VIP Shipper Club story – Making Sense of Statistics

ISSUE 4 / 2018

THE PUBLICATION FOR THE INDUSTRIAL PROJECT SUPPLY CHAIN INDUSTRY

ISSUE 4 / 2018

MAKING SENSE OF STATISTICS Sustained Growth Closer Than You Think

VIP SHIPPER CLUB MEMBER:

CATERPILLAR ............................................................................................. page 60

PROFILE

Making Sense of Statistics Sustained Growth Closer Than You Think

BY CARLY FIELDS

Lausanne, Switzerlandeducated Clerc hen the economic forehas sat on the casts you produce are board of trustees part of the backbone of for Caterpillar’s the growth strategy for pension fund for its a company with revenues in excess of Swiss employees US$45 billion, the pressure to perform since 2009, first could easily be crushing. through an employee appointment and But, if Nicolas Clerc, chief economist then by company appointment. He’s a at Caterpillar, feels that strain he man that clearly knows his numbers – does not let it show. In a meeting at his BA, M.Sc., and Ph.D. in Economics Breakbulk Europe he is calm, & Finance from The Faculty of cool and collected and ready Business and Economics of to deliver his keynote the University of Lausanne speech to the recordare simply cherries on Read more about breaking attendees at this the cake.

Clerc’s keynote year’s event.

On the sidelines speech at Breakbulk Europe 2018 For nearly four of Breakbulk Europe, on page 80. years, Clerc has headed Clerc was asked to share up the 15-strong team insights from his ecothat produces outlooks nomic modeling. He started to help the world’s leading with the positives, something manufacturer of construction the breakbulk and project cargo and mining equipment, diesel and industry has been lacking of late. natural gas engines, industrial gas Caterpillar saw higher demand turbines and diesel-electric locomotives across most of its end markets in the chart its future course, year after year. first quarter 2018, including demand

W

LOGISTICS CHAINS WILL NEED TO BE PREPARED TO HANDLE A VOLUME OF GOODS AGAIN GROWING FASTER THAN THE OVERALL ECONOMY. – Nicolas Clerc, Caterpillar

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for construction and mining equipment and for onshore North American oil and gas applications. Economic data points to a continuation of that upswing, according to Clerc. The International Monetary Fund, or IMF, expects the recent broad and strong economic bounce back to continue, measures of business confidence are robust, and monetary and fiscal policies remain supportive.

“World trading volume is strengthening,” he said. “Looking back at the 2012-2016 period, trade growth relative to overall economic activity was the weakest since the mid-1980s. Last year was a turning point, and the IMF now forecasts the volume of goods traded around the world to grow 4.8 percent in 2018 and 4.4 percent in 2019.

That means logistics chains will need to be prepared to handle a volume of goods again growing faster than the overall economy.”

The positive state of the world economy makes it difficult to see significant imbalances, he added. Inflation is generally within central banks’ target zones and economic activity is growing in all main regions of the world.

ISSUE 4 / 2018

e h t e v a S Date! ope ulk eur BreakB ay 2019 M 3 2 1 2 En In BrEM

Breakbulk community: It was a pleasure to welcome you in Bremen!

We would like to thank all of our partners and participants for making Breakbulk Europe 2018 a successful and very special event.

See you 2019 in Bremen!

www.bremenports.de/en

Two Cat 793F CMD autonomous trucks operating at a Fortescue iron ore mine.

CREDIT: CATERPILLAR

bridge the gap between internal and external innovation,” he said.

Clerc added that he is convinced that technology and digital innovations will help the transportation industry to improve its operational efficiency significantly, while decreasing its environmental footprint. More innovation will boost productivity, effectively doing more with less.

FUTURE BLACK SWANS

INNOVATION A KEY DRIVER

Beyond economic growth, there are other factors at play that could support further opportunities for the logistics and transportation sector, Clerc said.

“Technology and digital innovations offer exciting perspectives into how the transportation industry can meet stringent emission standards, improve operational efficiency, and lower fuel and repair costs,” he said. Caterpillar plays its corporate social responsibility hand with its dual-fuel engine options, emission upgrade kits and hybrid systems, among other products.

Clerc is upbeat about prospects for all three of Caterpillar’s business segments. For example, in its Construction Industries group it has launched the next generation of 20-tonne hydraulic excavators.

“This product improvement – the first redesign of our excavator in 25 years – has increased operator

efficiency up to 45 percent, lowered fuel consumption up to 25 percent, lowered maintenance costs up to 15 percent and provides unmatched operator safety.” This, he added, is an approach that is being replicated in many areas across the company.

Indeed, being continuously challenged to innovate is crucial to medium-term success for project cargo and breakbulk companies.

“We listen to our customers in order to develop the products and services that help them succeed,” Clerc said. “Our company purpose statement is to provide the solutions that help our customers build a better world. We make it happen through innovation and collaboration.”

Caterpillar embraces the power of open innovation through ideas from external startups as well as through its own technology licensing programs.

“These types of collaborations help us

TECHNOLOGY AND DIGITAL INNOVATIONS OFFER EXCITING PERSPECTIVES INTO HOW THE TRANSPORTATION INDUSTRY CAN MEET STRINGENT EMISSION STANDARDS, IMPROVE OPERATIONAL EFFICIENCY, AND LOWER FUEL AND REPAIR COSTS. – Nicolas Clerc, Caterpillar

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But innovation alone cannot protect the industry from Black Swan events on the horizon. While the prognosis is generally for a patient that is coming out of recovery, shocks can happen at any time and the global trade situation remains very fluid. Brexit – the ongoing process of Britain’s departure from the European Union – is one such unknown.

Clerc reserves judgment, accepting that elements from these types of events are difficult to quantify and incorporate into an economic forecast.

In a reflection of past economic trends, Clerc’s examination of the average age of capital stock around the world that took place during the “extremely severe” recession of 2008-2009, revealed that “the pace of investment was not enough to offset depreciation.”

But things have moved on and the world economy is much larger today than a decade ago. “So, it requires the infrastructure, processes and people to handle stronger global economic conditions. Stronger world growth supports better investment,” he said.

Overall, world economic growth, barring any negative shocks, should continue to drive significant activity across construction, mining, energy and transportation sectors. “In that context, as a company we’ll remain focused on continued cost discipline, executing our strategy and investing for long-term profitable growth,” Clerc concluded. BB Carly Fields has reported on the shipping industry for the past 18 years, covering bunkers and broking and much in between.

ISSUE 4 / 2018

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Breakbulk VIP Shipper Club is an invitation-only membership program for project owners and developers, EPCs, manufacturers of industrial equipment, oil & gas service companies, energy firms, chemicals producers, mining companies and metals producers.

The club is a central hub for all those who are involved in projects that require oversized cargo. For nearly three decades, Breakbulk events have brought shippers together with service providers to forge a reliable industrial supply chain.

Members may grow their positions as thought leaders to the industry by participating as panelists at Breakbulk events, serve as mentors in our Education Day programs to help encourage the next generation of leaders, and offer insight and guidance as editorial resources for Breakbulk Magazine.

There is no fee for membership in Breakbulk’s VIP Shipper Club and all members receive free admission to Breakbulk events around the world – in Houston, Dubai, Shanghai and Bremen.

To apply for membership, visit breakbulk.com/vip-shipper-club