuts, but the region is readying itself for increased production. “There’s renewed interest in big oil, gas and petrochemicals projects in the Middle East,” Mammoet’s van Gelder said. “We’re seeing ADNOC, Aramco and others pushing the button on big projects that will start to come through in 2020-2021.”

The United Arab Emirates continues to invest heavily across the energy sector, from building the world’s largest oil storage facility to seeking to ramp production from its oilfields. Rystad Energy forecasts the UAE’s oil production could grow from 3 million bpd to 3.71 million bpd in 2025. There are also signs that oil production in the Neutral Zone between Saudi Arabia and Kuwait, Continues on page 22 >>

RUSSIA PIVOTS EAST

Meanwhile, massive gas developments are underway in Russia, which is eyeing energy-hungry markets in China and beyond as it continues to pivot east.

Shrugging off sanctions, Novatek has signed a US$2.5 billion construction contract with Italy’s Saipem and Turkey’s Renaissance services company for its giant Arctic LNG 2 project in the Yamal-Nenets autonomous district, north of the Arctic Circle, which is due online in 20222023.

This will be a mammoth project, requiring specialist equipment and experienced personnel to handle the extreme temperatures. “You need specialized equipment for temperatures of minus 40 degrees and it takes time to procure this and find the right people who are willing to work in these remote areas,” said Paul van Gelder of Mammoet, which worked on the Paul van Gelder successful Yamal LNG plant in Mammoet

DECOMMISSIONING OPPORTUNITIES When it comes to investment, much attention focuses on commissioning.

But for heavy-lift, shipping and project cargo companies, there are also opportunities at the other end of the project life cycle.

According to analysis by Norway’s Rystad Energy, several hundred offshore oil and gas wells could cease production by 2021, with decommissioning obligations set to average about US$12 billion per year through 2021. Much of the expected offshore decommissioning spend will be in the UK, which is forecast to spend more than US$2 billion annually in the next three years.

But activity is expected to ramp elsewhere, with Rystad Energy partner Audun Martinsen noting that

a growing number of fields in Asia, North America and Latin America are “under evaluation for dismantlement.”

Project cargo sources are more downbeat, however, noting that timelines are continually pushed out as oil companies seek to extend asset lifespans.

First-generation wind assets are also entering the decommissioning stage. In March 2019, energy firm E.ON announced plans to decommission the Blyth offshore wind project, the first wind farm built in UK waters, marking a new phase for breakbulk activity in the sector. By 2035 it is estimated that 2 gigawatts of wind power projects will be decommissioned each year, representing 500 turbines.

www.breakbulk.com BREAKBULK MAGAZINE 19

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Wind energy has performed well over the last couple of years, which has provided more transport and shipping opportunities for us.”

–D an Leach, Hemisphere Freight Services

shut due to disputes since 2015, might be restarted this year, according to reports by S&P Global. The fields there have a combined capacity of 500,000 bpd.

Iraq, still in recovery from the war, is also ramping production from its giant fields in the south, Rumaila, West Quarna-1 and West Qurna-2. Rystad Energy forecasts the country’s oil production could grow to 6.15 million bpd in 2025. Oman is also investing for future growth, upstream and downstream.

ENERGY TRANSITION ALREADY UNDERWAY

Increased exploration and production activity ensures a pipeline of development projects to sustain production over the next decade. Yet, increasingly, these long-term capital decisions must be weighed against the pace of the world’s energy transition: a multibillion-dollar project with a 20-year production tail could find itself on the wrong end of emissions rules designed to “keep fossil fuels in the ground.”

Oil companies are attempting to plot their own energy transition, but as yet these investments are just a toe in the water, with the oil majors allocating less than 3 percent of their budget to renewables since 2016. This caution is not surprising. Even such august forecasters as the International Energy Agency have been wrongfooted by the speed and scale of the energy transition.

For operators in the project cargo sector, the giant wind turbines that are powering the energy transition are

generating plenty of work. Wind power continues to grow globally, with 50.2 gigawatts, or GW, of new wind power added in 2018 to take installed capacity to 600 GW, and analysts expecting a further 723 GW to be added between 2019 and 2028.

“Wind energy has performed well over the last couple of years, which has provided more transport and shipping opportunities for us,” Hemisphere Freight Services’ Leach said. “There can be no doubt going forward an increasing number of major projects will center around renewables.”

He noted, however, that a fastgrowing sector where the technology is still evolving creates its own challenges. “For our industry it will be a big challenge to keep pace with this ever-changing sector and the opportunities it can represent,” Leach said.

It is also a sector with its volatility as a result of its dependence on changeable subsidy regimes and notin-my-backyard opposition to onshore wind farms.

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22 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 3 / 2019

EUROPEAN WINDS OF CHANGE

Wind energy provided 14 percent of the EU’s electricity last year, up from 12 percent in 2017, as capacity rose by 11.3 GW to 189 GW, of which 171 GW is onshore and 18 GW offshore.

Continued growth in capacity and the use of more powerful turbines are helping to drive up wind’s share in the electricity mix, led by Denmark (wind accounted for 41 percent of its electricity), Ireland (28 percent) and Portugal (24 percent).

While onshore wind has been stalling, particularly in Germany and the UK, offshore is powering ahead. A UK Sector Deal, for example, sets out an ambition for 30 GW by 2030, about

one-third of the country’s electricity needs, which would require a doubling of the pace that offshore wind has been deployed to date, from about 1 GW per year to 2 GW per year through the 2020s.

“The UK Sector Deal will deliver an enormous boost to offshore wind in the UK, with capacity set to almost quadruple in a decade,” said Iván

ABOVE: Wind energy is an ever-changing sector presenting challenges and opportunities.

CREDIT: BBC CHARTERING

Pineda of WindEurope. “This move will consolidate the UK as the largest European market for offshore wind by 2030, making it the second-largest globally behind China.”

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www.breakbulk.com BREAKBULK MAGAZINE 23

Australia has been having a big push on renewable energy and 2018 was a breakthrough year, with more than 80 wind and solar farms worth more than A$20 billion underway, double the level of investment seen in 2017. Unsurprisingly solar is big in Australia, with on average six solar panels installed per minute in the country, but wind is also on the up. In 2017, Australia’s wind farms produced 33.8 percent of the country’s clean energy and supplied 5.7 percent of Australia’s overall electricity, with Hemisphere Freight Services and Mammoet both reporting a busy start to 2019 keeping up with the work flow.

China has been a phenomenon when it comes to clean energy, transitioning far quicker than many analysts expected. Wind and solar generated 8 percent of China’s power needs last year, up from 3 percent five years ago. According to Greenpeace Unearthed, power generation from wind and solar in China in 2018 was equal to the total power generation of the UK and the Netherlands.

24 BREAKBULK MAGAZINE www.breakbulk.com

BACK TO THE FUTURE

But not everyone is focused on renewables. From 2000 to 2010, while economists were busy worrying about looming peak oil, engineers in the U.S. were busy finding a solution. Two established producing technologies – hydraulic fracking and horizontal drilling – were combined to unlock vast resources of previously unproducible oil locked in tight rocks. It has been a global gamechanger, with 60 percent of new oil production since 2008 coming from the U.S., where output continues to exceed all expectations: drillers there pumped almost 11 million bpd in 2018, beating the 1970 record of 9.6 million bpd, and expected to remain above 14 million bpd through 2040.

Gas production will also surge, to 43 Tcf by 2050, driving a domestic gasto-power boom but also seeing the country continue to export gas, via pipeline to Canada and Mexico and via LNG to global markets.

By 2021, the IEA thinks the U.S. will become a net energy exporter,

with net exports rising to nearly 4 million bpd by 2024; the Energy Information Administration calls it a year earlier in 2020 and expects the country to remain a net exporter through 2050.

There are some barriers ahead, namely above-ground infrastructure bottlenecks that will moderate growth until new pipeline capacity comes online to shift more oil to market. IHS Markit, for example, believes Texas needs to add more than 10,000 miles of new, currently unplanned, pipeline infrastructure projects in the next 30-plus years to achieve its full production potential.

In addition to pipeline infrastructure, there will need to be additional storage terminals, processing plants, refineries and port capacity in the U.S. Gulf Coast region to ship the product to market.

This boon has created busy orderbooks for the heavy-lift and transport industries. “Demand from the energy industry is very strong and there are great opportunities,

ISSUE 3 / 2019

particularly in the Gulf region and parts of Canada,” said Joel Dandrea, chief executive of the Specialized Carriers & Rigging Association.

“There’s Joel Dandrea also a big Specialized Carriers & infrastructure Rigging Association push in the U.S. right now, so that’s also creating demand.”

Dandrea noted that a shortage of skilled labor, from truck drivers to crane operators, is an ongoing challenge. “There is enough capacity in the industry to handle this work,” he said. “We’re pleased to see our members, sometimes three or four different companies, working in innovative ways and coming together in partnership to fulfil these projects.”

President Trump has called this “a golden era of American energy,” and he’s not wrong. “The U.S. trade deficit will evaporate and its foreign debt will be paid quickly thanks to the swift rise of American oil and gas net exports,” said Rystad Energy’s senior partner, Per Magnus Nysveen, who said the U.S. is destined to soon outpace Saudi Arabia when it comes to gross exports of oil and petroleum products. “The tanker shipping industry will see the boom of the millennium, as the excess fossil fuels from America will find plenty of eager buyers in fast-growing Asia.”

ABOVE: Finding skilled labor is an ongoing challenge. / CREDIT: ALLELYS

It’s an amazing transformation and its ramifications go beyond pure economics: U.S. oil dominance may well have geopolitical ramifications that will be felt around the world. BB Amy McLellan has been reporting on the highs and lows of the upstream oil and gas and maritime industries for 20 years.

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OPINION

Energy in Transition

Converging Streams Prompt Production Questions

T

BY MATTHEW BEY

CREDIT: SHUTTERSTOCK

STRATFOR

he global energy sector is in a period of multiple overlapping transitions that are providing challenges and risks – as well as opportunities – to those involved in the industry.

This constant flux will remain the status quo for the near future as technological, economic and political risks continue to mount.

In the short-term, the oil market itself will be driven by Saudi Arabia, and the U.S. U.S. crude oil production is now above 12 million barrels per day, or b/d, and is expected to average 13 million b/d in 2020. This will continue to apply bearish pressure on the global oil market.

But the Trump administration’s sanctions on Iran and Venezuela will work in the opposite direction. The U.S. has effectively made regime change its preferred outcome in both cases, and by the end of the year sanctions on both countries could take another 500,000 b/d off the market.

But the biggest driver of whether or not oil prices will be bearish or bullish will continue to be Saudi Arabia. Riyadh has made a determination that propping up prices by reducing supply is necessary in order to maintain high government spending on its long-term Saudi Vision 2030 program. It will continue to be proactive in managing oil markets, deepening or extending production cuts as necessary to ensure oil prices remain stable or increase slightly.

26 BREAKBULK MAGAZINE www.breakbulk.com

Long-term, however, Saudi Arabia is facing a critical question. As the U.S. becomes a net exporter of crude oil, will Aramco find it necessary to continuously take barrels off the market in order to prop up prices? Investment for a lot of oil plays globally makes sense at US$60 per barrel or higher. Saudi Arabia’s strategy may be untenable in the longer-term should oil markets continue to soak up shale oil produced by the U.S.

TROUBLES DOWNSTREAM

The downstream market is also dealing with its own challenges. First, the International Maritime Organization’s 2020 sulfur content in marine fuel regulations go into effect by the end of this year. It is not yet fully clear how the tightening of sulfur dioxide emissions exactly will impact the careful balance between various refined products, refiners’ intakes of crude grades or the energy industry more broadly. Heavy crude oils with high sulfur content will see their relative value decline, but this is precisely the oil U.S. sanctions are targeting and that Saudi Arabia is taking off the market.

Second, the market for lighter products like plastics is now becoming oversaturated, while diesel and gasoline demand continues to grow. The type of crude produced by shale oil formations – light crude – is beginning to outstrip refining capacity of light ends. This has already become the case in the U.S. and will extend globally as production increases.

All of these forces upstream and downstream will keep the oil and gas industry in flux over the next five years. And beyond that the impact of renewables will keep the overall energy industry in flux for longer. BB Matthew Bey serves as a senior global analyst at Stratfor. Bey focuses on political and economic issues globally, including international trade, global finance and commodity developments.

ISSUE 3 / 2019

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CARGO LENS

WASTED WATER WORLD Tidal Potential Waiting to be Tapped

BY HELEN CAMPBELL

F

ew can have missed the urgent drive for a lower carbon future and the push to develop forms of renewable energy to help enable it. One of the lesser-used forms of renewable energy is tidal power, which converts the energy obtained from tidal variations into electricity.

The lunar cycle and the laws of gravity mean the standout benefits of tidal energy are its predictability and reliability, especially when compared with the more widely known and developed forms of renewable energy 28 BREAKBULK MAGAZINE www.breakbulk.com

– wind and solar. Although 70 percent of the Earth’s surface is water, with the vast bulk of that oceanic, tidal power certainly does not work everywhere.

Nevertheless, there is good potential for the technology in specific circumstances and, if it takes off, the tidal energy sector could provide lucrative new business for project cargo carriers.

Just a tide is not enough. The key to tidal power is the differential between flood tide and ebb tide – the difference must be a minimum of 4.5 meters, preferably at least 7 meters to facilitate a sufficient head of water for the turbines and commercially

economic operation. Other constraints are the comparably lower capacity of tidal energy developments – averaging between 20 percent to 35 percent – and that tides flow twice a day only at times that do not necessarily chime with peak demand.

Areas with large numbers of small remote islands often provide the right conditions for tidal flows and depth variations appropriate for tidal power developments. Around the UK, suitable locations include off the north of Scotland; globally, the right conditions are to be found in the English Channel towards France; around the numerous islands that make up countries such ISSUE 3 / 2019

TIDAL POTENTIAL

UK

Depth: 30-50meters Potential: 11,400MW

FRANCE

Depth: 30-50meters Potential: 1,000MW

RUSSIA

Depth: 20-100meters Potential: 350MW

CANADA

Depth: 30-80meters Potential: 2,000MW+

CHINA

Depth: 20-100meters Potential: 2,000MW

JAPAN

USA

Depth: 20-80meters Potential: 2,200MW

Depth: 20-100meters Potential: 350MW+

SOUTH KOREA

MEXICO

Depth: 20-50meters Potential: 1,000MW+

Depth: 20-50meters Potential: 200MW+

PHILIPPINES

Depth: 30-50meters Potential: 500MW+

PANAMA

Depth: 20-100meters Potential: 200MW+

PAPUA NEW GUINEA

Depth: 20-30meters Potential: 200MW

CHILE

Depth: 30-100meters Potential: 100MW

BRAZIL SOURCE: SIMEC ATLANTIS

as the Philippines and Indonesia; and offshore parts of Canada, in particular the Bay of Fundy, situated between Nova Scotia and New Brunswick, and which boasts the biggest tides in the world. Most of Africa, other than the island of Madagascar, is not seen to hold good tide potential.

Battery storage is also important, to counter the fact that the tides, while reliable, flow only twice a day.

However, tidal power could feasibly be harnessed on both sides of an island, with one side feeding the local network for a period of time, to be taken over later by the other array, taking account of the different tidal timings on each side of the island and better balancing out power supply and distribution during a 24-hour period.

Fast-flowing rivers also provide good tidal power potential, as does adding them downstream of huge hydropower plants – this approach can provide a valuable second opportunity to harness power after huge volumes of water have already been released in freefall from a dam.

Depth: 30meters Potential: 200MW

INDIA

Depth: 20-50meters Potential: 700MW

STREAM OPPORTUNITIES

The two main forms of tidal power technology are tidal barrage and tidal stream. Barrage installations see tidal waters filling an estuary via sluices which are opened to allow the tide to flow into the basin. When the sluice is closed, the sea level drops and the flow of elevated water in the basin drives turbines to generate electricity. Barrage is expensive – one UK development, the Swansea Tidal Lagoon, was thrown into doubt when the UK government withdrew its backing, although developers are now trying to raise the funding themselves.

The bulk of the hardware for tidal barrage is concrete, with a handful of large bespoke turbines required per development.

Much more likely to provide project cargo opportunities in the medium term is tidal stream. This harnesses the kinetic energy of moving water through devices installed on the seabed, and which are very similar to onshore wind turbines, albeit a lot more squat. A significant advantage of

AUSTRALIA

Depth: 20-100meters Potential: 500MW

NEW ZEALAND

Depth: 30meters Potential: 200MW

water over air is water’s far-superior density.

“The turbines we are developing at the moment are around 18 meters in diameter including the blades, so a lot smaller than wind turbines,” said Cameron Smith, director of project development at Simec Atlantis, a leading developer of tidal stream technology. “The reason for that is that water is 700 times denser than air, so you can use a much smaller blade to extract the same amount of energy as you would do from a wind turbine.”

Simec Atlantis’ largest development, and indeed the largest approved tidal stream development in Europe, is MeyGen, just off the very tip of John O‘Groats in the far north of Scotland. Situated between the tip of the mainland and the island of Stroma, one of the Orkney Islands and whose name means “Island in the Tide” in Gaelic, MeyGen is in the perfect tidal conditions to harness power.

The project is in two phases, with 6 megawatts of the 86-megawatt first phase already installed and feeding the www.breakbulk.com BREAKBULK MAGAZINE 29

national grid via four turbines of 1.5 megawatts each. The full first-phase capacity will require a further 50 1 megawatt turbines and will be able to supply 2,600 homes. While the project has grid capacity for 252 megawatts, the site could accommodate enough turbines to provide up to 398 megawatts of power.

QUESTION OF SCALE

“Tidal stream is no longer research and development – it works,” Smith said. “The challenge is to make it cost effective. We could just add one, two or three turbines. What we really want to do is build 50, because that means we can get huge economies of scale. We can increase the size of the blades, we can use bigger vessels, we can keep the vessels for a reasonable amount of time, and we can cut down on vessel mobilizations. That would 30 BREAKBULK MAGAZINE www.breakbulk.com

all make a huge difference to our levelized cost of electricity.” Levelized cost of electricity is the net present value of the unit-cost of electricity over the lifetime of a generating asset.

Simec Atlantis recently signed a joint venture with the regional authorities in Normandy, Northern France, to build a large-scale tidal stream development between the Channel Islands and the French mainland. Construction is expected to begin in 2021 and turbines will be fitted out in either Cherbourg or Le Havre. Simec Atlantis is also looking at the Philippines, China, Indonesia and Japan.

“We are certainly being asked to go to these countries and to look at putting in demonstration projects in these areas where there are strong tidal currents between the islands, and there are a number of other

ABOVE: Preparing for installation of turbines for the first phase of the MeyGen tidal power development off Orkney, February 2017.

CREDIT: SIMEC ATLANTIS

companies doing the same,” Smith said.

While one of the installed MeyGen turbines is Simec Atlantis’ own, some of them were made in Germany and Austria by Andritz Hammerfest Hydro before being moved by train and transferred to a vessel. The considerations for transporting components for tidal turbine projects are fairly similar to those associated with wind developments, although retrieving a damaged blade from the seabed and replacing it is a lot more complex and expensive than replacing a blade on an onshore wind turbine.

ISSUE 3 / 2019

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FLOATING TIDAL OPTIONS

DISRUPTING THE FLOW Challenges that continue to stall increased development of the tidal sector remain.

“Tidal works, the sector has shown that,” said Cameron Smith, director of project development at Simec Atlantis. “But the hurdle now is all about getting the costs down and, to do that, we need volume so we can mass produce and get scaled up. We hope that with some fairly ambitious moves on our part and, hopefully, some support from government, the sector can get there.

“There are a number of arrays around the world now where there are two or three turbines, so giving 5 megawatts. We need to see the first 50-100 megawatts [development] to really make it work.”

Tim Wood, founder and director of engineering, procurement and construction services provider DWR Offshore, agreed, saying the “obliteration” of government money that had previously been ringfenced for tidal has held things at the prototype stage for longer than hoped, and means the inflection point where tidal takes off is still way off.

“The business models of all the big tidal players are to have big offshore deployment of these units, with around 20 units probably being the smallest array, going up to 100 to achieve the levelized cost of electricity they say they aim to get down to,” Wood said. “At that stage, that is an enormous undertaking.

“Lots of companies are dabbing their toe in the water by putting five or six units in, and there are incentives to do that in various places around the globe. Tidal is still very much at that point where developers are limited to these smaller arrays. The next phase I expect to see is someone putting in 10 units. That’s where tidal is and it’s still relatively early.”

“Second generation” tidal stream power, with turbines hosted by a hull moored to the seabed, could bring costs down. But while floating solutions utilize greater numbers of turbines, the turbines are significantly smaller than in a fixed development. Leading players in floating tidal include Sustainable Marine Energy, developing projects in Canada, and Orbital Marine Power (formerly Scotrenewables).

“Our turbines weigh in the region of 1,500 kilos with a blade diameter of 6 meters,” said David StoddartScott, strategic projects manager at Sustainable Marine Energy. “They fit into containers while our hulls go onto flat-racks and are shipped that way, so the opportunities for [project] carriers there are currently limited. Our future preference, depending on global prices, is to build our structures as close to our installation sites as possible. In Canada though, that’s probably not going to happen, because their cost for building structural steel is more expensive than in Scotland, and obviously Scotland is more expensive than Southeast Asia.

“Our next platform is going to be slightly larger and will be slightly more difficult to fit onto flat-racks, so there will be opportunities for stuff to be shipped around. At the same time, the next five to 10 years will see our

machines get bigger and bigger.”

Tim Wood, founder and director of engineering, procurement and construction services provider DWR Offshore, said about 10 percent of the company’s business is generated by the tidal power sector.

“We have noticed a bit of a dropoff in tidal, for reasons of a lack of support governmentally,” Wood said. “For shippers, there is potential there. In fact, that potential is there almost as a result of there not being so much support to develop physical tidal projects here [in the UK]. There has been quite a lot of support from various governmental schemes such as the Welsh European Funding Office (WEPO) and Scottish Renewables too, for companies to come up with designs for tidal, so there is a lot of innovation going on here and there are a few companies who are technically well advanced.”

ANTICIPATED GLOBAL GROWTH

That innovation in the UK, coupled with the lack of governmental support, plus the expected impacts of Britain’s exit from the European Union on investment, may well mean greater global opportunities for project cargo shippers as the tidal sector starts to grow.

ABOVE and LEFT: Sustainable Marine Energy, a strong proponent of floating tidal power technology, prepares to install floating tidal energy equipment off Canada.

CREDIT: SUSTAINABLE MARINE ENERGY

32 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 3 / 2019

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LEFT: A Simec Atlantis offshore construction team redeploys two 1.5 MW turbines at the MeyGen tidal energy project.

CREDIT: SIMEC ATLANTIS

“Certainly, schemes like WEPO and the Cornish equivalent, the Marine Challenge Fund, are aimed at making European money available to develop regions of economic deprivation,” Wood said. “Part of the deal for companies to get hold of this money is that they set up a base in the areas where they are operating, and look to local manufacturers, at least for the prototyping.

“In terms of the shipping side of things, all of those companies are now looking abroad – where they’ve been previously demonstrating their units in Scotland, now you see those companies going to Canada, to the Philippines, and locations like Portugal and France. I am skeptical about whether they will carry on manufacturing in the UK. Brexit will

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ISSUE 3 / 2019

have a huge impact on that, as will the final destination of the units.”

The technical complexity of tidal units will certainly play a significant role in the determination of manufacturing locations.

“Some of the units are extremely technically complex, but there are definitely parts of them which are not,” Wood added. “The big uncertainty with tidal, and how it does differ from wind, is that the variation in the types of device is absolutely huge. I would anticipate the more complex elements would be built somewhere in Europe with good fabrication, while the easier steel work would be built in the target markets, such as in Southeast Asia.”

high-value and quite complex pieces of machinery that can take up to two years to manufacture and, once they’re in water, they cost a lot of money. Each 1.5-2 megwatt would be insured to the ballpark of around £5 million to £10 million, and what’s important to us is that they arrive in the exact same manner and condition they were taken out in.”

While tidal timetables are wholly predictable years in advance anywhere around the globe, the

timetable for tidal power revolution is less certain. Project carriers that have been busy moving wind turbines over the past decade look well placed to take advantage of tidal power sector growth, should the surge ever come. BB Helen Campbell is a freelance journalist based in London who has specialized in energy, environment, sustainability and technology for more than 20 years.

DESIGN CONSIDERATIONS

Tidal turbines generally weigh in the region of 50-100 tonnes apiece.

Units can measure up to 20 meters high or more, with the blades to be factored into the width, adding in the region of 10-18 meters depending on design. Unsurprisingly, what developers need to make tidal work commercially is economies of scale.

So, if tidal does take off, individual units are only likely to grow bigger in size and to increase vastly in number per array.

Whatever the number, and wherever tidal components are moved from and to, they will need careful handling. “The most delicate parts of these units are the parts where the blades fit into the turbine, just like the top of a windmill tower,” DWR’s Wood said. “The very top of it, the nacelle, houses all of the rotating equipment and all of the energy generation equipment, so that is the bit that needs to be taken very good care of.”

Again, it is the variation in design for tidal that will be the key to project cargo business-growth opportunities. Some companies’ designs do fit into a container, but the packaging necessary to protect tidal turbine units means that many other designs are simply too big once the packaging is taken into account, and they cannot be containerized.

“The guys who are good at transporting wind turbines will be good at moving tidal,” Simec Atlantis’ Smith noted. “We’re looking for people who are careful, and people who are good. These are www.breakbulk.com BREAKBULK MAGAZINE 35

INLAND TRANSPORTATION

BEYOND

HYPE

Super-Fast Transport Mode Offers Vast Opportunities

W

ith transport capabilities transcending the speed of sound, hyperloop technology is zooming beyond the hype, gathering momentum to begin to realize multitrillion-dollar potential in reshaping freight and passenger movement, while also affording worldwide opportunities for shipment of project cargoes.

Building upon a concept dating back to the early 19th century, hyperloop is speeding toward reality with such recent developments as a joint venture to bring the technology to cargo operations at Germany’s Port of Hamburg among partnerships extending from Spain to Brazil to India, as well as numerous North American markets.

In conversations with Breakbulk, 36 BREAKBULK MAGAZINE www.breakbulk.com

leaders of several leading-edge hyperloop firms indicated they believe the environmentally friendly, time- and cost-saving technology will be in real-world use moving goods and people well within the coming decade.

“We see hyperloop as being transformative to the freight industry,” said Dirk Ahlborn, CEO of Culver City, California-based Hyperloop Transportation Technologies, which in December announced its agreement with Hamburger Hafen und Logistik Aktiengessellschaft, the leading container terminal operator in the Port of Hamburg, with plans to efficaciously link Hamburg docks with inland points through a system which could then be marketed to other ports and logistics companies.

BY PAUL SCOTT ABBOTT

“Part of our focus with our venture in Hamburg is to develop ways to make ports more efficient by using hyperloop technology to expand port capacity and reduce freight traffic on urban roads Dirk Ahlborn and railways,” said Ahlborn, whose Hyperloop TT company is known as HyperloopTT for short.

GLOBAL PACTS ABOUND

HyperloopTT, which last year led development of a global safety and regulatory framework for hyperloop, also already has international commercial ISSUE 3 / 2019

hyperloop systems – using technology such as electromagnetically levitated pods propelled through vacuum tubes – underscores that implementation of the mode is zipping forward.

Most recently, in March of this year, the Pennsylvania Turnpike Commission signed a pact with Los Angeles-based engineering and construction giant AECOM to study a hyperloop system to connect Philadelphia and Pittsburgh, with a branch from Harrisburg to Wilkes-Barre/Scranton.

AECOM is the same firm which three years earlier built the first hyperloop test track, in Hawthorne, California, for SpaceX, the space transportation company founded by Tesla and PayPal entrepreneur Elon Musk. Musk is credited with bringing to the fore in 2012 the hyperloop concept that has its roots in the “atmospheric railway” concept proposed more than 200 years ago by British inventor George Medhurst and further advanced by rocketry pioneer Robert Goddard’s 1909 vacuum train proposal.

ABOVE: Cityscapes are envisioned to take on a futuristic look with the installation of hyperloop transportation tubes.

CREDIT: ZELEROS

agreements in the United Arab Emirates, Czech Republic, Slovakia, France, Indonesia, China, Korea and Brazil. In spring 2018, HyperloopTT began construction in Toulouse, France, of the world’s first full-scale hyperloop tube system, and it unveiled a global innovation research center in the Brazilian city of Contagem, with support from the Brazilian state and municipal governments and others.

Earlier last year, the company, in conjunction with the Northeast Ohio Areawide Coordinating Agency, Illinois Department of Transportation and several other public and private entities, embarked upon studies for the Great Lakes Hyperloop, to link Cleveland and Chicago and perhaps other cities.

The fact HyperloopTT is one of more than a dozen companies worldwide engaging in development of

TESTING ADVANCES

Meanwhile, Los Angeles-based Virgin Hyperloop One promotes its DevLoop, located in the Nevada desert north of Las Vegas, with its first phase opened in mid-2017, as the first fully functioning hyperloop prototype in the world, with vacuum pumps reducing tube air to 1/1,000th of atmospheric pressure. Last August, Virgin Hyperloop One signed an agreement with the Spanish government’s rail administration for its first European development and testing facility, to be built in the Andalusian province of Malaga.

The company, known simply as Hyperloop One prior to the engagement of Virgin Group entrepreneur Richard Branson, was one of the first to pursue hyperloop development in earnest with its 2016 prefeasibility study, in collaboration with global accounting firm KPMG and multi-stakeholder consortium FS Links, for a 310-mile connection, linking Finland and Sweden through a tunnel under the Baltic Sea, which could whisk cargo or passengers in less than half an hour between Helsinki, Finland, and Stockholm.

“Now,” said Ryan Kelly, Virgin Hyperloop One’s head of marketing and communications, “we are working with governments and organizations around the world to progress the first projects. We’ve already seen groundbreaking commitments from governments around the world who understand that transformative technology like hyperloop can leapfrog their economies and deliver unprecedented connectivity and opportunity to their citizens.”

Virgin Hyperloop One, in early 2018, became the first company to sign a framework agreement with the intention of building a hyperloop corridor in India to connect Mumbai and Pune in 25 minutes. A detailed feasibility study has been completed, and a comprehensive project report is in the works. The initial report projects US$55 billion in socioeconomic benefits over 30 years of operation, inclusive of productivity improvements, economic catalysts, emissions and accident reductions, and more, while easing severe expressway congestion and reducing greenhouse gas emissions by as many as 150,000 tons a year.

“As with any new transport infrastructure,” Kelly said, “there will be regulatory hurdles to overcome. We believe that hyperloop will require a fresh approach to regulation, and collaboration with forward-thinking countries like India will be key.”

DP WORLD ENGAGED

On the cargo-specific front, Virgin Hyperloop One and Dubai-based global port terminal operator DP World in April 2018 introduced DP World Cargospeed – a product to provide hyperloop-enabled cargo systems to support fast, sustainable and efficient delivery of palletized cargo and high-priority goods in Arab states of the Middle East Gulf region and beyond.

“DP World Cargospeed systems will deliver freight at the speed of flight and closer to the cost of trucking,” Kelly said. “The system will revolutionize logistics, support economic zones and create thriving economic megaregions. www.breakbulk.com BREAKBULK MAGAZINE 37

LEFT: DP World Cargospeed systems are designed to deliver freight at the speed of flight at closer to the cost of trucking.

CREDIT: VIRGIN HYPERLOOP ONE

“Virgin Hyperloop One-enabled supply chains can dramatically impact bottom lines by reducing both finished goods inventory and required warehouse space by 25 percent,” Kelly continued. “This can add up to far more than the savings in transportation costs, especially for high-value and time-sensitive products.”

In the U.S., Virgin Hyperloop One has completed an in-depth feasibility study for a Missouri route, and is wrapping up feasibility studies for Ohio, Colorado and Texas routes. The company also is participating in a firstof-its-kind environmental impact study of hyperloop routes in Ohio and Texas.

The Virgin Hyperloop One Global Challenge, launched in mid-2016, drew interest from more than 2,000 teams seeking to have routes deemed worthy of the company’s engagement. Among 35 semifinalists across 17 countries, 10 routes were chosen by an expert panel as most meriting pursuit.

The four in the U.S. are: • Chicago-Columbus-Pittsburgh.

• Miami-Orlando.

• Dallas-Laredo-Houston.

• Cheyenne-Denver-Pueblo.

Non-U.S. winners are: • Bengaluru-Chennai and MumbaiChennai in India.

• Edinburgh-London and GlasgowLiverpool in the UK. • Mexico City-Guadalajara in Mexico.

• Toronto-Montreal in Canada.

ALBERTA LINK NEARS

Canadian routes are part of the focus of Toronto-based TransPod, which, in addition to pursuing a Toronto-Ottawa-Montreal link, is proceeding toward a 2020 construction start on a route in Alberta between Calgary and Edmonton. Because, 38 BREAKBULK MAGAZINE www.breakbulk.com

of Hardt Hyperloop, from the Netherlands; Zeleros, from Spain; and Hyper Poland, from Poland.

“It’s good the EU is onboard, because it’s key if you want to be able to use it commercially speaking,” Gendron said. “As with an aircraft or a train, you need to have the stamp from the authorities to be able to operate such a system.”

Gendron said the working group is to soon include Transport Canada officials, and he expects representatives of the U.S. Department of Transportation to be taking part by the end of 2019.

With extensive hyperloop construction planned in Canadian and U.S. markets, this participation and support is of critical importance.

Ryan Kelly

Sebatien Gendron

Virgin Hyperloop One

TransPod

according to Sebatien Gendron, TransPod’s co-founder and CEO, most of the investment the company has secured to date has come from Europe, TransPod has initiated activities in Italy and France as well. Australian lines between Melbourne and Sydney and between Sydney and Brisbane are also targeted in TransPod’s future plans.

TransPod, through a French subsidiary, is building a test track in Limoges, a city 250 miles south of Paris historically known for its fine porcelain and now intended as site for construction of a working prototype for TransPod’s new hyperloop vacuum train. Gendron said plans call for system certification between 2023 and 2025.

“There’s actually a lot more need and interest than we thought initially, and the European Union is leading the pack,” Gendron said, adding that EU officials met for the first time with leadership of TransPod in December in seeking development of standardized global practices related to hyperloop development, including common track specifications. Also part of the industry consortium taking part in the ongoing series of meetings are representatives

CUSTOMERS TARGETED

TransPod, according to Gendron, looks to sell the hyperloop freight vehicles it is developing to potential customers including such major shipping concerns as FedEx, UPS and Amazon, while infrastructure lines are to be built with a boost from companies such as AECOM, with the financial capabilities to finance hyperloop corridors.

Gendron said he perceives “a huge opportunity” in particular for hyperloop transportation of time-sensitive freight, including food and e-commerce goods, in addition to passengers.

Also, getting the requisite components to hyperloop construction sites should afford opportunities for project cargo shipments. For example, one of TransPod’s partner companies, Indian-owned, Luxembourg-based steel manufacturer ArcelorMittal, is looking to on-site building of hyperloop tube installations using prefabricated pillars, steel plates and other materials brought by ship and truck.

Gendron said he believes global demand for hyperloop systems is sufficient to keep numerous companies busy for decades, adding that he sees a competitive advantage for TransPod as a Canadian company with European investors.

ISSUE 3 / 2019

“The market is there,” Gendron said, “and the benefits are many.

Hyperloop is faster, cheaper and more convenient, and it’s sustainable.”

GREEN BENEFITS SEEN

GOING HOLLYWOOD One of the more unusual entries in the hyperloop marketplace is Santa Monica, California-based Hyper Chariot, which was founded by University of Southern California theater school graduate Nick Garzilli, whose acting credits include a 2005 turn as a mugger on TV’s Everybody Hates Chris. Hyper Chariot’s advisory board chairman is award-winning actor Matthew Modine, currently appearing in Stranger Things on Netflix.

Garzilli said hyperloop, in addition to solving urban transportation challenges by providing personal rapid transit, should prove highly valuable in the movement of time-sensitive freight.

He said 94 percent of the world’s goods will fit in a Hyper Chariot unit.

According to Garzilli, hyperloop has potential to go well beyond the initial pneumatic tube system vision of Musk, which, in a 2013 concept paper proposing a route (no longer being pursued) between Southern California and the San Francisco Bay area, estimated achievable speed of 760 miles per hour. Garzilli characterized the term “hyperloop” as “loopy,” as he sees it as a marketing term describing only the initial Musk vision.

“We plan on developing a highspeed tube system to go 4,000 miles per hour,” said Garzilli, who looks to a different type of magnetic levitation, or maglev, deploying quantum locking with cryogenically chilled superconductors such as liquid nitrogen or solid propane. That velocity is more than five times the speed of sound.

40 BREAKBULK MAGAZINE www.breakbulk.com

Such “green” sustainability gains are viewed as vital by Jelte Altena, head of marketing for Hardt Hyperloop, headquartered in Delft, Netherlands.

“The biggest benefit is that the hyperloop responds concretely to a growing need and a lack of a form that both meets current requirements and is environmentally friendly and affordable,” Altena said. “The hyperloop makes long-distance travel possible without concessions in terms of time, comfort, price, safety and living environment.

“It is the most environmentally friendly form of transport, with no less than 30 times less energy per passenger than the plane and even four times less than the train,” Altena continued. “It offers a concrete Jelte Altena solution for the Hardt Hyperloop increasing number of short-haul flight movements with associated consequences for the climate and the living environment.”

Because, he said, hyperloop consists of a network of low-pressure tubes built where possible along existing infrastructure and, where this is

not possible, to a large extent underground, hyperloop will have hardly any impact on nature and the built environment.

“Where above-ground construction takes place, the infrastructure will be provided with solar panels,” Altena said. “This will provide a smart and efficient energy network, with which urban areas along the route can be supplied with green energy. In this way, the hyperloop provides more energy than it uses.”

CARGO COMING FIRST

Like other leaders in the hyperloop industry, Altena said he believes the technology is likely to be applied to the cargo market before the passenger sector. When used specifically for cargo transport, tube diameters, travel speeds and service frequencies can be defined to meet demands for goods movement rather than passenger comfort. In combination markets, he said, cargo and passenger schedules can easily be alternated automatically.

Hardt Hyperloop’s vision is realization of a hyperloop network reaching throughout Western Europe, to be formed by connecting various corridors, including the route between Amsterdam and Frankfort examined in a recently completed concept study.

The study found the 280-mile trip can be completed in 50 minutes via hyperloop compared with four hours using existing modes.

The Hardt firm, with a hyperloop test facility in the Netherlands, is also collaborating with Amsterdam Airport Schiphol on implementation of hyperloop in the field of aviation.

In the Nevada desert just north of Las Vegas, Virginia Hyperloop One is entering its third year of evaluating hyperloop prototypes on its DevLoop test track. / CREDIT: VIRGIN HYPERLOOP ONE

ISSUE 3 / 2019

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ABOVE: Virgin Hyperloop One has teamed up with DP World on development of port facilities relying upon hyperloop-enabled cargo systems.

CREDIT: VIRGIN HYPERLOOP ONE

“Essential to our development is the cooperation between public, private and semiprivate institutions, including those of research institutes,” Altena said. “We believe that the hyperloop, with its major impact on our future society, is not a development that may depend on a few parties, but must be a widely supported social discussion.”

For example, parties with which Hardt Hyperloop cooperates and/ or is a consortium partner include state-owned rail companies of the Netherlands and Germany, Mumbaibased Tata Steel, Dutch maritime vessel and services provider Royal IHC, Dutch construction group Royal BAM, Dutch architectural design firm UNStudio and German automotive equipment manufacturer Continental AG. Plus the Hardt firm enjoys the support of the House of Representatives of Dutch Parliament.

SPAIN FIRST

Spain’s first hyperloop company, Zeleros, founded in Valencia in late 2016, emerged from a Spanish student team formed to take part in a Muskled competition, partners with Renfe, 42 BREAKBULK MAGAZINE www.breakbulk.com

Spain’s state-owned rail company, and in March announced it is collaborating with German conglomerate Siemens on hyperloop technology.

Other Zeleros partners include the Polytechnic University of Valencia, Technical University of Madrid, Paris-based Altran Technologies, and investors ranging from Europe’s primary climate initiative to Silicon Valley’s Plug and Play Tech Center.

With the support of regional government, Zeleros is building a test track in Valencia.

“The technologies exist,” said Juan Vicen, chief communications officer at Zeleros. “Now, the main challenge is the integration of all the technologies that already exist and the establishment of a public-private partnership powerful enough to make it a reality and start implementing real routes.

We are working hard in that aspect.”

Vicen is among the several hyperloop executives who anticipate cargo transport to lead the way on hyperloop corridors and who expect abundant opportunities for project cargo shipping in construction phases.

“Although we see a bright future in the movement of passengers,” Vicen said, “we foresee that the fastest application of hyperloop will be for freight, since the requirements in safety and operation will be less in comparison to passenger transport.

“Hyperloop infrastructure will need project cargo shipments, as key materials for construction of hyper-

loop routes will need distribution across the world to develop specific routes,” he said. “It will be the case of tubes and other key elements, and it will depend on the location of the route and the origin of the materials.

“All in all,” Vicen said, “the hyperloop has the potential to offer wider economic, sustainability and societal benefits that will contribute to the progress of mankind, becoming one of the key technological developments of the following decades.”

So just how vast is the potential for hyperloop?

Pointing to estimates pegging the annual worldwide transportation market at US$8.7 trillion, about evenly split between moving cargo and passengers, Hyper Chariot’s founder Nick Garzilli said: “We see a system where eventually over 90 percent of that US$8.7 trillion could be moved by Hyper Chariot.”

And possibilities extend even beyond the planet Earth, with Musk, who states he wants to send humans to Mars as soon as 2024, saying the hyperloop concept would be wellsuited to the Red Planet, where no tubes would be needed due to the very low density of the Martian atmosphere. BB A professional journalist for nearly 50 years, U.S.-based Paul Scott Abbott has focused on transportation topics since the late 1980s.

ISSUE 3 / 2019

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‘STEELMAGEDDON’ LOOMS

A

Price-Crushing Glut Seen Disrupting Metals Market

s Bank of America Merrill Lynch forecasts “Steelmageddon” with such certainty it apparently has trademarked the moniker, and with the doomsday view backed by other observers and indicators, a bumpy downhill road appears to be ahead for the steel industry.

In the face of unrestrained optimism expressed by the Trump administration, the March 14 report from Bank of America Merrill Lynch – prognosticating a price-crushing steel supply glut in the U.S. by 2022 – is one of the latest predictors of forthcoming upheaval for American steel and related sectors.

Already impacted by heavy U.S. tariffs on steel imports, the steel marketplace is anticipated to face further turmoil when ramped-up American production leads to plummeting prices within the next three years, according to the report.

44 BREAKBULK MAGAZINE www.breakbulk.com

The overcapacity concern that long has focused on China and its dumping of underpriced steel exports may well thus be shifting its source to U.S. soil.

US MILLS TO SUFFER

“In the medium term, none of the U.S. steel mills look secure,” said report co-author Timna Tanners, who has covered the metals and mining business Timna Tanners since 2002.

“While we note Bank of America blast furnace operators [will] likely lose share and shut capacity, all mills suffer from low prices when excess capacity hits the market, in our view.”

Tanners, who wrote the March report with fellow Bank of America Merrill Lynch, or BAML, analyst Wilfredo Ortiz, is New York-based managing director covering metals and mining in BAML’s Americas equity research arm.

U.S. steel production capacity is expected to rise by 20 percent by 2022, creating oversupply of steel commodities, according to the report, exacerbating price declines. Average price of the benchmark commodity of hot-rolled coil, which had reached a high mark of US$900 per short ton in mid-2018, was already down to as low as US$660 a ton in early 2019, with predictions of a drop to US$550 per ton by 2022, as U.S. mills continue to augment recently unshuttered capacity with expansions plus opening of new mini-mills by such industry leaders as Nucor and Steel Dynamics.

All this steelmaking capacity coming online may well time with an ISSUE 3 / 2019

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overall global economic slowdown with concomitant reduced demand for steel and products made from it, according to at least one longtime observer.

Veteran steel industry analyst Christopher Plummer – no relation to the award-winning actor – said one of the two factors most impacting the global steel marketplace is the significant slowing of economies and end-market activity all over the world, including the U.S., where appliance, automotive and industrial equipment sectors are already feeling the pinch. The second major factor, he said, are tariff-related effects.

“We’re dealing with an environment of heightened trade regulations, with the U.S. at the forefront, but the cause ultimately is China,” Plummer said, who has been following the global metals and mining marketplace for more than three decades, serving since 1998 as chief executive officer, managing director and chief steel, metals and mining industry consultant for West Chester, Pennsylvania-based Metal Strategies Inc. “There’s nothing new there,” Plummer told Breakbulk, “except for the heightened trade tensions, which have hopefully reached a peak, but they may not have.

“We’ve clearly moved into a slower end market and general economic activity level around the world,” Plummer said. “The U.S. is a little bit of an exception, but, even here, we’re approaching a point within the next 12 to at-most 36 months before we see kind of a rolling recession. In steel, we already are seeing it in automotive, for Christopher example, and Plummer automotive is a classic earlyMetal Strategies Inc cycle performer.”

“We’re seeing the mixture of normal cyclical slowdown enhanced, unfortunately, in a negative way with the Section 232 tariffs on steel and aluminum,” Plummer said, citing billions of dollars of consequences reported by U.S. manufacturing giants including General Motors, Ford and Whirlpool, which rely on strong export volumes.

Meanwhile, China is expected to continue to account for more than half of all of the world’s steel production, even as total global output begins to see a bit less growth. China’s 2018 output was nearly nine times that of India, which last year passed Japan to become the world’s No. 2 steel producer, and almost 11 times the output of the No. 4 producer, the U.S.

Global crude steel production eclipsed 1.8 billion tons in 2018, up 4.6 percent over 2017, with China’s share increasing to 51.3 percent from 50.3 percent, but early 2019 numbers indicate a slowing of the upward trend, with worldwide output of 146.7 million tons in January of this year up just 1 percent on a year-overyear basis compared with January 2017.

UNCERTAINTY GROWS

As market uncertainty escalates, impacts may become more wide-spread.

“China has been really pushing its luck all over the world,” Plummer said, noting that 80 percent of China’s total economic activity – from metals to finished goods – remains within the Asia-Pacific region, including Japan,

INDUSTRY IMPACTED

Plummer said repercussions of hefty U.S. tariffs placed last year on imports of steel, aluminum and other goods are being particularly felt by heavy industry firms such as Caterpillar and Deere.

46 BREAKBULK MAGAZINE www.breakbulk.com

President Trump speaking to the Conservative Political Action Committee on March 2 termed the tariffs “the greatest negotiating tool in the history of our country.”

CREDIT: WHITE HOUSE PHOTO BY TIA DUFOUR

ISSUE 3 / 2019

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WORLD’S TOP 10 STEEL-PRODUCING COUNTRIES

R ANK

COUNTRY

PRODUCTION (IN MILLION TONS) 2018

2017

% CHANGE

2017 TO 2018

1 China

928.3 870.9

+6.6

2

India

106.5

101.5

+4.9

3

Japan

104.3

104.7

-0.3

4

United States

86.7

81.6

+6.2

5

South Korea

72.5

71.0

+2.0

6

Russia (estimated)

71.7

71.5

+0.3

7

Germany (estimated)

42.4

43.3

-2.0

8

Turkey

37.3

37.5

-0.6

9

Brazil

34.7

34.4

+1.1

10

Iran (estimated)

25.0

21.2

+17.7

Source: World Steel Association, Jan. 25, 2019 report

Korea and Southeast Asia, where global opportunities for shipping steel therefore remain the highest. “But even China’s peripheral stuff causes havoc all over the rest of the world, and they tend to shift their focus to the rest of the world when their home markets are not doing well.”

48 BREAKBULK MAGAZINE www.breakbulk.com

With 60 percent of China’s steel production going into construction, rebar is viewed as the best indicator of Chinese prices, he said, and last year Chinese rebar prices climbed almost as high as U.S. prices, which traditionally are the highest in the world. That compares with three to

four years earlier, when the Chinese price of rebar was about US$300 less per ton than in the U.S. “The price of rebar and the spread – the premium of U.S. prices versus China – is starting to widen again, and that’s not good,” Plummer said.

“And then you’ve got this whole black box of these trade cases, both Section 232 and individual product cases filed by companies all over the world, playing havoc with trade flows. It has come to a boil over the past six to 12 months.

“This is causing a lot of uncertainty,” he continued. “Trade flows are becoming restricted, and then you’ve got the secondary impact, with the people using steel and aluminum starting to really feel pain from their lack of competitive performance in selling their products. They’re paying much higher prices than their competitors.

With trade barriers going up against the U.S. in retaliation, that’s far more important than the health of the U.S. steel or aluminum industry.”

ISSUE 3 / 2019

Therefore, with heavy industry manufacturers employing as many as 10 times the number of people as directly work in steel industry, the ripple effects are great.

“Because they’re value-added, there’s much more of an impact on the economy when they start to slow down, and that’s, in fact, what we’re seeing,” Plummer said.

DEMAND TO DECLINE

Making predictions of future economic activity, including steel production, is fraught with increasing difficulty, Plummer said. The current strength of the U.S. dollar adds ambiguity to the forecasting equation, compounding the effects of trade policies.

With such caveats, Plummer ventured to say: “We’re seeing a decline in the relative intensity of steel in major applications, particularly automotive, appliances and a wide range of steel-intensive goods.”

Much of this decline is due to the increasing use of lighter-weight

materials in finished goods, he said.

“We’re likely to be seeing steel trending at least moderately downward, peak to peak,” he said, advancing a “best guess” that global steel demand will be down 20 percent at its next peak, around 2030, compared with the last high point in about 2014.

A broad schism is apparent between the boasts of U.S. President Donald Trump and the views of leading economists when it comes to impacts of the current administration’s protectionist trade policies, including last year’s imposition of hefty Section 232 steel tariffs under the guise of national security.

Trump, in his March 2 discourse to the Conservative Political Action Committee, termed the tariffs “the greatest negotiating tool in the history of our country,” proclaiming, “America is now booming like never before.”

However, a March paper from the London-based Centre for

Trade flows are becoming restricted, and then you’ve got the secondary impact, with the people using steel and aluminum starting to really feel pain from their lack of competitive performance in selling their products.

They’re paying much higher prices than their competitors.”

– Christopher Plummer, Metal Strategies Inc

Continues on page 52 >>

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Economic Policy Research, authored by economists from the Federal Reserve Bank of New York, Princeton University and Colombia University, called the policies “the worst-case scenario as far as consumers” are concerned and concluded that “the full incidence of the tariff falls on domestic consumers, with a reduction in U.S. real income of US$1.4 billion per month by the end of 2018.

“We also see similar patterns for foreign countries who have retaliated against the U.S., which indicates that the trade war reduces real income for the global economy as well,” the paper continued.

RISKS ABOUND

“The price of rebar and the spread – the premium of U.S. prices versus China – is starting to widen again, and that’s not good,” Christopher Plummer.

CREDIT: SHUTTERSTOCK

52 BREAKBULK MAGAZINE www.breakbulk.com

Various recent economic indicators point to a slowing of U.S. growth, with several risk factors coming into play. U.S. housing starts were up 18.6 percent in January compared with December, but they were 7.8 percent below their January 2018 level, according to the U.S. Census Bureau and U.S. Department of Housing and

ISSUE 3 / 2019

Urban Development, while existing home sales declined 1.2 percent in January, marking a third consecutive monthly drop, according to the National Association of Realtors.

Meanwhile, in February, the Institute for Supply Management’s Purchasing Managers Index dipped to its lowest confidence rating in more than two years, slipping to 54.2 from 56.6 a month earlier.

In July 2018, President Trump declared he had pulled off “an economic turnaround of historic proportions” and said gains are sustainable and will only accelerate.

However, according to minutes of the Jan. 30-31 meeting of the U.S. Federal Reserve’s Federal Open Market Committee, or FOMC, U.S. gross domestic product growth is anticipated to slow this year.

“Several participants commented that they had nudged down their outlooks for output growth since the December meeting, citing a softening in consumer or business sentiment, a reduction in the outlook for foreign

economic growth, or the tightening in financial conditions that had occurred in recent months,” according to the FOMC meeting minutes.

Risks cited by FOMC members included “the possibilities of a sharperthan-expected slowdown in global economic growth, particularly in China and Europe, a rapid waning of fiscal policy stimulus, or a further tightening of financial market conditions.” FOMC members also pointed to “an increase in some foreign and domestic government policy uncertainties, including those associated with Brexit, an escalation in international trade policy tensions, and the potential for additional extended federal government shutdowns.”

All may not be doom and gloom, however. A silver lining may materialize from the U.S. steel industry emerging with a reduced footprint, with newer electric arc furnaces replacing those of the older blast variety, according to the Bank of America Merrill Lynch report.

“This purge of inefficient capacity

This purge of inefficient capacity can ultimately result in a leaner, more competitive, streamlined U.S. steel industry” –B ank of America Merrill Lynch

can ultimately result in a leaner, more competitive, streamlined U.S. steel industry,” the report said. “After the dust clears from Steelmageddon™, an attractive steel industry could emerge. But we would warn investors the path for the next several years of upheaval can be treacherous.” BB A professional journalist for nearly 50 years, U.S.-based Paul Scott Abbott has focused on transportation topics since the late 1980s.

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www.breakbulk.com BREAKBULK MAGAZINE 53

REGIONAL REVIEW

LIFE BEYOND BREXIT

Northern Europe Hopes to Swerve Political Posturing

BY KATE JONES

A

t the time of writing, the soap opera that is Brexit – Britain’s exit from the European Union – was reaching its jaw-dropping cliffhanger.

A long-held scheduled Brexit date of Mar. 29 was off the table, and the revised Apr. 12 deadline came and went with no decisive action and no withdrawal agreement having been approved by the UK Parliament.

Prime Minister Theresa May looked for solace in cross-party negotiations with the Official Opposition to her own political 54 BREAKBULK MAGAZINE www.breakbulk.com

party, as she tried to form a Brexit compromise deal – yet at the time of publication, no such deal had been struck.

However, while the UK and European populace might find it hard to believe, there is life after Brexit. Breakbulk and project cargo shipments will continue to move in Europe, regardless of whether the UK is part of the EU. Indeed, the short-sea sector for breakbulk and project cargoes in Northern Europe cares little for these political machinations.

DEAL OR NO DEAL?

The region’s short-sea market is, in fact, “very much customer driven,” according to Tim Reardon, head of UK exit at the UK’s Port of Dover.

“The demand for ships is derived from the demand for the cargoes that they carry, so the health of the shortsea shipping market is a reflection of the health of the economy as a whole,” he explained.

Although North European breakbulk and project cargo ocean transport is a given whatever the political circumstances, an important ISSUE 3 / 2019

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element in determining the shortsea shipping scenario in this region post-Brexit is whether the UK leaves the EU with or without a deal. Bob Sanguinetti, chief executive of the UK Chamber of Shipping, said that opportunities for breakbulk and project cargoes for short-sea shipping are dependent upon the nature of the UK’s Brexit agreement.

“If we leave the EU without a deal and we then have to negotiate on trade deals and so on – with, potentially, imposition of tariffs – then that will affect the market considerably,” he said.

According to Sanguinetti, a no-deal Brexit “just generates further uncertainty, which is not good for business; potentially the introduction of tariffs; [and] potentially the need for documentation for infrastructure, which in turn will create friction at the ports and therefore impact negatively on our business with the EU. “If there’s an introduction of checks at ports and increased documentation, and the need for infrastructure to support trading with the EU as we go beyond Brexit, then clearly that will cause friction

the EU for access by UK companies into the EU market,” he said.

LOSS OF OPPORTUNITIES

Bob Sanguinetti

Isabelle Ryckbost

UK Chamber of Shipping

European Sea Ports Organisation

and that will slow down traffic, and that will move away from the seamless flow of traffic that we have at the moment.”

Sanguinetti added that an imposition of tariffs could affect the competitiveness of the UK in the breakbulk sector. More broadly, there is a need for the UK to have continued access to EU markets, for example in the transportation of offshore wind material. “While the [UK government] has, I think, declared that we will remain open for business with the EU, we need to see reciprocal arrangements agreed by

Isabelle Ryckbost, secretary general of the European Sea Ports Organisation, or ESPO, argued that it is unknown to what extent Brexit with or without a deal will impact the market. A similar lack of clarity was felt by Robert Jan Timmers, business manager for breakbulk at the Netherlands’ Port of Rotterdam, who said that there are so many uncertainties that he is unsure whether there are any opportunities post-Brexit for northern European short-sea shipping for breakbulk and project cargo. One of the most serious challenges in his eyes concerns documentation. When the UK is classed as a “third country” postBrexit, additional documentation will be required, and cargo flows will impact the time taken up on trade volume for individual forwarders.

“The whole Brexit situation, I think … [is] pretty unclear and I’m not sure whether it’s of benefit to anyone – not for the British side, not for the European side nor the Port of Rotterdam side,” Timmers said.

Rotterdam anticipates that documentation issues will be one of the most serious challenges resulting from Brexit.

CREDIT: PORT OF ROTTERDAM

56 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 3 / 2019

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Antwerp Port Authority believes that Brexit may favor breakbulk short-sea shipping.

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Reardon argued that operationally the short-sea shipping industry in northern Europe for breakbulk and project cargo is anticipated “to look very much like the sector as it is now” following the UK’s EU departure.

“What may change, depending on the nature of the Brexit settlement, is the potential imposition of customs and other controls on cargoes moving between the UK and its European neighbors,” he noted. “Those changes could take one or more of a number of different forms. Firstly, of course, there’s the potential imposition of customs tariffs on goods traded across borders, which, put simply, make the goods more expensive to buy from overseas sources markets, particularly if currency fluctuations mean that the currency that you’re buying in has lost value in relation to the currency you’re paying for the goods with.

“Secondly, of course, there’s the question of whether the imposition of formalities at ports, to ensure that customs declarations are made and customs duties are paid, could have the impact of slowing the movement of goods through the port from the 58 BREAKBULK MAGAZINE www.breakbulk.com

quayside to the dock gate. … We’ll need to see the future shape of a post-Brexit settlement before we can identify what the precise impact will be.”

ADVANTAGES ABOUND

However, Brexit is not all doom, gloom and uncertainty for breakbulk and project cargo on short-sea trades in North Europe. Tim Morris, chief executive of the United Kingdom Major Ports Group, or UKMPG, believed that although it is important not to be complacent about Brexit’s risks, there are also opportunities to the UK’s EU exit. Many ports in the UK, he explained, are actually witnessing more enquiries from potential new clients.

“Brexit seems to be acting as a catalyst for organizations to reexamine their existing logistics chains and routes,” Morris said.

“This questioning can lead to the

Brexit seems to be acting as a catalyst for organizations to re-examine their existing logistics chains and routes.”

–T im Morris, UK Major Ports Group

realization that ‘the way we’ve always done it’ might not be the right answer as business changes and evolves.” He explained that different routes and freight modes could now make more sense, both economically and environmentally. “It’s a really interesting prospect that we might be on the cusp of some very interesting reorganization of logistics chains, moving freight off the roads and more onto both water (short-sea and coastal shipping) and rail, with road miles being focused on the delivery over the last few miles.”

Continues on page 62 >> ISSUE 3 / 2019

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We think that Brexit may favor breakbulk short-sea shipping: larger volumes can be moved across the English Channel more efficiently compared to ferry transport as customs clearance of larger lot sizes is less burdensome.”

–W im Dillen, Port of Antwerp

Ports in pre-Brexit UK already handle large breakbulk and project cargo volumes without issue from the EU, other northern European countries and further afield. In many locations, the processes and systems exist to handle cargoes from a range of regulatory and customs jurisdictions.

“Part of the Brexit preparations that ports have been doing is working with customers to share their expertise and offer solutions in terms of border processes and handling ‘third country’ cargoes,” Morris said.

He does, however, see some challenges. Speaking to Breakbulk, Morris said he felt that uncertainty exists regarding customs and phytosanitary arrangements with the EU, something he believed is “undoubtedly” having some impact on certain bulk cargoes. For the longer term, structural repositioning of maritime freight with the EU for certain cargoes that have become dependent on short-sea roll-on, roll-off, or ro-ro, routes could occur.

However, Morris said that “looking into anything other than the short term, we’d anticipate a strong future for the UK in the Northern Europe breakbulk and project cargo markets.”

Furthermore, contrary to the belief that a no-deal Brexit is exclusively bad news, a scenario of this sort may actually offer some perks for short-sea breakbulk moves. Wim Dillen, international development manager at Belgium’s Port of Antwerp, suggests that a no-deal scenario may actually be beneficial for those moves.

62 BREAKBULK MAGAZINE www.breakbulk.com

“We think that a no-deal or hard Brexit will result in cargo shift from manned transport (ro-ro) to unmanned transport (lift-on, liftoff and others), as the principal idea of Brexit is to ‘take back control’ and stop free movement of people,” he said. “As such, we think that Brexit may favor breakbulk shortsea shipping: larger volumes can be moved across the English Channel more efficiently compared to ferry transport as customs clearance of larger lot sizes is less burdensome.”

Dillen revealed that discussions with breakbulk carriers had reached the conclusion that the current advantages of manned ferry transport may very well be countered by the future advantages of unmanned breakbulk transport.

PIPELINE OPPORTUNITIES

Richard Ballantyne, chief executive of the British Ports Association, saw short-sea breakbulk and project cargo moves post-Brexit could constitute “continuation as we have now.” According to him, a hard Brexit, with new customs controls and border checks being brought in, has the potential to be “particularly problematic” for ro-ro traffic. However, he said that although additional bureaucratic processes will not be particularly welcomed by breakbulk and project cargo, it could be easier to build any new documentation obligations into current processes and systems.

Equally, while Ballantyne said that a Brexit that causes negative economic impact and an economic slowdown could lead to less demand for breakbulk and project cargo, opportunities could surface in the green energy sphere.

“You’re probably looking at an increase in offshore renewablesrelated equipment,” he said, noting a recently unveiled UK government goal for offshore wind to account for more than 30 percent of British electricity by 2030. Ballantyne cites Aberdeen Harbour in Scotland – a port project connected to offshore oil and gas servicing and decommissioning – as one that has the potential to benefit from rising decommissioning-related work.

UKMPG’s Morris pointed to offshore renewables and offsite or modular construction as two further

examples of changes in “enduser” industries which open new, or significantly increased, opportunities for ports and shortsea, or coastal, shippers. For him, boosting value-add is Richard just one of Ballantyne three factors he British Ports believed were Association coming together in the wider environment to make this a very exciting period for UK short-sea shipping markets. The other two factors are policy and environment.

SHORT-SEA STILL RELEVANT

However, it is not only the UK where short-sea shipping can play a crucial role. Timmers claimed that for receiving and distributing cargo, it is “of great importance” to both the Port of Rotterdam and project cargo in general. Rotterdam has recently extended part of the port area set aside for breakbulk cargoes, with plans to designate more area for breakbulk. It has also realized the first steps of extending the port’s project cargo stevedoring business, and is making efforts to connect more with the project forwarding market, even in its hinterland.

ESPO’s Ryckbost added that breakbulk is well-suited to short-sea shipping: “Short-sea, I think, is a very obvious mode of transportation of breakbulk,” she said. “Certainly if you talk about transport of things that because of their size cannot be fitted in containerized units or on bulk lorries, I think it’s fairly good to transport them by sea. It’s a lot more difficult to transport them by road, so I think it’s really one of the transport modes that is very suitable for breakbulk.”

Brexit or no Brexit, it looks like there might be good times ahead for short-sea breakbulk and project cargo shipping in North Europe. BB Kate Jones is a specialist port and shipping reporter based in the UK.

ISSUE 3 / 2019

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CASE STUDY

TENDER CARE FOR ELDERLY LAUNCH Complex Move Brings War ‘Veteran’ to New Home

BY KATE JONES

W

orld War II veteran Rescue Motor Launch 497, or RML 497, now calls Hartlepool on the North Sea coast of the UK home.

After a long and varied life on the water, the launch was moved to The National Museum of the Royal Navy Hartlepool, or NMRN Hartlepool, ahead of a conservation program to display it at the museum on a permanent basis.

Constructed in 1941, the vessel is an 81-ton, 34-meter-long Fairmile B motor launch – a type of small military vessel

in British Royal Navy service, built by boatbuilder Fairmile Marine, during World War II, for the Royal Navy for coastal operations. According to the NMRN, the boat undertook service all over the UK during World War II, rescuing downed British Royal Air Force pilots, training soldiers from the British Commandos and undertaking a Commandos raid on the Channel Islands. After the war, in 1947, the ship became a passenger ferry, carrying people for many years on the waters of the south of England.

NMRN acquired RML 497 in 2015, and last year, planning permission was

granted for the launch to be located at NMRN Hartlepool. The vessel had been moved to Southampton, located on the South coast of England, for a lift out of the water to perform a survey and was unable to make the journey to Hartlepool under its own power due to its fragile condition. The launch therefore needed to be moved to Hartlepool via barge — an operation which took place in January this year.

CRADLE TO GRAVE

Two and a half years were spent planning the move, with a number of attempts being made to move the

TOP: The route to the museum was mainly along a public highway, with the heavy haulage transportation planned in detail. / CREDIT: ALE

64 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 3 / 2019

motor launch prior to the successful transportation. An initial challenge for the NMRN was who they could contract to undertake the project. The NMRN historic ships department’s contacts in maritime logistics were found to be lacking, according to Arabella Roberts, NMRN’s historic ships manager.

“We couldn’t simply call on a couple of people that we knew because we didn’t really have that network, so it was quite difficult from our point of view at the start, just to make sure that we were contacting the right people,” Roberts said.

French engineering, project management and consultancy company Artelia was hired last year as project manager for the move and oversaw it in its entirety, as well as the construction of a temporary building to house RML 497 once it had arrived at NMRN Hartlepool. As the venture was a public, fully funded project, the firm had to go out to the marketplace to find its contractor. In September last year, it chose UK-headquartered Robert Wynn and Sons Ltd., or RWSL, for the move due to the suitability of its solution. It proposed floating RML 497 into a heavylift, roll-on/roll-off semi-submersible barge, the Terra Marique, to move the launch to Hartlepool.

“Other companies that we looked at were talking about using cranes and that kind of thing, which obviously would put a lot of pressure on the vessel,” said Ross MacAskill, project manager for Artelia UK.

SOME EXTRA LIFT

The vessel was prepared for loading into the barge at Williams Shipping’s facilities at the Port of Southampton.

This required it to be towed there from a pontoon on the River Itchen (which flows down to Southampton) — the vessel’s first movement in three years.

Before the tow, a waste oil barge came alongside the pontoon to remove fuel and oil from RML 497 so it wouldn’t pose an environmental risk if it sank while being towed. Additionally, during planning for the move, there was notification from the Harbor Master at the Port of Southampton of a need for secondary buoyancy because of the boat’s fragility. In a previous movement of a historic vessel on the River Itchen, that vessel had sunk in the channel and become a navigational obstruction.

Therefore, RWSL rented 60 tons of buoyancy bags and placed them inside the boat to offer extra buoyancy if the boat started to take on water while being towed.

A bespoke, 45-tonne steel cradle, manufactured by Malin Marine Consultants from Glasgow in Scotland, was constructed at the Port of Southampton to support the motor launch.

“During the planning phase of the project, it was discovered that there were no dedicated lifting points on the cradle, and that in order to achieve sufficient clearance between the keel of RML 497 and the support cradle once it had been lifted onto Terra Marique, the

The RML 497 was successfully floated into RWSL’s Terra Marique barge. / CREDIT: ROBERT WYNN & SONS

66 BREAKBULK MAGAZINE www.breakbulk.com

cradle had to be loaded directly onto the deck,” Sally Weston, RWSL group engineer, noted. “RWSL was contracted to design and fabricate suitable jacking lugs that could be retrofitted to the cradle once it had been delivered, as the design stage of the support cradle had ended with the cradle designers.”

The cradle was lifted into the Terra Marique’s cargo hold, overcoming gusting winds, by a 500-ton crane, and subsequently welded onto the barge so it didn’t move during transit. RML 497’s fragile state meant that to support the hull enough once out of the water in the purpose-built cradle, internal bracings were needed to preserve the hull’s integrity and, after recommendations from naval architects on the location of the bracings, RWSL chose to use Acrow props with wooden bracings.

GOING UNDER

The Terra Marique was semisubmerged to receive RML 497 in an operation that took more than six hours and was not without its challenges.

“As RML 497 was to remain in the support cradle permanently, positioning during docking was crucial, and because of this and the fragile nature of the vessel it was decided that she should be pulled into position on board Terra Marique by hand to provide the greatest level of control while minimizing the forces involved,” Weston recalled. “This required two teams of personnel, one on board Terra Marique and the other on board RML 497, in constant radio communication to line up RML 497 with several reference points that had been marked on Terra Marique, corresponding with the submerged support cradle on the deck of the barge’s cargo hold.

Under instruction of the load master on board RML 497, the vessel was successfully guided into position and monitored closely during the whole operation, from entry into the barge to final pump-out of the cargo hold.

“The draft of RML 497 versus that of Terra Marique was such that the central keel block at the after end of the support cradle had to be removed during the float-in of RML 497,” Weston added. “This meant that divers were required to refit the block once RML 497 was in position, which turned out to be fortuitous as during the docking operation, she was initially landed into the cradle but did not sit correctly, and she had to be refloated in order to alter her position.”

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The RML 497 is rolled off its barge transporter.

CREDIT: ROBERT WYNN & SONS

When the vessel landed for a second time, it was discovered that part of a block had become detached, meaning the launch would not have been able to dock safely. It was therefore refloated again to let divers reposition the block, and on try No. 3, it was docked safely and to the client’s satisfaction.

The water within the Terra Marique was then pumped out and the vessel and cradle were secured before a journey up England’s east coast to the Port of Hartlepool. However, on pump-out of the barge, it was found that significant keel-degradation had occurred and that due to the hull’s position in the cradle side blocks, a minimal length of the vessel’s keel was in contact with the keel blocks – which, had action not been taken to spread the load, had the potential to place extreme pressure through the hull at the side blocks. To spread the load, every other keel block had to be released from the cradle, raised using hydraulic jacks and secured in position using wooden blocks and welded steel sections. This additional work delayed the Terra Marique’s departure from Southampton.

Weston said: “On reflection, it has become clear that for future projects docking vessels of a similar hull shape to RML 497, it would be beneficial for divers to be arranged in order to perform final checks before fully pumping the water out of Terra Marique’s cargo hold, as had the vessel been docked with the 68 BREAKBULK MAGAZINE www.breakbulk.com

dislodged cradle block, there would have been significant potential for damage to the hull, especially considering the fragile condition of RML 497.”

A STRETCH OF ROAD

After a few days of delay at Southampton to ensure the vessel was totally supported by the cradle and to wait for weather conditions to improve, the 400mile sea passage to Hartlepool took four days to complete. However, the RML 497’s arrival at the Port of Hartlepool was not the end of its journey, as the vessel then had to be transported by road to NMRN Hartlepool in a mile-long journey. RWSL subcontracted UK-headquartered heavy transport and lifting firm ALE for this part of the move.

“There was very limited space onboard the Terra Marique, and as the vessel was so fragile, it needed to be handled very delicately,” said David Trigg, ALE project manager. “We also needed to minimize street furniture removals to avoid as much disruption to the public as possible. We wanted to find a solution that removed the need for an expensive crane.”

ALE designed and fabricated 16 bespoke brackets, which it fitted on the cradle surrounding the launch. These allowed RML 497 to be jacked up evenly from within the barge’s hold, using 16 50-ton capacity climbing jacks and avoided any extra strain being put on it. In all, 16 axle lines of self-propelled

trailer were then driven under RML 497, and ALE performed a ro-ro operation to load the launch onto the dock. RML 497 was then loaded onto a self-propelled trailer, or SPT, with a single powerpack, constructed by ALE before the vessel arrived in Hartlepool, as one of the challenges of the move was ensuring that the vessel was ready in Hartlepool so that a weekend booking with the police as an escort for the road move remained valid.

“We were able to source a large enough quantity of climbing jacks so that the vessel could be lifted evenly, and our computerized system ensured all the jacks operated in sync to provide a safe and accurate lifting operation,” Trigg said. “For the transportation phase of the project, we benefitted from the use of the SPT, which was very stable and had great maneuverability.”

The route to the museum was mainly along a public highway, with the heavy haulage transportation planned in detail.

It was arranged for a Sunday morning, when there would be less traffic, to minimize disruption to the public. Once at the museum, the SPT was positioned in the already-assembled, purpose-built, temporary building. ALE jacked the launch down using 16 50-ton hydraulic jacks to install it in the building ready for restoration work.

LOOKING BACK

MacAskill credited the move’s contractors, as well as coordination between the different parties involved in the move, for overcoming budget and timescale issues concerning the project. Roberts said that lessons learned from the move related to the issues of procurement, money and purpose. She also highlighted communication as overcoming challenges presented by the transportation, a sentiment that was echoed by Weston and Trigg, who noted that good communication aided ALE’s role in the move.

But more important than that, this historic motor launch made it in one piece to the museum where it is now displayed, telling the rich naval story of the coastal forces in the North Sea. “We got the outcome that we desired,” Roberts said. “That vessel is safe and sound up in Hartlepool, in a building and out of the water, and that is all we wanted.” BB Kate Jones is a specialist port and shipping reporter based in the UK.

ISSUE 3 / 2019

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PORT FOCUS

BY JOHAN-PAUL VERSCHUURE

TIME FOR TERMINAL RETHINK

Hub Strategies Need to Catch Up Trade Changes

B

reakbulk terminals used to be true multipurpose terminals, handling a wide variety of products, sizes and weights, but no container cargo flows. Those dedicated breakbulk terminals served all parts of their hinterland’s economies.

But with container shipments now transporting more than 80 percent of containerizable goods globally, the breakbulk terminal is transitioning to a new role in the port sector as a “special service provider.” New operational strategies for ports must now focus on becoming part of the client supply chain, increasing digitization and becoming temporary “pop-up” ports for breakbulk activities.

There is a growing need to handle cargoes in ports that are too large or too heavy to be containerized, which require special handling and storage, or require valueadded services at the terminal. This new role of breakbulk terminals, however, requires much more careful thinking about the value-add of the terminal in the supply chain.

This new breakbulk terminal is much more dependent on the activity and special needs in the direct hinterland than the traditional breakbulk terminal. Clear strategic direction, dedicated investment in terminals, and a proactive market approach are key to a successful breakbulk terminal. A modern breakbulk facility must adopt a comprehensive and broad marketing approach that looks at all cargo sectors and identifies an investment policy that anticipates demand.

Breakbulk terminals in mature and larger markets have mostly kept up with this transition. In smaller and emerging markets this transition is underway or starting up. These breakbulk terminals should examine what is happening in the more developed markets, as they will likely encounter the same challenges in the future.

70 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 3 / 2019

CREDIT: BLG LOGISTICS

www.breakbulk.com BREAKBULK MAGAZINE 71

LEFT: North West Europe terminals, like those in Bremen, are entrenched in the supply chains of their clients.

CREDIT: BREMENPORTS

Business models in which the revenues and risks are shared between the cargo owner and the terminal are relatively scarce. Yet, more creative cooperation models may benefit the operations and profitability of the terminal in the long run. Shared ownership of multipurpose terminal by the key clients is even scarcer, yet seems to be a logical way forward.

Another strategy could be to link the breakbulk terminal to a container terminal. Stuffing and stripping are typically profitable activities at container terminals and breakbulk terminals can benefit from this and offer breakbulk transport as a means of onwards transportation. Breakbulk terminals can usually consolidate or break up container loads in a more efficient and cheaper manner than container terminals, and the warehousing space required for these activities can take up valuable space at a container terminal. By collaborating with breakbulk terminals, container terminals can then fully focus on serving container vessels in the most efficient way.

INCREASED EFFICIENCY VIA DIGITIZATION SUPPLY CHAIN TIE-UP STRATEGY

Looking at the successful breakbulk facilities in North West Europe, they are almost all entrenched in the supply chains of their clients.

The particularly successful ones are the terminals that provide added value in the supply chain. Often this requires a dedicated special investment to tie the client to the terminal. This is exactly where new strategies should increasingly focus on.

Breakbulk facilities should aim to become part of the client’s supply chain and not just handle cargo. In some cases there are even opportunities for breakbulk operators to follow their key clients abroad and develop or 72 BREAKBULK MAGAZINE www.breakbulk.com

redevelop terminals to suit the needs of their key clients. This close cooperation seems to be the way forward.

One problem with this, however, is that terminals may become too reliant on a small number of clients and their success. Ideally this specialized service provider approach should be adopted for multiple clients in parallel, which may be hard to achieve. Overreliance on a low number of clients is particularly a problem when the cooperation between cargo owner and the owner/operators of the breakbulk terminal remains very traditional.

The cargo owner often just pays a per-tonne fee for shipping the cargo over the quay and only in a few cases do volume indications or guarantees become established.

Standardization is needed in order to fully reap the benefits of automation. But in the breakbulk sector standardization is a long way off. Given that the breakbulk sweet spot seems to be serving niche markets, standardization is not needed to the same extent as it is with containers or dry bulk.

However, digitization offers much more potential for the breakbulk sector. The difficulty with breakbulk logistics is the complex supply chain, with situation-specific and technical requirements in each step of the chain. Digitization can deal with this flexibility and should be able to provide opportunities in matching cargo and ports based on their special requirements and based on the volatile character of the market. This does not only hold true on the land side, but also for shipping lines in the ISSUE 3 / 2019

breakbulk sector. With breakbulk shipping less tied to strict schedules, digital solutions for matching supply and demand can result in new opportunities on the water side.

But digitalization challenges remain in the breakbulk sector: firstly, the players are small and numerous; and secondly, these players typically have less means to try to develop advanced platforms. As a consequence, breakbulk operators are less well suited to set up these initiatives. Instead, port authorities are ideally placed to pick up this opportunity and to take initiative and push the efficiency of the sector to the next level.

‘POP-UP’ PORTS

Changes in the breakbulk sector have not necessarily resulted in changes to the business environment surrounding its ports. Breakbulk operations used to serve a wide range of economic activities and hence were relatively stable; growth and outlooks were tied to overall

economic activity, similar to container terminals nowadays. However, with the transition to niche operations and strategies, operating conditions have become much more volatile, outlook horizons shorter, and operations have become tied to individual projects and clients. Port authorities around the world have not kept up with the speed of these changes.

Additionally, terms for concession agreements often have not been adjusted to reflect these new market conditions. Efficiency efforts have mostly focused on other sectors and pricing has not been adjusted. If port authorities want to keep breakbulk operations flourishing in their ports, they must work together with their breakbulk operators and other logistics players active in the industry.

This will become increasingly important now that overall container growth has slowed. Indeed, the additional activity from breakbulk operations may be an interesting complementary cash flow. Also, the value-add from breakbulk operations

on a per-tonne basis is typically higher than that of a containerized tonne of goods.

The ability to set up flexible port capacity can be an interesting way to capture the upswings in a volatile market – this has been seen in construction and/or assembly yards for offshore wind projects. Having a more flexible breakbulk terminal requires setting flexible terms for the “pop-up” port. It will also require more management time than the current straightforward long-term contracts with their simple pricing models.

However, with the increased availability of data and opportunities to standardize administration, perhaps now is the time to think about offering more flexible arrangements to breakbulk terminal operators or even sharing part of the risk. BB Johan-Paul Verschuure is technical director in the maritime team of consultant WSP.

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www.breakbulk.com BREAKBULK MAGAZINE 73

RULES & REGS

DAMP DATA SQUIB

BY DAVID WHITEHOUSE

GDPR Not as Troublesome as Feared

74 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 3 / 2019

CREDIT: SHUTTERSTOCK

R

eaders of a certain age will remember the Y2K bug which, as the year 2000 approached, was confidently predicted by the doomsayers to wreak cosmic computer havoc. A whole industry of instant IT experts flooded people’s inboxes with warnings of impending doom, and offers of quick, expensive solutions.

Fast forward to 2018 and the implementation of the European Union’s General Data Protection Regulations, or GDPR, produced a similar scenario.

Now, as back then, companies have miraculously survived. A year in, how have stakeholders in the breakbulk and project cargo sectors adapted to the change?

GDPR, which governs the collection, storage and handling of personal data, came into force in May 2018. A host of new rights came into being with the rules, including a customer’s right to be told that their data is being held, to access it and have it rectified in case of error, to restrict processing of the data and to have it erased on demand. It is not yet clear how the UK will deal with data protection after Britain’s departure from the European Union, but there is no reason to expect a marked deviation from GDPR: The UK’s 2018 Data Protection Act is an almost identical copy of GDPR. According to Lawrence B. Brennan, who specializes in maritime law as adjunct professor of law at Fordham University in New York, the GDPR requirements represent “dramatic shifts to data transparency as well as the empowerment of data subjects.” The new rules “place greater administrative burdens on shipping companies, ports, their contractors and subcontractors as well as others such as insurers, brokers and banks.” Inevitably, Brennan

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said, customer information must be shared with other parties involved in a transaction such as insurers, banks, financiers, delivery agents, customs brokers, and government and port officials.

The stakes are high in terms of compliance. Penalties can be as much as €20 million or 4 percent of the organization’s annual turnover, whichever is the greater. But the potential fines tell only part of the story: customers are in a position to inflict quicker and possibly more painful revenge.

THREAT OF NONCOMPLIANCE

CREDIT: SHUTTERSTOCK

Thales found in November 2018 that, across all industries, 86 percent of consumers would consider switching to another company in case of a data breach. Some 35 percent of consumers said that a data breach under the GDPR would “definitely” give them a negative perception of a company, while 69 percent said they would think about initiating legal action against a company that failed to manage their personal data under GDPR. In the UK, the Information Commissioner’s Office will publish any steps they take against an organization, putting the breach into the public domain.

In maritime disputes of any kind,

Brennan said, the rules will provide additional sources of documentation and inquiry for discovery and disclosure. However, he sees little chance of the rules in themselves having any direct impact on the number of legal disputes related to breakbulk and project cargo.

Mark Williams, managing director of Shipping Strategy Ltd. in Cambridge, agreed. He spent more than 20 years in shipping brokerage, including at HSBC, and has consulted on breakbulk projects. Best practice, he argued, has always been not to sell data on to third parties. The reputational risk in a small universe of customers is too great, he said. In administrative terms, he added, compliance with the rule is a relatively simple task and involves reacting to “unsubscribe” requests as they are received.

According to the 2019 Thales Data Threat Report, there are now more than 100 privacy laws and initiatives promoted by governments around the world on top of other industry-specific regulations. Thales argues that the impact of data use compliance is likely to continue to rise globally, and that regulations are likely to become more, not less, rigid.

The costs of meeting ever-higher compliance demands may be higher for small operators, with the GDPR

76 BREAKBULK MAGAZINE www.breakbulk.com

penalties enough to sink them. Brennan said smaller companies may find it more efficient to turn to third-party vendors to achieve compliance, and that they may not have the same direct control over a third-party agent as they would over their own staff. He recommended that contracts between smaller companies and third-party providers should include terms governing the extent of liability for any breaches.

A QUESTION OF SIZE

Alan Jervis, CEO at Jervis Marine Insurance Experts in London, a company that advises clients on riskmanagement practices, noted that large freight forwarders probably already have a dedicated data compliance employee and so can cope with the issues.

The issue, however, can be complicated for project cargo, Jervis added, as moves necessitate dealing with global businesses. Here the regulatory burden is more complex if the destination is in Africa or South America, as GDPR applies to any company anywhere that is dealing with EU business or personal data, regardless of whether it has a European presence.

He noted that then “you are only as good as the people you deal with.”

According to a briefing from HFW law firm, GDPR applicability outside the European Economic Area, or EEA, is likely to be triggered if any of the following conditions are met: • Having vessels flagged within the EEA. • Having services that can be bought within or a website that is targeted on customers within the EEA. • Having a registered office within the EEA. • Having a business registration with an EEA data protection authority.

• Use of servers located in the EEA. • Monitoring of the behavior of any individuals within the EEA, such as through website cookies.

All this serves to further complicate the task for small shippers or business that might only have a full staff of three or four people, Jervis said.

Project cargo, he pointed out, is very time sensitive, and smaller players spend a great deal of time ensuring that delivery times are met. In his view, it’s too early to say if the small players will successfully manage to juggle those deadlines with GDPR rules, but he noted that it wouldn’t surprise him “if they were struggling.”

ISSUE 3 / 2019

Available statistics do not provide a clear answer, but, across the board, the picture may be worse than it appears.

Research published in February by the law firm DLA Piper said that countries in Europe have already reported more than 59,000 data breaches since GDPR came in, with the Netherlands, Germany and the UK having had the most breaches. This, however, may be an understatement. Regulators are stretched, according to the research, and have a large backlog of notified breaches to deal with. They have prioritized the larger, higher-profile breaches, so many organizations are still waiting to hear from regulators whether any action will be taken against them.

MANAGING DATA

The rules, Brennan said, also underscore the importance of cyber security for all parties to a cargo transaction. Indeed, Jervis called GDPR “another compulsory nudge” in terms of cyber security. Yet the new rules also open up new, more positive possibilities.

GDPR has forced companies to take control of their customer data and

make it available for the consumer and the marketing department alike. There is now an obligation to make sure that information that is stored about clients is up to date and the rules oblige marketers to go back to basics and question whether customers actually benefit from a company’s communications.

Marketing that is lower in frequency but higher in impact in terms of authenticity and personalization has been found to be a possible benefit of the data management process.

The rules will “force people to do the work” in terms of marketing, according to Nic Ingle, executive director of the International Dry Bulk Terminals Group, which represents worldwide owners of bulk terminals. “I’d rather people make three calls a day that get somewhere rather than 30 that get nowhere,” he says.

Shipping Strategy’s Williams saw the rules as a positive in terms of renewed client relationships. “It’s an excuse to get in touch,” he said. Jervis agreed: “Any opportunity to communicate in a responsible way” will help cargo players.

There’s “more respect” from customers

when dealing with a proactively compliant firm.

Overall, Ingle argued that the GDPR rules are mainly a question of “good husbandry.” In his view, “people who misuse information deserve what they get.” There is a burden in the shape of new company hires who need to be trained in GDPR, he said, but in his view serious companies were already protecting client data before the rules came in. And there are sound business reasons for this: according to Ingle, there are few operators who are able to execute complicated project cargo deliveries. “They tend to have the smile on their faces of people who can charge what they like. I’m sure they won’t want anyone else to know who the client was.” BB David Whitehouse is a journalist who spent 18 years with Bloomberg, before turning to a career as a freelancer. He has written for The Financial Times, the World Economic Forum, Deutsche Bank, Germany Trade & Invest, and UBS Asset Management, among others.

www.breakbulk.com BREAKBULK MAGAZINE 77

INSURANCE

Minimizing Ship Risks Choose the Right Vessel for Project Needs

M

BY RICK BRIDGES ROANOKE TRADE

The best advice I can give when it comes to project cargo is that all vendors need to take on some role of risk management in the decisions or solutions they offer, and perhaps project owners need to emphasize this in their engagement.

–R ick Bridges, vice president, client development, Roanoke Trade

ultipurpose covers a huge variation of vessels including heavy-lift capability, but all are typically geared with some type of crane or derrick. In this modern age, multipurpose vessels will also have hatch openings that allow full access to ’tween decks and lower holds. While ’tween decks can be fixed but often flexible in their location, lower holds can often stretch the full length of the allowable cargo area.

Some multipurpose vessels have lift-on, lift-off; roll-on, roll-off; or float-on, floatoff capabilities, and many have container carrying facilities, both in the hold and on deck.

Tony Betteridge, head of marine – Asia at Munich Re Syndicate, agrees with me that the ideal for most underwriters, risk engineers and seafarers is that breakbulk cargoes should only be carried on vessels that allow full access to the stowage location and have their own lifting gear, so that vessels are not dependent upon port infrastructure for load or discharge operations.

In addition, the ability to weld seafastenings is a major advantage, although some multipurpose carriers prefer not to. In short, geared bulk carriers and multipurpose vessels deliver flexibility and, additionally, the ability to modify a stow plan late in the game should surprises pop up during loading.

Capt. Glenn Walker from Atlantic Marine Associates, or AMA, a worldwide surveying firm, points out additional risks associated using bulk carriers over multipurpose vessels.

He lists the risks as a lack of deck strength, and a lack of adequate lashing equipment and points in cargo holds and/or on deck.

Betteridge adds that the ability to weld adequate sea fastenings on the tank top in the cargo holds of a bulk carrier will likely not be an option due to the lack of vessel structure and deck strengthening, as well as the close proximity to bunker tanks. When weldments are considered in the holds of bulk carriers, weldments on the deck should be aligned with vessel internals to cope with high accelerations. Geared bulk carriers may

78 BREAKBULK MAGAZINE www.breakbulk.com

also lack suitable lifting equipment where heavy-lifts are concerned.

In all events, the type of vessel needs to be properly evaluated where loading and securing of cargo is concerned in order to ensure suitability. Chief Engineer John Poulson, director from AMA’s New York office, offers advice on carrying nonhomogeneous cargo such as steel coils in conventional bulk carriers. Carrying such products can test side shell-plating and structure due to hydrostatics and hydrodynamics that cause panting in heavy weather due to non-homogenous cargo support from the inside. I’ve seen shell plating failures from this type of cargo carriage, so the condition of internals is very important.

PREMIUM SHIP CHOICE

With such flexibility, multipurpose project carriers have long been billed as the “premium” option for project cargo, but this doesn’t mean that all other vessel types are not also capable of successfully delivering project cargo or breakbulk. Market forces such as overall economic growth and oil prices add to the rollercoaster of supply and demand of specific vessel types, so in parts of the market cycle the very best vessel choice may not be available.

A project manager really needs to do some detective work to make sure that a vessel being presented is not only the best fit, but not a potential problem in waiting.

Insurers have tremendous amounts of data at their fingertips and searching out vessel capabilities can be done with little effort.

Capt. Adrian McCourt, group chief engineer of the Munich Re Syndicate, gives some ship selection advice: “I would always look at port state inspection history and trading routes. It’s worth remembering, for example, regular callers to Australia which abruptly stop calling at Australian ports are sometimes avoiding the rigours of AMSA inspections. The quality of vessels can sometimes be guessed at when they are trading in non-aggressive inspection ISSUE 3 / 2019

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TIDE TURNING ON PREMIUMS

ABOVE: High-level planning between owners, charterers, shippers and receivers or their representatives for the load outs is essential.

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trades, such as Indonesia, Russia, India, Philippines and South America – excluding Brazil.”

Capt. Walker recommends taking a solid look at the carrier’s reputation as it relates to vessel class society and vessel age. He notes there are more than 50 vessel classification societies that monitor the condition of vessels through a wide variety of inspections and not all classification societies are created equal. The International Association of Classification Societies is composed of 12 of the largest class societies and handles more than 90 percent of the world’s tonnage. His suggestion: look at who classes your choice of vessel.

Age of a vessel is also an indicator to vessel condition. Older vessels typically are in a poorer state of condition.

When a vessel begins to approach the 15-year-old mark, therefore, you should know the age of the vessel. Typically, older vessels demand high insurance premiums.

TAKING RESPONSIBILITY

When vessels are chartered for the transport of project cargo, it is the charterer’s responsibility to provide a suitable vessel, ensure that it has a wellrecognized classification society, that all certificates are in date, that on-hire and suitability surveys are conducted, and that the lashing equipment is new and certified. High-level planning 80 BREAKBULK MAGAZINE www.breakbulk.com

between owners, charterers, shippers and receivers or their representatives for the load outs is essential. Review that lashing materials, quantums, passage plans, weather forecasts and calculations are acceptable for the worst weather that may be experienced.

There is no excuse for not performing all the requirements necessary to load and carry the cargo safely.

Additionally, the role of the cargo surveyor and risk engineers should also be fully appreciated. Cargo surveyors should not be there just to tick a box for cargo insurance requirements, and they should be selected on experience and ability rather than price. Like any other professional, surveyors all have their specialty, and it’s important to make sure they too have the experience.

A quick check of their resume and a review of prior employment and projects can prove helpful.

The best advice I can give when it comes to project cargo is that all vendors need to take on some role of risk management in the decisions or solutions they offer, and perhaps project owners need to emphasize this in their engagement. I suggest this as nobody wants a cargo claim, and even with insurance, including “Delay in Start Up” coverage, no loss is fully covered. A holistic approach to project risk management must be the guiding force and not simply up-front costs.

Richard W. Bridges is vice president, client development of Roanoke Trade.

With more than 21 years of international trade and insurance experience, Bridges advises on insurance and risk management matters involving the trade and transportation of freight.

For too long project cargo owners have taken advantage of a soft market when it comes to cargo insurance.

Ample capacity in the cargo insurance marketplace for the last 15 years or more has allowed project owners to get a relatively good deal on cargo insurance.

For many years underwriting discipline in the market has been encouraged. Now we are seeing this forced by the leading cargo insurance cooperative, Lloyd’s of London. This has had a ripple effect in the marketplace, and now much of marine and cargo insurance is tied in one way or another back to Lloyd’s.

To understand why and how the market has changed, we need to look back to 2017 when a significant amount of catastrophe claims totaling US$135 billion hit the insurance market, including a string of hurricanes – Harvey, Irma and Maria – plus the California wildfires.

2018 was better, but a series of vessel casualties struck, including the Maersk Honam fire at US$500 million and a shipyard fire at Lurssen Yachts at US$700 million in estimated insured loss.

Lloyd’s has mandated that syndicates with a history of underperforming marine insurance books of business show a path to “profitability;” otherwise they will be restricted from selling marine insurance. As a result of this directive, about a dozen syndicates, unable to come up with a turnaround plan, have ceased writing some or all of their marine business.

While I wouldn’t say that this has hardened the market, pricing has firmed up to a point where project managers will likely see larger differences in premiums when using vessels deemed most appropriate for the intended project. Underwriters are now more likely to ask more questions about a particular project and the intended vessels, details of inland transport, stevedores, and to some extent the risk for using less than suitable vessels will equate to higher cargo insurance premiums. BB

ISSUE 3 / 2019

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PROFILE

INSPIRED BY DRIVE AND AMBITION

BY CARLY FIELDS

Höegh Autoliners Eyes Middle East Growth Potential

D

ubai is known for its big ideas: it is an Emirate investing heavily in magnetic levitation of cargo through hyperloop; it has already installed smart street signage where other countries are still learning about the technology; and it has even developed an innovation index to compare its level of innovation with that of other global cities.

It’s from this dynamic platform that American-born Finn Roden heads up the Middle East region for roll-on, roll-off ship operator Höegh Autoliners. Speaking on the sidelines of Breakbulk Middle East, he confessed excitement for the region’s energy and drive: “I love the dynamic and fast action in this region.”

Roden heads a team of 19 in the local Dubai-based Höegh Autoliners branch. He’s well versed on both the commercial and the operational sides of the breakbulk business, having sailed onboard ro-ro carriers and served as a port captain. Over his career at sea and onshore he has seen the best and the worst of the freight markets. “Freight levels in the Middle East region have been steadily declining for close to 10 years,” he said.

Höegh is playing its part in addressing freight rates that are “not currently at sustainable levels,” and makes it clear that selected business will be “de-selected” unless rates improve. While Roden recognizes that this will lead the company to “take some hits,” he believes that the end justifies the means. “We’re 82 BREAKBULK MAGAZINE www.breakbulk.com

Finn Roden, Höegh Autoliners. / CREDIT: ITE GROUP

an asset player, we own the ships and have decades worth of logistics specialists working for our customers who have only seen rates going down.

They have no idea of the capital costs of running a ship.”

NARROWING DEMAND GAP

Roden sees signs on a global scale of a narrowing supply/demand curve for vessels and signs of improvement in the freight market. However, he believes that the entry into force of the International Maritime Organization’s 2020 sulfur limit in marine fuel regulations on Jan. 1 will place new pressure on the marine transport cost equation, a cost that will have to be carried over to the customer.

“Honestly, I’m really keen to see how the final touches of IMO 2020 play out,” he says. “I think it is very positive that we, the shipping industry, are moving towards a greener future with the help of regulations such as IMO 2020. But it’s going to be a very delicate subject with cargo owners. It is going to be a cost that has to be borne by somebody and carriers’ margins are not as sustainable as they were once were.”

To comply with IMO 2020, Höegh Autoliners has committed to burning low-sulfur fuel on its vessels and will not install scrubbers. “We think that low-sulfur fuel is the long-term solution – at least for the type of vessels and trading patterns that we have,” Roden says. Höegh has six ISSUE 3 / 2019

The Höegh Trotter, part of Höegh’s Horizonclass, which are the largest pure car and truck carriers by capacity, and produce record-low emissions per transported unit.

CREDIT: HÖEGH AUTOLINERS

new vessels that entered into service in 2015 and 2016, known as the Horizon class. They are the world’s largest pure car and truck carriers by capacity, and because of their large intake and modern design, they produce record-low emissions per transported unit.

While he acknowledges naysayers that forecast another market crash after the 2020 deadline, he remains positive about the short- to medium-term breakbulk and project cargo market, contingent on budgets and revenues. In particular, he singles out pockets of positivity as the construction and infrastructure side of the business and potential reconstruction opportunities in the region in the medium to longer term.

However, this is building on a weak base: 2018 was the worst year for contract awards in the Gulf Cooperation Council, or GCC, region since 2004. Many projects are still looking for investors and have not yet been awarded to contractors, Roden says. “But,” he continues, “the Middle East is still ripe with opportunity.

Government initiatives and mandates

will drive the entire GCC to diversify economies with the potential for the region to be a real incubator for innovation and manufacturing. Oil revenues will still be the driver, but the desire and mandate to diversify will make the GCC a hub for project and breakbulk opportunity.”

GROWTH AREAS

Phosphate mining in Saudi and other minerals in Oman could prove to be large growth areas as they develop and the potential growth for solar in the Middle East has not yet touched services, he adds.

“For Höegh Autoliners, we are watching infrastructure and grid development contracts. For breakbulk/project carriers the opportunity will lie in infrastructure and distribution, road infrastructure, machinery, distribution grid, transformers, distribution support, and storage,” Roden said.

There are also signs of promise in Saudi Arabia with its announced US$450 billion investment program.

“The Saudi Arabian 2019 budget was the largest in its history,” he notes.

But there’s no getting away from the importance of oil revenues as the driver for many of the projects planned in the Middle East region, Roden acknowledges. “The market in the Middle East can diversify but it can’t replace, and it needs a little oil revenue to help with the diversification.”

Here, Roden draws an analogy with Elon Musk: He made his first billion on PayPal and then converted that billion into other industries.

“But without that first billion, you wouldn’t have SpaceX and you wouldn’t have Tesla. I think this same thinking applies to the GCC.” If the breakbulk and project cargo world in the Middle East wants to capitalize on this “SpaceXeffect” professionals will need to keep a weather eye on the prices for black gold for some time yet, Roden concluded. BB Carly Fields has reported on the shipping industry for the past 19 years, covering bunkers and broking and much in between.

www.breakbulk.com BREAKBULK MAGAZINE 83

RULES & REGS

BREAKING NEW GROUND

Maritime Arbitration Body Expounds Strengths

CREDIT: SHUTTERSTOCK

D

espite having only been in existence since 2016, the Middle East’s sole maritime arbitration center is already making considerable strides within the breakbulk and project cargo domain.

The Emirates Maritime Arbitration Centre, or EMAC, which is a strategy of the UAE government and has already established a panel of arbitrators across the world, said that it has been “embraced” by the maritime industry. The body has established a specialized breakbulk panel and holds monthly breakfasts as part of a bespoke seminar series discussing key legal concerns from stakeholders.

Created by a decree issued by Sheikh Mohammed bin Rashid Al Maktoum, the UAE’s vice president and prime minister and the ruler of the Emirate of Dubai, EMAC offers impartial services connected to 84 BREAKBULK MAGAZINE www.breakbulk.com

BY KATE JONES

the resolution of maritime disputes through arbitration, mediation and related dispute mechanisms. Claiming some of the world’s renowned maritime arbitrators, mediators and experts, it aims to offer time-effective and cost-effective processes and quality resources to facilitate case resolution in the UAE, for its region and farther afield. Last year, two and a half years after commencing operations, it began to receive its first cases.

The arbitration model EMAC offers is a hybrid one that it said is designed to serve the maritime, logistics and offshore energy industries. Under this model, traditional arbitration, fasttrack arbitration for smaller claims, emergency arbitration, ad hoc arbitration and mediation are all available.

According to the organization, this is the first time that a maritime arbitration center has provided such a wide array of alternative dispute resolution

services all based on international standards.

Internationalism is an important part of EMAC’s offering. The organization said that although it began in Dubai, it is international in nature because in a dispute, an international party always exists. It also said that as well as complementing the existing UAE arbitration centers, it complements international centers, like the London Maritime Arbitrators Association, or LMAA. EMAC has agreed to exchange arbitration panel names with the LMAA, and has also invited the LMAA’s panelists to join the Dubai center.

“The beauty of arbitration is the choice of setting it offers,” said Majid Obaid bin Bashir, EMAC’s acting chairman and secretary general.

“The competition remains in the high quality of service. We have different types of rules for different types of disputes.”

ISSUE 3 / 2019

As we head into our third year of operations, our focus is to keep the awareness going, but also to help organizations within the region understand the benefits of ensuring that their dispute resolution and jurisdiction clauses in their standard forms are correct.”

–M ajid Obaid bin Bashir, EMAC

EMAC’s specialists have been engaging with different sectors.

CREDIT: EMAC

LOOKING AHEAD

This year will see EMAC continue its campaign of raising awareness, with the organization set to increase its presence at events and invite more specialists to its panels. One of the main projects for the year is implementing roundtables with industry.

EMAC believes that it must focus on its link with the industry in order to ensure that the support it lends is recognized.

In 2019, it will tackle more of the

bigger maritime concerns as part of a knowledge series, with the objective being “to provide these companies with firsthand information as to why the EMAC services are credible and reliable.

“As we head into our third year of operations, our focus is to keep the awareness going, but also to help organizations within the region understand the benefits of ensuring that their dispute resolution and jurisdiction clauses in their standard forms are correct,” Majid said.

“These … terms are often overlooked during negotiations and have been the pain of many disputes in the past, which results in unnecessary loss of time and money.

“It is important that the maritime, offshore energy and logistics sectors know that they have support in alternative dispute resolution services through EMAC,” he added. BB Kate Jones is a specialist port and shipping reporter based in the UK.

www.breakbulk.com BREAKBULK MAGAZINE 85

ADVERTORIAL

Port of Zeebrugge: Hub of Excellence for Breakbulk Cargoes Port of Zeebrugge lays claim to a strong reputation for the handling of breakbulk cargoes.

The port constitutes an authoritative port for roll-on/roll-off traffic, new cars and project cargo.

Handling almost 3 million new cars annually, the port ranks at the top of the world’s leading automotive ports. These cars are shipped within Europe and worldwide. The port accommodates several automotive centres for vehicle modifications and other value added logistics. Zeebrugge is also highly specialized in the handling of high & heavy loads such as agricultural and industrial machinery.

Almost 3 million tonnes of forest products pass through the Port of Zeebrugge. Paper products are distributed in Europe by train and by lorry and are shipped overseas by container or specialised roro vessels.

Port of Zeebrugge, being a clean or pollution free port, has evolved into a major distribution hub for food and perishables such as fresh fruit, fruit juices, vegetables, coffee, meat, fish and dairy products.

The coastal port also offers large expertise in the handling of project & heavy-lift cargoes, the Yamal LNG modules project being the latest succesful test piece. All terminals are equipped to load and unload project cargo such as offshore wind industry components, boats, towers, military equipment, etc.

Zeebrugge is also known as a London Metal Exchange/LME recognized zone for steel and non-ferrous metals.

86 BREAKBULK MAGAZINE www.breakbulk.com

HINTERLAND AND MARITIME ACCESSIBILITY

The substantial water depth and the easy maritime accessibility of the coastal port allows it to receive any type of ship 24 hours a day.

The extensive range of intra-European and intercontinental services, combined with an inland waterway, estuary barge, railway and road network, and the immediate connection to the new highway A11, safeguards your links to the markets in continental Europe and the UK, or overseas markets.

SKILLED LABOUR FORCE AND SPECIALIZED TERMINALS

Lashing and securing is performed by more than 250 highly skilled, experienced and trained dockers for breakbulk.

Solid support from the port authority contributes to the success of your logistic project. Your logistics can also be streamlined via partnerships with terminals, and shipping lines such as Wallenius Wilhelmsen Logistics, ICO, Verbrugge, PSA Zeebrugge, C.Ro Ports, PortConnect, EML, Flamar, Sea-Invest, CSP Zeebrugge, UECC, Minne Port Services and many other companies that offer specialized handling of breakbulk cargoes.

Port of Zeebrugge will point you towards the best possible transport solutions for your breakbulk volumes or challenging projects.

ISSUE 3 / 2019

DEDICATED BREAKBULK PORT

commercial.department@mbz.be

HEARD AT BREAKBULK ASIA

Optimism for China Projects Belt Road Initiative Offsets Tariff Troubles

BY MICHAEL KING

China might be facing multiple economic headwinds, but the outlook for breakbulk and project cargo markets is bright, according to key speakers at Breakbulk Asia 2019 in Shanghai.

Chinese Premier Li Keqiang, China’s top economic official, recently set this year’s growth target at 6 percent to 6.5 percent. Although this would still be among the world’s highest GDP expansion rates, it would represent a decline on last year’s growth of 6.6 percent and mark a new three-decade low.

The drop-off in economic expansion has been exacerbated by the ongoing trade war with the U.S., with talks between the two sides ongoing.

However, despite the challenging environment, keynote speakers and exhibitors at Breakbulk Asia were optimistic.

“One Belt, One Road means lots of infrastructure, equipment and project cargoes need to be shipped to all of these different locations,” said Wei Zhuang, regional manager – Asia at shipping association BIMCO. “In return, China is a big consumer in terms of trade. If you look at Africa and South America, there is a lot of EPC activity and that’s generating a lot of breakbulk,” Zhuang said.

Stephen Liu, sales director of specialist project forwarder Younger Niche Logistics, welcomed trade stimulus policies introduced by President Xi’s government, which he said would offset slowing growth and the trade dampening impact of U.S. tariffs. “The government 88 BREAKBULK MAGAZINE www.breakbulk.com

has announced it will cut down on road transportation tax in China and shipping taxes are being reduced substantially from April, so that will help all supply chains, and especially international forwarders.”

However, Zhuang admitted he was concerned about the headwinds afflicting the Chinese economy, not least the U.S.-China trade war, which was “causing choppy waters” and investment uncertainty.

“We don’t know what will happen,” he told Breakbulk. “Both parties are almost there, but on the other side they are very cautious. The U.S. is worried about China keeping its word.

And China is worried about [President] Trump being so unpredictable. So we’ll have to see how it goes.

“But yes, breakbulk people are deeply concerned – tariffs are a killer for trade.”

With the operating environment subject to such flux, adapting to changing times and embracing flexible operating models to meet the varied demands of shippers in China and beyond will be critical for the breakbulk sector in the years to come, according to Di Xu, chief engineer, Economic and Strategy Research Center, China Waterborne Transport Research Institute.

He said there remained many opportunities for the breakbulk industry in China, and was optimistic U.S.-China trade talks would prove fruitful – the world’s two largest economies were interdependent, he noted, while many U.S. companies were major investors in China, either via direct investment or via existing Chinese subsidiaries.

According to Di Xu, the breakbulk sector has been most impacted by the second tranche of U.S. and China tariffs introduced in July 2018, which saw tariffs of 10 percent to 25 percent applied to US$200 billion of imports from China and US$60 billion worth of tariffs imposed by China on imports from the U.S. “These were more targeted at consumer goods and machinery,” he said. “Increases in tax and trade friction impact U.S. companies as well as Chinese companies.

“Trade negotiations are ongoing … we have to be optimistic.”

In China’s domestic breakbulk shipping markets, he said breakbulk accounted for about 10 percent of overall port throughput, but was declining as other sectors saw larger volume increases year-on-year. He said the steel and wind generation sector both offered good growth potential but called on the breakbulk industry to become more competitive if it was to manage bumps in the trade cycle and fend off competition for cargo.

“There are opportunities for MPVs and heavy-lift, but the breakbulk market is highly diverse and we have to understand the specific features of demand and set up networks that can compete with container and bulk shipping,” he added. “We need to make best use of our advantages to reduce costs and use the latest technologies to find a competitive edge.

“By using technology to innovate and train personnel for the future, I believe we can create a platform that will meet the multiple demands of customers.” BB

ISSUE 3 / 2019

Building a Project Logistics Team Finding Right Partner Critical, Fluor Executive Says

BY MICHAEL KING

The rigorous standards the world’s biggest project shippers demand from their logistics partners were laid bare at Breakbulk Asia in Shanghai.

Miroslav Jakab, China logistics manager at engineering, procurement and construction major Fluor, said finding the right logistics partners was a critical task for shippers given the complexity of the biggest infrastructure supply chains. Illustrating his point by referencing Fluor’s various liquefied natural gas projects, he said increasingly these required turnkey solutions providers, forwarders, vessel operators and third-party logistics subcontractors to work as a team with full transparency.

“The traditional turnkey logistics providers are now becoming part of the EPC logistics team where the carriers, heavy haulers, and also the project freight forwarders are one task force team in order to deal with all the challenges on the project,” he said.

“We approach these projects by developing integrated solutions.

The point is not to concentrate on squeezing the labor cost per hour, but trying to come up with innovative approaches to reduce the risk, increase the safety, and increase the efficiency on the engineering side, construction, communications, and logistics side.”

LNG projects are particularly complex EPC projects due to their size and, often, isolated locations.

“The majority of LNG projects are large-scale projects, so often there are multiple projects in the same destination, which can result in logistics bottlenecks which need to be taken into consideration,” he said.

“These projects can also be in places which may not have adequate infrastructure for moving the material

over the required distances, so detailed planning and preparation are needed in order to prevent the disruption of the project.”

According to Jakab, the environmental impact of LNG project logistics also needed to be minimized at every step of the supply chain. “All logistics players must keep this in mind and plan accordingly,” he added.

SCALE AND STRATEGY

Module assembly ahead of delivery, while increasing safety and reducing errors, also added to the logistics challenge because modules “can reach quite significant dimensions and weight which need to be delivered to the site.”

The main factors to be considered, evaluated and optimized during LNG logistics strategy planning, development and implementation include landed costs in origin and destination, sea freight, stevedoring and port storage and indirect logistics processes, he explained.

“Logistics partners must offer quality and reliability,” he said. “Very skilled, very experienced companies

and people are required for things to happen in the right way.

“We try to optimize processes in changing situations – in the market and in the project.”

“All the players in the logistics chain must be very frank and very honest so whenever there appears a problem, it must be immediately identified so all teams can tackle it together.

Jakab predicted that LNG projects would continue to accelerate this year driving demand for forwarding and logistics services.

This point was also made by Saliya Wickramasuriya, senior advisor to the CEO, Hambantota International Port Group, Sri Lanka. He outlined how major LNG exporters had recently been boosting output and buying new terminals, not least due to demand from China, which increased imports by 12.7 percent year-on-year in 2017.

He said Cameroon, Australia, Malaysia and Mozambique had huge floating liquefaction capacity under construction, while China and the U.S. had proposed major increases in floating liquefaction capacity on the drawing board. BB

Miroslav Jakab, speaking at Breakbulk Asia in Shanghai. / CREDIT: ITE GROUP

www.breakbulk.com BREAKBULK MAGAZINE 89

HEARD AT BREAKBULK ASIA

IM-Uh-oh 2020

Carriers, Shippers Gird for ‘Brutal’ Implementation

BY MICHAEL KING

The International Maritime Organization’s 2020 low-sulfur fuel rules create “brutal” challenges for breakbulk and heavy-lift shipowners and will bump up costs for shippers, delegates heard at Breakbulk Asia in Shanghai.

Wei Zhuang, Asia regional manager at shipping association BIMCO, said: “This is maybe the most disruptive regulation that has ever happened to our industry – we still have a lot of uncertainties, no answers.”

He said implementation of the rules would be “brutal” and, as a priority, breakbulk shipowners must urgently address two critical issues. “First, how are you going to share the extra cost or pass it on to the cargo owner?” he said.

“Secondly, from an operational perspective, you need to prepare sourcing the new fuels so operations are smooth.

“Availability is a big question mark. If you look at the big ports, there are no problems at all. But for breakbulk, where you might be calling at small ports which have never used these fuels before, that will be the challenge.”

The higher cost of fuel is expected to hit shippers and carriers in the pocket, while charter and freight rates are likely to rise across the bulk, breakbulk and container shipping sectors as owners and operators seek to pass on the higher price of fuel via bunker adjustment clauses added to new contracts.

“Most clients understand that carriers will not cover the [full] cost without the shippers [help],” said Jungmoo Roh, vice president, China sales, Eukor.

Kristian Lund Knudsen, head of special and dangerous cargo solutions, Maersk, said the new rules were “a very good thing for society,” but “for the containerized business we estimate something to the tune of US$50 billion of additional costs as a consequence of this regulation.”

This, he said, would need to be recovered through freight rates.

“We’ve been out early communicating

with our customers and explaining to them how we see this panning out, explaining that there is of course uncertainty about the exact cost but that we should all plan for the cost going up,” he said.

“By the way, in the big scheme of a logistics cost it’s still a relatively minor component of it,” he added.

Steven Ou, vice general manager, SAL Heavy Lift, said in the competition for cargo, the most efficient fuel consumers among carriers across the broad spectrum of operators that compete for general cargo and breakbulk will thrive.

WHO PAYS?

Certainly, who pays how much of the higher bills was a hotly contested topic at Breakbulk Asia.

90 BREAKBULK MAGAZINE www.breakbulk.com

Clients are beginning to understand that carriers will not cover the cost of compliance with the rules. / CREDIT: SHUTTERSTOCK

ISSUE 3 / 2019

“I think the competition will be there – who can control the cost maybe slightly better, maybe they can get some more margins in their business,” he said.

Wei Zhuang speaking at Breakbulk Asia.

CREDIT: SHUTTERSTOCK

SOURCING SUPPLIES

Fuel availability will be another challenge. Lund Knudsen said this would come down to planning.

“At Maersk we deploy 750 vessels around the world, so obviously it’s not something we can just assume will be there,” he said. “We’ll need to plan it out ahead. We have made partnerships already with a couple of refineries, so we know for one-third of our need we have that planned out. We have indications from oil majors that they are planning for this and that they will be ready. I am fairly confident that we’ll be able to make it work.”

While many shippers have questioned the transparency of fuel charges they will face, one cargo owner said he had “full trust” that carriers would fairly pass on higher fuel cost and that was fine for his company “because we’re 100 percent behind the new rules.”

But he said, while he was sure carriers would use strategies such as slow steaming to reduce costs, they should also talk to shippers to mutually develop low-fuel strategies.

“I don’t want to talk about how much will be the cost of the fuel, I want to talk to them about this as a logistic process,” he told Breakbulk.

“Now they are moving the cargo from Origin A to Destination B, which has certain costs and certain parameters. Maybe we can change these parameters, which are still acceptable not only for us but also for other cargo owners, and these changed parameters will actually push the fuel cost down.

“They may think that you want to have the cargo from Point A to Point B within 10 days, but maybe we can do it differently and then the bill for all of us is lower.”

Fueling Fears of IMO 2020 Compliance Ensuring a level playing field for all operators will be critical once the International Maritime Organization’s 2020 low-sulfur rules are introduced, delegates at Breakbulk Asia 2019 were told.

Wei Zhuang, Asia regional manager at shipping association BIMCO, admitted that the temptation for unscrupulous operators to save money by dodging the new rules would be tempting.

“This is a serious question,” he told Breakbulk. “If you look at IMO, they have highlighted the importance of maintaining a level playing field.

Port State Control, the Paris MOU, the Tokyo MOU, they have announced zero tolerance.

“Of course, there will be some cheating, this is all about money and some owners and operators will look for illegal savings. We hope port state control and flag-state level, and as IMO member states, they all take a very strict implementation line on this.

“There will be enforcement in a number of ways. At Shanghai for instance, all the data will be checked, all the bunker records and deliveries

will need to be onboard. In some cases a digital analysis of fuel will be used. In some ports they will use drones; in Scandinavia for example, they will use to check emissions violations.

“If something is found, the ship will be detained, the shipowner will be fined and a record kept of ship that will be poor and could affect operations.”

Kristian Lund Knudsen, head of special and dangerous cargo Solutions at Maersk Line, said: “In terms of the enforcement of it, it’s crucial that we have very clear enforcement because there is this sort of gray zone of saying, well if you can prove [low-sulfur fuel] is not available then you are allowed [to not use it].

“That will drag the inevitable out and that’s not in anyone’s interest because it will create uncertainty for our customers [who want to know what they are paying for].”

Steven Ou, vice general manager, SAL Heavy Lift, said companies that did try to cheat the rules would be found out eventually and would suffer the consequences. “Then nobody will trust you,” he added. BB

www.breakbulk.com BREAKBULK MAGAZINE 91

HEARD AT BREAKBULK ASIA

New Carrier Realities

Business Slowly Responds Amid Evolving Customer Demand

BY MICHAEL KING

Taking place against the backdrop of last year’s Hansa Heavy Lift insolvency, the forward employment prospects of the multipurpose and project carrier fleet was the subject of much debate at Breakbulk Asia in Shanghai.

Delegates heard that the fleet’s fundamentals in terms of supply and demand have improved, albeit only marginally. Yet it was also made clear that the nature of demand is changing, and vessel operators have thus far been slow to recognize these new realities.

Strikingly, two central tenets of the strategic thinking of shipowners over the last decade – that project carriers with high capacity cranage offer the best insulation from the dog-eatdog world of general cargo, and that securing reliable flows of long-haul tonnage will always be the best means of turning a profit – were openly questioned.

Steve Saxon, partner, McKinsey & Co., said owners were failing to understand how global trade was evolving, arguing that the regionalization of global trade would change the nature of breakbulk shipping markets in the years ahead.

“We do see continued growth [in breakbulk volumes], but slower than it has been in the past because increasing amounts of global trade is going to be within countries, and also regionally.

“Because supply chains are becoming more regional, ton-mile growth will be relatively static – regional trade is going to be growing much faster than long-haul trade.”

As supply chains specialize, movements of out-of-gauge cargoes and manufacturing equipment will 92 BREAKBULK MAGAZINE www.breakbulk.com

grow more quickly than general trade flows. So in terms of future routes for tramp trades, “it’s going to be more short-haul regional than it is longhaul.”

He added: “There will also be a pivot to Asia associated with this growth, both in terms of where growth is happening, and also in terms of where it is controlled. And there will be a pivot to Asia in terms of the customer base and, likely, the ownership of breakbulk shipping companies.”

TRADE MOVES

Shifting trades could directly impact fleet types, Saxon said. “The fact that trades are becoming shorter means we’ll need a different fleet.

Smaller vessel sizes could become more popular. As the average length of haul decreases, the value of economies of scale is less strong.

“A set of flexible regional vessels is going to be more important for the agile regional supply chain.”

According to Ning Han, director of Drewry China, Hansa’s insolvency shocked the industry and had prompted a strategic rethink.

“The question that comes to us from operator clients is should we be more specialized, more heavy-lift focused, or have more flexibility like BBC Chartering so we have more vessels to cater to the market?

“I think we need more flexibility.

One approach is for specialized carriers to partner with MPV operators so they have both the specialization and the flexibility.”

This, she said, tied in with Saxon’s view on the market’s evolution.

“Carriers need to review their trading lanes,” she explained. “Long-haul route demand growth is static. New trading lanes are emerging. Short

distance lanes are expanding volumes and operators need to meet this demand.

“They need to review strategy and look for partners so they can borrow expertise or flexibility and then go to the market.”

Han said MPV cargo demand growth this year would be “less than 1 percent and supply growth would roughly be the same,” after demand growth in 2018 proved “slightly higher than supply growth.”

The slight improvement in the supply-demand balance has seen MPV charter rates trend upwards since 2016, but market conditions continue to be “soft,” she said.

“Rate increases have other influences than pure economic ones but our forecast is for slight gradual improvement.”

AGE CONCERNS

Ning Han’s analysis of the MPV fleet noted that it was now an average of 17 years old, making it older relative to other shipping sectors. 2011-2012 was the high-water mark for recent newbuilding fleet additions and delivery rates have been in decline ever since.

Over the last decade, fleet additions have primarily focused on vessels of more than 20,000 deadweight tons, as owners sought economies of scale and vessel differentiation via ships offering major heavy-lift capabilities.

The result was that as of December 2018, 45 percent of the total MPV fleet was classed as a project carrier (including premium project carriers).

This translated into almost 900 vessels with a lifting capacity in excess of 100 tons, of which 347 had crane capacity of in excess of 250 tons, and 25 had a lift capability of more than 1,000 tons. BB

ISSUE 3 / 2019

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Goldhofer Aktiengesellschaft Windblades on the Waterfront Puerto San Antonio Este, Argentina Learn more about us at Breakbulk Europe 2019, Hall 5-Stand H70

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Carga Coordinadora Slug Catchers Sail for Jubail Port of Gijón, Spain Learn more about us at Breakbulk Europe 2019, Hall 7-W05

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Höegh Autoliners World’s largest PCTC at Port of Tyne Port of Tyne, UK Learn more about us at Breakbulk Europe 2019, Hall 5-Stand F10 96 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 3 / 2019

Allelys Group Crossing the Welland Spalding, UK Learn more about us at Breakbulk Europe 2019, Hall 5-M30

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BACK PAGE

ECONOMY, EUROPEAN UNION

In anticipation of Breakbulk Europe, May 21-23 in Bremen, Breakbulk magazine looks at economic forecasts for the Europe region.

GDP FORECAST

Economists forecast flat to slight declines in GDP in 2019 and 2020.

2017

2018

2019*

2020*

% 3.0 2.5 2.0 1.5 1.0 0.5

UN IO N

SW IT ZE RL AN D SW IT ZE RL AN D

EU RO PE AN

SW ED EN SW ED EN

KI N G D O M

SP AI N SP AI N

UN IT ED

N O RW AY N O RW AY

N ET HE RL AN D S

ITA LY

G ER M AN Y

FR AN CE

BE LG IU M

0.0

INFLATION FORECAST

Inflation rates are projected to remain steady through 2020.

% 3.0 2.5 2.0 1.5 1.0 0.5

UN IO N

EU RO PE AN

KI N G D O M

UN IT ED

N ET HE RL AN D S

ITA LY

G ER M AN Y

FR AN CE

BE LG IU M

0.0

CURRENT ACCOUNT FORECAST

Current account balances are the difference between a given nation’s imported and exported goods, services and transfers and are an indicator of foreign trade trends. Figures in US$ billions.

496.7 372.5 496.4 344.8

285.8 278.8 294.0 264.0

100 80 60 40 20 0

UN IO N

EU RO PE AN

KI N G D O M

SW ED EN

SP AI N

SW IT ZE RL AN D

UN IT ED

*Forecast

N O RW AY

N ET HE RL AN D S

ITA LY

G ER M AN Y

FR AN CE

BE LG IU M

-104.4 -106.0 -113.3 -100.5

-20 -40 -60 -80 -100

Source: Consensus Economics, www.consensuseconomics.com 98 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 3 / 2019

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