VIP Shipper Club story – Direct Dealings

ISSUE 2 / 2018

THE PUBLICATION FOR THE INDUSTRIAL PROJECT SUPPLY CHAIN INDUSTRY

ISSUE 2 / 2018

DIRECT DEALINGS

Up-front Input Elevates MEG Project

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SAMSUNG ENGINEERING ...................................................... page 42

CASE STUDY

Direct Dealings Up-front Input Elevates MEG Project

BY LORI MUSSER

I

t’s a rare day when a global engineering, procurement and constructing company, or EPC, manages a massive project cargo move halfway around the world without a freight forwarder in sight, but Samsung Engineering did just that.

And although forwarders are typically irreplaceable in project logistics, in this case an EPC-carrier’s direct relationship allowed end-design tweaks and engineered transport solutions that cut lead time and elevated the supply chain experience.

The Samsung Engineering project featured monoethylene glycol, or MEG, modules fabricated by Hanjin Engineering in Seoul, Korea, as well as other MEG plant components totaling 120,000 freight tons.

The cargo moved on 10 consecutive Rickmers-Line voyages in 2017 from Seoul to Lake Charles, Louisiana, destined for Lotte Chemical’s US$1.1 billion MEG plant.

At the Port of Lake Charles, the Rickmers vessels were met by barges for a short move upstream, then offloaded on the bayou at a provisional company jetty and hauled to the adjacent plant site. Heavy-lift and transport specialist Fagioli Inc. managed the barge and truck movements. Global logistics provider FNS Inc. provided import customs brokerage and associated services.

SUPPLY CHAIN CHOICES

Samsung Engineering’s tender process for ocean carriage for the Lotte LA MEG project began in 2015.

Rickmers-Line was contacted mid-2015 to gauge its interest in participating in the pre-tender qualification. The carrier quickly recognized a strong match, submitted documentation, and was invited to participate in the tender. Following a string of meetings in Korea and the U.S., a contract for the over-dimensional cargo, logistics and heavy-lift was awarded at the end of 2016. In mid-2017, RickmersLine was also awarded the contract for the module transport.

Rickmers-Line had capacity, capability and services in place from the start. “Our Rickmers-Line liner service concept was a great advantage for Samsung Engineering, as we were able to offer regular sailings with our Asia to U.S. Service (part of Rickmers Line Round-the-World East Bound Pearl String Service). Schedule reliability was paramount to the client, and we were able to deliver all cargoes on time to Lake Charles within the required lay-cans with no delays,” said Benjamin Joithe, director of global sales and marketing from Rickmers-Line.

Suranjoy Das, who at the time was the Samsung Engineering project head for the Lotte LA MEG project, added: “The deal makers in this case were the value of the cargo, the cost of transport, and the business line that Rickmers-Line was in – their trade lane. My purpose was to ship these modules from South Korea to the U.S., and their trade lane covered exactly that. That kept costs down.”

Das recognized that EPCs don’t usually work directly with their carriers, but that very factor turned out to be exactly what was needed to work around pre-existing project execution limitations. For example, together, the carrier and the EPC identified potential lifting issues related to the modules. Das went back and was able to incorporate minor module design

changes that eliminated the problem.

Similarly, a lifting frame was needed for the modules, but it had to be designed and fabricated from scratch.

Working with Rickmers-Line’s vessel specifications, and a mutual goal of safe and effective handling, a solution was engineered.

Although the EPC considered other carriers, Rickmers-Line’s engineering strength helped secure the business. Samsung’s modules were in end-design. Some other carriers were out because they did not have the right vessels for the cargo, could not optimize stowage, or could not offer engineering solutions.

Rickmers-Line assembled a global team for the Samsung project. The team put communications first and foremost, internally addressed questions as they arose, and provided tailor-made solutions. They did their homework, with the cargo transport engineers producing method statements, 3D simulations and assisting in preparation of the spreader for loading of the modules.

“Rickmers-Line’s 30,000-deadweight-tonnes Hamburg Class liner vessels with combined gear capacity of 640 tonnes, flexible ’tween decks and large deck space turned out to be a great fit for the MEG project cargoes,” Joithe said.

Monoethylene glycol module frame drawing with bespoke lifting frame.

CREDIT: RICKMERS-LINE

OPPOSITE: A monoethylene glycol module fabricated by Hanjin Engineering is lifted with the aid of a specially fabricated lifting frame. Samsung

Engineering worked directly with Rickmers-Line to create tailor-made solutions to the move’s challenges. / 42 BREAKBULK MAGAZINE www.breakbulk.com

CREDIT: SAMSUNG ENGINEERING

ISSUE 2 / 2018

CASE STUDY

The move’s last mile.

CREDIT: FAGIOLI INC.

IMPROVING PROJECT EXECUTION

Samsung Engineering’s successful MEG project design and logistics generated interest on a number of levels.

The EPC worked directly with the carrier, which is unusual. It conferred with Rickmers-Line engineers before module end-design, and was able to take the MEG module design back for minor modifications to optimize transport, epitomizing an emerging best practice among global project managers. And it created a tailormade module lifting frame. Samsung Engineering was thereby able to reduce its project lead time and transportation bill through cutting-edge, collaborative and clever engineering, according to Das. Das recalled that, at the time, Samsung was looking for ways to improve their project execution, and he was called in as a U.S. project cargo engineering and logistics expert, with lengthy experience with several EPCs. “I looked into issues involving project execution and at expertise available in-house. I looked for costeffective solutions,” Das said. To minimize risk, cut costs, eliminate a layer of communication (and possible miscommunication) and go straight to the decision maker, he determined this project needed a more hands-on approach than usual, and he reached out to ocean carriers and transportation vendors directly.

Das was familiar with numerous 44 BREAKBULK MAGAZINE www.breakbulk.com

project cargo carriers, but said, “The project transport was not easy to shop.”

Das had dealt with Rickmers-Line for a decade and a half. He said: “I knew them, have friends there, knew what the carrier could do and couldn’t do.” That comfort and knowledge base underpinned negotiations and eventually led to a “win-win solution.” Das placed a lot of value on the fact that Rickmers-Line was “very responsive and cooperative” during negotiations, which telegraphed their responsiveness and communications style for the entire project.

TRICKY LAST MILE

Francesco Mazzei is project manager with global heavy-lift and heavy transport company Fagioli Inc. He saw Samsung Engineering’s different approach as a better way of approaching the move in this case.

Fagioli’s “last mile” role in this massive project was substantial, and Mazzei said exceptional communication and diligence geared it for success. Bolstered by “great quantities of engineering work,” Fagioli was able to optimize transportation, staging and securing. The company was in constant communication with the U.S. Coast Guard, port and pilots. The barges were prepared in advance for the stowage and lashing, and brought alongside at the Port of Lake Charles’ dock. Stevedores transferred the components to barge – using the bespoke lifting frame to transfer the MEG

modules – and Fagioli’s personnel lashed and secured the cargo.

“The main challenge was the modules [which weighed up to 400 tons], but with proper planning and communication, the operation went quickly.” Mazzei said. The cargo was delivered to the client’s jetty, over an undredged Louisiana bayou that customized surveys confirmed would allow, in places, a mere one- to two-foot margin of safety on a nine-foot loaded barge draft.

Another challenge was provided by the channel itself. “To move from the Calcasieu Channel to the small bayou required a 90 degree turn. We had to maintain a certain draft to prevent dragging and had to keep distance between the barge and a pipeline that ran alongside the bayou,” Mazzei said.

Once the barges docked, Fagioli used SCHEUERLE’s self-propelled modular transporters for offloading and inland transport of the modules. It was a short move – less than 1,000 feet – complicated by an ‘S’ curve in the road after exiting the dock.

“For the biggest modules we used up to 36 axles,” Mazzei said. That required the combined expertise of some of Fagioli’s most seasoned operators, supervisors and spotters.

Though challenging, the MEG project shipments went very well, according to all the transportation players. “We looked at every possible scenario, evaluated them, and did things the right way,” Das said. But there is always room for improvement from, for example, providing more information to the carriers early on, spending less time on the contract, even better communications, and optimizing carrier lifting capacity.

In the end, however, Samsung Engineering’s unique approach to defining and executing this project radically cut costs, minimized risks, pleased the client and may well spark new supply chain scenario and strategy debate. BB Based in the U.S., Lori Musser is a veteran shipping industry writer.

ISSUE 2 / 2018

Experience the progress.

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