Breakbulk Magazine Issue 5 2021 by Breakbulk Events & Media

This Breakbulk Issue is Sponsored by AAL Shipping

Issue 5 / 2021

The Publication for the Industrial Project Supply Chain Industry

OFFSHORE WINDFALL

US$12 Billion-a-Year Bounty Beckons off US Coastlines

Terrestrial Rocket Science

Keystone XL RIP

Peru’s Political Pawns

IN THIS ISSUE Cover Story

COVER IMAGE: MAERSK SUPPLY SERVICE

14 OFFSHORE WINDFALL US$12 Billion-a-Year Bounty Beckons off US Coastlines

22 COVER STORY

46 CASE STUDY

Massive Space Launch System Completes Journey

Extra Long Pieces Present Challenge for Logistics

TERRESTRIAL ROCKET SCIENCE

26 ENERGY UPDATE

PETROCHEM PROJECT TESTS HEAVY-LIFT MOVERS

50 REGIONAL REVIEW

KEYSTONE XL RIP

But All Not Lost for Oil Business

PERU’S POLITICAL PAWNS Tax Hikes Put Miners on High Alert

40 TECHNOLOGY

BUILDING A CYBER ARMORY

Hardening Infrastructure and Enhancing Performance

Also in this issue

GEORGE R. BROWN CONVENTION CENTER • HOUSTON, TEX AS, USA

06 EDITORIAL 08 CONVERSATION 32 BREAKBULK AMERICAS

THOUGHT LEADERS

BREAKBULK AMERICAS SPECIAL EVENT ESSENTIALS GUIDE Welcome back!

EVENT ESSENTIALS

Photo courtesy of Port of Lake Charles

www.breakbulk.com BREAKBULK MAGAZINE 3

IN THIS ISSUE

54 MARKET SPOTLIGHT

64 REGIONAL REVIEW

74 CASE STUDY

Soaring Demand for Red Metal Sparks Supply Concerns

Breakbulk Win with Plan to Fire Up Nation’s Industrial Base

Breakbulk Support for Offshore Diamond Mining First

COPPER RUSH

MADE IN THE UAE

DIAMONDS & PEARLS

60 INLAND TRANSPORTATION

68 PROFILE

Also in this issue

Breakbulk Supports UAE’s First Nationwide Rail Project

Natco’s Joerg Roehl on Remaining Fresh and Flexible

78 THOUGHT LEADER

ON THE FRONT LINE

AT THE SHARP END

– HEIKE WINKLER

80 BREAKBULKONE

84 P HOTO CONTEST

– HELLO SUMMER!

86 BACK PAGE 4 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 5 / 2021

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EDITORIAL

LIVE IN AMERICA At long last, Breakbulk Events & Media will have a live, in-person event when Breakbulk Americas kicks off Sept. 28 at the George R. Brown Convention Center in Houston. The Americas’ largest trade event for project cargo and breakbulk event returns Sept. 28-30, our first since the shutdown of March 2020. Enthusiasm has been running high among exhibitors, sponsors, delegates and esteemed speakers who will lend their expertise to a range of sessions on the Breakbulk Main Gary Burrows Stage. Breakbulk’s operations team continues to monitor the Covid-19 situation in the U.S., Canada and Latin America, as well as the rest of the world. They are working closely with the City of Houston and the George R. Brown Convention Center to make sure that this is a safe experience for all. Issue 5 / 2021 of Breakbulk magazine is overflowing with Americas coverage, including the Breakbulk Americas Preview, starting on page 41. It includes a glimpse of the event, which will be covered more in-depth in the Breakbulk Americas 2021 Event Guide, which will be distributed at the event along with this issue. Our lead feature topics dovetail with Breakbulk Americas content sessions, starting with our cover story, “Offshore Windfall” (page 14), in which Paul Scott Abbott looks at U.S. efforts to reach the Biden administration’s goal to deploy 30 gigawatts of offshore wind energy production by 2030. This effort “will trigger more than US$12 billion a year of investment off our coasts,” according to U.S. Bureau of Ocean Energy Management Deputy Director Walter Cruickshank. Picking up on this coverage will be the Breakbulk Americas session, “U.S. 6 BREAKBULK MAGAZINE www.breakbulk.com

Offshore Wind: Are We Ready?,” on Sept. 29, where Cruickshank will join speakers also covered in this issue: Percy R. Payne of Green Shipping Line (page 16), and Tim Axelsson of Liberty Green Offshore (page 36). Next, Abbott’s “Terrestrial Rocket Science” (page 22), looks at the movement of Artemis I’s Space Launch System traveling aboard NASA’s expanded Pegasus barge to Kennedy Space Center for the Nov. 22 moonward launch. Story sources Liliana Villarreal and Arlan Cochran of NASA will also participate in session “Space Logistics: The Sky’s the Limit,” also Sept. 29, along with representatives from Boeing, Jacobs Engineering and Port Houston. Also in this issue, Lori Musser looks at the end of the controversial Keystone XL Pipeline (“Keystone XL RIP,” page 26), and what’s next for the oil industry. Breakbulk Americas will feature the session “Oil & Gas: Their Role in the Energy Transition,” on Sept. 30, which will feature speakers who provided thought pieces for this issue: Marco Poisler of UTC Overseas (page 34) and Philip Ovanessians of Worley (page 33). Following the Breakbulk Americas Preview, Musser reports on an interview with Rob Scott, cybersecurity general manager of Bechtel National, “Building a Cyber Armory,” page 50. He speaks about the human factor, and hardening infrastructure while enhancing performance. Fellow Bechtel veteran Steve “Spo” Spoljaric also provides a thought leader (page 11). Still within the Americas, Simon West covers the impact of Peru’s socialist President Petro Castillo’s victory on the country’s mining industry (“Peru’s Political Pawns,” page 55), followed by a look at the challenges soaring copper demand are placing on South America’s producing nations (“Copper Rush,” page 58). We hope to see you in Houston Sept. 28-30. However, if you are unable to attend, we hope with this issue we have brought some of Breakbulk Americas to you!

EDITORIAL DIRECTOR Gary G. Burrows / +1 904 535 5460 gary.burrows@hyve.group NEWS EDITOR Carly Fields carly.fields@hyve.group DESIGNER Mark Clubb REPORTERS Paul Scott Abbott Felicity Landon Lori Musser Malcolm Ramsay Simon West BREAKBULK EDITORIAL ADVISORY BOARD John Amos Amos Logistics

Noelle Burke

Eos Energy Storage

Dennis Devlin Maersk

Dharmendra Gangrade

L&T Hydrocarbon Engineering

John Hark

Bertling Project Logistics

Dennis Mottola

Global Logistics Consultant

Roger Strevens

Wallenius Wilhelmsen

Jake Swanson

DHL Industrial Projects

Ulrich Ulrichs

BBC Chartering

Margaret Vaughan Consultant

Johan-Paul Verschuure Rebel Group

Frans Waals

Dynamar D.V.

Grant Wattman

Jade Management Group

PORTFOLIO DIRECTOR Nick Davison nick.davison@hyve.group MARKETING & MEDIA DIRECTOR Leslie Meredith leslie.meredith@hyve.group To advertise in Breakbulk Media products, visit: http://breakbulk.com/page/advertise SUBSCRIPTIONS To subscribe, go to http://breakbulk.com/page/ subscribe-breakbulk-magazine, or email: gary.burrows@breakbulk.com A publication of Hyve Group plc. The Studios, 2 Kingdom Street Paddington, London W2 6JG, UK

ISSUE 5 / 2021

Visit us at Breakbulk Americas September 28-30 at our booth G11-13!

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CONVERSATION Join the conversation – share your thoughts, opinions and feedback with Breakbulk! Send them to gary.burrows@breakbulk.com. Items we use will be edited for appropriateness, length and clarity.

US SENATE PASSES INFRASTRUCTURE BILL The U.S. Senate passed a record infrastructure bill, progressing plans for investment of more than US$1 trillion and significant upgrades to the country’s transport and infrastructure networks. The Infrastructure Investment and Jobs Act was passed by a bilateral majority of 69-30 in Senate after 50 hours of debate. But its passage to law still faces a number of challenges. The bill awaited passage in the house as Breakbulk went to press. The bipartisan bill includes total investment of about US$1.2 trillion of which an estimated US$550 billion will be for new federal funding for infrastructure over the next five years. From this total, roughly US$110 billion is earmarked for roads, bridges and major projects; US$66 billion will go to passenger and freight rail; US$39 billion for public transit; US$25 billion for airport upgrades; US$17 billion for port infrastructure; US$11 billion for transportation safety programs; US$7.5 billion for electric vehicles; US$7.5 billion for zero and low-emission buses

components vital for infrastructure development. For breakbulk providers working in the downstream or chemicals sector this may mean further complexity for future projects. Likewise, there was concern from the Owner-Operator Independent Drivers Association, or OOIDA, on the lack of measures to increase truck parking nationwide. Hours after the infrastructure bill’s passage, the Senate approved an additional US$3.5 trillion in spending to cover climate incentives, paid leave, childcare, education and healthcare. It passed 50-49 through a process known as budget reconciliation, in which U.S. Senate Democrats gained passage by a simple majority rather than the 60 votes usually required, and avoiding a potential filibuster from Republican senators. With House Democrats holding only a slim majority in voting, there is great uncertainty whether the infrastructure bill will pass, let alone passing both bills together, which is how House Speaker Nancy Pelosi planned to proceed.

and ferries; and $1 billion for revitalization of communities. The U.S. is currently ranked outside of the top 10 for transportation infrastructure, despite the country’s economic power. About one-fifth of major highways and roads are deemed to be in poor condition as well as an estimated 45,000 bridges. “Passage of this bipartisan infrastructure bill is a ground-breaking step toward revitalizing America’s decaying roads and bridges, supporting our supply chain and economy with the foundation they need to grow, compete globally and lead the world,” said Chris Spear, CEO of the American Trucking Associations. Despite broad support, there remain uncertainties and concerns. CEOs of the American Chemistry Council and National Association of Chemical Distributors pointed out that the legislation includes a provision for new Superfund excise taxes on 42 chemicals, critical minerals and metallic elements, and will ultimately lead to price rises on materials and

MPV CHARTER RATES CONTINUE TO BREAK RECORDS Multipurpose vessel time charter rates have continued their steady climb since a low during the pandemic latest summer, according to separate reports from Toepfer Transport and Drewry Maritime. Toepfer Transport Multipurpose Index reported MPV time charter rates reached US$12,435 per day in

August, up 10.8 percent from July and a whopping 94.9 percent above the pandemic low of US$6,381 in July 2020. Toepfer’s index is a monthly assessment from operators, owners and brokers on a six- to 12-month time charter for a 12,500-deadweight ton MPV/HL “F-type” ship.

Research consultancy Drewry Maritime’s Multipurpose Time Charter Index, however, was US$9,056 per day in July, for the latest report available. The increase was up just 1.4 percent from June, and 59 percent since July 2020. Drewry said it expects rates to increase a further 1.6 percent in August to US$4,200 per day.

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. $12.435

$6.492 Aug 20

$6.545

$6.615

$6.729

$6.931

$7,005

$7.146

Sep

Oct

Nov

Dec

Jan 2021

Feb

$7.520 $8.092 Mar

Apr

$8.984

May

$10.285

Jun

$11.225

Jul

Aug 21

Source: Toepfer Transport, www.toepfer-transport.com 8 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 5 / 2021

DSV BUYS AGILITY’S INTEGRATED LOGISTICS BUSINESS DSV Panalpina said it expects to complete the purchase of Agility’s Global Integrated Logistics Business, or GIL, for nearly US$4.78 billion in an allshares transaction. Pending regulatory clearances, the acquisition raises Danish-based DSV to the third-largest global freight forwarder, with an aim “to continue to grow the business from this very strong position,” the company said announcing the deal Aug. 16. DSV and GIL combined will have pro forma revenue of about US$25.2 billion with a combined workforce of about 75,000 employees in some 90 countries. Jens Bjørn Andersen, DSV Group CEO, said there were similarities in the two companies in terms of business models and services. “DSV and GIL

simply constitute an excellent match. We will now start the integration, and together, we are going to grow the business and bring even more value to our many customers, partners and shareholders than we do separately.” GIL reported annual revenue of US$4.6 billion, primarily from air and sea freight. It will build upon DSV’s presence in the Asia-Pacific and the Middle East. For Kuwait-based Agility, the transaction represents about 8 percent of all post-transaction shares of DSV, making Agility DSV’s second-largest shareholder. Tarek Sultan, Agility’s chairman and CEO, said that along with its “strategic investment in DSV,” it will accelerate growth in the business it continues to

operate, which accounts for about 80 percent of its EBIT. DSV previously acquired and integrated Swiss Panalpina in 2019 and American UTi Worldwide in 2016. More recently, rumors have swirled that DSV Panalpina is pursuing acquisition of DB Schenker, among several other logistics operators, with an estimated price tag of €8 billion to €10 billion. “Generally, we do not comment on any specific or potential M&A targets,” said a DSV spokesperson. “If hypothetically DB Schenker was to come up for sale, we would take a look and see if we can establish a strong business case. M&A is a vital part of our strategy, and it is natural for us to monitor the market. At the moment, our full attention is on the upcoming closing and integration of GIL.”

www.breakbulk.com BREAKBULK MAGAZINE 9

CONVERSATION

Skimp on Insurance, Pay the Price Cargoes Need Financial Protection. Period.

BY MARGARET VAUGHAN

’ve never understood the reluctance on the part of some clients not to secure marine cargo insurance. Yes, it can get expensive, especially if your company ships a great deal, but the cost of a single loss can be somewhat catastrophic. Generally, when shippers are shaving costs, insurance is the first to get eliminated or severely modified. But not insuring shipments can be a costly mistake. Working on a project for which the products being shipped were replacements for existing structures and central to the plant’s continuing operation, I brought up the subject of cargo insurance. I was told: “No. We don’t want it.” I asked if they were selfinsured and they said “Yes.” “That’s great,” I replied, “what’s your deductible?” “US$56 million,” their transport and logistics guys answered. They were insured for catastrophic situations without looking at the catastrophe that might occur if the shipment were lost. And they knew it. “You’re preaching to the choir” was what they told me. The company wouldn’t even listen to their own T&L experts. Many companies are under the impression that the Builder’s Risk Insurance they carry on a project will cover goods in transit for that project. It does but only if the goods are in transit from the point of origin directly to installation. They are not covered if they are stored in a warehouse for any period of time or if they are set in a yard to be modified before installation. But companies don’t know/understand/care about these issues. It’s a money thing, I get it. Unfortunately, it makes the jobs of those working on the transports more difficult and stressful. Another thing that companies rarely consider is what their underwriter’s policy actually says, what it covers, and what conditions might change the coverage from an

Institute Clause A to a Clause B, Clause C, or even invalidate it entirely. As an example, the marine cargo insurance policy at a former employer covered barge shipments. However, barge shipments with cargo valued at more than US$1 million needed to be surveyed prior to shipment by one of three specific survey companies. These were not our normal surveyors and their higher cost had not been calculated into our project. I’ve always said that proper export packing by a qualified export packer is the cheapest insurance you can buy. Properly blocking and bracing containers protects goods from damage that can occur during shifting or bouncing around during truck transport. Boxing goods before containerizing can save a company in a number of ways: 1) Goods have additional protection while in transit. 2) There is a significant decline in pilferage. 3) Goods are easier to move and store in warehouses decreasing labor costs on site. 4) It lessens the amount of times the goods are handled. And we all know that damage most often occurs during handling. Since you carry insurance on your business, vehicle(s), house, life, spouse, children, it seems ridiculous not to carry it on the key components of your business. Just sayin’. But I’m preaching to the choir. Margaret J. Vaughan has more than 30 years’ experience in all facets of supply chain management. She has been a regular columnist with Breakbulk since late 2018. Sadly, she will step down at the end of the year, saying “it’s time to let someone else have a voice.” Her last submission will be in Issue 6 / 2021.

Top: Cargo protection is a necessity, not a luxury. CREDIT: SHUTTERSTOCK

10 BREAKBULK MAGAZINE

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ISSUE 5 / 2021

Measuring Sustainability in Project Logistics Collective Responsibility is a Necessity

he U.S. Environmental Protection Agency, or EPA, estimates that 29 percent of U.S. greenhouse gas emissions are the result of transportation-related activities. As we strive to build a cleaner, greener world we need to identify methods to reduce the impact of transportation activities on the environment and sharpen our focus on sustainability across the logistics industry. However, in order to measure improvements in sustainability across our industry, we first must collectively determine what success in this area looks like. I encourage all of us to learn from other facets of our industry to see how success is measured. Established in 1971, the Occupational Safety and Health Administration, or OSHA, ensures safe and healthy working conditions for workers by setting and enforcing standards and by providing training, outreach, education and assistance. OSHA requires the collection of data, across industries, on workrelated injury and illness. The data is used by OSHA to calculate specific injury and illness incidence rates. OSHA’s measurement and analysis of the data collected helps to determine both problem areas and progress in preventing work-related injuries and illnesses. We can learn from our industry’s steadfast commitment to safety. When an incident occurs it is reported, investigated, corrective actions are taken, and lessons learned are distributed. We need to take similar actions

in support of our commitment to build a cleaner, green world. But, first, we must define our goals and the timeline in which we wish to achieve them. The International Maritime Organization’s targets for 2050, which emphasize a timeline to achieve aggressive improvement goals in reducing carbon emissions in the maritime industry as compared with 2008 levels, are a great starting point. We need to implement similar timelines and goals across all aspects of project logistics. Developing industry standards, specific to each segment of our industry, will help us to measure our success. Additionally, standardizing the methodology by which we measure success, will help to set guidelines and create industry best practices which we can all benefit from. Now is the time for us to come together, as an industry, to discuss our goals and the ways in which we will achieve them. It is our collective responsibility to take part in building a cleaner, greener world. We can start by clearly defining what sustainability success looks like for the logistics industry, setting goals, and measuring ourselves against our goals to lessen our industry’s environmental impact. BB

BY STEPHEN SPOLJARIC

Stephen Spoljaric is Bechtel corporate manager of global logistics and president of the Exporters Competitive Maritime Council.

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COVER STORY

OFFSHORE WINDFALL

US$12 Billion-a-Year Bounty Beckons off US Coastlines BY PAUL SCOTT ABBOTT

Maersk Supply Service vessel Maersk Involver engages in offshore maintenance activities at a wind farm in Europe’s North Sea. CREDIT: MAERSK SUPPLY SERVICE

ropelled by the Biden administration’s aggressive climate-change-fighting goals, winds off U.S. shores offer a US$12 billion-a-year bounty for clean energy industry players and supply chain providers. The impressive annual investment figure, plus an estimate of 80,000 jobs to be created, highlight efforts to responsibly pursue renewable energy development along the Outer Continental Shelf. Meeting the goal of deploying 30 gigawatts, or GW, of offshore wind energy production by 2030, as set forth by Joe Biden shortly after assuming the nation’s presidency in January, “will trigger more than US$12 billion a year of investment off our coast, and it’s beginning now,” said Walter Cruickshank, deputy director of the Bureau of Ocean Energy Management in the U.S. Department of Interior. 14 BREAKBULK MAGAZINE www.breakbulk.com

Walter Cruickshank Bureau of Ocean Energy Management

Liz Burdock Business Network for Offshore Wind

“There is tremendous potential for offshore wind here in the U.S.,” said BOEM’s Cruickshank, who holds a doctoral degree in mineral economics from Penn State and has worked in the Interior Department for more than 35

years. “There’s a lot of opportunity to invest in both the wind farms themselves and the supply chain.” While present activity is focused off Atlantic and, to a lesser extent, Pacific coastlines, the Gulf of Mexico proffers significant potential as well, thanks in large part to the extensive oil and gas industry infrastructure already in place, according to Cruickshank and other observers. Cruickshank’s optimistic views are supported by project cargo supply chain providers and by the chief executive of the not-for-profit group dedicated to building the U.S. offshore wind supply chain, as expressed in separate interviews with Breakbulk.

‘EXCITING TIME’

“This is an exciting time for the U.S. offshore wind industry,” said Liz Burdock, CEO of the Towson, ISSUE 5 / 2021

Maryland-based Business Network for Offshore Wind. “There is tremendous domestic opportunity for project carriers and freight forwarders looking to join the offshore wind industry, in part due to the uniqueness of offshore wind project development and the U.S. market.” Burdock cited the sheer size of offshore wind project components – with 900-foot-tall towers, blades as long as 400 feet and nacelles weighing as much as 600 tonnes – which make them very difficult to transport by land and which will require development of new quayside staging and manufacturing facilities. “The U.S. has massive offshore wind resource potential,” Burdock said. However, three principal challenges must be addressed if the nation is to reach its goals. “First,” she said, “to meet the combined state and federal goals, the country must develop a robust domestic offshore wind supply chain. This is a once-in-a-generation opportunity for entrepreneurs to get into a growing market and for existing businesses – be it maritime, engineers, welders, aviation, O&G [integrated oil and gas] and so on – to diversify.” A second hurdle, already earmarked for federal funding, deals with upgrading the nation’s onshore electricity grid infrastructure so new power sources can efficiently and effectively power homes and businesses. Third, Burdock said, depths off much of the U.S. coastline are too substantial to accommodate fixedbottom installations, thus requiring floating turbine technology, which, she said, “can become a great strength if the U.S. embraces it as an opportunity to be a global leader in floating wind research and development.” Furthermore, according to Burdock, state-driven procurement processes often designate desired ports for marshalling, assembly and installation activities, and Jones Act requirements, demanding use of U.S.flag vessels, add more layers to an already complex logistical puzzle.

Maersk Supply Service’s “walk-to-work” solution offers a stable platform for turbine electricians and related personnel at a North Sea offshore wind farm. CREDIT: MAERSK SUPPLY SERVICE

“For project carriers and freight forwarders,” she said, “that means opportunities abound, and innovation is needed.”

GULF HAS LEG UP

One way in which the nascent offshore wind market may take advantage of existing capabilities is in utilizing the vast infrastructure supporting the more traditional oil and gas industry along and in the Gulf of Mexico. “There is a great deal of offshore energy in the Gulf of Mexico,” said BOEM’s Cruickshank, positing that oil and gas vessels have potential to be repurposed and/or retrofitted to serve the wind market. “Offshore wind can take advantage of the infrastructure that’s there.” Cruickshank noted that the foundation for the first U.S. offshore wind installation – the 30-megawatt-capacity Block Island Wind Farm opened off Rhode Island in 2016 – was built at Gulf Island Fabrication in Houma, Louisiana. In addition, the nation’s first Jones Act wind turbine installation vessel, or WTIV, is being constructed at the Keppel AmFELS shipyard in Brownsville, Texas, at a cost of US$500

million, using 14,000 tons of domestic steel and providing 700 jobs. The 472-foot-long WTIV, on target for late 2023 delivery, is being built for Richmond, Virginia-headquartered Dominion Energy, which plans to base the vessel out of Hampton Roads, with a U.S. crew, in support of installation of more than 5 GW of wind generation capability off the Atlantic Coast. Nonetheless, the Gulf of Mexico only recently has been eyed by BOEM for potential offshore wind installations, with the Department of Interior agency publishing a June 11 request for interest in future development off the shores of Texas, Louisiana, Mississippi and Alabama. Interior Secretary Deb Haaland called the request “an important first step to see what role the Gulf may play in this exciting frontier.” A pair of February 2020 studies by the National Renewable Energy Laboratory, funded by BOEM, found the shallow, warm waters of the Gulf of Mexico to be highly suitable for offshore wind energy development. The studies pointed to advantages related to the existing offshore oil and gas infrastructure, but also cited technological challenges posed by hurricane exposure, lower wind speeds and softer soils. www.breakbulk.com BREAKBULK MAGAZINE 15

A sister ship to Green Shipping Line’s planned Eleanor carries blades to a wind farm off the European coast. CREDIT: DEKC MARITIME

ENDEAVORS PROCEED

GREEN SHIPPING LINE MAKES FEEDER ADVANCES New Jersey-based Green Shipping Line is carving a niche in the U.S. offshore wind market as it advances plans for a fleet of Jones Act-compliant feeder vessels specifically designed to transport oversize components to installations springing up in the nation’s Outer Continental Shelf waters. Applying a concept already being deployed in the North Sea, Percy R. Pyne IV, founding partner, chairman and CEO of Green Shipping Line, or GSL, has spent the past six years pursuing his vision of U.S.-built feeder vessels serving the market that is emerging off American shores. “For the next 20 years, there’s going to be a huge opportunity along the East Coast, with opportunities off California and in the Gulf not far behind,” Pyne told Breakbulk. In his pursuit, Pyne is applying more than three decades of shipping industry experience, including as developer of a short-sea service that linked the U.S. ports of Boston and Maine’s Portland with Canada’s Halifax, Nova Scotia. Percy R. Pyne IV In June, GSL announced an agreement with Groningen, Netherlands-based DEKC Maritime to team up to Green Shipping Line produce the first of a planned three offshore wind feeder vessels for the U.S. market. That pact follows GSL agreements with Onaway, Michigan-based Moran Iron Works to build the multipurpose vessels and with Bala Cynwyd, Pennsylvania-based Keystone Shipping Co. to operate them. Similar to a sister vessel designed by DEKC and already in service in Europe, the GSL vessels are to be built to each carry a complete wind tower unit, as well as blades and nacelles, to offshore wind farms, said Pyne, who estimated the cost per GSL vessel at US$50 million to US$55 million. The vessels are being configured to also be able perform such ancillary functions as rock dumping, scour protection and provision of offshore accommodations. The first Green Shipping Line vessel is to be named Eleanor, in a nod to Eleanor B. Ford, great-great-granddaughter of automotive pioneer Henry Ford. She is a co-founder of GSL and sits on its board of directors. Delivery of Eleanor is slated for late 2023, according to Pyne. The U.S.-built, U.S.-flag, U.S.-crewed, 364-foot-long feeder vessels are to move at speeds of 10 to 12 knots – faster than tug-and-barge combinations that might be put to similar use – facilitating a two-day cycle between port and installation sites, an attribute Pyne said could cut costs and production time by more than 40 percent. “Our standards follow what our European partners have established,” Pyne said. “Using their vast experience as our roadmap, our international team will help the U.S. realize its offshore wind goals.”

16 BREAKBULK MAGAZINE www.breakbulk.com

Meanwhile, most of the significant recent BOEM activity has related to the U.S. Atlantic Coast, involving endeavors from New England to the Carolinas, plus a pair of July actions dealing with California – the first a call for information to determine industry interest in development within the 399-square-mile Morro Bay areas off Central California, and the second being advancement to the environmental review stage for the 206.8-square-mile Humboldt Wind Energy Area off Northern California. California has a goal of producing all of its electricity from carbon-free sources by 2045. Perhaps most notably off the U.S. East Coast, the Biden administration in May approved construction and operation of the Vineyard Wind I project as the nation’s first large-scale offshore wind undertaking. About 12 nautical miles off the Massachusetts islands of Martha’s Vineyard and Nantucket, the approved project calls for installation of as many as 84 turbines as part of an 800-megawatt, or MW, facility aimed at powering 400,000 homes and businesses. In June, BOEM began an environmental review of the Vineyard Wind South project, which calls for phased development of a 2 to 2.3-GW facility farther off the shore of Massachusetts and Rhode Island. June also saw BOEM proposing the first competitive offshore wind lease sale under the Biden administration – for the New York Bight area of shallow waters between Long Island and the New Jersey Coast – with potential to unlock more than 7 GW of clean energy. Then, in July, BOEM announced its intention to conduct an environmental review of a proposed 69-turbine wind energy project off the shore of North Carolina, which has set goals of developing 2.8 GW of energy off its coast by 2030 and reaching 8 GW (enough to power 2.3 million homes) by 2040. As of late July, according to Cruickshank, the U.S. government had issued 18 commercial leases for wind farms in the Atlantic, with plans for additional lease sales in the near future. Also in July, Denmark-based ISSUE 5 / 2021

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U.S. Department of the Interior Bureau of Ocean Energy Management Office of Renewable Energy Programs

COVER STORY

Ørsted, owner and operator of the pioneering Block Island installation, announced the submission of a bid to develop the 760-MW Skipjack Wind 2 project off the Maryland shore.

Outer Continental Shelf Renewable Energy

PROVIDERS GEAR UP

tip of the iceberg in terms of projects the U.S. can anticipate in the coming years,” it is little wonder that project supply chain providers from New Jersey-based Blue Water Shipping to

With all of this immediate activity and the Business Network for Offshore Wind’s Burdock calling President Biden’s goal for 2030 “just the

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Deepwater Wind South Fork Sunrise Wind

Vineyard Wind South

Empire Offshore Wind

Humboldt Call Area

Bay State Wind Vineyard Wind

New York Bight Wind Energy Areas Atlantic Shores Offshore Wind

Ocean Wind

Orsted North America GSOE I (Garden State) Skipjack US Wind

California

Commonwealth of Virginia Research Lease

Virginia

Dominion Avangrid Renewables

Morro Bay Call Area

North Carolina

Diablo Canyon Call Area

80 Nautical Miles

Wilmington West Wind Energy Area

Oahu North Call Area

Wilmington East Wind Energy Area Grand Strand Call Area

Oahu South Call Area

Winyah Call Area

Bathymetry

meters

Cape Romain Call Area

Deeper than -2,000 -1,000 to -2,000

Charleston Call Area

-500 to -1000 0

100 Nautical Miles

-200 to -500 Shallower than -200

100 Nautical Miles

Bathymetry meters Deeper than -90 -60 to -90 -45 to -60 -30 to -45 Shallower than -30

Maps updated July 22 show sites of existing and planned offshore wind farms in Pacific and Atlantic Outer Continental Shelf waters. CREDIT: U.S. BUREAU OF OCEAN ENERGY MANAGEMENT

18 BREAKBULK MAGAZINE www.breakbulk.com

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COVER STORY

From a shore-based marshaling facility in Providence, Blue Water Shipping furnishes marine logistical support for Block Island Wind Farm off the Rhode Island coast. CREDIT: BLUE WATER SHIPPING

a unit of Danish shipping conglomerate Maersk are gearing up to meet demand. “The hottest thing around today is the offshore wind in the United

20 BREAKBULK MAGAZINE www.breakbulk.com

States,” said Brent Patterson, Blue Water Shipping’s regional director of Americas energy and projects. “The vision here over the next 10 years is to deploy the offshore wind expertise we

have developed in Europe over the past 30 years.” As Blue Water Shipping looks to significantly expand its presence in the U.S. offshore wind energy arena, the company in July brought aboard a new head of renewables with extensive experience in the sector while opening a pair of offices in New England. Blue Water Shipping’s new hire is John O’Keeffe, most recently head of marine affairs for North America for Ørsted, the world’s largest developer of offshore wind power. O’Keeffe led Deepwater Wind – now part of Ørsted – in development of the Block Island Wind Farm. “This is a unique opportunity for us at Blue Water Shipping,” Patterson said, noting that Blue Water provided marine logistical support for the Block Island project among more than 30 global offshore wind projects with which the firm has been engaged. While O’Keeffe’s responsibilities will also include such areas as solar

ISSUE 5 / 2021

COVER STORY

energy and hydro-renewables, he is expected to devote much of his efforts to offshore wind, for which Blue Water Shipping furnishes turnkey management from receipt of the oversize components, to laydown and storage management, to loadout for transport to offshore installations. To best serve the offshore wind market that is emerging in particular in waters off the U.S. Northeast, Blue Water Shipping this year opened new offices in Boston and in Providence, Rhode Island.

“Over the next four to five years, you’re going to start to see the real big commercial wind farms,” Leyni said. Through the end of the 2020s, he said, numerous commercial projects are anticipated to come online off the coast of the U.S. Northeast, with California offshore wind undertakings to be producing power late in this decade, to be joined after 2030

by projects off Hawaii. As for when commercial wind projects are likely to be seen in the Gulf, Leyni predicted, “not in the next eight to 10 years – nothing before 2030.” BB A professional journalist for more than 50 years, U.S.-based Paul Scott Abbott has focused on transportation topics since the late 1980s.

FLOATING FUTURE

Maersk Supply Service’s director of floating wind solutions, Aberdeen, Scotland-based Yvan Leyni, said he sees floating offshore wind farms – as opposed to bottom-fixed installations – offering the greatest potential in the U.S. and elsewhere, with waters off the U.S. Northeast holding much promise. The Maersk unit, which is partnering in a small-scale demonstration project targeted to be ready by 2023 off the Maine coast, has been engaged in offshore wind projects in Europe and Asia for 15 years, Leyni said. “Floating wind is one of the key elements in our strategy now,” Leyni said, adding that about 80 percent of oil and gas expertise is transferable to offshore wind, including in providing broad-spectrum engineering, procurement and construction and engineering, procurement, construction and installation services that may well encompass laying cables between turbine units and for exportation of power to the shore. “We are using our experience from oil and gas. It’s very transferable to floating wind.” Leyni said floating wind offers several advantages over bottom-fixed installations, including better wind quality farther from the coastline and the aesthetic benefits associated with being a greater distance from shoreline view. The Biden administration commitment, he said, should help speed approval and permitting processes and also furnish some project funding assistance. Currently, according to Leyni, the cost for a single turbine for a demonstration project can run as high as US$50 million.

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www.breakbulk.com BREAKBULK MAGAZINE 21

COVER STORY

BY PAUL SCOTT ABBOTT

TERRESTRIAL ROCKET SCIENCE Massive Space Launch System Completes Journey

he U.S. National Aeronautics and Space Administration has been at the forefront of astrodynamics since its founding in 1958, but not all rocket science applies to actual treks into space. While the Earth’s most powerful rocket is slated to blast off from NASA’s Kennedy Space Center on Nov. 22, the moonward Artemis I launch won’t mark the first challenging journey for its 212-foot-tall, 85-tonne Space Launch System core stage. Culminating years of precise logistical planning and a significant lengthening of NASA’s Pegasus barge, the massive SLS rocket unit in April completed a six-day, 900-mile trip by water to the Kennedy facility on Florida’s Atlantic Coast from the agency’s Stennis Space Center near Bay St. Louis, Mississippi. The heavy-lift transport operation involved open-water barge transit, propelled by an ocean tug, through the Gulf of Mexico, around the tip of Florida and up the Atlantic coastline, before engaging a pair of smaller tugs for the final leg up the snaky Banana River to a Kennedy Space Center wharf.

There, following an intensive ballasting process, the SLS core stage was carefully offloaded and placed on four wheeled, self-propelled module transporters and slowly moved less than a mile to Kennedy’s iconic Vehicle Assembly Building, where it is being integrated with the Orion spacecraft, solid rocket boosters and other components, and undergoing extensive pre-launch testing.

‘HIGH-LEVEL OPERATION’

In describing the successful move to Breakbulk, Liliana Villarreal, NASA’s exploration ground systems program operations flow manager, couldn’t help but make a football analogy. “It’s not winning the Super Bowl – because that’d be the launch – but it’s definitely getting a couple of good touchdowns,” she said. “It’s a pretty high-level operation.” Villarreal has more than two decades of experience at Kennedy Space Center, having begun work at Kennedy in 2000 as an engineer for The Boeing Co., supporting assembly missions for the International Space Station, before joining the NASA operations team in 2007. Boeing is a major NASA

contractor, including as manufacturer of this Space Launch System, or SLS, core stage and other Artemis mission rocket units at the NASA Michoud Assembly Facility in New Orleans. Villarreal was part of a team of more than 50 specially trained workers involved in the final steps of the operation to deliver the core stage following its Kennedy arrival. The contingent included barge personnel and technicians, plus engineers and safety and quality specialists from NASA, as well as employees of Boeing and primary NASA exploration ground systems contractor Jacobs Engineering Group. When launch time comes, the 27.6-foot-diameter, aluminum alloy SLS core stage is to have its tanks filled with propellants consisting of 844 tonnes of liquid oxygen and 144 tonnes of liquid hydrogen, bringing total launch weight to considerably more than 1,000 tonnes.

TO MOON, MARS, BEYOND

Whereas the Artemis I launch scheduled for November is to be an uncrewed lunar orbit and return mission, increasingly complex future flights aim to deliver Orion spacecraft, astronauts and

The Pegasus barge carries the Space Launch System core stage along the Banana River on April 27, completing the final leg of a 900-mile journey from Stennis Space Center in Mississippi to Kennedy Space Center on Florida’s Atlantic Coast. CREDIT: NASA/JUAN BUSTO

22 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 5 / 2021

supplies to the moon later this decade, laying the foundation for eventually sending humans to Mars and perhaps beyond. According to NASA engineers, the ability of the super-powerful SLS rocket to send craft, astronauts and supplies to the moon on a single mission is critical to reducing the number and complexity of in-space operations and increasing opportunities for mission success. NASA has deployed barges to terrestrially move large spaceflight structures for decades. However, because the SLS core stage is much taller – or longer when laid horizontally on a barge deck – compared with previous rocket units, it required a barge longer than even the original 260-foot-long Pegasus, which was specially designed and built in 1999 to transport the giant external tanks for the Space Shuttle from the Michoud facility in New Orleans to Kennedy Space Center. Responding to this latest demand, NASA tasked Conrad Shipyard in Morgan City, Louisiana, with refurbishing the Pegasus barge, including removing a 115-foot-long section and replacing it with a 165-foot-long section, extending its total length to 310 feet, or about the length of a football field. With expertise furnished by the U.S. Army Corps of Engineers Marine Design Center in Philadelphia and Bristol Harbor Group of Bristol, Rhode Island, the Pegasus modifications were completed in 2015. By 2017, the lengthened barge was carrying core stage test articles from Michoud to NASA’s Marshall Space Flight Center in Huntsville, Alabama.

April trip to Kennedy with the SLS core stage but also on three or four trips a year carrying various oversize articles between the Marshall, Michoud and Kennedy installations. “The main uniqueness of the barge is its size,” Cochran told Breakbulk. “Plus most barges don’t have a canopy.” The protective canopy is needed to shield the highly sensitive cargoes from foul weather, but, Cochran said, it can act as a sail in high winds, sometimes helping increase operating speed but at other times forcing the barge to slow down to maintain course. Typically, he said, the Pegasus barge creeps along at 8 knots or less, slowing to half that speed along rivers. The bendy Banana River near the

very end of the journey to Kennedy Space Center can present some of the greatest challenges, according to Cochran, who commented, “There’s a reason they call it the Banana River. It has a lot of turns.” Another waterway posing tricky transit is the Pearl River, which is part of the inland portion of the route between Marshall Space Flight Center and the Michoud and Kennedy facilities. The Pearl River proved particularly pesky on recent moves when there had been abundant rain, bringing the waterway to flood stage while Cochran and crew dealt with current and wind issues. Whenever the Pegasus barge is in use, a minimum of two crewmembers are on watch around the clock, Cochran said.

After completing its barge journey from NASA’s Stennis Space Center in Mississippi, the Space Launch System core stage is delivered into Kennedy Space Center’s Vehicle Assembly Building in Florida on April 29. CREDIT: NASA/FRANK MICHAUX

SIZE, CANOPY STAND OUT

Arlan Cochran NASA

NASA’s team leader for logistics, engineering and marine operations, Arlan Cochran, is based at the Marshall facility and serves as master of the Pegasus barge, not only on its www.breakbulk.com BREAKBULK MAGAZINE 23

COVER STORY

Maneuvered by a pair of tugs, the Pegasus barge approaches a wharf at Kennedy Space Center with its precious oversize cargo – the 212-foot-tall Space Launch System core stage – carried horizontally on its covered deck.

An artist impression of Elon Musk’s SpaceX Dragon module. CREDIT: SHUTTERSTOCK

CREDIT: NASA/KIM SHIFLETT

Richard Branson was one of six Virgin Galactic passengers who soared 50 miles above the New Mexico desert in a rocket plane launched from Spaceport America. CREDIT: SHUTTERSTOCK

WEATHER PLAYS A ROLE

Just as with rocket launches, meteorological fortune plays a crucial role in NASA’s earthly moves, according to Villarreal and Cochran. “The No. 1 challenge is to be sure there is good weather,” Villarreal said. “We were fortunate that the weather was just perfect. Those are the best days.” The ideal weather and smooth water facilitated precise integration between the Pegasus barge and the berth in the shadow of the Vehicle Assembly Building. That, Cochran said, eased the leveling process involving moving water via the barge’s 27 ballast tanks in what Villarreal described as the “very unique integration between the barge and the wharf.” In keeping with NASA’s longstanding practice of testing, testing and more testing, the agency successfully transported a full-scale mock-up of the core stage to Kennedy Space Center on the Pegasus barge in September 2019, in that instance from the Marshall facility with a stop at the Stennis installation. 24 BREAKBULK MAGAZINE www.breakbulk.com

As with the real SLS core stage more than a year and a half later, the mock-up was offloaded from the barge at Kennedy’s Launch Complex 39 wharf and slowly wheeled on four self-propelled module transporters – two in front and two in the rear – to the Vehicle Assembly Building for testing.

SPACE RACE HEATING UP

Now, as pre-flight testing of the SLS core stage and units with which it is being integrated continues in advance of NASA’s scheduled November launch of Artemis I, the global race into space keeps heating up, with a trio of billionaires and the private sector assuming considerable roles. Although South African native Elon Musk has yet to blast into space himself, his SpaceX was awarded a US$2.9 billion NASA contract for a lunar landing system, only to have the pact swiftly suspended while the U.S. Government Accountability Office adjudicates protests. Musk’s stated objective is human colonization on Mars.

Meanwhile, Englishman Richard Branson was one of six Virgin Galactic passengers who soared 50 miles above the New Mexico desert on July 11 in a rocket plane launched from Spaceport America, with a promise of commencing commercial flights into space in 2022. And, nine days later, on July 20, on the 52-year anniversary of American astronaut Neil Armstrong taking the first human steps on the moon, Amazon founder Jeff Bezos and three others shot 65 miles into space above West Texas in a craft built by Bezos’ rocket company, Blue Origin. Bezos also has his sights set far into the heavens but says his priority is to use spaceflight to solve problems on Earth, which he termed “the only good planet in this solar system,” adding, “Big things start small.” BB A professional journalist for more than 50 years, U.S.-based Paul Scott Abbott has focused on transportation topics since the late 1980s. ISSUE 5 / 2021

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ENERGY UPDATE

But All Not Lost for Oil Business

he fortunes of the project cargo industry are largely intertwined with the state of American energy in general and oil and gas in particular. As the shift to renewables accelerates, and energy investments realign, it muddies the markets sought by energy supply chain participants. Realignment spells opportunity for those willing to make the shift, but those who stand firm to serve their traditional fossil fuel customers have prospects too. The plug was pulled by U.S. President Joe Biden on the last leg of the controversial 1,200-mile Keystone XL pipeline that was being built to take Alberta oil sands product to Nebraska. While delivering a staggering blow to Alberta, the U.S. market impact may prove largely inconsequential, according to Garrett Golding, business economist in the Research Department at the Federal Reserve Bank of Dallas. Since the pipeline was first announced in 2005, the U.S. need for additional pipeline capacity from Canada has fallen because of the emergence of alternative supply chains (rail and other pipeline capacity) and the emergence of cheaper fuel from fracking. The Canadian oil sands, with about 165 billion barrels, comprise the thirdlargest oil reserves in the world, after those in Venezuela and Saudi Arabia, according to the Alberta provincial government. Upstream-sector capital investments were massive, peaking at more than US$28 billion in a single year. 26 BREAKBULK MAGAZINE www.breakbulk.com

BY LORI MUSSER

Then, on June 9, 2021, Canada’s TC Energy Corp. confirmed it had terminated the Keystone XL Pipeline Project. New construction was suspended following the revocation of the project’s U.S. Presidential Permit on Jan. 20, 2021. Andy Black, Association of Oil Pipelines president and CEO, said the decision to cease has ripple effects across multiple industries. He said it killed 10,000 jobs and took US$2.2 billion in payroll out of workers’ pockets. He said that the pipeline’s builder was about to award US$3 billion in contracts to U.S. contractors and suppliers. Project cargo players took a hit. Pulling the permit didn’t, however, shut down the sands, or stop TC Energy’s other capital expenditure, or close alternative routes and modes for transporting the Alberta oil to the U.S. TC Energy confirmed that it continues to make progress on US$20 billion of secured growth projects and US$7 billion of projects under development. In a June 2021 media release the company stated: “Looking forward, there is tremendous opportunity for TC Energy in the energy transition.”

BIG QUESTION FOR ALBERTA OIL

Alberta oil sand product will still move to the U.S. Keystone XL was designed to handle 830,000 barrels per day, so there will need to be modal shifts. Industry analysts suggest some of that oil will instead ride on rail. Some oil will shift to existing pipelines including

Enbridge’s Line 3 Canada-to-Wisconsin pipeline, or their Line 5 pipeline, which runs under Lake Michigan, or the soonto-be-twinned Trans Mountain pipeline that connects Alberta to the Canadian West Coast and then potentially south to Washington State. Some Alberta oil product has moved by vessel and will continue to do so, but first the oil has to get to a waterway. Tucker Gilliam is vice president of marine assets at Crowley Shipping, which operates the largest U.S.-flag independent fleet of petroleum tank vessels, including tankers and articulated tug barges that serve the West, East and Gulf coasts. “While general domestic consumption demand may impact fleet volumes, our tank vessel fleet anticipates no change due to the pipeline decision,” Gilliam told Breakbulk. However, Port of Corpus Christi CEO Sean Strawbridge said scrapping Keystone XL was shortsighted. “Even with new sources in the U.S., the Keystone pipeline could have delivered crude to U.S. refineries that they might otherwise have to get from more nefarious sources of production.” Other oil producing countries may, for example, be politically unstable or have supply issues, or may not have the same level of commitment to protecting the environment as Canada. Strawbridge added: “This hurts our Canadian trading partners at a time when we are all excited about the United States-Mexico-Canada [free trade] Agreement. I’m disappointed for the simple fact that pipelines are the safest modality to move hydrocarbons.” ISSUE 5 / 2021

A QUESTION OF CAPACITY

The construction of pipelines serving Alberta, and indeed, all of North America, has created a decades-long wealth of project cargo volumes for transportation and logistics businesses. The loss of the massive Keystone XL project will be mourned by many, but the energy industry has plenty of other projects in the works, including other pipelines, wellheads, access roads, refineries, pump stations, and power plants. Rob Scott is a past Keystone XL project manager for Bechtel Oil, Gas and Chemicals, currently serving Bechtel National. When asked about the impact of Keystone XL being pulled, he said to Breakbulk: “I believe in the near term with ongoing expansion projects, there is enough capacity to support energy needs.”

That doesn’t mean there won’t be investment and expansion. “The critical steps in the next zero to two years will be No. 1, maintenance of existing critical infrastructure through the proposed infrastructure bill and No. 2, execution of sustainable energy transition projects.” The need for North American energy infrastructure investment is highly sectoral and localized. Dallas Fed’s Golding said: “We are still going to see production growth out of the U.S. It isn’t clear that we will always need more rigs to maintain and grow production. Because of the lower production growth path we are in, the need for crude pipeline [construction] isn’t as great as in the past. We are overbuilt in the Permian Basin for now. On the gas side, we still need more pipeline and processing capacity in the shale basins.”

Going forward, Golding sees a dichotomy in capacity expansion in oil and gas: “U.S. operators that are publicly owned are still under heavy investor pressure to not increase spending or drilling activity even if prices go higher. Instead, they are to use the higher prices to return capital to shareholders. Privately owned companies are ramping up capacity. They aren’t under the same pressures. A lot of them have chosen to drill more. Those two factors are balancing each other out in overall spending levels and impact to U.S. production growth.” We can expect, by historical standards, somewhat modest production growth in the U.S., Golding concluded. Corpus Christi’s Strawbridge, meanwhile, is concerned that there is an emerging “investability” issue in oil and gas. “Institutional pension Keystone’s builder was about to award US$3 billion in contracts to U.S. contractors and suppliers when the plug was pulled on the project. CREDIT: GOVERNMENT OF ALBERTA

www.breakbulk.com BREAKBULK MAGAZINE 27

ENERGY UPDATE

Energy-related businesses make up roughly 80 percent of Corpus Christi’s business. CREDIT: PORT OF CORPUS CHRISTI.

“Companies cannot function without fossil fuels. Crude oil is ultimately consumed in the manufacture of things like medicines and cosmetics, apparel and footwear. I don’t think Main Street America fully realizes the necessity of hydrocarbons in their daily lives.” – Sean Strawbridge, Port of Corpus Christi funds are investing more in sustainable projects. We are engaging this administration to lower the vilification rhetoric on fossil fuels. They are needed for quality of life,” he said. The U.S. Senate have been negotiating a historic, trillion-dollar infrastructure package meant to “transform America.” If the bill is passed by Congress and signed into law, a great deal of federal funding would be directed toward U.S. roads, bridges and waterways, broadband and clean energy. The infrastructure bill isn’t expected to provide direct benefits for the oil and gas industry, but there may be indirect benefits, perhaps for plugging abandoned wells or decommissioning, and there may be benefits for renewables, specifically related to electric-vehicle charging infrastructure – but that remains to be seen. 28 BREAKBULK MAGAZINE www.breakbulk.com

ENDURING CASE FOR FOSSIL FUELS

Clean energy cargoes are becoming increasingly important to many supply chain participants. Carriers, forwarders, insurers and others that historically specialized in traditional oil and gas industry components may be able to take on or switch to renewable energy construction components such as wind blades and massive batteries. Some may not, but that may not be an issue just yet. Strawbridge said the emergence of greener energy is inevitable, but in his opinion, there will be hydrocarbon projects for the foreseeable future: “Companies cannot function without fossil fuels. Crude oil is ultimately consumed in the manufacture of things like medicines and cosmetics, apparel and footwear. I don’t think Main Street America fully realizes

the necessity of hydrocarbons in their daily lives.” In Corpus Christi, the necessity is perhaps more obvious. Energy-related businesses make up roughly 80 percent of port business and comprise the vast majority of the US$55 billion in investment made around the port in the last seven years. The port is America’s largest energy export port and also the top port as measured in revenue tons. Strawbridge’s forecast for fossil fuel production remains buoyant: “Today we move a variety of petrochemicals – resins, plastics, natural gas, refined products and crude. That gives us a bit of resiliency. We have not seen the peak, in my opinion. For up to five more decades we will continue to see fossil fuels as part of any sovereign economy, including the U.S.” ISSUE 5 / 2021

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ENERGY UPDATE

Left: The volumes and composition of energy project cargoes is evolving, embracing more renewable energy infrastructure components, but traditional fossil fuel cargo will not, it seems, evaporate overnight. CREDIT: PORT OF CORPUS CHRISTI.

THE COVID-19 EFFECT

American oil prices bottomed out in May 2020 with an historic and almost unimaginable low of minus US$37.63 a barrel (U.S. benchmark crude, West Texas Intermediate, or WTI). The Covid-19 effect, which almost annihilated oil consumption and had storage tanks overflowing, meant buyers were paid to take product. What a difference a year makes. Economic recovery is well under way in the U.S., and while it may take two steps forward one step back, at the end of July 2021, WTI crude was above the US$70-per-barrel mark. Industry optimism on pricing has emerged – but is tottering. The July Organization of Petroleum Exporting Countries-plus, or OPEC+, decision to boost production and the resumed spread of coronavirus throughout the summer months are just two of the many factors that have shaped oil prices and made industry capital expenditure levels anyone’s guess. Garrett Golding is a business economist in the Research Department at the Federal Reserve Bank of Dallas. After the impacts of Covid-19 last year, he said: “We had a very impressive, broad-based recovery in global demand. It started in Asia and was carried by the U.S. and others over the last several months,” adding “we appear to be leveling off. The demand increases we were seeing every week are slowing down, not necessarily because of Covid rearing its head, although that is one factor. Barring unforeseen developments, we’ll settle into the US$70 range for the time being.” Because of OPEC’s spare capacity, and some from non-OPEC sources, there has been some movement in the oil futures curve, but Golding does not predict a big price spike. “It is the opposite of that,” he said.

30 BREAKBULK MAGAZINE www.breakbulk.com

Despite a drop this past year, Corpus Christi anticipates a solid future in project cargo. “Yes, we’ve seen it diminish as companies introduce more discipline to their capital programs. Historically, when energy prices rose, the additional cash flow would be invested in more production and balance sheets would balloon with debt. Now, when they have additional cash flow they pay down debt,” Strawbridge said.” But he has no doubt of a recovery, noting a recent uptick in rig counts, and great potential in emerging fuels. Corpus Christi expects growth in blue hydrogen, which is already produced locally but could be scaled up with a successful carbon capture program and offshore storage in geological formations. Solar is also growing. The port has signed a memorandum of understanding with an institutional investment company to build a solar array with 800 megawatts of storage. The port sees a market for ammonia, and another for green hydrogen, which will be accelerated when a ready water source becomes available. The permitting of an 80-million-gallon per day water desalination facility, the largest in the U.S., is under way. Strawbridge noted that will continue to attract more investment: “Water was an Achilles heel.” The future of U.S. energy will be shaped by supply, consumer will, demand, competition, government diktats, private industry wherewithal and even energy cyber security, among other factors. The volumes and composition of energy project cargoes is evolving, embracing more renewable energy infrastructure components, but traditional fossil fuel cargo will not, it seems, evaporate overnight. BB Based in the U.S., Lori Musser is a veteran shipping industry writer. ISSUE 5 / 2021

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BREAKBULK AMERICAS THOUGHT LEADERS

Thought Leaders Breakbulk Americas Special Edition Insights from Four Speakers Who Will Be Part of the Breakbulk Americas Conference Program Influence and expertise are common traits for this group, and each provides a perspective from where they sit in the project cargo supply chain. Together they present a preview of some of the topics that the industry must address to move successfully into the future during this time of market disruption and long-term change. We invite you to join the conversation at Breakbulk Americas 2021 in Houston.

IN THIS SECTION: “Transitioning EPCFs to Renewables,” by Philip Ovanessians, Vice President of Commercial Management, Worley “Commanding New Heights in Global Energy,” by Marco Poisler, COO – Global Energy & Capital Projects, UTC Overseas “Once-in-a-Lifetime Opportunity: Logistics Performance Is Vital for Green Energy,” by Timothy Axelsson, Director, Liberty Green Offshore “Do You Believe in Miracles?,” by Jeff Tucker, CEO, Tucker Company Worldwide

32 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 5 / 2021

Transitioning EPCFs to Renewables Differentiation, Agility Key for Success

ow can engineering, procurement, construction and fabrication, or EPCF, firms that typically have served the traditional hydrocarbons market transition to the renewables space? In my experience hydrocarbons complement renewables. It is not one or the other. What I have seen in the past 18 months is there has been an increase in activity with national chemical manufacturers in Africa, Asia, the Americas and the Middle East. Some of these customers I currently support remotely. For an EPCF to transition to renewables is not a major step change. Examples are: • Partnering with select module fabricators to provide structural steel supports to offshore wind farms. • Increasing implementation of carbon capture and storage units in liquefied natural gas, thermal power, and chemical plants. • Teaming with a regional and/or specialty niche general services contractor that operates in the hydrogen and nuclear power markets. • Early on engagement with developers in the project development phase to incorporate solar, hydro and wind power as an energy feedstock. • Partnering with subsea vessel providers to offer environmentally safe, cost effective solutions in the offshore wind market. • Establishing agreements with rail and surface transporters to provide process modularize transport.

ENGINEERING AS A COMMODITY MARKET

The trend in both the hydrocarbons and renewables markets continue to push engineering to be more of a commodity market. Contractors, now more than ever, need to bolster their commercial acumen to assist owners and developers early on in the conceptual stage of the project to: • Seek financial capital. • Provide estimates that have current factors. • Have a good understanding of the various commercial and schedule models. • Determine how to best handle the risks associated with each of them. • Have proper change management processes during the execution phase. While there is no one solution in energy transition, the focus should be on what differentiates your company as an EPCF contractor from your competitors, and whether your organization is agile enough. BB

BY PHILIP OVANESSIANS

Philip Ovanessians is vice president of commercial management for Worley, an Australian engineering company which provides project delivery and consulting services to the resources and energy sectors, and complex process industries. Philip will participate in the Breakbulk Americas panel, “Oil & Gas: Their Role in the Energy Transition,” which will be held at 11:30 a.m. to 12:15 p.m., Sept. 30.

Hydrocarbons complement renewables; it is not one or the other. CREDIT: SHUTTERSTOCK

www.breakbulk.com BREAKBULK MAGAZINE 33

BREAKBULK AMERICAS THOUGHT LEADERS

Commanding New Heights in Global Energy Many Questions to Solve in Embracing the Transition

BY MARCO POISLER

n the bookshelf of every traditional oil and gas leader is the Pulitzer Prize winning book, The Prize, by Daniel Yergin. The book has been translated into 12 languages and became a PBS series. This legendary author cautions that the transition to a netzero economy will take time, and will not happen overnight. It took five decades for wind and solar to clamber out of a niche existence and for costs to come down, and it took at least a century for electric vehicles to gain ground after Thomas Edison first introduced them. Many powerful executives in oil and gas, power generation and shipping companies all seem eager to embrace the transition. Transportation is a derived demand, so the impact of roasted plans and robust investments take time to percolate into brewed results. For cargo interests – breakbulk carriers, project forwarders, customs brokers, specialized transportation – what does this mean? Over the next weeks and months, it means patience with “budgetary” quotations. Project owners, as they explore budgets for new alternative fuel source refineries and capital equipment, face at the same time the inherent challenges in transporting that capital equipment. How large of a vessel? What type of vessel? What type of truck? The impact of Covid-19 on shipping is well publicized. We not only face “going green” challenges in the transition, but also budgeting new cargo designs, shapes and sizes in new capital and also global sourcing. Will there be space available on a liner service in the budget for a project that may only materialize in two years? Trade agreement disruptions raise new questions of global sourcing beside the challenges of Covid-19. U.S. trade policy in Section 232 and 301 raised a review of shifting production from China to countries in Southeast Asia such as Vietnam. Will

34 BREAKBULK MAGAZINE www.breakbulk.com

today’s trade agreements still apply in two years’ time? Will there be enough containers in Asia? Ultimately, moving cargo remains a human endeavor. As Roger Kavanagh, founder of Intermarine, often said: “Ships do not move cargo. People do.” This insight is evidenced in its most acute form in our pandemic age. Flights are delayed for lack of crew. Ports restrict crew from departing the vessel. Free pratique, the clearance granted to a vessel to proceed into a port after compliance with all relevant health regulations, takes on new meaning for on-time delivery. Who pays for the delay? Was detention of the vessel in the budget? Port terminal closure or delays for Covid-19 incidents remain an inherent risk. Driver shortages? Can we get our insurance survey at cargo loading and discharge for cargo loss prevention? Medicine speaks of intercurrent infections exacerbating the existing disease. In this is an appropriate metaphor for shipping: we face intercurrent disruption. Historically, logistics managers have become experts in hedging fuel in sophisticated attempts to deal with a lack of a reliable crystal ball. The novelty of simultaneous project investment planning for the energy transition, uncertainty in shipping schedules and cost, and preserving the safety of the human talent moving cargo during Covid-19 raises hedging in global energy project logistics to new heights. BB Marco Poisler is chief operating officer, global energy & capital projects for UTC Overseas Inc., a Houston-based international freight forwarding and cargo logistics company. Poisler will participate in the Breakbulk Americas panel, “Oil & Gas: Their Role in the Energy Transition,” which will be held at 11:30 a.m. to 12:15 p.m., Sept. 30.

ISSUE 5 / 2021

Once-in-a-Lifetime Opportunity Logistics Performance is Vital for Green Energy

BY TIMOTHY AXELSSON

36 BREAKBULK MAGAZINE www.breakbulk.com

technologies to extract this globally available resource have been on an exponential path of development with a doubling of capacity in wind turbines every five years, starting in 1995 with a 0.5 megawatt machine through to today with the announcement of a 15 MW machine. Each of these technological advances presents a more efficient, cost-effective means of resource extraction, consequently lowering the cost to produce and supply the energy. The new U.S. offshore wind industry requires the movement of parts and pieces consisting of heavy structures, large turbines, and miles of wire to support, transmute, and transmit green energy to society. This coordinated movement, otherwise known as supply chain logistics, is where Liberty Green will assist and actively participate in a variety of sectors in the industry to add value to our partners, clients and the global community. Further advances in technology will continue, and together the global supply chain will undergo its own advances in sustainable activities and transportation systems. The ultimate goal of achieving a circular economy is clearly underway and the Liberty team wants to contribute to the collective future of clean energy production. BB Timothy Axelsson is director offshore wind for Liberty Green Logistics. He has worked in offshore renewal energy since 2010, following a 28-year career in commercial fishing, offshore oil and submarine cabling. Starting as project director for Fishermen’s Energy, he moved to Vestas as U.S. project director for offshore wind projects, before joining Liberty Green Logistics. Axelsson will participate in the Breakbulk Americas panel, “U.S. Offshore Wind: Are We Ready?,” which will be held at 1:15 to 2 p.m. Sept. 29.

ISSUE 5 / 2021

CREDIT: SHUTTERSTOCK

he green energy revolution is happening worldwide and is providing a once-in-a-lifetime opportunity for society, the environment, industry and finance to collectively achieve success for the good of mankind and our planet. The energy industry at large is dependent on a first-class service for the movement of people, parts and machinery throughout the entire supply chain. Liberty Green Logistics will focus on consolidated service offerings and value creation in the supply chain for renewables and particularly the U.S. offshore wind industry. Green energy is different from other forms of energy in that it has scalability in both directions. Electricity as an energy source can be as regional as utility scale wind and solar generating facilities, to as local as residential solar panels, electric vehicles, and the battery powered cell phones we all carry around. Electrification of the world started with Tesla and Edison in the U.S. in the 1880s, and it continues today with a transition to the sun and wind as fuel sources. Making power from the environment has been in our collective consciousness ever since Einstein in 1905 showed us the power in a ray of sunshine, and James Blyth in 1887 invented the first wind turbine in Scotland. Today, the U.S. renewable energy markets are already a mature industry on land with 122 gigawatts, or GW, of wind capacity and 100GW of solar capacity, making the U.S. second globally in renewable capacity. Now the U.S. is turning towards the ocean as the next source of green energy, where the fuel source is steady, the location is socially acceptable, and there is the least impact to the environment. Green energy as a resource is available worldwide, but make no mistake, the mechanisms to extract these free resources are not free. The good news is the equipment and

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BREAKBULK AMERICAS THOUGHT LEADERS

Do You Believe in Miracles?

Infrastructure Bill Holds Promise for Breakbulk

BY JEFF TUCKER

38 BREAKBULK MAGAZINE www.breakbulk.com

CREDIT: SPORTS ILLUSTRATED

n Aug. 10, two days after the Tokyo Olympics closed, some of us might have been reminded of those immortal 1980 Winter Olympic words, “do you believe in miracles?” Why, you ask? Because in our deeply divided U.S. Congress, where progress is rare, and political theater has reached lows most Americans never dreamt possible, the Senate, divided along 50-50 party lines, passed a (gasp!) bipartisan surface transportation bill on a 69-30 vote (see related story, page 8). It’s a Washington adage that highways and bridges are neither Democratic nor Republican issues. Infrastructure bills, like defense, are generally common ground. For breakbulk members and stakeholders who stress the limits of what infrastructure can handle, we can breathe a sigh of relief. But there’s substantially more work to do. At the time of this printing, the House hasn’t moved its infrastructure bill. So, we wait. The U.S. House passing this bill is important to breakbulk stakeholders and the country. The U.S. has several natural resources that have enabled our economic growth, such as abundant food, energy, fertile land, rich seas on both sides, minerals and other natural resources. The American people and their spirit of ingenuity, creativity, drive and the freedoms enjoyed have collectively enabled world-class, world-leading innovation in so many areas of art, science, technology and commerce. As a transportation professional for more than 30 years, I bear witness every day to the economic might we’ve derived from the U.S. Interstate Highway System and our ports, bridges, and intermodal terminals. Supply chains have been revolutionized in the past 10 years, and while money and technology spurred much of it, none of it would be possible without the U.S. infrastructure. Removing bottlenecks helps cars and trucks, and swiftly, inexpensively ushers our products to market. The Senate bill was US$1 trillion in total, and contains US$550 billion for long overdue, highly stressed infrastructure that Breakbulk readers desperately need, like investments in roads, bridges, public transit, rail, and other traditional infrastructure. There are bridges in the U.S. Northeast where engineers have

calculated how many rivets can be missing, and still be deemed safe! That’s scary – for the record, I vote “none” should be missing. But it’s probably not surprising to breakbulk professionals, given the level of detail, red tape, engineering, surveying, and specialized and unique equipment they know is needed to traverse roads and bridges. Those assets need to be in top form and built for today and tomorrow, not 60 years ago. The U.S. freight industry provides nearly US$1 trillion annually. That’s US$1 of every US$22 of the U.S. economy. Yet, for my entire career, we’ve largely neglected infrastructure. One thing each of us can do today is to email, call and write U.S. House members and ask them to pass the infrastructure bill. Encourage your members of Congress to act on this bill now, and bring it home. BB Jeffrey G. Tucker CTB is the third-generation CEO of Tucker Company Worldwide. He is past chairman of the Transportation Intermediaries Association, and continues to chair the committee for TIA’s “Carrier Selection Framework,” which provides guidance on selection of safe motor carriers. He has testified before Congress on truck safety matters and served as a U.S. Department of Transportation Administrator to advise the DoT on highway safety. He is also on the National Industrial Transportation League’s board and chairs its Highway Transportation Committee. Tucker will participate in the Breakbulk Americas panel, “Infrastructure in 2021 and Beyond,” which will be held at 12:20 to 1:05 p.m. Sept. 29.

ISSUE 5 / 2021

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TECHNOLOGY

BUILDING A CYBER ARMORY Hardening Infrastructure and Enhancing Performance

40 BREAKBULK MAGAZINE www.breakbulk.com

Rob Scott, cybersecurity general manager of Bechtel National, said Bechtel is one of the first global EPCs to offer industrial control system, or ICS, cybersecurity capability for customers. He said that, as the worlds of information technology (used for data-centric computing) and operational technology (used for monitoring and controlling industrial operations) evolve and converge, opportunities are surfacing. “The industrial Internet of Things produces tons of data. We no longer want that,” he said. “What we want now is usable information, at our fingertips. Deploying a combination of asset strategy and risk management, predictive forecasting, reliability-centered maintenance, and tools for data capture, integration, visualization and analytics, Bechtel can help increase an asset’s efficiency while increasing cyber resiliency.” That is the goal of the Virginia-based ICS cyber lab. Scott said the cyber initiative looks beyond a project’s EPC and commissioning/startup phases: “We are building on lessons learned throughout Bechtel, such as creating modular and scalable products and services. We want to leverage our design, construction and operational expertise. Customers shouldn’t have to choose between hardening an asset and improving performance efficiency. We can help them do both.”

Bechtel has already introduced solutions at diverse sites within its Defense and Space Business Line and in support of its Energy and Mining and Minerals businesses. Scott described a three-phased approach starting with a project assessment with the customer, defining the elements that are within or outside of their network. That isn’t always well-documented, especially with older systems. With a complete assessment in hand, and a full knowledge of IT and OT sensors, priorities for improvement can be found, whether the goal is to harden a network, reduce downtime or debottleneck. New data will be needed, and its sources must be identified. Then there will be light EPC, which may include adding and/or removing sensors, air gapping certain parts of the asset’s critical path, and other measures. Customers ultimately decide on scope limits. “They can’t do everything,” Scott noted.

HIGH TIME

“A lot of what we do now leverages cloud computing and [site] edge computing, Wi-Fi, platforms, 5G, and artificial intelligence machine learning. Ten years ago, there was some poor soul crunching numbers and trying to find anomalies – today so much has been automated,” Scott said. Amid the plethora of data from ISSUE 5 / 2021

CREDIT: SHUTTERSTOCK

t all boils down to people – the human factor. Infrastructure is built by people and can be damaged, destroyed, interrupted, protected or improved by people. In this cyber era, new ways to do all those things are emerging. The key is to leverage technology for good while warding off evil. Infrastructure glitches, bottlenecks and failures caused by poor design, inadequate protective measures, operational errors, and deficient maintenance are almost always preventable. At a cost. Global engineering, procurement and construction, or EPC, companies and infrastructure owners are increasingly focused on developing affordable tech solutions that ensure industrial controls work right, human errors are mitigated, and malicious interference is prevented. It is a massive challenge to deploy technology to armor up new infrastructure builds, and perhaps an even greater challenge to incorporate successful cyber systems in legacy infrastructure such as electrical grids, hospitals, subways and pipelines. EPC giant Bechtel has launched an effort to tackle infrastructure’s cyber challenges, largely from an engineering perspective. Bechtel’s Industrial Control Systems Cybersecurity Technology Center was created to help customers protect large-scale industrial and infrastructure systems.

BY LORI MUSSER

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“What happens to a ship or office can affect what happens to a terminal or crane. The Colonial Pipeline shut down because their accounting network was hacked … The adversaries don’t have to get to the crane or gate or ship, they don’t have to control the throttle.” — Rob Scott, Bechtel sensor readings, there are valuable insights and actionable information. Bechtel’s ICS cybersecurity initiative helps customers refine that information. It helps customers protect and operate critical infrastructure through OT cybersecurity and asset performance management solutions that integrate process optimization, cybersecurity, and the asset-related software that runs the enterprise. This can involve numerous strategic partners, including, of course, cloud companies. The May 12, 2021, White House Executive Order, “Improving the Nation’s Cybersecurity,” included public-private data-sharing provisions that may prove helpful in the quest to secure U.S.-based infrastructure. “We have to find ways to work together. It is a new operating environment and requires new partnerships,” Scott said. That might include asset advisory teams with a life-cycle lens. “There is no one company that commissions, constructs, operates and maintains an asset.” Finding companies with merging interests that understand the integration and synchronization 42 BREAKBULK MAGAZINE www.breakbulk.com

required to build a dam, electric plant or road is a challenge, he said.

LEVERAGING SENSORS, STOPPING FAILURES

Scott said Bechtel’s approach to cybersecurity starts at the sensor level. “We leverage the asset’s existing original equipment manufacturers’ sensors. We look for data anomalies or system compromise.” Scott described a case where automated robots were having a high failure rate. “Engineering figured out that the percentage of foam in a water tank when serviced was an indicator of a failure in automation two weeks later. Now we track the foam and know when there will be an outage,” he said. In this way, the right data can help prevent shutdowns due to a simple sensor failure. “With the right data, you can make the right decision. Backups are expensive,” Scott said. Every toll booth or ship, pipeline or port can be hacked, and the industry continues to underestimate the interdependencies within the supply chain. “What happens to a ship or office can affect what happens to a terminal or crane. The Colonial

Pipeline shut down because their accounting network was hacked … The adversaries don’t have to get to the crane or gate or ship, they don’t have to control the throttle,” Scott said. Transportation systems are complex and if they are not synchronized there can be chaos. With that synchronization – which technology has improved greatly in recent years – comes vulnerability. Scott said the goal should be to make transportation infrastructure more resilient while finding ways to operate more efficiently. He said the improvements will be iterative as cyber solutions evolve.

CONTROLLING ICS

Ensuring infrastructure is not compromised requires expertise. Scott shares three recommendations to those responsible for such weighty tasks. First, approach it from a crossfunctional perspective. “It can’t be IT, or engineering, or Ops. This requires a cross-functional approach with trade- offs.” Second, there are no guarantees. The surest way to be hacked is to declare your asset’s invulnerability. There must always be robust plans for early threat identification and response. Third, follow the threats. Training and human behavior modification with workforce incentives are some of the most important aspects. And remember that everything comes back to the human element. Recent cyberattacks on major infrastructure could have been prevented by deleting an expired password, preventing the use of a USB drive with code running in the background, changing passwords, and other relatively simple cyber-hygiene efforts. “The adversary has the advantage right now. We have to be strong everywhere. The adversary has to get lucky only once,” Scott said. “But if we all work together, we find ways to radically improve resiliency.” BB Based in the U.S., Lori Musser is a veteran shipping industry writer. ISSUE 3 / 2021

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EVENT ESSENTIALS

Photo courtesy of Port of Lake Charles

WELCOME BACK TO BREAKBULK AMERICAS

Say hello

To new project cargo business It’s been a long time since we were able to get together face-to-face, and the Breakbulk team is ready! We’ve put together an event that will deliver everything you’ve come to expect from Breakbulk Americas—an exceptional group of exhibitors to explore, an on-target conference program and an engaging array of networking opportunities. We’ve also added Safe & Secure measures to protect all attendees, including either proof of vaccination or a negative Covid test to enter the event. If you’re looking to build the foundation for new project cargo business this year and for the years ahead, your opportunity starts at Breakbulk Americas 2021.

Jamie Reesby, Breakbulk Americas Event Director

What’s new for this year’s event Tuesday’s Welcome Reception has always been the most popular networking event at the show, so this year we’re making it more festive than ever before.

Western wear raffle and more. The party will continue over at The Rustic, immediately following the Ranch Reunion. All Breakbulk Americas participants are invited to return to The Rustic on Wednesday night compliments of ILA and WGMA. All three gatherings are included with your Breakbulk Americas pass. On the show floor, look for the newly revamped Breakbulk Global Shipper Lounge, an elevated experience for key decision-makers, along with an Association Lounge where our association partners can meet with members and prospective members. The main stage will feature an expansion of the Women in Breakbulk group to introduce effective mentorship and different paths to leadership to create a diverse and productive workplace. We’re bringing back the full-size event guide to provide not only a useful onsite resource but a comprehensive resource for post-show networking.

You’re invited to the Breakbulk Ranch Reunion, a celebration of the industry’s resilience and can-do spirit over the past two years. True Texas hospitality will be on display throughout the evening with a Taste of Texas Beer Garden, a variety of hosted watering holes, a

passholder who decide they need more time on the show floor. MORE TO SEE AND DO Jerry Nagel Education Day for students and jobseekers on Thursday. This session is free for authorized students. ECMC members will host personalized tours of the exhibition floor, the Greg Gowans Education Day Guided Tours, for students and job seekers looking to make real connections. Stop by to see the Hello Summer photo contest entries on display in Aisle J. On Sept. 14, the official MEET app will be available. Use it to set up meetings prior to opening to get the most out of your time at Breakbulk Americas. Register now at xpressreg.net/register/ BATC0921

As part of our Safe & Secure health measures, we will now require proof of vaccination or a negative Covid test to enter the event. See page 5 for details. A new one-day pass will be available for $99 for the day of your choice: Tuesday, Wednesday or Thursday. An upgrade will be available for any one-day

2021 BREAKBULK AMERICAS EVENT ESSENTIALS | americas.breakbulk.com

INTRODUCING

FIRST STOP

Houston

The Breakbulk Global Shipper Network (BGSN) brings together shippers at the world’s most important events for the project cargo and breakbulk industry, starting with Breakbulk Americas.

Qualifying BGSN members receive FREE passes to the exhibition and conference, access to the BGSN lounge—offering meals, refreshments and a quiet place to meet—along with a free print subscription to Breakbulk magazine. Qualifying Companies Oil & Gas • Energy • Aerospace Mining and Metals • Industrial Manufacturers • Engineering, Procurement and Construction If you work for a company in one of these sectors and would like to attend Breakbulk Americas 2021, go to xpressreg.net/register/BATC0921 and select “Global Shipper Network Members” and complete your registration. See you in Houston!

Photo courtesy of Mammoet USA

LOOK WHO’S COMING Shippers know Breakbulk Americas is the place to fill roles needed in on-going and new projects. The companies listed here all have representatives coming to the event. Air Products and Chemicals Aramco Americas Babcock Power Services Bay Ltd. Bechtel Corporation Boskalis Caterpillar ChampionX Cheniere Energy Covanta Energy Doosan Fuel Cell America Edgen Murray Enerflex Services Inc. Epiroc Drilling Solutions LLC ExxonMobil GE Georgia Pacific Halliburton Heurtey Petrochem Development Holland Southwest International Huntsman Corporation Island Group Enterprises (IGE) Jacobs Engineering KBR

Kiewit Kinder Morgan Linde Engineering Americas Marubeni-Itochu Steel America McDermott NASA Nordex, USA NOV Oil States Industries Olin ONCOR Electric Delivery Primetals UK Saipem Schlumberger Seabridge Energy Shell Siemens Energy Siemens Gamesa Renewable Energy, Inc. Tarsco Construction Corporation Tata Steel Europe thyssenkrupp Toshiba Logistics America Tricon Energy Vestas American Wind Technology Weco USA Westinghouse Electric Co. Wood Worley Zachry

2021 BREAKBULK AMERICAS EVENT ESSENTIALS | americas.breakbulk.com

EXHIBITORS A

Abbey USA Inc. - P22 ACME Truck Line - L14 Advanced Rigging Company - C54 Air Charter Service - K51 Air Partner - M17 Alatas Americas Inc. - N30 American Commercial Barge - N42 American Roll-On Roll-Off Carrier - H15 American Wind Transport Group - L34 Anvil Attachments LLC - L02 Apex Specialized Rigging and Moving - M42 Atlas Heavy Transport - P40 ATS - Anderson Trucking Service - G20 AUDAXIA - L19

Bahri - E41 Barnhart Crane & Rigging - H02 Basic Crating & Packaging - J50 Bateman Manufacturing & Winkle Industries (GRYB) - B41 BDP International - C20 Bellemare Transport - K23 Bengal Transportation - N23 Bennet International Group - J01 Big Top Manufacturing - K30 Bishop Lifting Products, Inc. - M43 Blaxtair - P20 BNSF LOGISTICS, LLC - F41 Bragg Heavy Transport - J31 Bremenports Gmbh& Co. KG - F25 Buckingham Heavy Transport - L13

D, E, F

G, H, I

G2 OCEAN - F17 Gateway Terminal - F24 Glovis America - P41 Goldhofer Aktiengesellschaft - J35 Guy M. Turner - H51 HAL, Inc. - H41 Hapag-Lloyd AG - G15 Harbor Freight Transport Corp. - J20 Holloway Houston, Inc. - C40 Houston Terminal - P51 HWH Corridor - M40 HWY H20 - C01 Hyster - Q21 Hyundai Material Handling - P11 Intermountain Rigging & Heavy Haul K18

J, K, L

Canal Barge Company, Inc. - E25 CargoLive Global Projects - M51 Carlile Transportation Systems Inc. - K04 Carver Maritime - C50 Cashman Equipment Corp. - H21 Central Boat Rentals - B02 Central Oceans USA - F51 Ceres Barge Line - H53 Ceres Terminals, Inc./Texas Stevedoring Services - F31 CES Srl - B33 Chapman Freeborn Airchartering - Q40 CIMOLAI TECHNOLOGY SPA - L25 CM Labs Simulations - P14 CMA CGM - D17 Colossal Transport Solutions - L17 Contractors Cargo Company - M10 Daily Express, Inc. - M21 Deep South Crane & Rigging - M30 Delta Southern Railroad, Inc. - N53 DeMase Trucking Co., Inc. - M52 DHL Industrial Projects - E11 Dixie Cullen Interests Inc. - G01 Dr. Shrink, Inc. - B31 DSR International Corp - B51

Eastern Lift Truck Co., Inc. - P31 Edwards Moving & Rigging - N32 EIMC LLC - L31 ELME Spreader AB - M25 Emmert International - K02 Eukor Car Carriers - G13 Fagioli Inc. - J21 Falcon International - C10 Farren International - J11 Faymonville - H25

JZI IntermodaLogistics, A RoadOne Company - N40 Kenco Bucket Trucks - B27 Konecranes Lift Trucks - D11 Landstar Systems Inc. - C30 Liebherr - D40 Logistec - M18 Logisticus Group - L35 Lone Star Transportation - H31 Lynden - L10

M, N, O

Magaya - B11 Mammoet - M02 Manson Construction Co. - L50 Mantsinen Group LTD Oy - J52 MARITIME ADMINISTRATION, USDOT - H01 MARTIN BENCHER GROUP - G51 MASABA - C15 Matcom - E01 Matson Logistics - D01 McDonough Marine Service - K11 Metro Ports - D25 Michelli Weighing & Measurement - J30 ML Crane Group - M23 Monarch Heavy Haul - M34 MSC Mediterranean Shipping Company - F11 MSRC - M22 Mullen Trucking Corp. - L23 Navis LLC - C11 NBIS - N21

NC Ports Authority - H23 NEK Group - C26 Noatum Logistics - B28 Northwest Logistics Heavy Haul - K34 NYK BULK & PROJECTS CARRIERS LTD. - N50 Omega Morgan - J24 OTR Wheel Engineering - P01 Oxbo Mega Transport Solutions - P32

PACIFIC OOG & PROJECT TRANS - K19 Palletized Trucking - J51 PEINER SMAG Lifting Technologies GmbH - L20 Perkins Specialized Transportation Contracting, Inc. - L11 PhilaPort - C28 Piazza Trucking - C27 Port Arthur - L18 Port Freeport - D10 Port Manatee - L40 Port of Baltimore - G50 Port of Brownsville - K20 Port of Corpus Christi - D24 Port of Everett - K41 Port of Galveston - L42 Port of Lake Charles - D14 Port of Longview - D30 Port of Pascagoula - H19 Port of Portland - K43 Port of San Diego - L21 Port of Stockton - M11 Port of Tampa Bay - J34 Port of Virginia - L51 Ports America - D20 Pro Box, Inc. - N41

Q, R, S

QSL - C31 Red Hook Terminals - D50 RHENUS Logistics - H11 Richards Transport Ltd. - K17 Roanoke Insurance Group Inc. - J15 Roll Group - M53 ROMCO Equipment Company - K25 Rubb Building Systems - L16 S & R Transport & Logistics | S & R Forklift & Rigging - N20 Sallaum Lines - N51 SANY - Q51 Sarjak Container Lines - D31 Sennebogen LLC - J19 Servygru Allroads S. de R.L. de C.V - C51 Silence Lines, LLC - P30 South Jersey Port Corporation - D42 Specialized Carriers & Rigging Association (SC&RA) - L15 SPMT-RENT B.V. - M50 SRT Transportation Solutions - L41 SSA - E17 Stevens Towing Co. - M20 Superior Trailer Sales - C22

2021 BREAKBULK AMERICAS EVENT ESSENTIALS | americas.breakbulk.com

SAFE & SECURE Swan Transportation - L60

T, U, V

Taylor Machine Works, Inc. - B30 TBA GROUP - J13 Terminal Link - L22 The Port of West Virginia - J22 The Vision Shipping Company - C43 THOR Global - N17 Three D’s Marine, Inc. - B23 TM Hydraulics - N19 Toplift North America - Q31 Totran Transportation Service Ltd. - C33 Tradelossa - J40 Trail King - L52 Trak Transportaciones - C24 Trans American Trucking & Warehouse - K32 TransPak, Inc. - B29 Tucker Company Worldwide - J17 Tulsa Ports - C25 Unified Logistics - G02 UTC Overseas - K24 Van der Vlist Transportgroup - K21 VERSTEGEN GRIJPERS B.V. - M24 Volga-Dnepr Unique Air Cargo - G30 Volvo Penta - N31

W, X, Y, Z

W.O. Grubb Crane Rental - G43 Wallenius Wilhelmsen Ocean - G13 WCS Permits - M41 Weeks Marine Inc. - M31 West Coast Packers and Port Services - K15 Westmor-Superior Industries - C53 Wiggins Lift Company - G31 XLG Transportation - K01 ZMac Transportation - P21

Safe & Secure Update: Proof of Vaccination or Negative Test Result Required for Entry In response to the evolving Covid situation, Breakbulk Americas will require all attendees, exhibitors and sponsors, staff, contractors and vendors at the event to either show proof of vaccination or a negative Covid test to protect the health of all participants. Proof of Vaccination Please bring your CDC issued COVID-19 Vaccination Record Card. It can be the original paper card, a paper copy, a photo stored on your phone or in an app, such as Clear or one provided by your state. Negative Test Alternatively, you may supply a negative COVID test that was taken within 72 hours. We encourage you to be prepared for this requirement prior to coming to the show. If you do not have either of these documents, there will be testing available nearby that you can acquire at your cost. What to expect at registration We are working on the logistics of these new requirements, and we will share additional details as we move closer to the event. Here’s what we know today: Your first stop will be at the screening station where your vaccine or test record will be checked. Note that the entrance doors to the building have thermal sensors for temperature checks. Once approved, you will proceed to registration. We urge you to print your badge before arrival in line with our contactless checkin program. You will receive a QR code with instructions in mid-September. You will pick up your lanyard and badge holder, and then be scanned as you enter the exhibition hall. There will be a limited number of printing stations for those that need to print their badges. Masks The CDC recommends masks be worn inside at public locations. Further guidance on masks will be released closer to the event. Hand Sanitizer & Cleaning Hand sanitizer stations will be available throughout the event space. We have contracted for additional cleaning between conference sessions and the venue provides rigorous cleaning on all high-touch surfaces and in high-traffic areas. Social Distancing The Main Stage, other content areas and the catering area and lounges will be set up with social distancing in mind and monitored to avoid overcrowding. Speakers Speakers participating in the Main Stage conference sessions and in Education Day do not have to wear masks while on the stage. Please check back for updates We will be sending further updates by email to registrants, posting to the Breakbulk Americas website, including in the Americas MEET app and posting to our Breakbulk Events & Media Linkedin page. We will keep the Americas Safe & Secure policy page up to date and invite you to check for updates. Our pledge to you As we all know, safety requirements and recommendations are in a state of flux as information emerges. We are in constant contact with local officials and can say with certainty that the safety of all involved in Breakbulk Americas is our priority and shared by Visit Houston and city officials.

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WHAT’S ON TUESDAY, SEPTEMBER 27 Registration Hours: 8:00 am – 8:00 pm Exhibition Hours: 5:00 pm - 8:00 pm 7:00 AM – 1:00 PM Maritime Workers Emergency Medical Fund Golf Tournament & Lunch - SOLD OUT Hermann Park Golf Course 5:00 PM – 8:00 PM Welcome Reception: Breakbulk Ranch Reunion George R. Brown Convention Center ∙ Halls D & E Embrace the spirit of Texas and celebrate the return of the breakbulk industry to Houston. SPONSORED BY:

8:00 PM – 10:00 PM After-party at The Rustic Let’s keep the party going! Join us at The Rustic - just steps from the GRB. Open to all Breakbulk Americas attendees (free of charge!).

WEDNESDAY, SEPTEMBER 29 Registration Hours: 8:00 am – 6:00 pm Exhibition Hours: 10:00 pm - 6:00 pm

MAIN STAGE CONFERENCE SESSIONS 10:30 AM – 10:40 AM Opening Remarks 10:45 AM – 11:20 AM Economic Outlook: The Evolving Impact of COVID on Business and Projects SPONSORED BY: This session will present an overview of how key industry sectors are continuing to recover from COVID and what the outlook is for the breakbulk and project cargo industry over the next 12-18 months. Carl Bentzel, Commissioner, Federal Maritime Commission

11:50 PM – 12:35 AM Infrastructure in 2021 and Beyond SPONSORED BY: With a potential $621 billion pledged for transportation infrastructure and resilience, this session will highlight the opportunities that are important to the breakbulk and project cargo sector. OPENING REMARKS: Steve Mickelson, Sales Director, Port of Vancouver USA MODERATOR: Martin Whitmer, Partner, Whitmer & Worrall LLC Andrew Gardner, President of Kiewit Supply Network, Kiewit Jeff Tucker, CEO, Tucker Company Worldwide Spencer Murphy, VP Risk Management, Canal Barge 1:05 PM – 1:50 PM US Offshore Wind: Are We Ready? The offshore wind market, bolstered by President Biden and supported by his BOEM analysts, is set to take off over the coming years. This session will provide a status report on when we can expect wind farms to be operating off the U.S. Northeast Coast and the steps that need to be taken in the meantime to ensure, as an industry, we are ready to meet the demand. MODERATOR: Greg Trauthwein, Vice President, New Wave Media Jonathan Zier, Director Business Development, Offshore Services, Crowley Shipping Percy R. Pyne, Chairman and Co-Founder, Green Shipping Line Tim Axelsson, Director, Liberty Green Offshore Walter Cruickshank, Deputy Director, BOEM 2:20 PM – 3:05 PM The Ocean Carriers Forum SPONSORED BY: This session will bring together top global ocean transport providers to discuss the current market status and what lies ahead for prices, fuel options and more. MODERATOR: Gary Burrows, Editorial Director, Breakbulk Events & Media Anders Hyrup, President, Jumbo - SAL - Alliance Andy Powell, Commercial Director, G2 Ocean Michael Morland, General Manager Americas, AAL ShippingM – 4:00 PM 3:35 PM – 4:20 PM Space Logistics: The Sky’s the Limit This session follows on from Breakbulk Magazine Issue 5’s feature story on the arrival of NASA’s most powerful rocket, the Space Launch System, known as the Artemis rocket, at the Kennedy Space Center. Learn more about the project and its immediate next steps, as well as the ins and outs of these specialized logistics. MODERATOR: Dominic Sun, Director, Trade Development, Port Houston

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WHAT’S ON Space Logistics: The Sky’s the Limit (continued) Andrew Shroble, Engineer – Project Manager and Integrated Operations Flow Manager for Artemis | Exploration Ground Systems Program, Jacobs Engineering Group Inc. Arlan Cochran, Team Leader for Logistics, Engineering and Marine Operations, NASA Liliana Villarreal, Exploration Ground Systems Program Operations Flow Manager, NASA Mark Nappi, Director, Space Launch System Core Stage Green Run, The Boeing Co. 6:00 PM – 10:30 PM Wednesday After-party Join the ILA & WGMA for a night of fun at The Rustic. Wear your Breakbulk Americas lanyard for entry. HOSTED BY:

Diversity & Inclusion in Breakbulk (continued) MODERATOR: Leslie Meredith, Marketing & Media Director, Breakbulk Events & Media Casey Cooper, Founder, The Compass Circle Charlye Hebert, Account Supervisor, VP Customs Brokerage, Bertling Logistics Georgine Guillory, President, Port of Beaumont Board of Commissioners, Port of Beaumont John Hark, Director, North America, Bertling Logistics ASSOCIATION REPRESENTATIVES: Citlalli Martinez, President, YoungShip Texas Kasey Eckstein, Sales, Ingram Barge and Founder & Executive Director of WIMOs

11:50 PM – 12:30 PM

THURSDAY, SEPTEMBER 30 Registration Hours: 8:00 am – 2:00 pm Exhibition Hours: 10:00 pm - 2:00 pm

EDUCATION DAY 8:30 AM – 10:30 AM Jerry Nagel Education Day George R. Brown Convention Center ∙ 3rd Floor, Room TBA Now in its 11th year, this special session provides an introduction to the project cargo and breakbulk industry for those considering a career in one of the most challenging sectors of transportation and logistics. Amy Hark, Director, Global Logistics Purchasing, Huntsman Corporation Stephen Spoljaric, Corporate Manager of Global Logistics, Bechtel Corporation 11:00 AM – 2:00 PM Greg Gowans Education Day Guided Tours Meet in exhibition foyer HOSTED BY: Tour of the exhibition floor led by members of the Exporters Competitive Maritime Council (ECMC), representing the leading U.S. EPCs, manufacturers and project forwarders.

MAIN STAGE CONFERENCE SESSIONS 10:20 AM – 11:20 AM Diversity & Inclusion in Breakbulk: How to Become a Diversity Champion Three women share their different paths to leadership, including their challenges and keys for success. We’ll then discuss mentorship, networking and other strategies to build a diverse workforce.

Oil & Gas: Their Role in the Energy Transition To help tackle climate change and reduce our reliance on fossil fuels, we are in the process of transitioning to a lowcarbon energy system. Oil and gas companies are reshaping their businesses and investing heavily in cleaner energy sources and technologies to ensure they are playing an important part in this unparalleled global challenge. MODERATOR: Tim Fitzgibbon, Senior Expert, McKinsey & Company Marco Poisler, COO – Global Energy & Capital Projects, UTC Overseas Philip Ovanessians, Vice President of Commercial Management, Worley Additional speakers to be confirmed 12:30 PM – 1:00 PM Technology at Work: Connecting to Improve Cost and Production SPONSORED BY:

New technology can provide solutions to many a challenge, but correct implementation and utilization is imperative to ensure optimum results and return on investment is achieved. Charles Thompson, CIO, Port Houston Deane Stuart, Head of Sales, Versiant Hans Bean, Senior Vice President Business Development, North Carolina State Ports Authority 1:00 PM – 1:30 PM Technology at Work: Specialized Hardware Is Soon Replaced by a Common Consumer Device SPONSORED BY: Leveraging mobile phones and tablets with their GPS, scanners, voice, camera and other features with connectivity to run a smart cargo operation. Peter Charron, VP Architecture, Navis

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BREAKBULK AMERICAS 2021 HAS THE FULL SUPPORT OF THE CITY OF HOUSTON AND MAYOR SYLVESTER TURNER FOR A SAFE AND SECURE EVENT

Hello Attendees, Exhibitors and Sponsors, I am excited to have members of Breakbulk Americas 2021 join us in Houston in late September. I understand this will be the region's largest trade event for the project cargo and breakbulk industry. It's also your first time coming together in 18 months. While I realize you may have concerns about meeting in a large group, I want to assure you that, in Houston, we are doing all we can to minimize the risks associated with the spread of COVID-19. So far this year, our city has hosted more than 50 safe and successful meetings and conventions. And there is no better facility than the George R. Brown Convention Center (GRB). The GRB was the first convention center in the country to install an Integrated Viral Protection (IVP) system, which is the world's first biodefense filtration technology proven to eliminate airborne contaminants like COVID19. Additionally, the GRB earned accreditation earlier this year from the Global Biorisk Advisory Council (GBAC) STAR Facility Accreditation Program-the industry gold standard of safe facilities. To meet the program's rigorous requirements, venues must establish and maintain detailed protocols and procedures on cleaning, disinfection and prevention of infectious diseases. A citywide task force developed the Houston Clean initiative to establish a unified standard among venues, events and major institutions to mitigate the spread of disease. Through our collective efforts, more than 100,000 guests safely attended events in the GRB in July. I applaud and support your proactive initiatives as an organization to further protect the well-being and health of attendees, exhibitors and staff by doing onsite temperature checks, and requiring proof of a vaccine or a negative test for those who enter the convention center. The pandemic has created an unprecedented challenge for all of us, but let me be clear, protecting everyone who lives, works and visits our city is a top priority. I want you to feel confident that you can safely explore Houston whether you are inside the convention center or visiting area hotels, events and attractions. By working together and following protocols recommended by health professionals, I know we can safely host Breakbulk here in Houston. And if you haven't already, I urge you to get vaccinated. Again, I look forward to you safely visiting Houston.

CASE STUDY

PETROCHEM PROJECT TESTS HEAVY-LIFT MOVERS

Extra Long Pieces Present Challenge for Logistics

espite turbulent times for the global downstream oil and gas industry, many firms in the petrochemicals sector have managed to weather the storm over the last year and have continued to deliver large-scale projects and yield growth. Project freight forwarding expert deugro has played a vital role in

one such project in the U.S., which started in June 2019 and at the time of writing was still being executed. With more than 550 shipments, including a considerable amount of outsized heavy-lift components, the project has involved delivery from worldwide origins for a petrochemical refinery expansion near Houston.

BY MALCOLM RAMSAY

Weighing a total of 24,246 tonnes (105,710 freight tons), the deliveries have included large overseas shipments from Italy, Vietnam, Korea, and China, as well as transports from domestic U.S. origins, Canada, and Mexico. The complexity of the project required detailed planning, coordination and method statement preparation.

Discharging operation at Houston City Docks. CREDIT: deugro

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ISSUE 5 / 2021

“Executing complex projects and operations is always challenging, especially in terms of the health, safety and security of everyone involved. The added impact of Covid-19 does not make it any easier,” Gert Jensen, senior vice president operations USA at deugro, told Breakbulk. “As project logistics service providers for industries with the highest quality and safety requirements, deugro and dteq have appropriate processes, experience and regulations in place for risk identification and solution design to minimize risk and this approach resulted in the safe and successful execution of all operations without any issues.”

CAREFUL PREPLANNING

Due to the high number of oversized heavy-lift components, 12 barge movements have been executed to date, including the transport of an impressive 91.9-meter-long and 485-tonne C6 column, originating from South Korea.

COLUMN MOVES

All moves for the C6 column, a 61-meter-long lights tower and a primary fractionator with a length of 49.9 meters – which all arrived on the same vessel from South Korea – were coordinated and executed by deugro in close collaboration with the transport engineers of dteq, a member of deugro group and involved in the delivery to Port Houston. The timeline for the project saw the partners complete these moves in mid-2020, in the midst of the global pandemic, raising a number significant challenges.

Having agreed to the terms of the project, the first phase of planning was to map out the route and ensure all measures were in place to avoid any adverse outcomes. “For the preplanning of such a challenging project, several important factors needed to be considered. These included the client’s budget, the cargo’s technical requirements, the project’s schedule, the selection of suitable transportation modes and equipment, the transport route, as well as local infrastructure, restrictions and safety regulations,” Jensen told Breakbulk. From an early stage, deugro worked closely with dteq to consider the individual transportation modes and the equipment used across all interfaces. This involved clear definition of every operational step and process in the form of detailed method statements. “Because of the complexity of the operations and the cargo dimensions and weight, deugro involved its project experts and dteq’s transport engineers from the early drawing review to the detail planning, method statement issuance and barge preparation to the on-site supervision and delivery,” Jensen added. dteq is an independent company of the deugro group and provides tailor-made transport and marine engineering services for the handling of oversized and heavy cargo, as well

as port captain, surveying and supervision services, and project consulting. In close coordination with deugro, dteq carried out a variety of analyses, technical studies, simulations, and calculations using computer-aided design software as well as internally developed calculation tools which had been certified by DNV. These evaluations were based on the individual cargo unit weights and dimensions and covered the complete marine engineering package, including stability and ballasting calculations, grillage design for load spreading, cargo securing calculations, mooring analysis as well as roll-on, roll-off simulations including trailer configurations. Franklin Alvarez, regional head of transport engineering for the Americas region at dteq, explained that special consideration was given to essential factors such as vessel outreach, lifting capabilities, barge and vessel stability, lashing applications, stowage options and external factors during the transshipment operations such as wind, weather, or river current.

LOADING CHALLENGE

With detailed plans in place, the partners commenced loading to the charter vessel BBC Coral, which was docked at the Port of Ulsan in South Korea. This multipurpose vessel was chosen due to its heavy-lift capabilities. Once the cargo was brought alongside by trailer, the components were loaded using the on-deck cranes. “Based on all the calculations, a suitable heavy-lift vessel had to be identified with appropriate stowing and lifting capabilities for the sea voyage as well as maximum crane outreach for discharge operations onto the barge,” Jensen explained. The loading was coordinated by deugro Korea and under supervision of the surveyor, with the C6 column, lights tower and primary fractionator lifted using the Coral’s 800-tonne combined lifting capacity. With the cargo safely loaded, the Coral set sail for the U.S. on May 5, 2020, travelling 9,641 nautical miles and arriving on schedule in Port Houston. www.breakbulk.com BREAKBULK MAGAZINE 47

CASE STUDY

The C6 column had to be placed “strategically” on the barge, as it hung over its stern by about 20 meters, dteq’s Niels Meldau said. CREDIT: deugro

Upon arrival at the port, the teams at deugro and dteq faced some of their toughest challenges of the project as the dimensions of the largest breakbulk items added restrictions to movement. The project plan called for the direct transfer to a barge, for onward transport by waterway to Scott Bay. “The most critical parts of the project were the discharge operation and final positioning on the barge of the 91.9-meter-long and 485-tonne C6 column from the multipurpose heavylift vessel onto the barge at the Port of Houston,” Alvarez said, “as the length and the weight of the column required precise lifting and balancing of the vessel.”

BARGE PARAMETERS

Based on the detailed method statements, the teams had calculated the optimal barge for on-carriage of the over-dimensional cargo as well as suitable tugboat constellations to safely maneuver the barge. With these in place, the barge was brought alongside the Coral, and two tugboats were utilized to position it and ensure it stayed in a specified offloading location throughout the discharge operation. “Transferring critical heavy-lift cargo from a floating vessel onto another floating object is always a challenging operation because both objects are exposed to dynamic factors, including wind, weather and river current,” Alvarez said. To combat this, the partners mandated regular communication between all team members to ensure they were aware of progress and any discrepancies compared with the detailed plans. Operation-specific toolbox talks with all parties were compulsory prior to the move with all stakeholders having 48 BREAKBULK MAGAZINE www.breakbulk.com

clearly defined responsibilities and lines of communication. “During the critical discharge operation of the oversized C6 column from the heavy-lift vessel onto the barge, the biggest challenge was the close and simultaneous communication between all stakeholders involved, and especially between the port captain, the crane, barge and tugboat operators, the stevedores, and the chief mate,” Jensen said. Niels Meldau, managing director of dteq, reinforced the point, noting that “high value, critical components with such impressive dimensions and weight require the utmost precise analysis at all the various steps in the handling process ... Everything must be engineered and managed to strict standards. There can be no room for error.” The requirement for detailed planning and management of risk when handling the C6 column was further increased as, at more than 91 meters long, it was far longer than the barge. As Alvarez explained, this meant that it “hung over the barge’s stern by approximately 20 meters” and as a result needed to be placed “strategically on the barge to ensure lashing according to engineering plans and to achieve proper load distribution on the structure of the barge.” The lights tower at 61 meters and the fractionator at 49.9 meters also required careful positioning.

SAFE ARRIVAL

Having successfully transferred the cargo to the waiting barge, the next stage on the journey was to sail the barge about 25 miles from Buffalo Bayou to Scott Bay. “The voyage from Buffalo Bayou to Scott Bay went smoothly,” Alvarez said, although additional tugs were required to maneuver for this part of the journey because the overhang was blocking

the line of sight for the tug operators. “Furthermore, due to its large overhang, additional tugs were needed to maneuver around Goat Island and enter the bay through the narrow stretch, also ensuring proper orientation of the barge while completing this maneuver in extremely shallow waters.” The route, while relatively short, added further complications for planning as it crossed the bustling ship channel outside the Port of Houston and passed through the shallow waters of Scott Bay. Throughout all stages, the teams not only had to safeguard against the typical health and safety risks in handling outsized cargo but also dealt with numerous restrictions due to the Covid pandemic. “Regarding Covid-19, bespoke processes developed by deugro group’s QHSES department monitored the dynamic situation in each country, providing guidance to employees on travel, risk assessments and office occupancy guidelines to ensure the highest safety levels,” said Tobias M. Schultz, executive vice president of deugro. This commitment to QHSES values, upheld throughout the project, was recognized in part when deugro received the ConstructSecure Gold Safety Award 2020, with Garrett Burke, CEO of ConstructSecure, commenting on the “remarkable job” that deugro (USA) had done in 2020 to keep employees and stakeholders safe and its “profound commitment” to managing down risk. BB Based in the UK, Malcolm Ramsay has a background in business analysis and technology writing, with an emphasis on transportation and ports. ISSUE 5 / 2021

REGIONAL REVIEW The swearing in ceremony of President Pedro Castillo. CREDIT: PRESIDENCIA PERÚ, CC BY-NC-SA 2.0

PERU’S POLITICAL PAWNS E Tax Hikes Put Miners on High Alert BY SIMON WEST

lection-weary Peruvians may have heaved a sigh of relief in July after another bitterly contested presidential race finally drew to a conclusion. But socialist Pedro Castillo’s victory has left the country’s mining industry fretting over an uncertain future. Castillo, a former schoolteacher

50 BREAKBULK MAGAZINE www.breakbulk.com

and union leader, was sworn into office on July 28 after right-wing rival Keiko Fujimori had reluctantly conceded defeat almost two months after a second-round vote, electoral authorities throwing out her claims of voter fraud. Fujimori’s business-friendly policies had chimed with Peru’s urban middle classes, but Castillo captured the rural

vote, tapping into widespread discontent in impoverished regions such as Cusco and Apurimac, home to some of the country’s biggest extraction projects. The runoff ballot on June 6 went down to the wire, with Castillo prevailing by just 44,000 votes out of millions cast to become Peru’s sixth president in a decade. ISSUE 5 / 2021

“It was a big shock,” said Beatriz De la Vega, partner at KPMG in Peru, on the 51-year-old’s triumph. “But over the years, the regular people, the families over there (in rural regions) were not getting any direct benefit, or they did not see in their own eyes the benefits of those industries.” Much of Castillo’s platform has centered on a broad restructuring plan designed to benefit the poor, whose numbers have swelled amid the devastation caused by Covid-19. While many of the policy proposals presented during the campaign trail were universally embraced, such as a pledge to clamp down on tax avoidance and corruption, other ideas put Peru’s business community – and in particular miners – on high alert. A plan to nationalize key natural resources including mining and natural gas assets has since been downplayed, but the president has stuck to his guns on proposals to lift taxes on profits and royalties for the mining sector. Such a hike would capitalize on soaring mineral prices, with the extra revenue used to fund significant spending increases on health, education and other public services, Castillo said in the election run-up.

FINDING A TAX ANGLE

Peru is the world’s No. 2 copperproducing nation after Chile, while also ranking among the top global producers of silver, gold, zinc, tin, lead and molybdenum. Mining accounts for about 10 percent of the country’s GDP, 60 percent of export income and a sizeable chunk of its breakbulk demand. “Copper prices are getting high, and production in Peru is increasing,” De la Vega said. “So Castillo was saying, ‘what I will do is analyze if I can create taxes, an additional tax in order to extract more from the extra profits that the industry is getting.’ ” Castillo has indicated he would double the state’s share of mining profits to 70 percent, a move that would require the new administration to renegotiate so-called tax stability agreements with international producers. Such deals, designed to lure investment in new mining projects, shield

BHA Cargo Logistic’s Piero Raffo said Castillo’s target of retaining 70 percent of mining profits would have a “strong impact” on the sector. CREDIT: BHA CARGO LOGISTIC

foreign firms from market turbulence by freezing tariffs for a decade or longer. Since the 1990s, some 25 stability agreements have been struck between governments and operators, including major Chinese companies, according to a recent Reuters report. “These deals last for many years,” an executive at Buenaventura, one of Peru’s largest producers of precious metals, told Breakbulk. “In effect it is so these companies that spend a lot can recover their investment with clear and predictable rules that do not change. The contracts cannot be modified, so the government would have to sit down and negotiate them on a case-by-case basis,” the executive said. Proposed tax hikes, rejigged stability deals and talk of nationalizations are fueling concern among industry players. “There have been other presidents in Peru over time that have gone into office with similar types of comments, and when they get into office, the reality of the importance of the mining industry to support their economies become self-evident,” said Richard Adkerson, CEO of Freeport-McMoRan, during a conference call in late July to discuss the firm’s second-quarter results. “We do not know now. We are working with the rest of the industry in Peru to present the case about the importance of copper mining to the country. But we will have to work our way through this. It is an uncertainty.”

SPECULATION AND STABILITY

Phoenix-headquartered FreeportMcMoRan, one of the world’s largest copper producers, owns the Cerro Verde copper and molybdenum mining complex in Peru’s southern Arequipa region. Cerro Verde entered into a new 15-year stability agreement with the government in 2014. Adkerson revealed during the call that a similar move by Chile’s congress to raise taxes on mining profits had forced the company to delay a decision on a multimillion-dollar expansion at its El Abra copper complex in Chile’s northern El Loa province. FreeportMcMoRan owns a 51 percent stake in El Abra, with Chile’s state-owned Codelco holding the remainder. “Forty percent of today’s copper supply comes from Chile and Peru,” the CEO said. “And now we have both countries going through a political process that is looking to get more for the governments away from the miners. We don’t know how all this will turn out and it is going to take time.” Other miners contacted by Breakbulk were unwilling to speculate so soon on how a Castillo presidency may affect investor confidence. Canada’s Hudbay Minerals, owner of the Constancia copper project in Cusco, said in an email it expected to work “constructively” with the new administration, while Anglo American pointed to ongoing investments www.breakbulk.com BREAKBULK MAGAZINE 51

Soaring copper prices are supporting investment in projects such as Quellaveco, shown here with a data rich overlay. CREDIT: ANGLO AMERICAN

at its US$5.3 billion, 300,000-tonnes per year Quellaveco copper mine in Moquegua, slated to start operations next year. Breakbulk movers active in Peru, meanwhile, are keeping a keen eye on developments. Mining is a key sector for logistics specialists, with recent projects such as the expansion of Southern Copper’s Toquepala mine in the southern region of Tacna demanding significant project cargo support. A dip in investor confidence leading to delays in new projects would deprive the industry of a valuable source of cargo-carrying contracts. Piero Raffo, logistics and forwarding manager at BHA Cargo Logistic, said Castillo’s target of retaining 70 percent of mining profits would have a “strong impact” on the sector that could result in a flight of capital. “We all know that the first source of work and employment is private investment, whether local or foreign,” Raffo said. “If investment dries up, if a mining company leaves because it is not good business, then obviously there is no exploitation of metals. And if there is no exploitation of metals then logistics do not work, and part of logistics is transport.” Soaring copper prices for the time being at least are supporting investment in projects such as Quellaveco and the expansion of Chinese firm Chinalco’s Toromocho copper mine in central 52 BREAKBULK MAGAZINE www.breakbulk.com

Junin. According to the energy and mines ministry, Peru could be producing 3 million tonnes of copper from 2023, up from 2.5 million tonnes in 2019.

LEANING ON CABINET HOPES

Castillo’s cabinet picks at the end of July have stirred mixed feelings among industry players. The president’s choice of the controversial far-left lawmaker Guido Bellido Ugarte as prime minister may have rattled investors, but the swearing in of the more moderate Fernando Francke as finance minister has given grounds for cautious optimism. “Francke is a left-wing economist, widely-known with a lot of experience, someone who really knows Peru,” said the executive at Buenaventura. Castillo’s political agenda may yet be hindered by a sharply divided congress. The president’s Marxist Free Peru party will occupy just 37 out of 130 seats in congress during the five-year legislative period, with centrist parties forming a majority alliance that analysts believe will try to block many of the government’s reforms. “The election was very close, but the congress is in the hands of the opposition and there are very strong groups against Castillo,” said Eduardo Dargent, a professor of political science at the Pontifical Catholic University in Lima.

“I try not to minimize the radicalism of some of the allies of Castillo. But his actions in the last weeks have been much more moderated than in the first round of the election, so my sense is that he is being pushed and at the same time he is becoming more convinced of the necessity to move towards a more moderate government.” “He needs to conduct a pretty complicated balance between the promise of change and the assurance to people that voted against him that things will not go in the direction of expropriation and all the other more radical stuff.” In a country that clocked the highest per capita Covid-19 death rate in the world, Castillo’s immediate focus will be driving the jobs recovery and rescuing a health system that came close to collapse. The economy has already begun to rebound, with BBVA Research predicting GDP growth of 9 percent this year and 4.3 percent in 2022. Castillo may decide that right now, with the situation remaining precarious, that locking horns with the mining industry – the engine of Peru’s economic revival – might not be such a wise choice. BB Colombia-based Simon West is a freelance journalist specializing in energy and biofuels news and market movements in the Americas. ISSUE 5 / 2021

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COPPER RUSH

Soaring Demand for Red Metal Sparks Supply Concerns BY SIMON WEST

t has been a tough few months for the mining industry in Chile, the world’s No. 1 copper-producing nation. Covid-related supply chain disruptions, a congressional bid to raise royalties on copper sales and the threat in August of strike action at Escondida, the largest copper mine on the planet, have jeopardized operations and output. One executive at a Santiagobased forwarder told Breakbulk that mining-related projects in Chile are “pretty much on hold.” Others are more bullish, pointing to the industry’s resilience during the pandemic. “The copper industry has never really diminished its activity that much,” said Rodrigo Izquierdo, deputy general manager at logistics firm Integral Chile. 54 BREAKBULK MAGAZINE www.breakbulk.com

“At some points during Covid, it slowed down a bit. But during the worst phases, it maintained its operational status. Copper is really important to the Chilean economy, so the government has done everything in its power to keep the industry going.” Its significance for project cargo as well cannot be overstated. Chile and its neighbor Peru produce about 40 percent of global mined copper supplies, providing breakbulk movers with a steady stream of cargo-carrying opportunities. Upgrades and expansions at industrial-scale copper mines, typically sprawling developments spanning dozens of square kilometers, depend on specialist logistics support to transport heavy and oversized cargo, from smelting plants to hulking dump trucks.

PROJECT LOGISTICS SUPPORT

A few hundred kilometers north of Escondida, across the border into Peru, Southern Copper’s open-pit Toquepala mine churns out copper ore locked up in volcanic rock formed high in the Andes Mountains 70 million years ago. Once dug and collected, the ore is broken up by giant rotating crushers, mixed with water and ground down to a fine powder by rod and ball mills, then sent by conveyor belt to concentrators to recover the ore’s copper and molybdenum in a process called flotation. The concentrate is transported a few kilometers west by rail to the coastal city of Ilo for processing at Southern Copper’s smelting plant, which has the capacity to manufacture 345,000 tonnes of copper anodes per year. ISSUE 5 / 2021

BHP’s Spence copper mine is located in the Atacama Desert, in the North of Chile. CREDIT: BHP

A nearby solvent extraction and electrowinning, or SX-WE, facility produces grade A copper cathodes, which are then shipped to industrial sectors around the globe. In July, Toquepala took delivery of some heavy cargo as part of a multimillion-dollar investment package Southern Copper has earmarked for the mine this year. The cargo was shipped from Europe to the Arica Port Terminal in northern Chile, and from there was picked up and transported to Toquepala by Chilean project cargo specialist Ulog. “In our industry, mining is the most important sector, and the one we focus on most,” said Ulog’s Nicolas Araya. Other major producing nations include China, the world’s largest copper importer, the U.S., Australia and the Democratic Republic of

Congo, Africa’s biggest metals miner and the world’s No. 1 cobalt producer. Europe’s largest producer is Poland’s KGHM, a state-run mining enterprise that last year produced 710,000 tonnes of copper, mainly from three underground mines at Lubin, Rudna and Polkowice-Sieroszowice. Development at KGHM’s Deep Glogów copper mine in western Poland, the biggest underground non-ferrous metals mining project in Europe, will enable current extraction levels to be maintained “for the next several decades.” KGHM also owns stakes in several overseas assets, including the Sierra Gorda open-pit copper and molybdenum mine in Chile’s northern Antofagasta region. “It is a great challenge to cooperate with such a big and prestigious company,” said Joanna CzubaSzafranska, owner of JCS Trade and Services, a Poland-based heavy-lift specialist that provides logistics support for KGHM projects. “It is fabulous transporting big and challenging loads like absorbing towers and large filters, or moving special lifts used to replace mining lines.”

RECORD DEMAND

Driven by pandemic recovery and a clean energy transition with an insatiable thirst for metals and minerals, copper demand is soaring. Over the next two decades, consumption could rise by 50 percent, according to the International Copper Association, or ICA. Copper is a highly efficient conductor of electricity and heat, and is widely used in industrial machinery and equipment, communication technologies, construction materials and transport. Fast-expanding industries such as renewable power and electric vehicles are demanding ever-higher quantities of the metal. Electrical vehicles, for example, use up to three times the amount of copper required in gasoline cars, while in renewables, the largest offshore wind farms can contain 30

tonnes of copper per turbine in their ring generators, the ICA said. The metal’s recyclability also boosts its popularity among end users. Recycled copper, or secondary copper, is one of the few metals to retain its chemical and physical properties once reprocessed. Concerns are mounting though over whether enough of the material is being produced to meet this surging demand. The world is unlikely to run out – the U.S. Geological Survey, or USGS, estimates worldwide reserves of some 870 million tonnes, with yearly demand standing at 28 million tonnes. Resources including undiscovered deposits could top 5 billion tonnes, the USGS said. But a lack of investment in new projects is pointing towards a supply crunch. Bank of America said in May that current stocks cover just three weeks of demand, levels not seen for more than 15 years. Low inventories have already pushed London Metal Exchange prices this year to a decadehigh US$10,000 per tonne, with the Bank of America warning prices could hit US$13,000 in the coming years. The shortfall could be as large as 16 million tonnes by 2040 if serious spending on new capacity fails to materialize, according to consultancy Wood Mackenzie.

INVESTMENT HOPES

The higher price environment, on paper at least, should spur investment. “The taps cannot be turned back on that quickly, but if prices do remain at sustained levels then inevitably we will start to see increasing numbers of new projects being announced,” said Simon Morris, head of metals at Wood Mackenzie. “With such spikes in prices, producers will be wary of basing multi-decade investments on potentially short-term blips. As such, they will be assessing whether what we are seeing today is likely to translate into more sustained price uplifts beyond the here and now.” www.breakbulk.com BREAKBULK MAGAZINE 55

MARKET SPOTLIGHT

Hudbay Constancia copper mine processing plant Peru. Peru and its neighbor Chile produce about 40 percent of global mined copper supplies. CREDIT: HUDBAY MINERALS

The readiness of producers to bring new capacity online can rest on factors other than price. Government policy, for one, is hampering the start-up of several world-scale projects. President Pedro Castillo’s pledge to double the government’s share of mining profits to 70 percent is unsettling the industry in Peru, while in the U.S. the Biden administration has adopted a more rigorous approval process before giving the thumbs up to extraction projects. In March, the U.S. Department of Agricultural withdrew consent for the proposed Resolution underground copper mine in Arizona, a joint venture between Rio Tinto and BHP, to allow further consultation with environmental and indigenous groups. The project had been rubber-stamped by former President Trump just weeks earlier. Another factor is geography, and the logistics required to mine valuable deposits, especially those located in remote and hard-to-access places, such as in the Andes, on the Pacific Ocean floor or in the Arctic Circle. “The more remote the project the more complex it will be to turn it into an operating mine,” Morris said. 56 BREAKBULK MAGAZINE www.breakbulk.com

GOVERNANCE ISSUES ABOUND

The risks associated with environmental, social and governance, or ESG, criteria may also deter investment. Stakeholder pressure to engage with local communities, fund development projects, preserve water supplies and reduce the environmental impact of operations pushes up costs and lead times for miners, who find themselves increasingly at loggerheads with local conservation and indigenous groups. “ESG challenges may lead to the postponement or delay of projects, or at least an increase in costs relative to the past,” said Charlie Durant, a copper analyst at metals consultancy firm CRU. “The industry though must not lose sight of the need for future copper supply. This supply will be more technically complex, have higher project capex than in the past and will require a more complete social license to operate.” Adapting to strict ESG standards, costly perhaps for producers, can translate into opportunities for breakbulk. BHP has recently finished work on its Escondida water supply expansion project, which has increased the mine’s desalination production

capacity to some 3,300 liters per second. The original water supply plant, one of the world’s largest and most complex desalination infrastructure projects, was brought online in 2017 as part of BHP’s transition away from groundwater resources for its mining operations. The project called for the installation of a twin 42-inch diameter, 180-kilometer pipeline, four highpressure pumping stations and a reservoir to move water from Chile’s Coloso Port across the Atacama Desert to Escondida. Another 15 desalination plants for the mining industry are expected to start operations by 2028, adding to the eight plants and three seawater impulsion systems already up and running in Chile, according to the government. Antofagasta Minerals, Teck, Capstone Mining and stateowned Codelco, the largest copper company in the world, are among the producers involved in the construction projects.

MAKING SUBSTITUTIONS

While supply constraints on copper hinder production, price rises trigger substitution, as end-users opt for cheaper alternatives. ISSUE 5 / 2021

MARKET SPOTLIGHT

Escondida copper mine, the largest in the world. CREDIT: BHP

The most to benefit from the switch is aluminum, cheaper and lighter than copper but also possessing lower conductivity and durability. Aluminum, which accounts for about half of copper’s substitution, is commonly used in high and mid-voltage power cables, but less so when end uses are constrained by weight or tighter spaces, such as in car wiring or in small electronic systems. According to Durant, the pace of substitution has slowed in recent years. Just 1 percent loss of market size though is equivalent to almost 250,000 tonnes per year of copper. “Many markets have already seen large moves out of copper, and these losses are likely permanent, but these switches can only happen once,” the analyst said. “The copper industry has seen some rapid changes before. For example, the shift away from the use of copper plumbing tubes in favor of plastics during the early 2000s, or the increasing use of fiber-optic cables and wireless that has resulted in an 85 percent reduction in the previously 1 million tonne per year copper external telecoms cable market. Other changes have been more subtle or geographically focused.” By far the biggest aluminum producing and consuming nation is China, 58 BREAKBULK MAGAZINE www.breakbulk.com

accounting for some 60 percent of global output. Disruptive technologies, meanwhile, also threatening to cut into copper’s market share, could provide breakbulk with a potential source of future work. UK-based Tirupati Graphite for example has developed an aluminum and graphene composite with 95 percent of the conductivity of copper. The lightweight product, while still in testing phase, could eventually replace the metal in thermal, power and propulsion systems. Graphene is sourced from Tirupati’s Vatomina and Sahamamy graphite extraction projects in Madagascar, with upgrades at the two mines expected to boost capacity to 81,000 tonnes per year by 2024. Graphite is used in more than 150 applications, according to Tirupati, including coatings, thermal management conductivity and rubber tires. “We are expanding to become a large-scale operation in terms of the graphite market,” said Puruvi Poddar, head of business and corporate development at Tirupati.

RISING TO CHALLENGES

Despite the challenges to copper, higher prices have given the industry a

shot in the arm. Global copper mining capacity is rising, albeit slowly, slated to reach 29.5 million tonnes by 2024, up by 22 percent on 2019 levels, the ICSG said. Prices retracted slightly in August on the back of slower demand from China, but analysts speaking to Breakbulk expected a rebound sooner rather than later. In Chile, project cargo movers remain resolute, despite political developments that are generating uncertainty for the mining industry. Chile’s lower house has already approved a bill that would alter existing tax structures for miners, which could result in levies on pre-tax income exceeding 70 percent. The proposed regime, tagged to copper prices, has been sent to the Senate for scrutiny. “We are very attentive to what is decided and we will react as quickly as we can,” Integral Chile’s Izquierdo said. BB Colombia-based Simon West is a freelance journalist specializing in energy and biofuels news and market movements in the Americas. ISSUE 3 / 2021

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INLAND TRANSPORTATION

ON THE FRONT LINE Breakbulk Supports UAE’s First Nationwide Rail Project BY SIMON WEST

heavy-haul locomotive pulling more than a hundred 30-tonne hopper wagons loaded with granulated sulfur cuts through the desert dunes of Rub’ al Khali in the United Arab Emirates. The convoy, stretching for almost two kilometers, is transporting the sulfur – a by-product of the Abu Dhabi National Oil Co.’s natural gas operations at Shah and Habshan – to the Port of Ruwais on the UAE’s Middle East Gulf coast for processing and export. 60 BREAKBULK MAGAZINE www.breakbulk.com

The initial stage of the UAE’s first national rail network began operations in 2016. Since then the 264-kilometer line linking the Shah and Habshan fields with Ruwais has delivered almost 40 million tonnes of granules for ADNOC, with two trains shifting a combined 22,000 tonnes per day. The project, developed by Etihad Rail, is now entering its crucial second stage, a 605-kilometer route connecting all seven emirates from the town of Ghuweifat on the Saudi border to Fujairah on the Gulf of Oman coast

via Abu Dhabi, Dubai, Sharjah and Ras al Khaimah. The network is expected to help the UAE diversify its oil-dependent economy and support its green ambitions by cutting CO2 transmissions from road transport by up to 80 percent. Planned expansions into Abu Dhabi’s desert interior would stretch the route to 1,200 kilometers, while the terminal at Ghuweifat would link to the rest of the Gulf Cooperation Council, or GCC, in a proposed region-wide rail system. ISSUE 5 / 2021

“The advantage of the railway for them is that it is able to haul big quantities of natural resources,” said Kevin Smith, editor-in-chief at the International Rail Journal. “Extracting the mineral wealth and transporting it out of the country – the most efficient way to do that is by rail, especially from the interior where the environment is a lot more hostile.”

STAGED DEVELOPMENT

Etihad Rail has divided the second stage into four so-called packages. Package A, a 139-kilometer line from Ghuweifat to Ruwais, is being built by a joint venture between China State Construction Engineering Corp. and South Korea’s SK Engineering and Construction. Track-laying for the route began in January, with local heavy-lift specialist Al Faris hired to shift the first shipment of rails. The Dubai-based company used custom-built flatbed trailers to carry the 25-meter-long rails 250 kilometers from the Port of Mina Zayed in Abu Dhabi to Etihad Rail’s laydown zone at Ghiyathi. Some 12,000 tonnes of track were hauled through the desert in 250 separate trips over 26 days. The forwarder was also recruited this year to deliver seven of 38 locomotives earmarked for second-stage operations. The 138-tonne engines, designed and built by U.S.-based Progressive Rail and fitted with special filtration systems to keep sand out of the components, were carried in one overnight convoy using Goldhofer Transport THP mechanical trailers. Other heavy items requiring breakbulk support include earthmoving equipment, track-laying engines and freight wagons, which are expected to number more than 1,000 once the network is fully operational. Some 842 wagons boasting four different capacities are being designed, built and delivered by China’s CRRC Yangtze, according to Etihad Rail. Packages B and C linking Abu Dhabi’s Khalifa Port and Khalifa Industrial Zone with Dubai’s Jebel Ali Port, the Middle East’s busiest shipping destination, were awarded to

China Railway Construction Corp., or CRCC, and Abu Dhabi-based Ghantoot Transport and General Contracting Co. For Package D, CRCC engineers are using blasting techniques to hollow out 16 kilometers of tunnel through the Hajar Mountains, forming part of the route connecting Dubai to Fujairah. A joint venture between the Chinese firm and Abu Dhabi’s National Projects and Construction is also building 35 bridges and 32 underpasses through the craggy terrain. An operations and maintenance facility at Al Faya is partially complete, while a purpose-built, 9,000-square-meter factory at Saih Shuaib has a capacity to churn out 3,200 pre-stressed concrete sleepers per day. The 2.6-meter-long, 340-kilo sleepers are made from cement and aggregates sourced from quarries in the northernmost emirate of Ras Al Khaimah. “Engineering-wise, building a railway in the desert is easy in the sense that there are no buildings in the way, but difficult in that it is quite a hostile environment with high temperatures and moving sand dunes,” Smith said. “There are a lot of things you have to do on a desert railway that you do not have to do on a conventional railway to protect the infrastructure.”

AN ‘AGGRESSIVE TIMELINE’

Installing the first stage of Etihad Rail, which was carried out simultaneously with the construction of the Shah gas plant and a ship-loading facility at Ruwais – as well as upgrades at Habshan – was no mean feat. More than 4,000 workers and 30 subcontractors took less than three years to complete the line. The excavation of more than 90 million cubic meters of earth and the installation of civil works, tracks and systems were carried out by lead contractor Saipem, an Italian firm operating in the energy and infrastructure sectors, alongside partners Tecnimont and UAE-based Dodsal. “The project was delivered under a very challenging and aggressive timeline,

with key dates based on the two sulfur producing plants and the ship-loading facility all coming on stream,” a Saipem executive involved in the project told Breakbulk. “Specific training was provided for desert working conditions, such as driving in sand and recognizing and combating dehydration and heat stroke. Other training highlighted the risks from snake bites during the summer.” Minimizing the environmental impact of the project was also a top priority, with the contractors working closely with Abu Dhabi’s environment agency to safeguard protected forests and animal habitats. “Bridge crossings and reinstatements of tracks were extensively carried out using underpasses and overpasses, special camel crossings were provided every seven kilometers, reptile crossings were also provided and wadi crossings for seasonal hydrological events were included,” the executive said. The second stage, which could eventually be tailored for passengers, poses even greater tests for contractors. Excavation work through the Hajar mountains for example is demanding “softer” blasting techniques to ensure stability and to protect biodiversity, while integrating the network with the UAE’s ports is a major challenge. Roger Clasquin, CEO of RAK Ports, a chain of ports located in Ras Al Khaimah, said rerouting internal traffic in existing terminals to accommodate rail hubs would require significant investment in bridges, tunnels and other costly infrastructure. “Discussions (on integration) are still ongoing,” the CEO said. “In Fujairah the rail will end up inside the port. In other locations it will make more sense to have a railway siding where the cargoes are being produced and received so it does not necessarily have to be at the port.” Contacted by Breakbulk, Etihad Rail was unable to provide a timeline for the second stage, although previous projections had completion slated for 2024. www.breakbulk.com BREAKBULK MAGAZINE 61

INLAND TRANSPORTATION

The Operations and Maintenance facility at Al Faya will be the largest and the most significant on the network. CREDIT: ETIHAD RAIL.

In statements, the developer said the fully functioning network would shift close to 60 million tonnes per year of containerized and bulk freight, including petrochemicals, aggregates, construction related materials, industrial and perishable goods, waste and cement.

BRINGING IN CONTRACTORS

Freight contracts between Etihad Rail and producers are already being signed off. In April, mining company Stevin Rock signed a deal with the developer to transport raw materials from Ras al Khaimah to Abu Dhabi for use in the construction, cement, steel, mining, glass and chemical industries. Some 3.5 million tonnes will be shipped from Stevin Rock’s Al Ghail quarry in 500 annual trips, according to a release. Meanwhile, neither Etihad Rail nor the UAE’s federal transport authority 62 BREAKBULK MAGAZINE www.breakbulk.com

could provide an update on plans to connect the six members of the GCC – the UAE, Saudi Arabia, Qatar, Oman, Bahrain and Kuwait – in a region-wide rail system. The 2,177-kilometer Gulf Railway has hit several stumbling blocks since being approved by member states at a 2009 summit. “The broader GCC rail network project has faced delays for multiple reasons, some based on fiscal restraint since 2015 and some on basic regional integration problems of a more political nature,” said Karen Young, a senior fellow at the Washington, DCbased Middle East Institute. “There are more efforts on a national basis to develop new logistics and transport projects. How these connect and create synergies for the region is less clear.” Linking the UAE to the rest of the GCC would be relatively straightforward, with national networks, tracks and systems in the region in line with U.S. and European standards, according to Smith.

“It is not a case where one of the countries is very different to the other and that will cause interoperability issues. They are on the same page of what they are building, so you will be able to run cross-border,” Smith said. A green light for such an ambitious project would be a boon for breakbulk. According to Shashi Shekhar, chairman at the Dubai-headquartered Supply Chain and Logistics Group, cargo-carrying opportunities linked to a GCC train network could be worth in the region of US$30 billion to US$40 billion. “Investment in railway infrastructure is for sure creating big transport and logistics opportunities for the heavy-lift and movement industry,” Shekhar said. BB Colombia-based Simon West is a freelance journalist specializing in energy and biofuels news and market movements in the Americas. ISSUE 5 / 2021

CMA CGM PROJECT CARGO DIVISION

EXCEEDING YOUR BIGGEST EXPECTATIONS

REGIONAL REVIEW

MADE IN THE UAE Breakbulk Win with Plan to Fire Up Nation’s Industrial Base

or the United Arab Emirates, 2021 is turning out to be an “annus mirabilis.” The 50th anniversary this year of the UAE’s unification has already seen the start-up of commercial operations at the nation’s sole nuclear power plant and the arrival of its first space mission to Mars. Both feats were milestones for the Arab world. Also launched this year, albeit with less fanfare than the Hope space probe, was Operation 300bn, touted as a major driver in the UAE’s bid to diversify its hydrocarbon-dependent economy and usher in a new era of economic and environmental sustainability. 64 BREAKBULK MAGAZINE www.breakbulk.com

Spearheaded by the Ministry of Industry and Advanced Technology, or MoIAT, and backed by the state-run Emirates Development Bank, or EDB, the 10-year strategy is seeking to fire up the nation’s industrial base and more than double the sector’s contribution to gross domestic product from 133 billion dirhams (about US$36.2 billion) to 300 billion dirhams by 2031. “The strategy will achieve a giant leap in the UAE’s industrial sector to become the main driving force of the national economy and lead the journey of our next 50 years with greater confidence and speed,” Sheikh Mohammed bin Rashid Al Maktoum, Dubai’s ruler and UAE vice president, said at the launch in March.

BY SIMON WEST

PROJECT FOCUS

Operation 300bn will put into action a series of initiatives that aim to raise the country’s profile beyond oil and gas to a hub for advanced technology, innovation and clean energy. Research and development will boost the efficiency of supply chains, with the MoIAT planning to roll out fourth industrial revolution technology, or 4IR tech, to support productivity. An in-country value, or ICV, program will direct spending towards local products stamped with “Made in the UAE,” while digital processes will be upgraded to simplify registration, licensing and fee procedures. ISSUE 5 / 2021

RAK Ports is keen to attract more project cargoes from Ras Al Khaimah’s large fabrication cluster. CREDIT: RAK PORTS

emirates of which we are one of the smallest, so typically these exercises are very Abu Dhabi-Dubai centric. But there will definitely be a positive spinoff for us as well.” “If you have seen the development of Abu Dhabi and Dubai in the last 40 years, it has been really quite staggering. And now they are moving on to the next phase, not being renowned for just skyscrapers and for winter tourism and for producing oil, but really for other things. So they are quite clever and keen to profile themselves and change course and strategy.”

CHANGE OF FORTUNES

The country’s industrial law is being overhauled, meaning overseas investors will enjoy a more favorable regulatory environment and a chance to own 100 percent of their onshore companies, doing away with previous rules stating that 51 percent of shares had to be held by one or more UAE nationals. “Investors will be attracted by the expected easing of complex setup structures and remaining regulatory barriers to entry, so there will be a boost to foreign investment, supported by complementary government incentivization schemes,” said Neil Quilliam, an associate fellow with the Middle East and North Africa program at Chatham House in London. “The

UAE is among the leaders regionally in this regard.” Operation 300bn is zeroing in on a number of industries, including petrochemicals, plastics, renewable energy, machinery and equipment, metals, space technology, food, agriculture, pharmaceuticals and water desalination. The strategy has already got the thumbs up from industry executives. “The country is always jumping from one initiative to the other, so they never rest on their laurels, and this is another example. I think it is a great thing,” said Roger Clasquin, CEO of RAK Ports, a network of ports located in the UAE’s northernmost emirate, Ras Al Khaimah. “The UAE is seven

The unveiling of Operation 300bn has brightened the prospects for an economy still recovering from Covid19 and the slump in oil prices. The nation has also had to contend with rising competition from its neighbors in the Gulf Cooperation Council, or GCC, who are keen to poach foreign talent and money from the region’s main business and logistics hubs in Dubai and Abu Dhabi. Rivalry with Saudi Arabia in particular has been building, coming to a head in early July after the two nations fell out amid a dispute over oil production levels within OPEC. This followed an announcement from Saudi Arabia in February that it would no longer work with foreign companies whose Middle East headquarters were located in any other country in the region, a move seen as a challenge to the UAE. “Saudi Arabia has made some ambitious announcements in recent months with a view to gaining the upper hand over regional competitors. But for both the UAE and Saudi Arabia, and even other GCC states such as Qatar, developing a viable alternative energy and industrial strategy will require time and significant capital investment, both state-led and foreign,” Quilliam said. “The UAE already appears more advanced with efforts to diversify income sources, but has also accelerated government-led initiatives and legal and regulatory changes to improve the business and operating www.breakbulk.com BREAKBULK MAGAZINE 65

REGIONAL REVIEW

A focus on “future industries” is likely to benefit breakbulk and project cargo in the UAE. CREDIT: RAK PORTS

environment. The momentum around national strategies such as Operation 300bn and the recently approved National Agenda for Non-Oil Export Development (a plan aimed at breaking in to 25 new markets and boosting exports by 50 percent over the next decade) is strengthening.”

BREAKBULK BOOM EXPECTED

The MoIAT’s focus on “future industries” is likely to benefit breakbulk

and project cargo, with the buildout of clean energy infrastructure calling for significant logistics support. The Abu Dhabi National Oil Co., or ADNOC, has already set its sights on becoming a major force in blue hydrogen, a cleaner form of hydrogen created when carbon is captured and stored during the processing of natural gas feedstock. ADNOC is developing its first world-scale blue ammonia facility at the TA’ZIZ chemicals plant at Ruwais

on the Middle East Gulf coast, with start-up slated for 2025. The statecontrolled energy giant, which already produces more than 300,000 tonnes per year of regular hydrogen, would use locally sourced blue hydrogen and nitrogen as feedstocks. Mandar Apte, an Abu Dhabibased project manager at engineering, procurement and construction firm TechnipFMC, said green hydrogen – derived from renewable energy sources such as wind or solar – could also play a key role in achieving the goals of Operation 300bn. “The cost of today’s expensive green hydrogen is expected to decline by up to 85 percent by 2050 and to cost less than natural gas by 2050. One can only imagine the possibilities and opportunities,” Apte said. “If we have to reach there by 2050, efforts must be made today. One aspect is installing industrial capacities to produce large quantities of hydrogen and achieve economies of scale. This includes the cycle of setting up

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66 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 5 / 2021

REGIONAL REVIEW

industries, construction, production and supply and distribution. Second is to redouble the efforts towards R&D to ensure that the requisite technological achievements are not just made but bettered.”

FINANCING TO LIFT PROJECT DEMAND

A further potential source of breakbulk work stems from the EDB’s allocation of 30 billion dirhams to UAE-based companies over the next five years. Financing packages will be offered to 13,500 new small-tomedium enterprises, or SMEs, a move that is expected to create 25,000 jobs in the industrial and manufacturing sectors. “Our expectation is to see an increased volume of heavy-lift and outof-gauge cargo movements coming out from newly established or expanded engineering and fabrication yards,” said Rajesh Damodaran, business development manager at Dubai-based Polaris Shipping Agencies.

Ports in the UAE could also benefit from the strategy. The nation is already home to several world-scale ports, including Jebel Ali in Dubai, the Middle East’s busiest shipping destination, Khalifa in Abu Dhabi and Fujairah on the Gulf of Oman coast. RAK Ports, which has invested more than US$250 million in infrastructure upgrades and plant equipment, controls four world-scale ports in Ras Al Khaimah. The largest of those, SAQR Port/Free Zone, located 50 kilometers north of the city of Ras Al Khaimah and strategically located near the Strait of Hormuz, handles some 60 million tonnes per year of cargo, mainly bulk exports of aggregates, limestone, cement and clinker from the emirate’s extensive rock quarries. According to Clasquin, RAK Ports is keen to attract more project cargoes from Ras Al Khaimah’s large fabrication cluster, which until now has imported and exported mostly through other UAE ports.

The group wants to diversify its port activities and is in the process of building a new port on a tract of land currently used by quarry companies. The new facility’s first usable infrastructure is slated to be ready by early 2024 and would be used to handle non-bulk such as project cargo or liquids. “The quarries, they have a lot of surplus material, which they basically have to dump. And we have decided that we could actually reclaim an area of land and diversify our port activities,” Clasquin said. “(The port would also handle) commodities like agri bulk, grains, making sure that we are in time for the food security program. “In that sense, Operation 300bn ties in very nicely with our own port developments.” BB Colombia-based Simon West is a freelance journalist specializing in energy and biofuels news and market movements in the Americas.

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www.breakbulk.com BREAKBULK MAGAZINE 67

PROFILE

BY FELICITY LANDON

AT THE SHARP END

Natco’s Joerg Roehl on Remaining Fresh and Flexible

yclical, dynamic, challenging, unpredictable – whatever label you might like to attach to the world of shipping and logistics, Joerg Roehl has been at the sharp end of it all. More than three decades since he took his first steps into the industry as an apprentice fresh out of school, Roehl is now a global board member of Trans Global Projects Group and CEO of TGP’s subsidiary Natco, based in Switzerland. Along the way his career has included taking over as managing director of Beluga Shipping a matter of days before the company ran out of 68 BREAKBULK MAGAZINE www.breakbulk.com

financial road; creating Hansa Heavy Lift out of the Beluga ashes (or vessels, to be specific); and then, after moving on from Hansa, seeing that company becoming an unfortunate victim of the market. Anyone who knows him, however, will recognize the positivity. He has overseen significant growth at TGP in the past four years; he relishes the challenge of decarbonization; and he has re-embarked on the journey of parenthood, recently becoming a father all over again. More used to traveling frequently, he has been enjoying the opportunity to work at home and have family time during the pandemic.

LOGISTICS BY LUCK

Roehl’s career started in 1989 when he decided to take up an apprenticeship in freight forwarding and logistics in Germany. “It seemed a good starting point – there was no particular motivation to go into logistics, although my mother was active in the industry,” he said. “I decided I would rather do this, a hands-on job, than go into banking.” In 1994 he decided to study full time for two years to gain a degree in economics, with the focus on logistics. From completing his degree in Bremen, he went straight to Singapore to take up a job with Kuehne + Nagel. “I ISSUE 5 / 2021

was 26. It was a tough experience but a great opportunity,” he said. “I worked as part of the company’s in-house consulting team.” After three years, he was offered a position as managing director of GeisSDV, a competitor in Singapore that subsequently became part of Bolloré. This was a big career move, putting him in charge of the Singapore office and the whole of Southeast Asia. “It would have taken a lot longer to advance in that way if I stayed in Kuehne + Nagel,” he said. He stayed with Bolloré for 10 years, working in Singapore and then Frankfurt. In 2009, he joined Agility as senior vice president sales and marketing for Europe, staying for two years. The common thread throughout these moves was project logistics: “Even in Germany before I studied, we moved factory equipment and machinery, and at Kuehne + Nagel we moved items such as mailing sorting machines, so project logistics was always part of my career,” he said. The next step was high-profile but did not turn out well. “I got this

splendid offer from Oaktree Capital to join as managing director for Beluga Shipping in Germany. Oaktree had invested and taken over 45 percent of Beluga and hired me to restructure the company.” However, as he served out his notice at Agility, the unhappy picture became clear. By the time he joined in March 2011, Beluga’s days were numbered. “All the fraud and mishandlings came to light and suddenly we had all the issues with creditors, etc. The company was almost already run down when I started, but still we had hopes to secure and restructure the organization. By mid-March we knew we couldn’t satisfy the creditors and had to file for insolvency.” It was clear that Beluga could not be rescued, but the team were able to create Hansa Heavy Lift out of it, as a premium heavy-lift carrier with 14 ships. “Hansa increased to 25 ships and was successful in difficult market conditions,” Roehl said. “After five years I left, for personal reasons – I was traveling a lot between Hamburg and Singapore, and five years is enough.”

He joined TGP in 2017, as a global board member and with responsibility as CEO for the Natco brand. “Pre-Covid we were very much engaged in the project world in the Middle East, Australia, China, Brazil, and so on. I was basically traveling left, right and center, seeing a lot of clients – as everyone was. The shipping market was very difficult for the shipping lines, but so it was also for the forwarders. “However, we have always had a bit of an advantage as an asset-light forwarder. We can maneuver our activities around where the action is, whereas assets have to be used and occupied.” And then came Covid – “and all of us didn’t really know what to expect. We came out with a bruise initially but, as we know now, logistics is extremely important and relevant everywhere and people do realize that now.”

PEAKS AND TROUGHS OF RATES

The rocketing rates on westbound container rates have had a spillover effect into the breakbulk and multipurpose vessel, or MPV, sectors in terms

Roehl helped create Hansa Heavy Lift out of the ashes of Beluga Shipping. CREDIT: PIERGIULIANO CHESI, CC BY-SA 3.0

www.breakbulk.com BREAKBULK MAGAZINE 69

PROFILE

Meanwhile, his focus is on decarbonization, not as a trend but as a necessity, all the while maintaining resilience. This year TGP has introduced a CO2 calculator which is integrated with its transport management system. “We are able to measure all the CO2 per transport and give our clients options, including CO2 compensation,” he said. “For example, we can give them the options for air freight, for transshipment via two airports, for using the maximum volume per truck load, per ship charter, and so on. “The oil and gas multinational players are investing a lot in making their organizations greener and going into alternative energies; the energy supply needs to be there, whether fossil or moving away from fossil. And if you don’t use fossil fuel anymore, there need to be alternative energy generators. These are generating work for us as project forwarders – i.e., wind power, solar power and other power plants. There is always something happening – that is the beauty of the industry!”

TGP was awarded a major contract for offshore wind turbine delivery earlier this year. CREDIT: TGP

OUTSIDE INTERESTS

Beluga Shipping’s financial woes became apparent when Roehl joined as managing director. CREDIT: MARTINI0814, CC BY-SA 3.0

of rates and occupation of vessels, he said. “The situation we see right now is that things are being taken out of containers, i.e. de-containerization. However, containers are also being moved by breakbulk and MPVs from Asia in any direction – just to find space and get things moved.” As he said, it is just another example of the importance of keeping an open mind in this industry. “You always have to remain fresh, be full of ideas, keep your flexibility. 70 BREAKBULK MAGAZINE www.breakbulk.com

“We have seen peaks and high rates in heavy-lift and super heavy-lift before, but the individual rates for ordinary cargo have never been seen before. I have been in the industry for 32 years – my gut feeling is that those kinds of rates, that behavior, cannot go on. Rates were certainly far too cheap at US$900 for a container westbound, but US$15,000-plus is not sustainable. We need to find sustainable long-term rates for everyone, and we hope the rates will settle at a reasonable level.”

Outside his fascination with project logistics, and Covid notwithstanding, Roehl said he loves large family gatherings – “we live all around the world” – and also enjoys traveling for holidays, playing golf when time allows and reading. “And gardening. I like being my own handyman, being very hands on, as a contrast to sitting behind the desk.” He has two sons from his first marriage, aged 21 and 19, who are studying landscape architecture and international business management, respectively. In August 2020, he and his wife Antje Hanna welcomed a baby daughter. The rest sounds a familiar Covid-19 story: “During the peak of the corona crisis we both worked from home and helped each other. Working from home gives you flexibility – it means you can be fully engaged in work and also have time for family.” BB Felicity Landon is an award-winning freelance journalist specializing in the ports, shipping, transport and logistics sectors. ISSUE 5 / 2021

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LOGISTICS PERSPECTIVE

THE SCHENKER SALE SAGA

BY FELICITY LANDON

Suitors Swirl Deutsche Bahn Subsidiary

umors have been swirling around the future of rail operator Deutsche Bahn’s logistics unit, DB Schenker – with DSV Panalpina being named as a potential buyer. Industry sources have predicted that a sale will take place after Germany’s elections in September. DSV Panalpina is said to be one of several logistics operators considering making a bid. The price is estimated at between €8 billion and €10 billion. While Deutsche Bahn did not respond to an approach by Breakbulk, DSV Panalpina willingly provided a statement. “Generally, we do not comment on any specific or potential M&A targets,” said a spokesperson. “If hypothetically DB Schenker was to come up for sale, we would take a look and see if we can establish a strong business case. M&A is a vital part of our strategy, and it is natural for us to monitor the market. At the moment, our full attention is on the upcoming closing and integration of GIL [Agility Global Integrated Logistics].” DSV Panalpina looks for companies with a matching business model “and where we can achieve synergies in a combination,” she added. “We cannot comment specifically on any targets, but an asset-light freight forwarding company is a good starting point.” 72 BREAKBULK MAGAZINE www.breakbulk.com

Deutsche Bahn describes DB Schenker’s business model as “a broad global customer base and asset-light operations.” In fact, DB Schenker played something of a starring role for Deutsche Bahn in 2020. In its best economic result so far, DB Schenker reported a 32 percent increase in operating profit, €711 million, on revenue of €17.67 billion. The company employed 74,161 people and handled 108 million shipments in 2020. Its ocean freight volume was 2.1 million TEUs and airfreight was 1.1 million tonnes. DB Schenker serves both established and emerging markets, with a global network extending to more than 130 countries. In air and ocean freight, it acts as a freight forwarder without its own planes or ships, but in land transport DB Schenker relies in part on its own vehicles and swap bodies.

GROWTH AND SCALE

In a recent supply chain brief, Gartner analysts David Gonzalez and John Johnson noted that DSV Panalpina’s US$4.1 billion acquisition of Agility, announced in April, will create the world’s third-largest third-party logistics provider in terms of revenue, behind DHL and Kuehne + Nagel and with about a 4 percent global market share. The Agility announcement came only two years after DSV’s US$44.6 billion purchase of Panalpina and was

DSV’s third major buyout of a key rival in the last five years, they noted. The deal is expected to close in the third quarter of 2021. “The deal continues a trend of the world’s largest 3PLs and shipping lines getting bigger, meaning more logistics capacity is controlled by fewer companies,” said Gonzalez and Johnson, who added that acquisitions are expected to continue in what is a highly fragmented industry. “Large mergers in highly fragmented markets, such as freight forwarding, can have huge implications for shippers. The merged company often has the capability to offer more value-added services with a broader geographic reach. In some cases, pricing can also be more competitive because of the new scale enjoyed by the merged company,” they said. DSV Panalpina believes in consolidation, said the company’s spokesperson. “We have been taking part in the consolidation in our industry for years and we expect there is more to come. We believe more consolidation will happen, driven by scale benefits and the increasing importance of IT and technology.” BB Felicity Landon is an award-winning freelance journalist specializing in the ports, shipping, transport and logistics sectors. ISSUE 5 / 2021

ADVERTORIAL

The Port of West Virginia offers more than 1,000 acres and 8,000 contiguous feet of river frontage.

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Empire Diversified Energy has Dock and Wharf Projects Underway

mpire Trimodal Terminal LLC in Follansbee, West Virginia, is now officially known as The Port of West Virginia (www. portofwestvirginia.com/). Located on the Ohio River in Brooke County in West Virginia’s Northern Panhandle, the Port of West Virginia is a major part of Empire Diversified Energy’s Ohio River Industrial Complex, comprising more than 1,000 acres and includes 8,000 contiguous feet of river frontage. The facility is less than 30 miles from Pittsburgh International Airport and only 70 river miles from the confluence of the Allegheny and Monongahela Rivers at The Point in downtown Pittsburgh. With five miles of company-owned rail complementing the on-site barge and truck access, the property is well situated geographically and commercially to serve as a premier Midwest distribution and storage facility. Fagioli, which already operates at the Port of West Virginia, plans to make it a regional hub.

PORT ENHANCEMENTS

The Port of West Virginia is well underway with engineering and design of a new Dock and Wharf project that will substantially enhance the transloading and storage offerings already in place at the site. This project, initiated with US$26 million in tax-exempt bonds issued through the State of West Virginia, will include: • Bulk and breakbulk transloading and storage. • Heavy-lift pad. • Roll-on, roll-off dock. • ISO container storage. • Liquids transfer and storage. • Climate-controlled storage buildings. • Office space.

• Loading, unloading and storage of sand and aggregates. • Permitted raw-water supply from the Ohio River. • A high-capacity groundwater well for gas well fracking and other industrial/commercial uses. Additional expansion is planned for the complex to leverage the continued growth of the region’s industrial, petrochemical, and manufacturing base. n For more complete information about the project, please go to the company’s website: www.EmpireDiversifiedEnergy.com.

PARTNERS WITH FAGIOLI

Empire Diversified Energy has selected Fagioli, with U.S. headquarters in Houston, Texas, as construction manager for the build out. Empire and Fagioli together selected Genesis Structures of Kansas City, Missouri, for the design of the 3,600-foot steel sheet-pile wall, concrete apron, and heavy-lift pad. Fagioli already operates at the facility and plans to utilize the Port of West Virginia as its regional hub, where it will provide crane, selfpropelled modular transport (SPMT), and other services. Empire will maintain full-service operations at the facility during site construction. These services include: • Screening and loading furnace coke from adjacent Cleveland-Cliffs’ Mountain State Carbon plant.

Additional links: www.portofwestvirginia.com www.portofwestvirginia.com/media/ www.portofwestvirginia.com/port-ofwest-virginia/ www.weirtondailytimes.com/news/ local-news/2021/07/area-port-officials-seek-support-from-state/ www.waterwaysjournal.net /2021/07/30/new-port-of-westvirginia-moves-forward/

www.breakbulk.com BREAKBULK MAGAZINE 73

CASE STUDY

DIAMONDS & PEARLS Breakbulk Support for Offshore Diamond Mining First BY MALCOLM RAMSAY

BBC selected its multipurpose vessel BBC Pearl as the best option to move the towers, due to its 800-tonne combined lifting capacity. CREDIT: BBC CHARTERING

hen it comes to precious goods there are few more expensive than diamonds. But for the firms that mine these prized jewels, the most valuable cargoes of all can often be the equipment needed to recover them. In the second quarter this year, engineering and breakbulk specialists BBC Chartering and Swift collaborated on just such a project, shipping 74 BREAKBULK MAGAZINE www.breakbulk.com

two outsized units for the world’s largest diamond recovery vessel, the AMV3. Owned and operated by mining group Debmarine Namibia, the ship is one of the most technologically advanced vessels in the marine diamond industry, valued at more than US$450 million. Thanks to its advanced subsea crawling equipment the vessel can extract high quality diamonds from the seabed at water

depths of 90 to 150 meters. The firm is a 50/50 joint venture between the Government of the Republic of Namibia and De Beers Group, the world’s largest diamond company. Swift was approached by Debmarine prior to the global pandemic in 2020 and tasked with delivery of two large tower units and accessories for final construction of the vessel. Transport was required from the Port of Tallinn in Estonia to Cape Town ISSUE 5 / 2021

one vessel, but due to Covid restrictions globally my client didn’t want to jeopardize their project and said we should ship what we have ready, which is what we did.” The two largest components in the move were the upper and lower parts of the drilling tower, weighing about 159 and 214 tonnes and measuring 27 meters high. Alongside these components, the partners were tasked with delivering multiple cases and crates with a total weight of about 50 tonnes.

INTENSE PRE-PLANNING

in South Africa, and involved a number of unique handling challenges that dictated a partner with suitable breakbulk expertise. “For us it was a case of knowing who was the best in the industry when we did our research, and BBC Chartering stood out,” Trevon Padayachee, business development manager at Swift, told Breakbulk. “At first we were good for time and even considered shipping all this equipment on

Having agreed terms for the project, the booking was handled by BBC Chartering’s Bremen office and scheduling work began for the loading operation in Tallinn. This stage involved detailed preplanning between Swift, BBC, the carrying vessel crew, Tschudi Logistics as the port agent and the manufacturer of the units, Marketex Offshore Construction. “The first contact about this shipment was at the end of May 2020, which was approximately one year before the actual shipment,” Knut Voigt, branch manager for the Bremen office of BBC Chartering, told Breakbulk. “During this time, we, together with our client Swift Worldwide Logistics, the shipper, the receiver and other parties involved, planned this shipment carefully and in detail. The lifting and lashing of the Upper Tower with a height of 27 meters and a weight of over 200 tons needed intense preplanning.” This preparatory stage involved partners from across the supply chain including key stakeholders at De Beers Marine, Mammoet and a local crane company called Concord. Padayachee explained: “We had a lot of meetings via Teams around the logistics and who does what. The loading and offloading of these massive tower units needed expert advice from BBC Chartering’s technical team, who were fantastic with input from port of load to discharge. Mammoet – moving the equipment to laydown areas – were brilliant in how they handled the equipment safely and secured them into storage.”

Based in Durban, South Africa, Swift Worldwide Logistics is a global freight forwarder and logistics firm with eight locations across Southern Africa, including Johannesburg, Cape Town, Upington, Port Nolloth, and Nakop as well as field offices in Oranjemund, Luderitz Bay, Noorhoewer and Ariamsclei in Namibia. Technical plans were drawn up for the loads, with BBC making use of Loadplanner software for the stowage plans and Autocad for planning the lifting and lashing. Once the detailed plans were ready, BBC selected its multipurpose vessel BBC Pearl as the best option for the job, due to its 800-tonne combined lifting capacity. In April, the Pearl set sail for the Vene-Balti port in the Western part of Tallinn. Due to the global pandemic no face-to-face or preloading visits by technical superintendents were possible, so numerous conference calls took their place, sharing details, planning and discussing the technical aspects needed to secure a safe and smooth loading, Voigt said.

NEW TECHNOLOGY

Alongside coordination between Swift and BBC, the project also required close contact with BBC’s port agent in Tallinn, Tschudi Logistics, and Marketex Offshore Construction. Based in Kopli on the north coast of Tallinn, Marketex has a long history in offshore oil and gas and industrial construction projects and had built the tower units to a design by AxTech of Norway. AXTech was responsible for the design and supply of the launch and recovery system, or LARS, a mechanism at the center of the firm’s exploration and extraction operations for subsea diamond. The on-deck equipment is used to launch a 310tonne purpose-built machine called the Crawler, which operates on the seabed connected by a production riser hose and umbilical cable. “For AXTech this is a great achievement and we are looking forward to the cooperation with De Beers on this exciting project,” said Richard Myhre, CEO of AXTech. www.breakbulk.com BREAKBULK MAGAZINE 75

CASE STUDY

On arrival in Capetown, the tower units were discharged using the Pearl’s deck cranes directly to self-propelled modular transporters. CREDIT: BBC CHARTERING

Valued at about €20 million, the project not only marked a significant achievement in breakbulk handling, but also a world first for the diamond industry, as it transitions towards offshore exploration over the coming years. Traditionally based around onshore open-cast mines along the Namibian coastline, diamond miners in the country are steadily turning their gaze to offshore opportunities as land-based resources in Namibia are expected to run out in the next 15 years. “Some of the highest quality diamonds in the world are found at sea off the Namibian coast,” explained Bruce Cleaver, CEO, De Beers Group. “With this investment we will be able to optimize new technology to find and recover diamonds more efficiently and meet growing consumer demand across the globe.” With every detail for the project finalized by early April, the BBC Pearl arrived on April 7 and the cargo was loaded by the vessel’s cranes over the course of two days, with additional spreader bars provided by BBC Chartering. Headquartered in Leer in the northwestern part of Lower Saxony in Germany, BBC Chartering operates one of the largest fleets of project carriers, counting more than 140 vessels, ranging from 4,325 to 56,800 deadweight tonnes. The firm, a global project chartering network with more 76 BREAKBULK MAGAZINE www.breakbulk.com

than 400 project shipping professionals across 30 offices worldwide, is part of the Briese Schiffahrt Group.

SEAMLESS DISCHARGE

With its precious cargo onboard, the BBC Pearl departed from Tallinn on April 11 and set sail on a threeweek voyage to the Port of Cape Town in Cable Bay, South Africa. Upon arrival in Cape Town, the tower units were discharged using the Pearl’s deck cranes directly to self-propelled modular transporters, or SPMTs. “This was a direct discharge from the BBC Pearl onto Mammoet SPMT twin trailers. The highest tower needed a twin lift with both deck cranes onto the trailers and for the second piece – which was the smaller of the two but still quite big – we did a single lift on to the SPMT trailer,” Padayachee said. These key components were then transferred directly to Debmarine’s AMV3 where they were assembled to form the core of the LARS. “For me, the offloading was one of the stages with the tightest margin for error, because we had very limited space to work with,” Padayachee said. “But Mammoet were brilliant with this leg. Obviously, we – Swift/Mammoet – did a lot of groundwork and site visits, and they had their engineers prepare some technical drawing for the laydown area and the route as well.” The timing of the project meant

that restrictions were in place in Germany, Estonia and South Africa throughout the move, but the partners managed to stay on schedule even though very little interaction was possible in person. Looking back on the project, Voigt recalled the biggest challenge as “no face-to-face meeting and/or preload visits due to the pandemic situation,” but noted that due to “the great cooperation” of all parties involved the difficulties were overcome and the entire cargo “was loaded, shipped and discharged in a safe and secure manner.” With the towers successfully delivered and installed, the AMV3 is now ready for final preparations to begin exploring the seabed in offshore Namibia from 2022. Debmarine expects the ship will increase annual production volume by 35 percent, adding 500,000 carats to current levels. What is more, this new vessel is expected to spearhead a dramatic shift in the industry as diamond miners focus offshore, a move that will doubtlessly drive steady growth in breakbulk activity for years to come. BB Based in the UK, Malcolm Ramsay has a background in business analysis and technology writing, with an emphasis on transportation and ports. ISSUE 5 / 2021

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THOUGHT LEADER

Setting Lifecycle Standards

ffshore wind, the foundation of the energy transition, is here to stay. With plans in the European Union in place to expand the installed capacity of offshore wind to 300 gigawatts, or GW, until 2050, breakbulk providers should not underestimate the sustainability of the expansion of this technology. The EU goal represents a 25-fold increase over today, adding to the UK goals of 40GW by 2030 and likely rising to more than 100GW by 2050. In fact, long-term projections for the need for green hydrogen produced either offshore or onshore via offshore wind energy will increase the need for a further buildout of wind turbines in the North and Baltic Seas and other waters. In early August, the German federal cabinet approved a regional development plan to expand the country’s offshore wind capacity to more than 40GW – the current goal for 2040. To date, some 1,500 turbines, according to numbers presented by WAB and other Germany associations in July this year, are spinning in the German part of the North and Baltic Seas. Another 2,200 are installed in the UK, according to British government figures. After an expected lifetime of at least 20 years, these turbines will need to be decommissioned, dismantled, and recycled. We believe an industry standard to which deconstruction and recycling can take place will make this process sustainable, safe and efficient. How the large offshore wind components are handled then depends on the requirements of such a standard and the fact that we both need environmentally friendly and very cost-efficient solutions. 78 BREAKBULK MAGAZINE www.breakbulk.com

Our cooperation partner and German industry association RDRWind last year unveiled the DIN SPEC 4866, a new industry standard for dismantling, disassembly, recycling and recovery of onshore wind turbines published by the German Institute for Standardization. An offshore standard has to be developed. With the new standard spelled out for onshore wind, we are exchanging information for its further development within our innovation cluster. This could ultimately result in the adaptation to offshore wind in a possible similar standard. To this end, we are planning to work together in joint wind industry research projects.

Towards a Circular Economy for Wind Turbines

BY HEIKE WINKLER

WIND INITIATIVES

Our plans also include a cooperative industrial cluster development for recycling management and the development of a first recycling hub. Later this year, the City University of Applied Sciences in Bremen and partners of the research project SeeOff will present first results of a multi-year research project on the decommissioning process to identify project-specific efficient decommissioning strategies at our WINDFORCE Conference, to be held in Bremerhaven on Oct. 5-6 (https://windforce.info/windforce2021/en/). Recent industry developments show an encouraging trend towards a circular economy in the making. In June, we supported a call by the wind industry for a Europe-wide landfill ban on decommissioned wind turbine blades by 2025. For the time being, this ISSUE 5 / 2021

almost exclusively applies to onshore wind turbines as the components of an increasing number of turbines installed some 20 or more years ago are reaching the end of their lifetime. This, however, sets a standard as the industry commits to re-use, recycle or recover all decommissioned blades. This landfill ban, it is believed, will accelerate the development of sustainable recycling technologies for composite materials. In May, a coalition of industry and academic leaders spearheaded by turbine manufacturer Vestas developed a new technology to enable circularity for thermoset composites, the material used to make blades for wind turbines. A new initiative entitled CETEC (Circular Economy for Thermosets Epoxy Composites) has been established to enable the adoption of this new technology. Within three years, CETEC

PUERTO DE

PORT OF

is aiming to present a fully scoped solution ready for industrial adoption. And in early 2021, a consortium consisting of 10 project partners including Siemens Gamesa, Vestas and blade manufacturer LM Wind Power received funding from Innovation Fund Denmark for the three-year DecomBlades project, which seeks to provide a basis for commercialization of sustainable techniques for recycling wind turbine blades. These are a few important examples of the industry’s ambition to scale sustainably. Along that path, ports and transporters will need sufficient equipment and space to handle and recycle a growing number of offshore wind farm components. As we expect most offshore wind components to be recycled locally at ports, it needs to be understood that the amount of cargo

BILBAO

to be handled will rise exponentially over the next two decades. Therefore, steps need to be taken to avoid landside congestion. With installation and decommissioning activities increasing, ports already face pressure due to limited storage space. At the same time, the size and scale of new turbines are growing. BB Heike Winkler is managing director of WAB e.V. Bremerhaven-based WAB is the nationwide contact partner for the offshore wind industry in Germany and the leading business network for onshore wind energy in the northwest region. It comprises some 250 smaller and larger businesses as well as institutes from all sectors of the wind industry, the maritime industry as well as research.

PORT OF

WORLDWIDE HEAVYLIFT & PROJECT CARGO LOGISTICS VIA

Cluster for the competitiveness improvement and promotion of the PORT OF BILBAO and its companies

BILBAO

Uniport Bilbao Port Community

Alda. de Urquijo, 9 1º dcha. 48008 Bilbao - SPAIN T +34 94 423 6782 info@uniportbilbao.es www.uniportbilbao.eus

www.breakbulk.com BREAKBULK MAGAZINE 79

Breakbulk Events & Media’s biweekly BreakbulkONE newsletter keeps the industry connected between issues of Breakbulk. Here’s a selection of subscriber favorites from the past few months. KNOWLEDGE HUB: ENERGY

PROJECT GIVES US OFFSHORE WIND A FOUNDATION Steel Manufacturing, Deployment Hub Planned BY PAUL SCOTT ABBOTT

Plans for development of offshore wind energy infrastructure off the coast of Maryland include a steel fabrication facility to be built in Baltimore County, as well as a waterfront deployment hub. The Maryland advances, announced Aug. 3, are among the latest steps forward as the U.S. looks to meet aggressive Biden administration goals to deploy 30 gigawatts of offshore wind energy production by 2030. Plans of Baltimore-based US Wind, a unit of a subsidiary of Chieti, Italyheadquartered Toto Holding SpA, are aimed at initially serving the first 22-turbine phase of development of the MarWin project on an 80,000acre lease area off Maryland’s Eastern Shore that ultimately, under the Momentum Wind name, may support 82 turbines generating as many as 1.5 gigawatts of annual energy production, according to US Wind executives.

The US$150 million Sparrows Point Steel fabrication facility – to manufacture monopiles to serve as foundations for offshore wind tower installations – is to be built on Tradepoint Atlantic property that formerly was home to a Bethlehem Steel plant.

TRADEPOINT ATLANTIC HUB US Wind also announced a port facility agreement with Tradepoint Atlantic, a 3,300-acre multimodal logistics and industrial center a dozen miles southeast of downtown Baltimore. The agreement, backed by an initial US Wind investment of US$77 million, calls for development of 90 waterfront acres to serve as a deployment hub for the offshore endeavor. “The combination of expanding offshore wind and welcoming steel back to Sparrows Point is truly a full-circle moment for Tradepoint Atlantic,” said Kerry Doyle, Tradepoint Atlantic’s managing director. “US Wind’s vision for the future and commitment to establishing critical elements of the offshore wind

Renderings depict the Sparrows Point Steel facility, planned for Baltimore County, Maryland, for fabrication of offshore wind energy foundations. CREDIT: SW COMMUNICATIONS

Breakbulk Americas will also have a session, “U.S. Offshore Wind: Are We Ready?,” at 1:15 to 2 p.m. , Sept. 29 on the Breakbulk Main Stage. Speakers will include Jonathan Zier, Crowley Shipping; Percy R. Pyne, Green Shipping Line; Tim Axelsson, Liberty Green Offshore; and Walter Cruickshank, BOEM. For more information, go to https://americas.breakbulk.com/business-programme.

80 BREAKBULK MAGAZINE www.breakbulk.com

supply chain at Tradepoint Atlantic is transformational, and we look forward to partnering with them for many years to come. As Marylanders, we should be very proud: Offshore wind is here, and steel is back.” US Wind CEO Jeff Grybowski, also announced agreements with United Steelworkers and other unions to furnish labor. He estimated the undertaking will provide about 3,500 direct construction jobs and, upon completion, support more than 500 permanent operational jobs. “Because of the successes we’ve achieved in the development of MarWin, US Wind is ready to offer Maryland its most ambitious clean energy project to date and, with it, the state’s first permanent offshore wind steel fabrication facility,” Grybowski said. “Developing Momentum Wind and Sparrows Point Steel at full capacity will give Maryland the opportunity to bring steel back to Baltimore and become the epicenter of offshore wind manufacturing.” Maryland Gov. Larry Hogan, one of several public officials speaking at the announcement event, commented, “The State of Maryland is proud to support this transformative and gamechanging partnership between US Wind and Tradepoint Atlantic, two of the leaders of Maryland’s economic turnaround. “Offshore wind presents a oncein-a-generation opportunity to expand and diversify our economy and our energy portfolio,” Hogan continued. “Maryland is proud to continue to be an example of strong environmental leadership, and I am confident that we will be a leader in offshore wind development for decades to come.” See the related cover story, “Offshore Windfall,” on page 14. BBONE ISSUE 5 / 2021

KNOWLEDGE HUB: BUSINESS OUTLOOK

BOTTLENECKS BRING SHIPOWNERS HEADACHES Vessel Owners Face Changing Legal Landscape BY MALCOLM RAMSAY

Rising demand for project cargo handling related to offshore wind development may create bottlenecks and legal headaches for shipowners unless greater alignment is achieved, according to law firm Watson Farley and Williams, or WFW. The boom in offshore wind development in recent years, as firms pivot to renewable power, is expected to create unprecedented pressure on multipurpose shipping, with shipowners facing a changing legal landscape as demand shifts and contracts evolve. “In the offshore wind sector generally, we see the heavy-lift vessel segment as the key bottleneck impacting development,” Richard Smith, partner, and Gabriela Roque, senior associate at WFW, told Breakbulk. Demand for heavy-lift vessels will outpace the global fleet in “a matter of a few years,” due to the number of new offshore wind projects in the pipeline, but also the increasing size and weight of the turbines, blades and components, which the existing fleet will be unable to serve. Smith anticipates demand for specialized installation vessels for turbines and foundations as well as for multipurpose vessels should remain high over the next years, the latter “particularly significant.” Analysts estimate that offshore renewable projects achieved record project sanctioning of US$56 billion in 2020, overtaking offshore oil and gas at US$43 billion, for the first time. This trend is expected to continue into 2021 and beyond, raising serious questions for the composition of future heavy-lift fleets. Roque also noted that offshore wind projects due to start in 2022 have an average turbine size of 6.1 megawatts, more than double the industry standard in 2005 when the average was just 3 megawatts. To meet demand, Smith and Roque also foresee offshore support vessels

Wind energy’s growth, and the size of components will impact the composition of future heavy-lift fleets. CREDIT: SHUTTERSTOCK

and crewboats being redeployed from the offshore oil and gas sector to service the offshore wind industry and existing offshore wind installation vessels upgraded to meet requirements for larger turbine sizes.

LEGAL COMPLEXITY

With studies suggesting that the global fleet of installation vessels will be insufficient to meet demand by 2025, the need for long-term commitments is vital. But Roque cautioned that shipowners must ensure they have the relevant legal structures in place. “We anticipate investment in the larger projects will be predicated on either medium-term charter commitments or a view on the strong pipeline,” Smith said. The interplay between shipbuilding and charter contracts is likely to be vital for successful operation with diligence required by both owners and investors. “As the demand for specialized vessels increases, it is likely that in order to secure or maintain the required delivery slot from a shipyard, the owner

might have to start to negotiate with the builder before the charter is in place,” Roque said. In the longer term, WFW predicts that the offshore wind market could potentially provide opportunities for a range of different asset classes and those breakbulk shipowners willing to adapt may gain a competitive advantage. “With the scale of turbines and other related equipment increasing at a rapid pace, even new tonnage could become sized out of the market quite quickly. So considerable thought and due diligence is required before investment in any adaptation or expansion of an existing fleet,” Roque said. Collaborative ventures and more complex partnership arrangements may also add to the intricacy of future legal contracts as multi-stakeholder developments are closely integrated into power markets in multiple countries. This is further expected to drive the need for new breakbulk handling and logistics expertise towards the latter half of the 2020s. BBONE

Breakbulk Americas will once again feature “The Ocean Carriers Forum,” at 2:45 to 3:30 p.m., Sept. 29 on the Breakbulk Main Stage. Speakers will include Anders Hyrup, Jumbo-SAL-Alliance; Andy Powell, G2 Ocean; and Michael Morland, AAL Shipping. For more information go to https://americas.breakbulk.com/business-programme.

www.breakbulk.com BREAKBULK MAGAZINE 81

KNOWLEDGE HUB: TECHNOLOGY & INNOVATION

SPACE INVESTMENT DRIVES LOGISTICS OPPORTUNITIES Battery Development Reshaping Sector BY MALCOLM RAMSAY

The influx of billions of dollars of private equity into the space sector over the next decade is transforming the future of space flight, with many new opportunities emerging for project transport. Typically, the preserve of government organizations, the arrival of high-profile investors such as Elon Musk and Jeff Bezos with commercial firms SpaceX and Blue Origin, has upturned the industry as the space race heats up. One of the driving factors for this change has been the rapid advancement in battery technology over the last 10 years, which allows a range of new applications and opened new opportunities. “The greatest challenge ahead for space-related cargoes is navigating and maintaining compliance with frequently updated lithium battery regulations. International transportation agencies regularly update lithium battery regulations to keep pace with increased usage and shipments of batteries,” Ben Martin, logistics manager at U.S.-based Spaceflight, told Breakbulk.

BATTERY REGULATION

Improvements in battery capacity, driven largely by the electric vehicle and energy storage sectors, have allowed firms to pack more power into a smaller footprint, reducing the cost of production and the size of many cargoes. While this has meant that many cargoes may now technically be shipped by container, the complexity and sensitivities of cargoes means that in most cases breakbulk specialism is required for handling. “Traditionally, satellites have been large and heavy, and required project

cargo-like planning and execution. Today, satellites are small and light. They can use common freight networks instead of air charters and dedicated heavy-haul trucks. Nonetheless, satellites are difficult to transport due to the inclusion of lithium ion batteries to power the satellite. Additionally, many countries classify satellites as technologically sensitive and require a license to export the hardware. Proper planning is required to ensure smooth and safe transport on time and within budget,” Martin said. In contrast with the earliest space flights, which were largely based on mechanical operation, nearly every aspect of modern payloads is powered electrically, requiring custom configurations and often resulting in bespoke logistics paperwork. “Not all sections of the lithium battery regulations apply to every shipment of batteries. The regulations are very specific and each spacecraft (and the configuration of the battery contained in it) is different. Spaceflight spends considerable time understanding the regulations,” he said. The company determined that many of its customers share a common lithium ion battery attribute. Spaceflight evaluated it against the regulations, then procured and tested a shipping container that allows it to ship without the intervention of the U.S. DOT. The proliferation of private companies into the space industry over the last decade has led to a dramatic lowering of per-unit prices and increased pace of growth, but also creates the potential for future congestion and logistics challenges as competition increases. Consultancy Fortune Business Insights predicts that the global space launch services market size will deliver a

Breakbulk Americas will also have a related session, “Space Logistics, The Sky’s the Limit,” at 4-4:45 p.m. Sept. 29 on the Breakbulk Main Stage, with speakers from NASA, Boeing, Jacobs Engineering and Port Houston. For more information go to https://americas.breakbulk.com/business-programme.

82 BREAKBULK MAGAZINE www.breakbulk.com

compound annual growth rate of 13.35 percent, reaching US$26.16 billion by 2027. “The volume of space-related cargo is a fraction of other common commodities that drive freight capacity trends. It is unlikely that satellite shipments will influence capacity discussions or create congestion. They are not immune, however, to global freight capacity, like the reduced air freight capacity in 2020 and the ongoing issues in ocean transport,” Martin said.

GLOBAL SUPPLY CHAIN

Earlier this month, the Indian government prepared the way for private companies to establish and operate rocket launch sites. The draft National Space Transportation Policy-2020 allows for private firms to operate both inside and outside the country, marking a huge step forward toward a breakbulk supply chain in the world’s seventhlargest country. “The Draft National Space Transportation Policy-2020 is comprehensive covering all aspects of rocket launching, launchpads, re-entry of a space object and others,” said Srinath Ravichandran, CEO of Agnikul Cosmos. Previous regulation in India made it all but impossible for private firms to gain licenses and scale, but the new draft policy promises to make it easier to gain authorization from the Indian National Space Promotion & Authorization Center. While Martin of Spaceflight noted that “most launch service providers are based in the U.S., the sector is steadily changing with countries around the world increasingly opening up the tightly regulated industry.” BBONE Martin was featured in a Breakbulk Americas 2021 Digital Preview session, “Tremendous Opportunity for Handling Space Cargo,” http://breakbulk.com/ Articles/tremendous-opportunityahead-with-space-cargo. See the Space-related feature, “Terrestrial Rocket Science,” on page 22. ISSUE 5 / 2021

KNOWLEDGE HUB: ENERGY

OIL & GAS MAJORS REPORT STRONG Q2 RESULTS Buyback Plans Buoy Investment Outlook BY MALCOLM RAMSAY

Momentum for upstream project development in the oil and gas sector has continued to build this year, with the publication of positive second quarter results by several energy majors. A rebound in oil prices in 2021 has helped to drive firms back towards profitability and stringent cost-cutting measures, implemented in response to falling prices last year, have also helped to boost the bottom-line. U.S. oil and gas firms led positive news, with Chevron announcing a major buyback program to soothe investors and a significant rebound in profitability, with earnings of US$3.1 billion, compared to a loss of US$8.3 billion in the same period last year. “Second quarter earnings were strong, reflecting improved market conditions, combined with transformation benefits and merger synergies,” said Mike Wirth, Chevron chairman. “Our free cash flow was the highest in two years due to solid operational and financial performance and lower capital spending. We will resume share repurchases in the third quarter at an expected rate of US$2 billion to US$3 billion per year.” Chevron’s U.S. upstream operations earned US$1.4 billion in the second quarter due to higher crude oil realizations and the absence of impairments, write-offs and severance accruals seen in 2020.

EXXONMOBIL RECORD RESULT

ExxonMobil said its earnings increased US$5.8 billion over the second quarter of 2020, driven by oil and natural gas demand and chemical and lubricants performance. “Positive momentum continued during the second quarter across all of our businesses as the global economic recovery increased demand for our products,” said Darren Woods, CEO of ExxonMobil. “We’re realizing

significant benefits from an improved cost structure, solid operating performance and low-cost-of-supply investments that, together, are generating attractive returns and strong cash flow to fund our capital program, pay the dividend and reduce debt.” The firm reported second-quarter capital and exploration expenditures of US$3.8 billion, bringing the first half to US$6.9 billion, and anticipates higher second-half spending on key projects, including Guyana, Brazil, Permian, with full-year spending of US$16 billion to US$19 billion. The firm reported exceptional results from its chemical business, which delivered the best quarter in the company’s history. Cash flow of US$9.7 billion from operating activities funded the firm’s dividend, capital investments and debt reduction programs. This positive cash position has allowed it to move forward with investment this year, giving an affirmative funding decision for the massive Bacalhau development in Brazil, among other upstream projects.

CAPEX INCREASES

In Europe, oil majors also reported a strong second quarter, with Shell announcing a US$2 billion share buyback program, along with a 40 percent dividend hike. France’s TotalEnergies posted a strong second quarter, with adjusted net income of US$3.5 billion, up 15 percent from first quarter 2021. The firm’s CEO Patrick Pouyanne also predicted that capex would increase from US$13 billion to US$14 billion in 2022, enabling the firm to relaunch short-cycle capex projects, but cautioned over larger projects, noting “we have suffered quite a lot of volatility, and it is also true that when you have underinvestment, you give support to higher prices.” “Operating performance was resilient in the second quarter with four major project start-ups, strong momentum in the customers business, including material growth in convenience gross margin, and delivery of US$2.5 billion of cash costs savings on a run-rate basis relative to 2019, around six months earlier than targeted,” a spokesperson for BP said. BBONE

Breakbulk Americas will have a session on “Oil & Gas: Their Role in the Energy Transition,” which will be held 11:30 a.m. to 12:15 p.m. Sept. 30 on the Breakbulk Main Stage. Participants include Tim Fitzgibbon, McKinsey & Co.; Marco Poisler, UTC Overseas; and Philip Ovanessians, Worley. For more information go to https://americas.breakbulk.com/business-programme.

www.breakbulk.com BREAKBULK MAGAZINE 83

Breakbulk’s Fair Weather Transports Photo Contest

Breakbulk invited companies to show off their best work under sunny skies. We feature some of the top photos here, and we’ll continue to share the entries throughout the summer on BreakbulkONE. Congratulations winners! 1st Place: Mammoet USA Mammoet’s crew successfully offload a 850-tonne vessel using 72 axle lines of SPMT. Beaumont, Texas. CREDIT: MAMMOET

6th: Oxbo Mega Transport Solutions U-turn! Portland, Oregon CREDIT: OXBO MEGA TRANSPORT SOLUTIONS

4th: Air Partner This AN 124 aircraft transported more than 70 tons of essential equipment and parts, journeying from Southeast Asia to North America. Toronto Pearson International Airport

CREDIT: KEVINPRENTICE.CA

84 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 5 / 2021

2nd: Port of San Diego Wind turbine components being offloaded at the Port of San Diego. San Diego, California CREDIT: PORT OF SAN DIEGO

3rd: Duluth Seaway Port Authority Discharge of refinery column from ship to barge at Duluth Cargo Connect facilities in Minnesota, USA. CREDIT: DULUTH SEAWAY PORT AUTHORITY.

5th: Port of Lake Charles Handling huge windmill blades for wind turbines in Lake Charles, Louisiana, USA. CREDIT: PORT OF LAKE CHARLES

www.breakbulk.com BREAKBULK MAGAZINE 85

BACK PAGE

AMERICAS ECONOMIC ACTIVITY 2018-2022 GDP FORECAST

Economists forecast a significant turnaround in GDP across the Americas in 2021, with more conservative growth seen in 2022. 2018

12 10 8 6 4 2 0 -2 -4 -6 -8 -10 -12

2019

2020

2021*

-20.3

-26.4

ST AT ES UR UG UA Y VE N EZ UE LA

PE RU

-27.8

UN IT ED

CH ILE CO LO M BI CO A ST A D RI O M CA IN IC AN RE P. EC UA D EL O R SA LV AD O G R UA TE M AL HO A N D UR AS M EX IC N O IC AR AG UA PA N AM A PA RA G UA Y

BR AZ IL CA N AD A

AR G EN TI N A BO LIV IA

-17.9

2022*

INFLATION FORECAST Inflation rates throughout the Americas remain relatively under control, with the extreme exceptions of Argentina and Venezuela.

10 8 6 4 2

10093.0 47.6 53.8 36.1 42.1 48.0

2930.0 1843.0 10500.0

0 -2 -4 ST AT ES UR UG UA Y VE N EZ UE LA

PE RU

UN IT ED

CH ILE CO LO M BI CO A ST A D RI O M CA IN IC AN RE P. EC UA D EL O R SA LV AD O G R UA TE M AL HO A N D UR AS M EX IC N O IC AR AG UA PA N AM A PA RA G UA Y

BR AZ IL CA N AD A

AR G EN TI N A BO LIV IA

-6

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.

US$ BN 25 10 0 -5

-20 -491.0

-35

-491.0

ST AT ES UR UG UA Y VE N EZ UE LA

PE RU

-791.3 -807.6

UN IT ED

CH ILE CO LO M BI CO A ST A D RI O M CA IN IC AN RE P. EC UA D EL O R SA LV AD O G R UA TE M AL HO A N D UR AS M EX IC N O IC AR AG UA PA N AM A PA RA G UA Y

*Forecast

BR AZ IL CA N AD A

AR G EN TI N A BO LIV IA

-50

-616.0

Source: Consensus Economics, www.consensuseconomics.com 86 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 5 / 2021

01 - 02 February 2022 Dubai World Trade Centre, Dubai, UAE middleeast.breakbulk.com

17 - 19 May 2022 Rotterdam Ahoy, Rotterdam, Netherlands europe.breakbulk.com

September 27 - 29, 2022 George R. Brown Convention Center, Houston, USA americas.breakbulk.com

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