Breakbulk Magazine Issue 4 2016

SAUDI VISION n CLEANING UP ON ENERGY n U.S. TREASURED TURBINES n DYNAMAR ANALYSIS

ISSUE 4 / 2016

MINORITY MOVEMENT Gender Equality Strides Need to be Made Faster.

contents

Cover Story

10

20 TRADE NOTES

VISION AND DRIVE Saudi Arabia Navigates New Path Beyond Oil

30 MIDDLE EAST

CLEANING UP

Alternative Energy to Propel MENA Project Cargo

36 RENEWABLES

TREASURED TURBINES U.S. Wind Energy Boom to Power Heavy-lift Imports, Exports

10 MINORITY MOVEMENT Gender Equality Strides Need To Be Made Faster

20

36

44 ENERGY UPDATE

WIND IN THE SALES Capitalizing On Asia’s Offshore Power Boom

52 REGIONAL REVIEW

TRADING FREEDOM Sanctions-free Iran Beckons Foreign Investors

62 REGIONAL REVIEW

62

CROSSROADS

Turkey Faces Tough Choices to Support Economic Growth

8 A Matter of Time n 60 Oil Rail & Ports Iran n 68 Reinvent And Realign n 118 Get Rail on Track With HS&E n 120 Britain’s State of Flux 122 Crime, Security and Liability n 128 Expect The Unexpected n 131 Breakbulk Index n 138 On The Waterfront Photo Contest Winner 4 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 4 / 2016

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contents

72

84 OCEAN SERVICES

THE SUPER HIGHWAY

Latest Generation of Vehicle Carriers Drive Innovation

92 TRADE NOTES

GREEN MACHINES

Time is Ripe For a Sustainability Initiative

100 CARGO LENS

BREWING A REVOLUTION Craft Breweries Multiply, Along With Project Opportunities

72 VIEW FROM THE TOP

Dynamar Ranks Breakbulk Carriers Amid ‘Opaque’ Outlook

84

104

104 PORT PROFILE

NEW ORLEANS JAZZ Helm Changes Hands, Breakbulk Focus Remains

108 CARRIER PROFILE

PLACE YOUR BETS

Zeaborn Wagers on Breakbulk Survival

114 CASE STUDY

UNCONVENTIONAL COVER

114

Temporary Storage Pushes Design Boundaries

6 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 4 / 2016

editorial

A MATTER OF TIME

B

reakbulk’s cover story this issue (Minority Movement, page 10), which explores gender equality in the breakbulk and project cargo industry, was an understandably complicated undertaking.

As Carly Fields points out in her opening, any traction on the subject is often lost, sinking in a morass of stereotypes that apply to the problems of gender inequality in the workplace, and the attempts to solve it.

The good news is more women are entering and succeeding in the maritime and logistics industries, gaining in roles and stature, as evidenced by the exemplary professionals Fields Gary Burrows interviewed.

The bad news is that the culture is not changing fast enough. While middle management in the industry has increasingly become genderneutral, the same can’t be said for upper management positions, which remain male dominated. For instance, only one in every 10 U.S. public port authorities are led by female CEOs. For the sake of equality, we attempt to put blinders on and focus on performance of the executive or manager in question, regardless of gender. But the disparity between men and women among the upper echelon is impossible not to notice, and the causes of the disparity become harder to explain away.

Yet the culture should and must continue to change, if not because it’s good and fair, then because it just makes good business sense. It’s not a matter of men vs. women but men and women; the attributes often contrast but the collective approaches 8 BREAKBULK MAGAZINE www.breakbulk.com

help eliminate barriers and cultivate effective action.

Common female attributes raised by the interviewees include “strong organizational skills, the ability to multitask and switch priorities readily, and better situational awareness,” Fields notes. Add to that a more holistic approach and a natural tendency to work collaboratively.

It is the value of diversity that will force industry to accept a balance, because the collective embraces the multiplicity of skills, philosophies and talents that generate the best solutions, the best management and the most productive teams.

The women who participated in our story also demonstrate quiet courage and a fierce determination.

“Women – and all under-represented professionals – need genuine, challenging opportunities to grow into and showcase their talents,” said Brandy D. Christian, who will soon move from COO to CEO of the Port of New Orleans. “Little successes can build confidence and help them see themselves as capable, strong and effective.”

While the industry downturn has taken a healthy bite of the job market, the inevitable turnaround will bring a need for talented professionals and talented women who place themselves in the market and prove themselves leaders who help force the hand of management to accept the best and brightest.

A Center for American Progress report in 2014 warned that equal representation of men and women among top businesses won’t occur until 2085, a seemingly dismal assessment. But looking back upon the historical path of equality comes perspective and resolve.

“Gender may have slowed us, but it has not stopped us,” said Margaret Vaughan, of Wood Group Mustang Inc. “It has just been a matter of time, a willingness to recognize talent and skills, and a willingness to give women opportunities to execute. After that, it’s up to us not to fail.”

EDITORIAL DIRECTOR Gary G. Burrows / +1 904 535 5460 gburrows@breakbulk.com NEWS EDITOR Carly Fields carly@breakbulk.com HEAD DESIGNER Catherine Dorrough DESIGNER Mark Clubb REPORTERS Paul Scott Abbott Lori Musser Criselda Diala- Malcolm Ramsay McBride VL Srinivasan Alan M. Field Herman K. Trabish Mike King Mark Willis

BREAKBULK EDITORIAL BOARD John Amos Amos Logistics

Ed Bastian

BBC Chartering

Murray Cooper

McDemott International Inc.

Etienne de Vel Fednav Belgium

Dennis Devlin DB Schenker

John Hark

Bertling Project Logistics

Dennis Mottola Bechtel Corp.

William Moyersoen

ArcelorMittal Antwerp Logistics

Albert Pegg

Antwerp Port Authority

Dirk Visser

Dynamar D.V.

Grant Wattman

Agility Project Logistics

MANAGING DIRECTOR Alli McEntyre / +353 21 477 3808 amcentyre@breakbulk.com ACCOUNT MANAGER Robert Janusauskas / +353 021 477 3808 +1 281 763 7231 rjanusauskas@breakbulk.com SUBSCRIPTIONS To subscribe, email bb.breakbulk@adsg.info, or call from inside the US +1 855 613 8186 between 8:00 am and 5:00 pm CST. A publication of ITE Group plc Transport & Logistics business 105 Salisbury Road London NW6 6RG, UK.

ISSUE 4 / 2016

cover story

Gender Equality Strides Need To Be Made Faster

MINORITY MOVEMENT

BY CARLY FIELDS

10 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 4 / 2016

B

e right with you … just need to finish washing up, baking, cajoling and corralling the children into bed and remedial sewing repairs, also known as performing all necessary duties under the job title of allround general keeper of the house.

Great. Now that the stereotypes are out of the way, it’ll be a great deal easier to focus on bridging the gender gap in the project cargo industry and the inroads made so far.

But before that, some ground rules the change is “painfully slow and the need to be set. This is not a feature that industry remains predominantly male.” doggedly rams home the amazingness of Katie Mehnert, founder and CEO womankind – heartfelt apologies to Emily of Pink Petro, the first and only global Pankhurst, Lucretia Mott, Elizabeth Cady social learning community for women in Stanton and their ilk for that lack of focus. energy aimed specifically at disrupting Women have come a long way since the gender gap, sees issues in meeting the 1900s suffragette movements. the middle-skills gap. “We’re seeing a Today, we make conscious efforts to massive shift in the energy value chain ignore whether a man or woman takes with crew change underway or almost the helm at an done. When the engineering, economy returns, procurement there will be a and construction dearth of women “I THINK THE company, port or left and the need OPPORTUNITIES ARE freight forwarder to develop up and – the emphasis reskill our workTHERE, BUT WE’RE NOT being on skill, not force.

CHANGING THE CULTURE gender. But for “I think the FAST ENOUGH.” all that has been opportunities achieved, women are there, but – Katie Mehnert, remain in the we’re not changfounder and CEO of Pink Petro minority in this ing the culture industry. fast enough,” As a woman Mehnert said. rising through the Margaret ranks at the Port of New Orleans, curVaughan, manager traffic and logistics/ rent COO and CEO-in-waiting Brandy export compliance at Wood Group D. Christian agrees that opportuniMustang Inc., sees women making ties for women in the cargo and cruise strides in this industry: “Gender may industries have improved at all levels have slowed us, but it has not stopped over the last decade. More women are us. It has just been a matter of time, being selected in the maritime and a willingness to recognize talent and logistics industries, and 10 percent skills, and a willingness to give women of U.S. public port authorities are led opportunities to execute. After that, it’s by female CEOs. But she notes that up to us not to fail.”

Brandy D. Christian COO, Port of New Orleans

Katie Mehnert Founder and CEO, Pink Petro

www.breakbulk.com BREAKBULK MAGAZINE 11

cover story

Margaret Vaughan Manager Traffic and Logistics/Export Compliance, Wood Group Mustang Inc.

“MEN AND WOMEN APPROACH PROBLEMS FROM DIFFERENT ANGLES, AND WOMEN HAVE DIFFERENT STRENGTHS THAN MEN DO.” – Margaret Vaughan

A DIFFERENT PERSPECTIVE The argument is that women bring something different to the table when they join a project cargo movement, regardless of the point in the chain. While most prefer to shy away from generalizations on male versus female attributes, a number of constants were raised: strong organizational skills, the ability to multitask and switch priorities readily, and better situational awareness. But these qualities need to be set against the complementary attributes of male counterparts. For many, it’s the combined force that makes the difference.

“For a very long time, I subscribed to the idea that women bring the same skills and capabilities to the table as men, and that’s why gender shouldn’t matter in the workplace,” said Kathy Canaan, global director trade compliance at engineering, procurement and construction company Fluor. “As I get older, I appreciate more 12 BREAKBULK MAGAZINE www.breakbulk.com

that diversity of opinions, work style and experience has incredible value.

“Breakbulk and project cargo logistics is a business of planning, problem solving and relationships. I believe that women generally take a more holistic view to problem solving and often have greater situational awareness than our male counterparts.

That, alongside a tendency to work more collaboratively pays tremendous dividends.”

Vaughan shares this viewpoint: “Men and women approach problems from different angles, and women have different strengths than men do. One is not necessarily superior to the other – they are just different and, quite honestly, complementary. My male colleagues may look at a challenge in a way that I may not. They may see things that I will not. Their perceptions, while no less valid than my own, may reveal a better methodology than mine and vice versa.”

Constant comparisons with male

Kathy Canaan Global Director Trade Compliance, Fluor ISSUE 4 / 2016

DEPENDABLE |

FMT

|

FALLine

|

Fednav Direct

| www.fednav.com

cover story

counterparts might be unavoidable, but it’s an issue that women in senior roles in the breakbulk industry strive to ignore, instead choosing to focus on reaching company and team strategic goals. The rest, as Canaan described it, is just noise.

Phyllis Saathoff, Freeport’s executive director and CEO, said she doesn’t consider gender when performing her duties. As an executive, she looks at the challenges and opportunities ahead and applies her knowledge and experience in a leadership capacity to positively impact her organization. Likewise, Vaughan does not compare herself with anyone else, nor does she accept anyone else’s comparison of her to others. “I expect to be judged against standards of excellence not against other people,” she said.

Phyllis Saathoff Executive Director and CEO, Freeport 14 BREAKBULK MAGAZINE www.breakbulk.com

Catrien Scheers, Chairman, Fast Lines Belgium

WOMEN IN THE GLOBAL LABOR FORCE 2006:

GLOBAL AVERAGE, ANNUAL EARNINGS

1.5 billion

women men

2015:

1.75 billion

TOP GENDER EQUALITY PERFORMERS GLOBALLY 01 Iceland 02 Norway 03 Finland 04 Sweden 05 Ireland 07 Philippines 09 Slovenia 10 New Zealand

2006

08 Switzerland

US$21,000

06 Rwanda US$11,000

Indeed, Mehnert described logistics as the best job in the value chain and the beating heart of the supply chain. “It’s the closest to the customer you can get,” she said. “Getting as close to the customer as possible is one of the best pieces of advice I received from a sponsor of mine who put me in a logistics support role despite my education not meeting the required role.”

Freeport’s Saathoff suggests that there be more focus at a school level on STEM, or the academic disciplines of Sciences, Technology, Engineering and Math, in conjunction with the promotion of working internships. Ongoing training opportunities can also raise the profile of the sector.

Once in the sector, women need to be clear in their ambitions. They need to perceive themselves as leaders to be able to move up the career ladder, according to Christian. “Women – and all under-represented professionals – need genuine, challenging opportunities to grow into and showcase their talents.

Little successes can build confidence and help them see themselves as capable, strong and effective.”

“As women we have to learn to be self-confident and say to ourselves ‘I am good enough’ to take up a senior role,” adds Catrien Scheers, chairman of Antwerp-based Fast Lines Belgium. She complains that too many women work-

US$11,000

While more young women are expressing an interest in logistics management at the university level, the fundamental challenge remains of how to get more women interested in project cargo logistics in the first place. Encouraging new female talent to the industry shouldn’t be the struggle that it undoubtedly is: a global industry, with a varied and challenging workload and travel opportunities to far-flung lands – the project cargo business has a lot going for it.

US$6,000

AN ATTRACTIVE PROPOSITION?

2015

Source: Global Gender Gap Report 2015, World Economic Forum ISSUE 4 / 2016

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cover story

ing in shipping stay in the shadows all their working life. “Why? Is it maybe because as small girls we are socialized to behave as a lady: be nice, do not shout or be loud, sit with our legs crossed … In other words, make ourselves invisible or at least do not take up too much space.”

Mehnert agrees that while the industry is increasingly encouraging women, it’s not doing enough to change its culture and is avoiding taking risks on women in their careers.

“We need to give them the responsibility and challenges they crave in rewarding assignments.”

FINDING AND CREATING OPPORTUNITIES However, Canaan points out that it is less about encouragement and more about opportunity. “I am not encountering any more women in executive roles than I did 10 or 15 years ago. The middle management layer has become more gender balanced, but the highest level roles in operations and sales remain male dominated. I think the conversation has to become more open.”

Canaan borrows a quote from Facebook COO Sheryl Sandberg to inspire female employees looking to enhance their breakbulk-related career: “‘Men attribute their success to themselves and women attribute it to other external factors.’ One of the hardest things to learn is how to recognize and be recognized for your accomplishments. It is usually a matter of subtlety, but it is a critical skill to master.”

That said, she acknowledged that not everyone, male or female, is cut out for a career in logistics. Those who love a challenge, thrive under pressure, and like to do something new every day are best suited to this industry, she said.

For those looking to move up, finding an experienced mentor is also encouraged, as is developing a network of professionals at all levels. As the role progresses, those who previously benefited from mentoring should be willing to mentor in return.

“I know I can contribute so much through mentoring and leading young women and men to rewarding careers in the transportation industry,” said Saathoff. “As a leader, it is vitally 16 BREAKBULK MAGAZINE www.breakbulk.com

QUOTES TO WORK BY, LOGISTICS-STYLE “LEAP – Love learning; Excel at what you’re best at and outsource the rest; Always remember why you started – life’s a marathon, not a sprint; and Push past the doubters, including that voice in your own head.

You’ve got this.

Just leap.”

Katie Mehnert

“Control your own destiny or someone else will.”

– Jack Welch Brandy Christian

“Believe in your decisions.

Be abundantly clear in your directions. And be prepared for daily confusion.”

Margaret Vaughan

“Set your goals high and don’t stop ’til you get there.”

– Bo Jackson Kathy Canaan

“Each person must live their life as a model for others.”

– Rosa Parks Phyllis Saathoff

“I can do all things through Christ who gives me strength” Pam Holdrup

“Do business with your head in the air but with your feet on the ground and never forget that assets are important but people make the difference.”

Catrien Scheers

important to the long-term growth and success of the maritime industry to assist the development of our next generation of leaders and executives.”

Canaan describes the strong sense of responsibility that she has to perform well, model the professional behavior that she appreciates and to mentor to enable her to advocate for women in the industry.

Pam Holdrup, founder and principal of Houston-based Proven Logistics Solutions, views mentoring as an opportunity and a privilege not just for women, but for anyone new coming into the industry, particularly the next generation coming up.

Christian considers herself a voluntary advocate for women and all under-represented groups. “The industry as a whole benefits when the best and brightest minds are contributing their experience and ideas at all levels,” she said.

TAILORED NETWORKING QUIBBLES But debate on whether exclusively female networking groups dedicated to shipping and logistics help or hinder can split the room. Vaughan dislikes exclusivity in any form: “You lose more than you gain,” she said.

Christian recognizes that female networking groups meet a distinct need and can serve as a valuable resource, but more important is the need to develop a broad network that extends beyond gender, functional expertise, geographic location, or any other specific criteria. She recommends joining several networking groups with different areas of focus.

Canaan added that these exclusive groups seem somewhat counterintuitive: “If the concern is that women are largely excluded from leadership roles, why then, would we network exclusively among ourselves? I think all perspectives have to be considered and discussed to affect any meaningful change.”

However, Scheers, a member of WISTA, or Women’s International Shipping and Trading Organization, feels empowered by the network of talent and expertise represented in these types of organizations. “Through this network and in our daily working ISSUE 4 / 2016

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cover story

AT THE CURRENT RATE OF PROGRESS, EQUAL REPRESENTATION OF MEN AND WOMEN AT THE TOP IN BUSINESS WILL NOT OCCUR UNTIL 2085. environment we give talented women faster access to more resources and more opportunities.”

Saathoff also believes that they are beneficial to the women who participate and provide excellent networking opportunities as well as guidance and support for young professional women.

But even with gender-specific support, equality for women in senior positions in logistics is still a ways off. Back in 2014, Judith Warner, senior fellow at the Center for American Progress, published a report that warned that at the current rate

of progress, equal representation of men and women at the top in business will not occur until 2085. That’s a painfully slow rate of progress by anyone’s standards, and the likelihood is that it will be even slower in the project cargo industry.

A parting thought comes from Mehnert who believes it’s high time that women in the value chain are recognized for their contributions and leadership. “I left the industry to make it my work to accelerate closing the gender gap. 2085 is unacceptable and it’s my mission to move the needle quicker using social technology.”

18 BREAKBULK MAGAZINE www.breakbulk.com

AN EMPATHETIC SIDE TO LOGISTICS From humble beginnings as a receptionist in Mediterranean Shipping Company’s Auckland office, Shanon Gould is making waves in Australasia’s logistics industry.

Gould has been selected to represent Australia and the Asia Pacific Region as one of only four finalists at the global Young International Freight Forwarder of the Year competition.

She was selected by the Council of Customs Brokers & Forwarders of Australia from a pool of “highly skilled candidates” to be its representative in the competition. The winner will be announced in October.

Now New Zealand export trade

ISSUE 4 / 2016

manager at Navia Logistics, Gould is fully entrenched in logistics, having had roles in imports, exports, breakbulk, roll-on, roll-off, air freight, customs, sales support and sales.

“I had originally just set out to have a gap year and earn money while I figured out what I wanted to study/ be when I grow up,” she said. “Turns out, the shipping industry was exactly where I wanted to be.”

Gould described the defining moment of her career to-date assisting with the salvage operations of the Rena, which grounded on the Astrolabe Reef, just outside of Tauranga, New Zealand.

“I was working in Melbourne, Australia, at the time in a ro-ro and breakbulk logistics role and was hired by a Melbourne aviation company to send a helicopter to assist with the

Cis4435_CSAL_Ad_Breakbulk_124x178_p.indd 1

salvage. It was the one time that I felt I made a difference, and that I had made a significant impact in helping with such a huge environmental disaster,” Gould said.

As a woman committed to logistics, she said that opportunities for her gender in the industry have improved over the last decade with women increasingly respected. Women bring the virtue of empathy to the task of moving breakbulk and project cargoes, she says, where men often bring a “hard line.” “Collaboratively meeting in the middle between both sides and coming to a solution that works for everyone is usually the best outcome.”

To those women facing hurdles in logistics-related career development, Gould encouraged perseverance: “The logistics industry is a hard industry, but there are so many parts to it.

If you fail at one part of logistics, don’t give up; try another avenue, there are just so many options, and it’s a huge world of shipping out there.” BB

2016-01-15 2:43:55 PM

www.breakbulk.com BREAKBULK MAGAZINE 19

trade notes

VISION AND DRIVE Saudi Arabia Navigates New Path Beyond Oil

BY SALMAN NISSAN, EDWARD OSTERWALD

The Shaybah Gas Oil Separation Plant (GOSP), a major gas and oil production facility in Saudi Arabia near the border of the U.A.E. Credit: Barry Iverson Photography/Barry Iverson/Newscom

20 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 4 / 2016

S

ince the news broke at the start of the year that Saudi Arabia was considering partially privatizing its stateowned oil giant Saudi Aramco, there has been much speculation about its valuation and what impact a sell-off would have on trade and shipping.

Saudi Arabia has indicated that it may sell a 5 percent stake in Saudi Aramco through an initial public offering. But will such a sale help the country’s diversification and, in doing so, drive/impact project cargo volumes?

Since the country’s establishment in 1932 and the start-up of the oil industry later that decade, Saudi Arabia has been heavily reliant on oil. At the heart of Saudi Arabia and its monarchy’s power is Saudi Aramco. This behemoth of an oil company is respon-

sible for raising most of the kingdom’s revenues (more than 90 percent of its annual budget of about US$230 billion) and playing a pivotal role in its various social programs.

Since the 1970s, Saudi Arabia has executed, with varying degrees of success, a number of national development plans to try and reduce the country’s reliance on oil and allow it to become a more effective business environment.

More recent versions have focused on the development of key industries such as mining, petrochemicals and cement, the latter two being particularly successful. However, their success has relied upon various forms of government subsidies, be they cheap raw materials, cheap utilities or soft financing. Many of the best performing industries continue to rely on some

form of subsidy, although the government is starting to phase these out.

More concerning is the recurring appearance of certain key objectives in each new set of industrialization plans (such as private-sector development, structural reform and infrastructure development), emphasizing their continued importance to the future development of the kingdom. Their recurrence, however, appears to highlight a lack of successful implementation. The state has also targeted the development of small-scale industry since the 1990s, yet there has been no serious follow through by the authorities to support growth in this sector. The inability to previously deliver on similar industrialization objectives raises questions about whether the impact of the current program will be any different.

www.breakbulk.com BREAKBULK MAGAZINE 21

trade notes

2,160.0

TIMING OF A SALE The recently sustained low oil price environment appears to have been a catalyst for the new guard in Saudi Arabia to try and push some daring structural and economic reforms that are hoped to have a dramatic transformational impact on the country and its future direction. Given Saudi Arabia’s past attempts to transform its economy, with largely unimpressive results that have not had any meaningful impact on the economy, why should it be any different this time?

These reforms are part of the kingdom’s “Vision 2030” under the umbrella of a number of transformation, restructuring and other executive programs.

This sets out a sweeping range of targets and reforms to be implemented by 2030.

The plan is spearheaded by Deputy Crown Prince Mohamed Bin Salman, who appears to have developed a considerable power base over a relatively short timeframe. The prince leads the military as defense minister, and oversees many of the kingdom’s ministries, as well as the Public Investment Fund, or PIF, through his role as chairman of the newly formed Council for Economic and Development Affairs.

The goals and targets of Vision 2030 are set to move the Saudi Arabian economy from its underlying reliance on oil production to one that is more broadly based. This is a huge transformational plan that requires a complete revamp of the existing economic infrastructure.

Although the deputy crown prince has concentrated his overall power, there is still general skepticism on the likely success this time around. There will be vested and entrenched interests that will resist change, and there are no signs on whether the religious establishment will fully support this plan. Should the strategy actually start to be fully and quickly implemented, the speed of change may shock a conservative society accustomed to decades of government largess. There are, however, instances when the kingdom has changed with speed and decisiveness such as the move from a Thursday/Friday to a Friday/Sat22 BREAKBULK MAGAZINE www.breakbulk.com

847.6 792.0 746.7 598.4 592.0 474.0 442.4 344.0 256.0 236.0 196.0 193.6 MOVING UP 160.0 THE RANKS 110.0 Ranking of selected 95.0 top sovereign wealth 91.8 funds by assets under 85.1 management, in US$ billions.

77.0 73.5 66.3 66.3

PIF (with Aramco) 1. Government Pension Fund (Norway) 2. Abu Dhabi Investment Authority 3. China Investment Corporation 4. SAMA (KSA Central Bank) 5. Kuwait Investment Authority 6. SAFE Investment Company 7. Hong Kong Monetary Authority Investment Portfolio 8. Singapore Investment Corporation 9. Qatar Investment Authority 10. National Social Security Fund 11. Investment Corporation of Dubai 12. Temasek Holdings 13. PIF (as is, without Aramco) 14. Abu Dhabi Investment Council 15. Australian Future Fund 16. Korea Investment Corporation 17. Samruk-Kazyna JSC 18. Kazakhstan National Fund 19. National Welfare Fund 20. IPIC Abu Dhabi 21. Mubadala Development Company

Source: Sovereign Wealth Fund Institute, www.swfinstitute.org/sovereign-wealth-fund-rankings/

urday weekend which was announced and implemented within a space of a few weeks.

Much of this reform is centered on the partial privatization of Saudi Aramco and the transfer of its ownership into the PIF. The successful focus of PIF once Saudi Aramco is under its wings will be a driver for further development within the kingdom.

POTENTIAL IPO PITFALLS As part of the Saudi Aramco strategic transformation program, the company will have its ownership transferred into PIF, and it is understood that up to 5 percent of the company will be listed in Saudi Arabia and on a major international exchange. Recent commentary suggests an overall valuation for the company of around US$2 trillion. This would make PIF the largest sovereign wealth fund in the world, overtaking Norway’s Government Pension Fund. Should a listing of 5 percent of Aramco be successfully executed, it would raise some US$100 billion, potentially making this the largest ever IPO (in fact four times as large as Alibaba’s IPO of US$25 billion) and enough to

have hordes of investment bankers salivating at potential fees.

Clearly an IPO of this size cannot be accommodated by the Saudi Stock Exchange. It is highly likely that there will be a dual listing in Saudi Arabia and elsewhere. Given its size, the obvious candidates to accommodate this IPO would be New York, London or Hong Kong.

Listing on any of these major stock exchanges comes with various requirements that Saudi Aramco would need to meet. Some of these requirements should not prove to be difficult and in certain instances may be negotiable for a listing the size of Aramco’s, such as the London Stock Exchange’s requirement for 25 percent of the entity’s shares to be listed and in public hands. However, there are certain listing requirements that will create challenges. Some of the key listing requirements that are likely to be most relevant to Saudi Aramco are: • A robust legal framework for operation. Regulators and institutional investors will look for certain shareholder protection measures, and will consider the local legal and regulatory environment of the country of incorporation.

ISSUE 4 / 2016

trade notes

CHALLENGES IN FUND EVOLUTION

ARAMCO KEY FACTS AND FIGURES

PRODUCTION AND RESERVES Crude oil and condensate reserves (billions of barrels):

261.1

Gas reserves (associated and non-associated, trillions of standard cubic feet):

297.6

Crude oil production, annual (billions of barrels):

3.7

Source: Saudi Aramco Annual Review 2015

• Ensuring formal/enforceable concessions and fiscal mineral extraction rights are properly in place, whether between the kingdom and the company, or some alternative. Will the kingdom want all of its oil income coming from Aramco dividends, or will it want to establish some form of fiscal regime like other countries? Investors will also want to know that Aramco has full contractual rights to Saudi Arabia’s reserves and production, as this will be the key business in which they are going to be investing.

• Controlling shareholders who exercise control over voting rights may need to enter into some form of relationship agreement to ensure that the company will be run in the interest of all shareholders to maximize profitability, rather than continue to be run as a quasi-government entity.

• A three-year financial track record that is prepared in accordance with International Financial Reporting Standards, with clean audit reports.

Currently Saudi Arabian companies are only required to file accounts in accordance with Saudi Arabian standards, however the Saudi Organization for Certified Public Accountants, or SOCPA, has set out a transition to IFRS for listed companies from 2017 and unlisted companies from 2018.

• Some form of declaration about 24 BREAKBULK MAGAZINE www.breakbulk.com

$

ECONOMIC IMPACT

Value of material procurement spending awarded to local manufacturers:

US$2.1 billion PEOPLE

65,266 Total workforce, of which 54,666 are Saudis and 10,600 expatriates

the adequacy of the company’s existing financial reporting procedures to fulfill continuing obligations as a listed company, and this will need to be supported by an accountant’s due diligence exercise. In the U.S., the CEO and CFO will need to certify such controls under the Sarbanes-Oxley Act. • To undergo legal and financial due diligence and some form of environmental impact assessment.

• Ongoing annual/semi-annual/ quarterly production and publication of financial reports, including consolidated financial information for the relevant period, together with an accompanying review of the company’s business for that period.

It is likely that Amraco is working in the background with its management and advisers to address many of these requirements. However, some of these requirements will open Aramco up to public scrutiny to which it has historically not been accustomed. The kingdom has never made public the level of oil reserves in the country.

If the IPO is to include the upstream business, a “Competent Persons Report” will be necessary to verify Aramco’s petroleum reserves.

Furthermore, the company will need to show that all of its revenues and costs are properly accounted for and that there are fully functioning integral

The Public Investment Fund, Saudi Arabia’s sovereign wealth fund, was established in 1971 to finance development projects that would help make the country less dependent on oil. It provides financing support to strategically significant commercial projects, as well as investing overseas.

The Public Investment Fund, or PIF, has about US$160 billion of assets under management, with a portfolio of about 200 investments, of which around 20 are listed on the Saudi Stock Exchange and only about 5 percent representing foreign investments. Over the past year, however, PIF has made a number of high-profile foreign investments, including acquiring a 38 percent stake in South Korea’s Posco Engineering & Construction in July 2015 and most recently investing US$3.5 billion for a 5 percent stake in Uber in its latest funding round, becoming the largest ever single investment in a start-up company to date.

The transfer of Saudi Aramco from direct government ownership into PIF will instantly catapult PIF from 13th to first in the sovereign wealth fund rankings from the Sovereign Wealth Fund Institute.

With Aramco under its ownership, a US$2 trillion PIF will dwarf Norway’s Government Pension Fund, currently the world’s largest sovereign wealth fund.

However, one of the main issues of placing Aramco under PIF will be transparency. In the Sovereign Wealth Fund Institute’s transparency index, PIF’s rating of 4 (on a scale of 1 to 10) falls far short of established funds such as Norway’s Government Pension Fund and Singapore’s Temasek Holdings, both with scores of 10. The PIF has no website, and with little to no public information on its investment and asset management strategies and no information on how investment returns are used.

ISSUE 4 / 2016

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trade notes

checks and balances. This would mean that Aramco could not be used by the state to support social or political projects as may have been the case in the past. Indeed, it would be expected that such items are disclosed should they have taken place in the three-year trading period covered by any prospectus.

CONSEQUENCES OF LISTING As a listed entity, Aramco will be expected to run its business in the interest of all of its shareholders and thus to endeavor to maximize profits. Investors are unlikely to buy into a company that is used for social or political goals by government.

The Saudi government and Aramco may want to learn from the mistakes of other state-controlled national oil companies that have gone public. Companies such as Petrobras and Rosneft, both with very large oil reserves, had high potential but their shares have performed poorly, due to corruption, lack of

AMBITIOUS PLAN TO FORGE SAUDI’S FUTURE Saudi Arabia’s “Vision 2030” has one overarching goal: to cement Saudi Arabia as the heart of the Arab and Islamic worlds, the investment powerhouse, and the hub connecting three continents. Spearheaded by Deputy Crown Prince Mohammad bin Salman, Vision 2030 incorporates some key aims, including: • Increase non-oil revenues six-fold from SR163 billion (US$43 billion) currently to SR1 trillion (US$267 billion) by 2030.

• Continue subsidy reform, particularly in the energy and utility sectors.

• Part-privatization of oil giant state-owned Saudi Aramco in order to create the world’s largest energy conglomerate. Less than 5 percent of the company is expected to be listed locally and internationally as early as 2017.

• Transform Saudi’s sovereign 26 BREAKBULK MAGAZINE www.breakbulk.com

transparency and effective controls and government interference.

Should Aramco be listed and run efficiently to maximize its profits, however, there are likely to be some major effects elsewhere in the industry, particularly in the Middle East Gulf. A profit-maximizing giant such as Aramco could start displacing the business of smaller rivals in the region, with potentially significant ramifications. Furthermore, it will also raise the question of Saudi Arabia’s role within the Organization of Petroleum Exporting Countries.

Despite PIF’s recent high-profile foreign investments, its domestic investments account for the majority of its portfolio. However, comments by Yasir Alrumayyan, secretary-general of the fund’s board, indicate that PIF plans to increase the proportion of foreign investments to 50 percent by 2020.

If this is the case, then of the amounts raised from the Saudi Aramco IPO, only about half is likely to be earmarked for

investment within the kingdom. Furthermore, in Vision 2030, it was made clear that PIF will not compete with the private sector, but instead help unlock strategic sectors requiring intensive capital inputs.

So, should the Aramco IPO raise about US$100 billion, only about US$50 billion is likely to be for domestic investments. On the basis that much of this money is reinvested in infrastructure and the further development of industry within the economy, there will only be a limited number of large-scale projects that can be supported, assuming such projects will be investing some US$10 billion to US$15 billion in initial construction. Furthermore, these large-scale projects are likely to be onetime events over the next 10 years or so.

Much of the country’s industrial development to date, outside of the oil industry, has relied upon heavily subsidized feedstocks such as gas, or electricity, to attract investment and make projects sufficiently attractive to outside investors to take on the perceived risk

wealth fund, the Public Investment Fund (PIF), into the world’s largest, involving the transfer of Saudi Aramco into the fund, as well as other land and property. It has been stated that the enlarged fund will have free rein to develop its domestic and overseas portfolios, which will theoretically move the Saudi Treasury’s key source of income from oil production to investment income (through dividend streams) from PIF. • Generate an additional 9.5 gigawatts of solar energy.

• Increase domestic spending on defense from the current level of 2 percent of the defense budget to at least 50 percent, through development of less complex industries such as spare parts, direct investment and strategic partnerships with leader players for more complex areas.

• Grow the private sector through minimizing government bureaucracy and red tape and encouraging the role and contribution of small and medium-sized enterprises (SMEs), with their share of GDP to grow from 20 percent to 35 percent, and the pri-

vate sector overall from 40 percent to 60 percent.

• Reduce the national unemployment rate (from 11.6 percent to 7 percent) and increase the migration of labor from public to private sectors.

• Update the education system to make those entering the workplace much better equipped with those skills required to boost productivity.

• Further develop the Saudi mining industry through additional exploration, combined with stimulation of the private sector investment allowing for easier investment and development within the industry.

• Privatize certain state-owned companies.

• Develop other sectors, particularly the country’s logistics to allow for a regional logistics hub.

Other elements include more female participation in the workforce; improve the Kingdom of Saudi Arabia’s global ranking in terms of ease of doing business; improve commercial cases average resolution time; reform and restructure primary health care and raise Saudi home ownership rates.

ISSUE 4 / 2016

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trade notes

BREAKBULK, OIL PRICE CORRELATION General cargo discharges track oil price movements in Saudi.

12,000

120

10,000

100

8,000

80

6,000

60

4,000

40

2,000

20

0

0

2004

2005

2006

2007

2008

2009

LEFT AXIS (IN ‘000 TONS) loaded

discharged

2010

2011

2012

2013

2014

2015

RIGHT AXIS (US$/BARREL) Brent Crude price

Source: Saudi Arabia Ports Authority, www.ports.gov.sa/English/Statistics/Pages/default.aspx

Worldwide heavy lift & project cargo logistics via

Bilbao

in investing in the kingdom. Previous attempts to develop large industrial clusters have had limited success, and it may be that instead of aiming to attract large-scale industrial plants, the government would do better to promote development of smaller firms. Therefore, if it is likely to succeed, Vision 2030 really will need to focus on using SMEs to develop a more localized/regional manufacturing base for future growth.

DOWNSTREAM OPTIONS Some of the focus may also be to expand Aramco’s footprint to move further downstream, through developing more refining capacity, potentially making the company the world largest refiner, or through ventures such as the “Oil to Chemicals” project it is looking at with chemical manufacturing company SABIC.

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ISSUE 4 / 2016

However, Saudi Arabia’s efforts to become a regional manufacturing hub and attract investment on face value appears to be a real challenge. It will be competing with neighboring Gulf states, such as the U.A.E., which have had their doors open to investment for far longer, are far better regulated and are not as conservative as Saudi Arabia.

For example, first Dubai and then Abu Dhabi have become particularly successful aviation hubs over a relatively short period of time.

Over the last 10 years Saudi Arabia has seen gradual growth in shipping quantities. The majority of the flows in and out of the kingdom, unsurprisingly, have been liquids (tankers), containers and bulk. On average, these three categories made up 98 percent and 84 percent of loaded and discharged volumes, respectively, from 2004 to 2015. Loaded

liquid cargoes made up more than twothirds of total volumes over this period.

General cargoes, which include breakbulk and project shipping, have in the past made up, on average, about 13 percent of total discharged and 1 percent of loaded volumes into the kingdom.

There appears to be a link between the level of general cargo volumes and oil prices. In particular, discharged volumes have decreased in 2014 since oil prices started falling.

Our view is that Vision 2030 will have some knock-on impact on project shipping volumes. In relative terms, however, the scale is unlikely to be significant and much of the investment in major plant over the coming years will be a onetime event, unlike the radical industrialization that China has been through since the 1980s.

What is likely to be more critical to

project cargoes is the oil price. If Saudi Aramco starts operating as a company run to maximize profits for its shareholders, then as oil prices start climbing so too will major capital investment in new wells and well upgrades, as well as its potential for further growth in the downstream sectors. BB Salman Nissan is a partner with CEG Europe, based in London and has 20 years’ experience in advising companies and governments on various aspects of the oil, gas and petrochemicals industries.

Ed Osterwald is a partner with CEG Europe, based in London with expertise in oil, gas and chemicals. He began his career with Mobil in New York and then became an oil and gas partner with Arthur Andersen in London.

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middle east

CLEANING UP Alternative Energy To Propel MENA Project Cargo

BY CRISELDA DIALA-MCBRIDE

E

nergy diversification has long been on Middle East nations’ agendas, even before global oil market fundamentals started to weaken two years ago. However, with the oil price rout dealing a serious blow to regional export earnings, there appears to be a growing sense of urgency to exploit alternative energy sources, in a bid to meet increasing domestic power needs and free up crude for exports.

This investment in clean energy has the potential to drive demand for heavy-lift

and project cargo business in the region.

A recent report by the International Renewable Energy Agency, or IRENA, makes a powerful case for clean energy in the Gulf Cooperation Council region.

The agency estimates that the fulfillment of renewable energy targets could potentially slash Saudi Arabia’s fossil fuel consumption by 25 percent or 170 million barrel of oil equivalent by 2030. Natural gas consumption in the U.A.E. may also be reduced by half, helping the country save 20 million tons of oil equivalent during the period.

PICTURED: In building wind farms, Middle East countries must source large materials from overseas original equipment manufacturers. / Credit: Atkins

30 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 4 / 2016

middle east

Emirates Nuclear Energy Corp. is developing the U.A.E.’s first nuclear power plant.

Credit: Atkins

In addition, the region’s emissions could shrink by 1 gigaton of carbon equivalent (Gt CO2 ), or an 8 percent reduction in per capita carbon footprint. As a result, renewable energy investment across the Middle East and North Africa, or MENA, region is expected to reach US$35 billion per year by 2020, according to IRENA. Keith Miller, Keith Miller associate director at Atkins Acuity, Atkins Acuity sees a strong appetite for alternative energy projects in the region, but is concerned that the piecemeal fashion in developing renewables could lead to uneven regulation or application of rules.

32 BREAKBULK MAGAZINE www.breakbulk.com

PREFERRED POWER SOURCES

Most of the current renewable energy projects in the MENA region focus on solar and wind, as governments have been encouraged by the strong drop in kilowatt-hour pricing using photovoltaic. Renewable energy has also become much cheaper to produce than fossil fuel. According to Bloomberg New Energy Finance, the cost of solar power has plummeted to a staggering 1/150 of its level in the 1970s, resulting in a 115,000-fold increase in solar installation worldwide today.

“Smart grids are developing quickly, but are behind the speed of change in cost-generating methods, which have moved at an amazing rate of change,” said Miller. “Currently smart grids are a bottleneck for effective use of household-based renewable energy generation, as it moves from a few centralized power generators to thousands of powergenerating sources requiring sub-second control of voltage and power.”

He predicts that the development of GCC’s storage and smart grids would be able to catch up with global levels in the next three to five years, as governments

integrate domestic scale renewable investments more optimally.

A spokesman for the Arab Petroleum Investments Corp., or Apicorp, agrees that solar and wind are the preferred source of alternative energy in the MENA region.

“The progress that we have seen in the last couple of years in countries like Morocco, Jordan, Egypt, and the U.A.E. has been impressive, despite wind and solar representing a very small share of the power mix,” he said. “This has been mainly down to the ability of these countries to put in place regulatory frameworks to attract the private sector, which is keen to invest in a region that has some of the cheapest wind and solar production costs in the world. Solar and wind are much smaller in scale compared to nuclear, thus requiring much less capital, whereas nuclear is capital intensive and very slow to implement.”

BREAKBULK POTENTIAL Nuclear and wind projects, rather than solar, are the segments of the alternative energy sector that could open up opportunities for engineering, procurement and construction management ISSUE 4 / 2016

middle east

companies, heavy-lift carriworth noting that many of ers and freight forwarders the components are quite in the MENA region, sensitive, particularly in “There is according to Craig Edgar, terms of exposure to climatic no question head of future energies, conditions, and that even that [wind energy UK & Europe at medium-term storage can and nuclear] Atkins. require special measures to He explained that in be considered,” Edgar said. will create building their nuclear Unlike the solar sector, opportunities power plants and wind which uses relatively small, in the cargo farms, Middle East counlightweight modules, the and heavytries must source large wind and nuclear market materials such as boilers, require significant-sized lift shipping turbines, pumps and pipecomponents that will need sector.” work from overseas original to be manufactured in speequipment manufacturers. cialized facilities and then – Craig Edgar, “Within either a nuclear transported to the point of Atkins plant or a wind farm, there use. “There is no question are some components with that this will create opporsignificant length and weight tunities in the cargo and that will require careful consideration in heavy-lift shipping sector,” added Edgar. terms of transport and lifting. It is also Indeed, the MENA region’s wind

power potential is one of the most promising in the world. In a report, IRENA and the League of Arab States noted that the Atlantic and Red Sea coasts could benefit from large-scale wind farms, as wind speeds often exceed seven meters per second, which is the threshold for wind power to be economically viable.

Regional governments are also exploring nuclear energy, albeit at a more conservative pace. But although nuclear projects can demonstrate lower operational and fuel costs in the long term, the initial investment – upfront capital costs range from US$3 billion to US$6 billion per gigawatt – can be restricting, according to an Apicorp survey. The organization further predicts that nuclear power will account for only 3 percent of Middle East electricity generating capacity by 2040.

“We don’t expect a change in atti-

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34 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 4 / 2016

tude in the near future. Financing and regulatory constraints will remain key obstacles for the development of the nuclear sector,” the spokesman said.

There are, however, pockets of opportunities for the development of nuclear projects in the region, he added. “Egypt has announced that it will explore nuclear options and has signed agreements with Russia to build nuclear reactors. The country is trailing back in its quest to add power capacity, and is seriously looking into nuclear to provide base-load generation for its rising population. Saudi Arabia has also included nuclear in its new plants, albeit modest capacity of 1.5 gigawatts in the West and 1.5 gigawatts in the East.”

UAE NUCLEAR FIRST Atkins is working with Emirates Nuclear Energy Corp., or ENEC to develop the U.A.E.’s first nuclear power

plant as part of the country’s policy on the peaceful use of nuclear energy, said David Haboubi, head of strategy, energy (nuclear) Middle East.

“We have been an established technical advisor to ENEC for all four units being developed at the Barakah site,” Haboubi said. “Our Middle East nuclear team is headquartered in Abu Dhabi, but we also draw upon Atkins’ global nuclear division and existing workforce of over 2,000 engineers in the Middle East to provide technical and project management support to the whole program. We are also providing training on a broad range of topics including introduction to nuclear fission, types of reactors, radiation protection, safeguards, regulations and nuclear safety culture.”

Although the nuclear energy sector may face headwinds in the short term,

Haboubi believes that it has strong potential, especially since demand for non-fossil fuel in the MENA region has never been stronger.

“Countries want less reliance on domestically generated or imported oil for their power source. Nuclear power offers security of supply and low carbon base load at scale,” he pointed out. “The high capital cost is clearly an obstacle in a world where a low oil price means that Middle Eastern governments have less funds for investment, but the attractiveness of nuclear power appears undiminished even if the pace of implementation may have slowed somewhat.” BB Criselda Diala-McBride is a Dubai-based journalist with more than 20 years of experience writing and editing articles on oil and gas and technology.

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renewables

TREASURED B TURBINES U.S. Wind Energy Boom to Power Heavy-Lift Imports, Exports

BY PAUL SCOTT ABBOTT

ig increases in renewable energy installations look to put a powerful wind beneath the wings of U.S. project cargo transportation for decades to come.

As sure as the wind blows, North American demand for wind energy is flying high, according to government and trade association projections, meaning those engaged in transport of the blades, turbines, nacelles, towers and related oversize components used in capturing it may just have to hold onto their proverbial hats.

With lower costs of wind power generation, extended production tax credits, and moves by forward-thinking corporations and state legislatures to reduce carbon footprints, the American Wind Energy Association has set its sights on doubling U.S. wind energy capacity over the next five years.

ABOVE: A section of tower for a wind installation is strapped to a specialized truck and taken to an under-construction wind farm. / Credit: Suzlon 36  BREAKBULK MAGAZINE  www.breakbulk.com

ISSUE 4 / 2016

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Utility companies see wind power providing energy security by diversifying the electricity generation portfolio, protecting against volatile natural gas price spikes, while using an environmentally friendly domestic source of energy.

Many utilities have signed long-term, fixed-price contracts for wind energy, often involving bringing the power across state lines.

Lest anyone be fearful of throwing caution to the wind, the U.S. government continues to make projections for very healthy increases in the amount of energy that will be produced by wind.

A May 2016 report from the U.S. Energy Information Administration, or EIA, presents one scenario showing 112 gigawatts of new U.S. wind and solar capacity being added through 2021. The new capacity would more than double the nation’s current wind capacity of 74.5 gigawatts, already enough to power more than 20 million homes. The EIA report also presents a case for wind generation growing nearly 150 percent from 2015 through 2040.

Wind energy installations such as northwestern Indiana’s Meadow Lake Wind Farm, with enough capacity to power 169,000 homes, are becoming increasingly prevalent in North America.

Credit: Paul Scott Abbott

38 BREAKBULK MAGAZINE www.breakbulk.com

“Wind is winning.... The challenge is to make renewable technology so cheap that it’s the obvious choice.” – Chris Brown, Vestas Wind Systems The EIA report shows wind surpassing coal as early as 2028 to become the second-largest U.S. electricity generation source, behind only natural gas.

The Obama administration’s Clean Power Plan, promulgated in August 2015 by the U.S. Environmental Protection Agency to take effect in 2022, features carbon reduction targets supporting objectives for renewables – especially wind and solar – to become the No. 2 U.S. power generation source by 2030.

Also, in December 2015, U.S. Congress extended for five years the tax credit program for generation of electricity from wind plants, with the level of credits incrementally declining until they expire at the end of 2021, when the Clean Power Plan is slated to go into effect.

Some goals are even loftier. For example, the Democratic Party platform going into November’s presidential election calls for renewable sources fulfilling 100 percent of U.S. energy needs by 2050.

While that goal might well be unattainable, it is unquestionable that political and corporate standard-bearers are jumping on the wind bandwagon. Legislatures in such states as California, Oregon,

Maryland, Vermont and Hawaii have passed laws requiring greater integration of renewable energy, while corporate buyers including Google, Amazon and Facebook are securing greater amounts of wind power to lower carbon footprints and keep long-term costs under control.

SHIPPING DEMAND GROWS

Whereas much of the federal reporting and various targets highlight anticipated reductions in emissions associated with cleaner energy, the prognostications undeniably indicate that substantial new wind farms will be coming online and thus lots more wind power components will have to be shipped.

As one might expect, Chris Brown, chairman of the American Wind Energy Association, or AWEA, is among those who are extremely bullish on wind as a North American energy source.

“Wind is winning,” said Brown, who is president of Vestas Americas and group senior vice president of Denmark-based Vestas Wind Systems, the world’s No. 1 provider of wind turbines, during an AWEA conference held in New Orleans in May. “While our fuel is free, our customers know, the machines aren’t Chris Brown free,” Brown told the audience. “The Vestas Wind Systems challenge is to make renewable technology so cheap that it’s the obvious choice.

“That’s why we’ve driven down costs by technology advancement including longer rotors, taller towers, advanced controls and product reliability,” he said. “Investor appetite has grown, also lowering the cost of capital. And, as a result, the real cost of wind power in the U.S. has dropped by more than 60 percent” since 2009.

ISSUE 4 / 2016

renewables

Highland Project Logistics moves Vestas blades from Colorado to Houston.

Credit: GPLN

Peter Kelley, AWEA’s vice president of public affairs, said American wind power is on track to achieve the U.S. Department of Energy’s vision of doubling its contribution to the U.S. power grid by 2020, to 10 percent of the nation’s electricity, up from nearly 5 percent today, and potentially growing to become the leading source of American electricity by 2050, with a 35 percent share.

The decreased cost of wind energy has made wind one of the cheapest new sources of electricity in some parts of the country and cost-competitive in many more, Kelley said. “That’s one reason

40 BREAKBULK MAGAZINE www.breakbulk.com

why wind was the largest source of new electricity in 2015, with more coming online than solar or natural gas.

“Wind power’s growth is showing no signs of slowing down, with strong under-construction numbers and many projects in the advanced stages of development,” Kelley said.

MOVING OFFSHORE While the dynamic growth in on-land wind energy installations is undeniable, companies such as Germany’s Siemens are at the fore in reducing costs of generating power with offshore wind farms, with innovations being developed off the coasts of such countries as Denmark (where wind already generates 40 percent of the country’s electricity) and Scotland. Methodologies include technical improvements

ISSUE 4 / 2016

within turbines, more cost-effective installation practices, new grid connection technologies, better maintenance strategies and enhanced logistics. As a general rule, blades for offshore wind farms are much longer than those for land-based installations.

This summer, the final stage of construction began on the first such U.S. offshore installation, the five-turbine Block Island Wind Farm off Rhode Island. Nearing approval from New York utility authorities is a 15-turbine project to be built off the south fork of Long Island. These and other endeavors indicate that regulatory hurdles and court battles that for years had kept wind farms from springing up off U.S. shores are being surmounted.

Rakesh Sarin, CEO of international business and global service at India-based Suzlon, which ranks among the world’s top five wind turbine suppliers, said the Rakesh Sarin growth of wind Suzlon power brings more business, but also challenges for the logistics industry.

Larger turbines, taller towers and longer blades make shipping more complex, Sarin said, leading to a greater number of components for the American market being made on U.S. soil.

“The U.S. has shifted to domestic manufacturing because of transportation costs and the structure of the wind project,” Sarin said. “Apart from the domestic manufacturing ramping up, the size of turbines is also increasing, resulting in the rise in the logistics cost.

“Shipment of components within the U.S. is a big business because of the huge market,” Sarin said. “As road transportation is costly, the manufacturers prefer to ship through water and rail. Largely, railway transport is being used for the heavy components.”

Sarin said companies are trying to locate component manufacturing as close as possible to wind farm sites, not only reducing transportation costs but

also potentially averting having to cross state lines, as regulations governing oversize and overweight loads can vary dramatically from state to state.

A veteran transportation writer for the past 40 years, U.S.-based Paul Scott Abbott specializes in maritime topics.

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renewables

WIND-RELATED EXPORTS RISE Increasing U.S. turbine-related production is heightening export opportunities for domestic project cargo ports, adding to the extensive import activity now taking place.

Jarl Pedersen, chief commercial officer at Port Corpus Christi on the Texas Gulf Coast, said his port is prepared to increasingly use infrastructure originally purposed for inbound shipments to handle outbound activity, just as it has recently done with its facilities for handling a more traditional energy cargo – crude oil – in response to shifting global demand and lifting of a federal export ban.

Shipping of components is a process that requires more and more cooperation, Pedersen said.

“Port Corpus Christi is closely following the innovation in wind turbine technology and is working closely with developers and logistics providers to ensure due diligence and advanced planning to accommodate larger wind turbine components, including taller towers and longer blades.”

Port Corpus Christi is used by all major wind turbine manufacturers, primarily for tower sections and rotor blades, but also for hubs and nacelles, according to Pedersen. Imported components head to wind farms in Texas, the No. 1 wind energy production state, and beyond.

Twin Liebherr mobile harbor cranes unload wind energy blades at the Port of Vancouver USA in southern Washington state.

Credit: Port of Vancouver USA

42 BREAKBULK MAGAZINE www.breakbulk.com

Jarl Pedersen

Alastair Smith

Port Corpus Christi

Port of Vancouver USA

Corpus Christi is a wind energy leader in another way. When the sixturbine Harbor Wind Farm opened in 2012 on Port Corpus Christi property, the port became the first North American industrial port with such an on-port installation. And the 200-turbine Papalote Creek Wind Farm rises just to the north of port property.

On the U.S. West Coast, the Port of Vancouver USA in southern Washington, across the Columbia River from Portland, Oregon, is also focused on collaboration to ensure safe, timely, and efficient moves of wind energy cargo.

Alastair Smith, chief marketing and sales officer at the Port of Vancouver USA, said port personnel work with equipment manufacturers and freight forwarders around the globe.

“We came to understand the

growth in the project industry, and learned that these components were going to continually grow in size and weight,” Smith said. “We found that shore cranes needed to have capabilities to handle these oversize and heavier shipments, such as wind energy blades, which can now exceed 200 feet in length.”

This spurred the Port of Vancouver USA to invest in its first Liebherr heavy-lift crane in 2006, and soon a second similar unit, as well as partner with stevedoring and longshore union leaders in a new crane operator training program providing certification in tandem and engineered lifts.

“Our stevedores – Jones Stevedoring and Ports America – have also invested in trailers, reachstackers and other equipment to ensure they can efficiently move cargo off the docks to waiting trucks or railcars,” Smith said. “Both companies have continued to adapt and modify equipment as necessary to suit industry needs.”

Smith also cited the importance of terminal laydown space, of which his port offers more than 100 acres, and sufficient rail infrastructure in the handling of wind energy components.

Still, larger components – not to mention a lot more of them – increasingly present logistical challenges.

“The biggest challenges that have begun to test the capabilities of our port are our customer’s largest components,” Smith said. “Close analysis of routing paths is necessary in order to ensure that there’s an acceptable roadway from the port and to the development site for the longest blades.

“Taller towers mean wider towers that may not meet rail clearances through mountain passes,” he said.

“Nacelles are reaching weights that test road limitations and standard trucking capabilities. It’s essential that the shipping community continues to develop answers to these challenges through continued efforts and communication between OEMs [original equipment manufacturers] and transportation entities.” BB ISSUE 4 / 2016

energy update

The arrival of the Fukushima Hamakaze turbine heralded the birth of a new Japanese energy industry.

Credit: JWPA

WIND IN THE SAILS Capitalizing On Asia’s Offshore Power Boom

BY HERMAN K. TRABISH

W

hen the Fukushima Hamakaze 5-megawatt Hitachi wind turbine, mounted atop a floating foundation, was towed through Osaka Bay by four vessels it heralded the birth of a new Japanese energy industry.

Now in place 20 kilometers off Japan’s Fukushima coast, Hamakaze 44 BREAKBULK MAGAZINE www.breakbulk.com

was the final piece in the second phase of the Fukushima Offshore Wind Consortium’s ambitious floating offshore wind pilot project.

Japan joins three other economies in the Asia Pacific region – China, South Korea and Taiwan – in looking to offshore wind to help renew their energy sectors. Importantly for this sector, the drive will also boost their ports and portaffiliated breakbulk economies.

The cost of offshore wind is falling faster than industry experts expected,

driven by technology advances, streamlined installation, a maturing supply chain, and economies of scale produced by accelerating growth. In a recent U.S. Energy Department survey, industry experts forecast costs will fall 24 percent to 30 percent by 2030 and 35 percent to 41 percent by 2050. Fixed foundation costs will remain lower, but floating foundation costs will close the gap between 2020 and 2030.

Global fixed foundation offshore wind set an installation record in 2015, upping its 1.07 gigawatts performance in 2014 to nearly 4 gigawatts. Cumulative global capacity is now more than 11.8 gigawatts, and is on track to reach as much as 47 gigawatts by 2020, according to the 20142015 Offshore Wind Technologies Market Report from the National Renewable Energy Laboratory, or NREL. More than 91 percent of offshore wind capacity, or 11.03 gigawatts, has been built in waters off the coast of 11 European countries, according to the Global Wind Energy Council. More than 65 percent of 2015’s new capacity, 2.47 gigawatts, went online in Germany, according to a recent Navigant Research report. The UK added 1.05 gigawatts of new capacity, while the Netherlands added 129 megawatts.

And growth is emerging in the Asia Pacific region: China added more than 300 megawatts of new capacity in 2015 to reach a cumulative installed capacity of 911 megawatts, according to Bloomberg New Energy Finance. South Korea had 5 megawatts of installed capacity at the end of 2015 as well as a 30-megawatt project under construction, according to the Netherlands Enterprise Agency.

Through 2020, the market will continue to be largely limited to the UK, Germany, the Netherlands, France, Belgium, and China, Navigant forecasts, where at least 24 gigawatts will be added at a compound annual growth rate of 33.1 percent to reach a cumulative capacity of more than 32 gigawatts.

ISSUE 4 / 2016

Experience the progress.

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energy update

ASIA RUNNING TO CATCH UP Operating and development pipeline for offshore wind projects by country

United Kingdom Germany 1,505 Denmark 1,271 China 310 918 Netherlands 247 873 Belgium 712 Sweden 202 Japan 52, 13 Finland 32 United States 30 Ireland 25 France 8 South Korea 5 Norway 2 Portugal 2 operating (MW) under construction (MW)

Source: 2014–2015 Offshore Wind Technologies Market Report, National Renewable Energy Laboratory

FLOATING FOUNDATIONS On the flipside, there is only 15.33 megawatts of installed floating wind capacity in the world, according to Bloomberg New Energy Finance. The lack of installations is largely due to prohibitive costs: Based on concepts developed to support deepwater oil exploration platforms, floating foundations cost eight times more than fixed foundations.

But floating foundations are needed in places like Japan, California and Hawaii because coastal waters are too deep to make fixed foundations practical. Proponents argue turbines with floating foundations can be cost effective for two reasons: installation is cheaper because they can be assembled dockside and towed into place, and the foundations can be reused when the turbines are outdated.

The Hywind floating foundation, with a Siemens turbine, has been in operation since October 2009 off the coast of Norway. Principle Power’s WindFloat, with a Vestas turbine, has been in operation since October 2011 off the coast of Portugal.

In Asia and following the aftermath 46 BREAKBULK MAGAZINE www.breakbulk.com

4,625

503

2,108

of the Fukushima meltdown, three fundamental changes are driving Japan toward renewables, according to a Carbon Trust report. First, its reliance on nuclear power will probably never be the same.

Second, Japan must wean itself off fossil fuels or literally pay the price.

When Japan turned off its nuclear fleet, imported fossil fuels went from 60 percent of its power mix to 90 percent, and the retail price of electricity went up by two-thirds, according to Varun Sivarum of the U.S. Council on Foreign Relations.

Third, onshore wind in Japan faces siting constraints. It may add as much as 2 gigawatts of capacity through 2025, but is expected to peak in the early 2030s. By contrast, Japan’s solar industry built a second-best in the world 9.7 gigawatts of new capacity in 2014.

“Longer term, Japan will need to install its farms further away and in deeper waters and so must develop greater expertise around floating foundations,” the Carbon Trust report concludes.

CAPTURING WIND GAINS At the end of 2015, Japan had a total of 53 megawatts of installed offshore wind capacity and 1,407 megawatts of capacity in some stage of planning.

About 800 megawatts of the planned capacity is in port-associated areas and considered more likely to be developed.

Prime Minister Shinzō Abe’s administration wants 37 gigawatts of offshore wind by 2050. With continued floating foundation research and development, Japan can attain this target, the report adds.

The Ministry of Environment’s Floating Offshore Wind Turbine Demonstration Project off Nagasaki prefecture has been testing a Hitachi 2-megawatt turbine on a floating foundation. The New Energy and Industrial Technology Development Organization started a feasibility study in 2015

SOUTH KOREA CAUTIOUS ON WIND DEVELOPMENT South Korea gets 70 percent of its electricity generation from nuclear power, according to the Korea Energy Economics Institute, but this dominance won’t last forever.

In 2012, the government introduced a 10 percent renewables mandate by 2024 for Korea Electric Power Corp.

In 2014, it was altered to 11 percent of total primary energy by 2035. Wind must be 18.2 percent of the renewables.

Korean wind builders have so far relied on proven hardware from global players like Vestas, Siemens, GE and Chinese manufacturers.

However, limited land sites and limited quality winds rule out meaningfully scaling Korea’s onshore wind, leading the government in 2010 to target an offshore wind build of US$7.5 billion, 2.5 gigawatts by 2030. It was counting on major contributions from national industrial giants like Hyundai Heavy Industries, Samsung Heavy Industries, Daewoo Shipbuilding & Marine Engineering, and Doosan Heavy Industries, or DHI. South Korea added 225 megawatts of onshore wind capacity in 2015 to reach a cumulative capacity of 835 megawatts, according to the Global Wind Energy Council annual report.

There was no new offshore capacity added and the offshore build timeline was altered to 80 megawatts of installed offshore capacity by 2018.

DHI is now building the 30-megawatt Tamar offshore project, but its turbine has reportedly performed less efficiently than imported machines.

Like Chinese developers, Korea’s builders will likely turn to proven imported turbines in the near term and require breakbulk carriers’ services.

“The Port of Masan in South Korea is known for its contribution to the export of heavy and odd-sized products for the energy industry worldwide,” BBC Chartering’s Henrik Pedersen said. The ports of Inchon, Pusan, Ulsan, Okpo and Pyeongtaek are also among those in Asia that “have managed to adapt with the changing times,” he added.

ISSUE 4 / 2016

energy update

CHINA OFFSHORE MOVES

FOLLOWING THE WIND LEADERS Operating and development pipeline for offshore wind projects by region.

250*

Operating

Announced

153,913

248,149

Planning

Total Pipeline

200 Europe Asia

150

North America Other

49,314

100

37,092

50

8,990

4,454

3,375

Operating

Under Construction

Financial Close

0

Approved

Major Permits Submitted

Operating and development pipeline for offshore wind projects by country.

18* 16 14 12

45* Cumulative

United States

Denmark

United Kingdom

Netherlands

Sweden

China

France

South Korea

Germany

Belgium

Japan

40 35 30

10

25

8

20

6

15

4

10

2 0

0

Q2 2015

2016

2017

2018

2019

2020

*‘000 MW Source: 2014–2015 Offshore Wind Technologies Market Report, National Renewable Energy Laboratory

for a third demonstration project that would test 7.5-megawatt turbines on floating foundations.

“High costs emanating from an immature supply chain, and challenging environmental conditions have caused the government to adopt a conservative approach,” said Jan Matthiesen, Carbon Trust director of innovation. But demonstration projects and studies are underway to “overcome these challenges and reduce costs in both fixed-bottom and floating offshore wind.”

The Japanese ports of Yokohama, Nagoya, Kobe and Moji generally offer breakbulk carriers good strategic positions with proximity to inland infrastructure, accessibility to the sea and 48 BREAKBULK MAGAZINE www.breakbulk.com

efficiency in handling breakbulk, said Henrik Pedersen, chief operating officer of BBC Chartering.

Some northern ports more proximate to Japan’s offshore resources may, however, require upgrades, the Carbon Trust noted.

Japan can meet most supply chain needs, but a dearth of specialty vessels for construction, towing, and ongoing operations and maintenance is “forcing costs to spiral upwards,” Matthiesen said.

This continued shortage of vessels could slow near-term growth. The recent acquisition by Marubeni and Innovation Network of the UK’s SeaJacks, which designs and builds such vessels, is a step toward a remedy.

China is already well established in the onshore wind sector. Indeed, it’s such an important player there that French multinational utility giant EDF recently bought an 80 percent stake in Chinese wind project developer UPC Asia Wind Management. In announcing the deal, EDF noted China’s goal of a 200 gigawatts cumulative wind capacity by 2020.

China began working its way into the challenges of the ocean environment in 2009 and brought its first offshore project online in 2010. Its initial goals were 5 gigawatts by 2015 and 30 gigawatts by 2020, but China discovered the ocean can be unforgiving. Its 335 megawatts build in 2015 brought its cumulative capacity of 911 megawatts, according to the BNEF report.

China’s slow progress is due to several factors, said Yiyi Zhou, BNEF senior associate and report lead author.

Domestic turbine manufacturers have not produced an adequate supply of offshore-ready products and developers remain inexperienced.

In addition, ocean winds have not been as productive as predicted and prices remain non-competitive in comparison to rapidly falling natural gas, onshore wind, and utility-scale solar prices.

Though slow progress is likely to drive a downward revision of the government’s 2020 goal to 10 to 15 gigawatts for its 13th Five Year (2016 to 2020) Plan, building continues. “Currently there are five offshore projects with a total capacity of 1 gigawatt under construction and we expect to see 900 megawatts of capacity commissioned in 2016,” Zhou said.

Each offshore wind megawatt represents about €3 million in capital investment, estimates Soren Juel Petersen, global market director for international wind project design and engineering consultant Ramboll Energy.

China’s planned 10 gigawatts therefore represents a potential €30 trillion. Adding the ambitions of Japan, South Korea and Taiwan takes projected investment to startling levels by 2030.

Turbines from 11 Chinese and foreign turbine manufacturers were producing power in Chinese waters in 2015.

“Developers prefer foreign manufacturers’ proven offshore products in order ISSUE 4 / 2016

energy update

to minimize the potential risks,” BNEF reports. “Siemens is currently the largest supplier.” This could be important to breakbulk carriers.

BOATS TO CHINA

A turbine off the coast of Awajishima Island in Japan. The 150-meter turbine was bound for waters off Fukushima for an experimental study on offshore wind generation. / Credit: Kyodo/Newscom

50 BREAKBULK MAGAZINE www.breakbulk.com

BBC Chartering deploys an average of three to five ships per month to carry Chinese wind turbines to ports around the world in 2016, Pedersen reported.

The most involved China ports are Tianjin and Taicang. There is also activity through Qinghuangdao, Lianyungang, Dalian, Dafeng, Jiangyin and Shanghai.

However, high capital expenditure, significant risk, and slow returns limit most project development in China to large, state-owned utilities, BNEF reports. Here, Guodian leads and subsidiary Longyuan Zhenghua holds 35 percent of offshore wind contracting.

Because foreign manufacturers’

ISSUE 4 / 2016

turbines remain in favor, demand for breakbulk carriers to deliver them is likely to continue in the near term, but “it is only a matter of time before Asia will have the required skills and quality of fabrication,” BBC Chartering’s Pedersen said. “Then it will be a matter of cost.”

The Siemens turbines dominating China’s market are built in China in partnership with Shanghai Electric, Ramboll’s Petersen added. He agrees with Pedersen that the longer term opportunity in breakbulk, probably within five years, is delivering Asian manufacturers’ exports to Europe.

A potential preview is the offshore wind vessel market that is a bottleneck in Japan. Several turbine installation vessels under construction in China are expected to cost 20 percent less than those made in Europe.

Crane-equipped construction vessels are presently being built in Europe and shipped to Asia via semi-submersibles.

China’s 10 gigawatts goal will require five to 10 of them, while Taiwan and South Korea will each need another five vessels.

That is a near-term opportunity for carriers with semi-submersibles in their fleet. But within five years, Petersen expects, Chinese maritime builders will be also shipping Chinese-made offshore construction and maintenance vessels and Chinese-made foundations to Europe.

However, growing wind industry breakbulk cargo weights and volumes make handling industry hardware more challenging, Pedersen said. Yet “most major ports in the Asia Pacific region live up to the standards we see in the Western Hemisphere and, in some cases, are even more efficient.”

They typically also offer lower port charges and less expensive labor than U.S. and Northern European ports, he added.

BBC Chartering expects the Asia Pacific region to drive the energy, power and construction sector. North and East Asian skilled and competitive labor and modern facilities are expected to keep major fabrication “at a high note,” Pedersen said.

He added that the region seems “fairly stable” despite the global financial slowing, the oil and offshore industries’ turbulence, and the western world’s

political and civil unrest. From its current tenders and bid-invitations, BBC Chartering is “cautiously optimistic for the short-term future of our business in the Asia Pacific region.” BB

Herman K. Trabish is a veteran reporter and regular contributor on energy generation, transmission and policy.

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regional review

TRADING FREEDOM Sanctions-free Iran Beckons Foreign Investors

BY VL SRINIVASAN

W

Credit: Shutterstock

ith the majority of its nuclear-related economic sanctions lifted, companies around the world are making a beeline for Iran, music to the ears of global engineering, procurement and construction companies.

Sanctions were lifted when Iran signed a nuclear deal with Western nations, paving the way for the United Nations and the European Union to remove the four-year-old restrictions in July 2015.

52  BREAKBULK MAGAZINE  www.breakbulk.com

ISSUE 4 / 2016

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The Port also offers on-dock rail and ship-to-barge services. You can count on use to exceed your cargo handling expectations — and you’ll love our Big Easy hospitality.

portno.com

regional review

in between, which is good news for global engineering, procurement and construction firms, or EPCs, looking to gain a foothold in Iran.

BUSINESS TIME

Hachem Yekehzare, CEO of Iran Khodro, signs documents with Jean-Christophe Quemard, Deputy of France’s Peugeot Citroen, as Iran’s Industry and Commerce Minister Mohammad Reza Nematzadeh looks on in Tehran last June.

Credit: STR/EPA/Newscom

This was followed by the International Atomic Energy Agency announcing in January 2016 that Iran had fully complied with the conditions of the agreement and, within a week, Iran and China agreed to boost bilateral trade to US$600 billion within a decade.

Iran has since signed contracts worth US$55 billion with Italian and French companies.

According to ratings agency Moody’s, at about US$417 billion Iran’s economy is the second-largest in the Middle East after Saudi Arabia, and is more diversified than other regional oil exporters, with oil and gas making up 17 percent of

GDP. Oil revenue accounted for 30 percent of total government revenue in 2014.

Since sanctions have been lifted, Iran has signed agreements for the sale of crude oil with a number of international companies, including Italy’s Saras and Iplom, Spain’s Repsol and Greece’s Hellenic Petroleum.

However, many other companies are watching the show from the sidelines as the oil prices continues to hover around US$40 per barrel; Iran needs at least US$70 per barrel to sustain the project construction momentum.

The bearish U.S. Energy Information Administration upped its forecasts of average crude oil prices in June to US$43 a barrel for 2016 and US$52 a barrel for 2017 in its monthly Short-Term Energy Outlook report. But analysts at financial services company Raymond James famously predicted West Texas Intermediate would average $80 per barrel by the end of 2017 in the same month.

The reality will likely be somewhere

Iran’s economy is the second-largest in the Middle East after Saudi Arabia, and is more diversified than other regional oil exporters.

54 BREAKBULK MAGAZINE www.breakbulk.com

Oil majors and automakers are already making moves. French carmaker Peugeot-Citroen has announced that it will enter into a €400 million joint venture with its former partner Tehran-based Iran Khodro to produce 200,000 cars per year. ONGC Videsh, one of the subsidiaries of the Indian government-owned major oil and gas explorer, Oil and Natural Gas Co. Ltd., is on the verge of bagging the rights of the US$5 billion Farzab-B gas field, while Italy’s oil and gas contractor Saipem has been awarded new contracts and variation orders offshore.

Aircraft manufacturers are getting in on the act: if America’s Boeing manages to confirm a US$17.5 billion contract to deliver planes to Iran, it will be a watermark in the annals of U.S.-Iran business relations. Rival European consortium Airbus has signed letters of intent to sell 118 jets to Iran.

On the EPC front, Iran plans to invest heavily to modernize and refurbish its mega infrastructure projects, including in the energy sector, which accounts for the largest slice of the country’s economy, and to develop its huge natural gas reserves. Iran is likely to invest an estimated US$200 billion in the coming years to reach its economic goals.

However, U.S. businesses could fall behind in the race to get into Iran. The U.S. government, citing Iran’s alleged support to terrorist organizations and human rights violation, has not lifted its dollar-denominated sanctions. This lingering restriction has placed U.S. companies at a disadvantage as they are unable to do any business with Iran, whereas EPCs and project cargo movers in the EU have no such restrictions.

A clearer picture on whether the U.S. will continue with its 37-year-old nonnuclear related sanctions will likely only ISSUE 4 / 2016

regional review

A NEW DAWN |

Status of new and upstream Iranian crude oil projects.

PROJECT DEVELOPER

Yadavaran phase 1 Yadavaran phase 2 Yadavaran phase 3 Azar phase 1 North Yaran South Yaran North Azadegan phase 1 North Azadegan phase 2 South Azadegan phase 1 South Azadegan phase 2 Forouzan South Pars (oil layer) phase 1

PLATEAU OUTPUT (000 B/D)

Sinopec Sinopec Sinopec NIOC subsidiaries Persian Energy NIOC subsidiaries CNPC CNPC no developer no developer NIOC subsidiaries PEDCO

EST. PLATEAU YEAR

85 95 120 30 30 55 75 75 150 110 100 35

2016 2019-20 post 2020 2016 2016 2018 2016-17 2019 NA NA 2017-18 2017-18

The Yadavaran, South Azadegan, and Forouzan fields are producing crude oil, but below their plateau levels.

CNPC is China National Petroleum Corp. PEDCO is PetroIran Development Co. Sinopec is China Petroleum & Chemical Corp.

Source: Facts Global Energy; EIA

Mamdouh G. Salameh

Andreas Schweitzer

Esfandyar Batmanghelidj

oil economist

Arjan Capital Ltd.

Europe-Iran Forum

emerge after the new president assumes office in November.

Mamdouh G. Salameh, International oil economist and consultant to the World Bank, said U.S.-based global oil firms and other engineering companies face a challenge not of their own making.

“American oil companies will be eyeing investment in energy products as Iran has the fourth-biggest proven reserves in the world. But they are in a fix and handicapped by the current policies prevailing in Washington.”

He added that U.S. companies such as ExxonMobil and Chevron will likely exert pressure on the U.S. government to ease sanctions to let them enter the Iran market, especially once oil prices rise.

56 BREAKBULK MAGAZINE www.breakbulk.com

Yashar N. Azad Siemens

Andreas Schweitzer, founding and managing partner of Arjan Capital Ltd. with offices in Malta and Tehran, has been investing in Iran since 2009. He said that the continuing U.S. sanctions were undoubtedly a complication for U.S. companies. However, there is a provision that foreign subsidiaries of U.S. companies can operate in Iran as long as no U.S. person or U.S. currency is involved. This loophole allows U.S. companies to operate in Iran.

Esfandyar Batmanghelidj, founding partner of the Europe-Iran Forum Business Conference Series, said trading complications between the U.S. and Iran started long before the imposition of broad international sanctions in the last decade.

With few exceptions, U.S. companies left Iran in 1979. In that respect the Boeing deal could really prove to be a turning point in U.S.-Iranian trade relations.

“But in more politically complex areas like transportation and energy infrastructure development, which require engagement from government stakeholders, the ability for the U.S. companies to enter the market will remain dependent on the larger trajectory of diplomatic relations and the policy approach of the next U.S. president,” Batmanghelidj added.

OPPORTUNITIES FOR EUROPE

Yashar N. Azad, corporate spokesman for Siemens, said that Iran lay at the heart of a regional market and even in the face of highly volatile commodities prices, it has enormous pent-up demand.

“In our opinion, this justifies our hope that Iran will be an attractive market for EU companies,” he said.

“European products, especially those made in Germany, enjoyed an excellent reputation in the Persian Gulf nation, and the EU has a long tradition in Iran primarily due to quality, reliability and highly innovative nature of its products,” he said.

As a result, there’s a great deal of potential for European companies, he added. Fulfilling this potential will take many successful projects, mutual trust over the long term and an environment that provides lasting stability for investments. “We’re working with our Iranian partners to enable this,” he added.

Siemens signed a pact with Iran in July to engage in talks on improving infrastructure in the country.

Batmanghelidj added that the big challenge for Iran was to ensure that its next generation of transportation of energy infrastructure would be worldclass, and help facilitate economic growth over the next few decades. To that end, it needs to attract European firms to bring in vital expertise and technology that is unavailable in Iran.

At lower oil prices, derivatives like petrochemicals have a higher margin, providing an opportunity for EPCs, pointed out Arjan Capital’s Schweitzer.

However, the problem of financing projects persists.

ISSUE 4 / 2016

regional review

Iranian president Hassan Rouhani speaks in Tehran the day after the U.S. and European Union lifted nuclear-related sanctions on Iran.

Credit: Abedin Taherkenareh/EPA/Newscom

“Regarding EPC for renewable projects, the price of electricity the government was willing to pay is a crucial element. Currently, the strategy and policy from Tehran has not always been totally clear for investors, which would impact the foreign investments,” he said.

On the role of EU companies, he said that Iran was looking to buy European quality at Asian prices, and that ongoing projects in that country were often chosen on the availability of financing, rather than on the quality of technology.

“The supplier that can provide a financing package is more likely to get the

58 BREAKBULK MAGAZINE www.breakbulk.com

deal, as offering hardware alone is not sufficient for Iranian projects. Sophisticated corporate finance will play a relevant role to see these projects succeed,” he said.

PROJECTS FOR EPCS Farshid Moghaddam, Hague-based director of CBC Oil and Gas, said that despite low oil prices, Iranian EPC markets are attractive to global majors, and local companies are scouting for overseas partners to start exploration and production, or E&P, of oil and gas.

Indeed, there is a mandate from government for overseas oil companies to have a local E&P partner in the country, and the emphasis is on technology transfers and using local content based on terms in the proposed Integrated Petroleum Contract, which is the new model for bagging oil contracts.

“While the Netherlands has nine

ISSUE 4 / 2016

E&Ps companies and Germany around the same number of players, Iran has had only one – National Iranian Oil Co. – for the last 80 years and now plans are underway to set up eight more companies in the country,” Farshid Moghaddam said.

Moghaddam Because of the low oil prices, CBC Oil and Gas National Iranian Oil Co. is trying to engage the private sector to work on developing more oil fields, particularly focusing on the common oil fields bordering neighboring countries.

Moghaddam said that with the country planning to invest more than US$185

billion in 56 projects based on Integrated Petroleum Contracts, the local companies need to cast their nets wide to secure foreign partners.

“With Iran hosting an exhibition and conference related to Iran’s oil and gas sector in the Netherlands in October and also within the country in the coming months to give a glimpse what it is all about, its good time for Iran’s EPC market,” he added.

Batmanghelidj said that post-sanctions, Iran represents a huge opportunity for global EPC players given the range and size of infrastructure development projects the country plans to undertake.

Iran is twice as large as France, with a 25 percent larger population, but lags behind in everything from airports and seaports, to the size of the rail network and to power generation.

What makes the country stand out is

that global EPC firms will benefit from a large degree of government willpower to support infrastructure projects as well as local firms with reasonably advanced capabilities.

“While Iran presents political risk and difficulties in securing financing, most emerging markets are similarly challenging,” Batmanghelidj said.

“EPC companies that can build a local partnership and win the support of the government could gain a foothold in a market with a decade or more of potential growth ahead.” BB V L Srinivasan is a senior journalist based in Hyderabad, India, covering finance, infrastructure, energy, shipping, transportation, IT, environment and political and regional developments in India and the Gulf Cooperation Council region.

www.breakbulk.com BREAKBULK MAGAZINE 59

ite conference

Nigel Kushner, W Legal Ltd.

The first international Oil, Rail & Ports conference, held May 15-16 in Tehran, was successfully organized by UIC, the worldwide railway association; ITE Group, the organizer of 240 events worldwide and parent company of Breakbulk Events & Media; and the Railways of the Islamic Republic of Iran, or RAI. Held in conjunction with the RAILEXPO 2016 Exhibition, the inaugural event demonstrated that the lifting of international sanctions on Iran is helping to open up rich perspectives for new cooperation and business in the region.

It marked the first international event ever organised by the rail sector in Iran on the topic of enhancing partnerships between rail, ports, shipping lines and other actors of the freight and multimodal transport chain in the Middle East. The event was attended by more than 600 participants, including some 100 international attendees from 27 countries. Participants represented government authorities, international institutions, foreign embassies, railways and other logistics and transport chain participants.

The opening ceremony of Oil, Rail & Ports conference and RAILEXPO 2016 Exhibition was moderated by Laurent Noel, director Transport & Logistics portfolio at ITE Group. Highlevel representatives addressed the conference participants, including Mohsen Pour Seyed Aghaei, vice minister for Roads and Urban Development and president of Iranian Railways RAI; Mohammadreza Nematzadeh, minister of Industry, Mine and Trade of Iran; Abbas Akhoundi, minister of Roads and Urban Development; Oleg Belozerov, president of JSC Russian Railways RZD and UIC chairman; Jean-Pierre Loubinoux, director general of UIC; and Francois Davenne, secretary general of the Intergovernmental Organisation for International Carriage by Rail, or OTIF. 60  BREAKBULK MAGAZINE  www.breakbulk.com

Laurent Noel, ITE

LEFT: Jean-Pierre Loubinoux, UIC CENTER: Dr. Mohsen Pour Seyed

Aghaei, Vice Minister for Roads and Urban Development, president of RAI

ISSUE 4 / 2016

Mohammad Saeed Nezhad, Vice Minister for Roads and Urban Development & president of Ports and Maritime Organization

Mohammadreza Nematzadeh, Minister of Industry, Mine and Trade

Grigore Havarneanu, UIC Security Division

Ed Osterwald, CEG Europe

www.breakbulk.com  BREAKBULK MAGAZINE  61

regional review

CROSSROADS Turkey Faces Tough Choices To Support Economic Growth

62 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 4 / 2016

BY MARK WILLIS

U

ntil recently a bastion of stability in a highly volatile region, Turkey is facing arguably its most difficult juncture in a generation, with a combination of domestic and geopolitical challenges weighing on the country’s immediate and medium-term economic prospects.

Factors behind the deteriorating economic outlook include the influx of refugees from Syria’s seemingly intractable civil war, soured relations with important trading partners Russia and Israel, and fissures in a relationship with the neighboring European Union that has been a cornerstone of the country’s success over the last decade.

To compound matters, political and economic instability has been further elevated by an attempted military coup in July, which has since been used by Turkey President Recep Tayyip Erdoğan as a catalyst to crack down on political opponents in an attempt to bolster the head of state’s personal authority.

The challenging status quo follows more than a decade of solid economic achievement when a combination of relative political stability, prudent fiscal management and economic reform have seen a solid expansion in employment, household wealth and disposable incomes.

Strategically located at the crossroads between Europe and Asia, and a bulwark in the NATO alliance, the economy has also benefited substantially in recent decades Turkey has a from a substantial number of large flow of European scale infrastructure Union funding projects in the and foreign direct offing. investment. With greater infrastrucCredit: Supramar ture development Shipping www.breakbulk.com BREAKBULK MAGAZINE 63

regional review

needs in line with the country’s economic advances, Turkey has also become the largest recipient of finance provided by the European Bank for Reconstruction and Development, or EBRD. Notwithstanding the recent escalation in uncertainty, and possible further economic and political headwinds in the second half of 2016, a longer-term assessment of Turkey’s economic prospects point to a cautiously optimistic outlook, with billions of dollars in future government revenues earmarked for future infrastructure and construction projects creating continued opportunities for the international project cargo community.

ECONOMY STILL GROWING While at slower growth rates than recorded during the previous decade, the Turkish economy is nevertheless projected to expand at a decent clip over the next several years, with the International Monetary Fund forecasting annual GDP expansion of about 3.5 percent during 2016-21. Business investment should also continue to expand over the next several years, with public and privately funded infrastructure development essential to cement Turkey’s middle-income country status.

Continuing the trend seen over the last decade, the principal opportunities for project cargo operators over the next few years look set to be found in the Turkish energy sector.

According to Fatih Can, vice president for business development at Tekfen Construction, a major channel for public investment will target upgrading domes-

tic power plants and further developing the country’s renewable energy capacity.

“Most of the infrastructure development in Turkey will focus around energy generation and distribution,” he said.

As a strategic bridgehead connecting commod- Fatih Can ity-deficient Europe Tekfen Construction with resource-rich economies of central Asia and Russia, Turkey should also witness significant inflows of foreign investment required to improve energy sector linkages between these two regions, most notably regarding oil and gas pipeline infrastructure.

Given Turkey’s comparative deficiency in oil and gas reserves – an important pillar of current and future energy sector policy – efforts to increase energy security and self-sufficiency aim to increase domestic renewable energy output, as laid out in the government’s National Renewable Energy Action Plan, or NREAP, which targets increasing its share of electricity production to 30 percent by 2023.

“The NREAP is a clear demonstration that Turkey wants to deploy renewables further in the next decade,” said Gaël Hankus, senior research analyst at IHS Energy.

RENEWABLES GOALS

As part of its ambitious renewable energy plan, the government is targeting expanding hydroelectric power capacity to 34 TURKEY DIGS DEEP gigawatts, onshore Inland infrastructure is increasing. wind energy to 20 gigawatts, solar to 5 6,000,000,000* gigawatts and geosea 5,000,000,000 air thermal energy to rail 1 gigawatt over the 4,000,000,000 road next eight years.

3,000,000,000 However, Hankus believes the 2,000,000,000 government will 1,000,000,000 ultimately fail to meet the renewable 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 energy production goals within the * Euros / Source: ITF Transport Outlook 2015, Organization for Economic Co-operation and Development. existing timeframe.

64 BREAKBULK MAGAZINE www.breakbulk.com

Levent Topcu

Bahadir Tonguc

EY Turkey

Supramar Shipping

“Despite some great interest from foreign investors to develop and finance renewable projects, IHS does not believe that these targets will be met. We believe that grid bottlenecks will remain a key obstacle to tapping the country’s full wind potential, and that these targets will instead be met by the mid-2030s,” he said.

While the government may struggle to meet its targets, analysts believe that Turkey will nevertheless witness a meaningful increase in its renewable energy infrastructure development over the next five years.

The government is placing a particular emphasis on wind power generation, according to Levent Topcu, member of EY Knowledge Research & Insights Team, EY Turkey.

“Wind power is seemingly Turkey’s technology of choice, and an individual target for wind power has been set by the Ministry of Energy and Natural Resources’ 2015-2019 Strategic Plan, which stated that it aims to increase installed wind capacity to 10 gigawatts by 2019, with a wider goal in the Electricity Energy Supply Security Strategy Paper of 20 gigawatts by 2023,” he said.

The outlook for increased renewable energy investment, with a particular focus on enhancing Turkey’s windpowered energy, was confirmed by Bahadir Tonguc, managing director of Supramar Shipping, an Istanbul-based shipbroker and chartering agent focused on breakbulk shipments and industrial projects servicing clients in the oil and gas, construction and energy industries, including renewables.

“We are expecting more renewable energy investments in addition to the ISSUE 4 / 2016

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awarded ones, particularly in the wind energy segment,” Tonguc said.

Many major renewable energy infrastructure projects scheduled to take place over the next several years will continue to be financed by the EBRD. These include the development of five new geothermal power plants, for which the EBRD has agreed to provide US$100 million to support new exploratory drilling and plant construction.

As part of its overall strategy towards increased energy security and indigenous sources of production, the government has also pledged to increase nuclear power development, with investment plans of US$22 billion, Topcu said.

“Looking to diversify its sources of energy, Turkey plans to have three operational nuclear power plants by 2023. A French-Japanese consortium will build the country’s second nuclear

DESIGNERS & MANUFACTURERS OF:

power plant in Sinop on the Black Sea coast, while a third plant is in the planning stage,” he said.

ENERGY STILL IMPORTANT Despite the relative lack of accessible domestic oil and gas reserves, energy sector infrastructure development over the next decade in Turkey will nevertheless be dominated by the petroleum industry, reflecting the country’s strategic location.

In this regard, Turkey is well placed to benefit from the EU’s new energy strategy and foreign policy aimed at reducing the bloc’s reliance on Russian gas imports, which could see the country transformed into a major regional energy hub through a substantial overhaul of existing oil and gas pipeline infrastructure.

Central to diversifying the EU’s energy mix is the creation of a new Southern Gas

Corridor linking Europe to Central Asian natural gas exporting countries, such as Azerbaijan and Kazakhstan, and includes the construction of the Trans-Anatolian Natural Gas Pipeline, or TANAP, which commenced earlier this year.

“The government signed an agreement with Azerbaijan to build the TANAP, which will carry gas through Turkey, stopping at its border with Greece. Turkey will therefore become an increasingly important transit country, shipping 10 billion cubic meters of gas through its territory to Europe by 2019, with a view to increasing this volume,” said EY Turkey’s Topcu.

Notwithstanding the recent increase in domestic political instability, the July 2016 failed coup is not expected to weigh significantly on oil and gas sector investments, according to Supramar Shipping’s Tonguc.

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ISSUE 4 / 2016

And while tensions between Moscow and Ankara resulted in a suspension of the new Turkish Stream pipeline linking Russia to Europe via the Black Sea and Turkey, a recent improvement in relations could also presage a resurrection in the halted project.

Another promising recent development is the improvement in relations between Turkey and Israel. “Better relations with Israel represent a big opportunity for closer cooperation in the gas sector, with the construction of a pipeline to transport Israeli natural gas from the Leviathan field to Europe through Turkey,” Tonguc said.

Mark Willis is a Dublin, Ireland-based freelance journalist specializing in politics and economics.

INROADS IN INFRASTRUCTURE There are a number of major non-energy-related infrastructure construction projects scheduled to take place in Turkey over the coming years, notably within the transport sector, which will increase opportunities for the project cargo community.

“Regarding transportation, projects such as high-speed railway projects as well as motorways will dominate the construction market. A crossing of the Dardanelles that consists of a suspension bridge and connecting roads will break ground in late 2017,” said Tekfen Construction’s Fatih Can.

“The Greater Istanbul Municipality, which manages a budget that is equivalent to that of a small country, has one of the most ambitious metro extension programs in the world. In addition to several lines under construction, there are a half-dozen currently tendered and more than a dozen that will be tendered from 2017 on,” he added.

Amid the plethora of Turkish new infrastructure scheduled for the next several years, the construction of a third Istanbul airport will be arguably the most significant single civil engineering and construction project, with about US$6 billion in funds already earmarked for the initial stage of the six-runway and fourterminal facility, which is set to propel Turkey into a major aviation transport hub over the next decade. BB

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trade notes

Q+A: Increasing Value in the Logistics Value Chain Cyril Joseph Varghese, global logistics director – strategy and commercial at Fluor, seeks innovation, a focus on embracing data and unique strategies to improve supply chain functions and customer relations.

REINVENT AND REALIGN

vice providers. The shippers feel that they get exploited by service providers through hidden charges and opportunistic surge pricing tactics. There has to be a happy medium that comprises of shared risks and joint decision-making, with significantly higher transparency in the whole value chain. At Fluor, we have already started conversations with select service providers on new formats of engagement that is pivoted on value, and less on costs and risks.

BB: What is your current role?

CV: While Fluor ventures more into lump sum turnkey and modular projects, my focus is to align the logistics function with the broader supply chain function of Fluor, to constantly reinvent and realign with the corporate objectives. As our projects get more complex, logistics is fast moving from a back-end execution role to a front-end strategic role. We are making strategic investments within the logistics group to support our logistics execution personnel with focused intervention on key areas of planning/execution, as well as in providing updated subject matter expertise in line with the changing focus of Fluor on project types/execution strategies.

BB: What are some of the most serious issues facing the industry?

CV: There is very low transparency in pricing regimes that encourages gambling by many service providers and also by shippers. The industry must collectively strive for more transparency that will eventually help both sides take the right optimized decision.

Low entry barriers for entering the non-asset-based logistics spectrum have allowed the entry of many unworthy players into the industry. Common sense, while understanding scope of work, pricing and contract awards can help separate the wheat from the chaff.

If the industry does not recover from the current gloom, we may be staring at looming bankruptcies of many asset owners, and may also see some mergers and acquisitions that may create monopolies in the long run.

BB: How can shippers and vendors improve their relationships?

CV: The industry as a whole, is far away from forming partnerships between shippers and logistics service providers, since an underlying sense of mistrust remains between the poles.

Service providers feel that they are forced to take significant risks and get penalized if the market conditions during execution work against the ser-

BB: If you could change one thing in your job or industry, what would it be?

CV: I would like to see the industry emerge into a more data-driven industry that builds capabilities to aggregate, analyze and constantly learn/unlearn from the wealth of unstructured data we deal with on a daily basis. We believe this is where the future lies, as understanding our data is key to increasing value in the logistics value chain.

68 BREAKBULK MAGAZINE www.breakbulk.com

BB: As a VIP shipper, what role do you feel you play in the industry?

CV: The current position affords us the incredible opportunity to constantly interact with industry stalwarts and thought leaders and to be abreast of technological advances in the logistics industry. We get to appreciate the scale and ingenuity of some of the service providers that we encounter, and by virtue of association with CYRIL JOSEPH VARGHESE companies like FLUOR ours, these providers receive significant visibility in the market. We are also actively involved in starting conversations during conferences/trade fairs and get diverse views from various strata of the industry on key issues/trends.

BB: What advice would you give someone entering the industry?

CV: It is important to have the passion and interest to encounter and manage different situations and challenges every day. Basic understanding of technical aspects of engineering, along with a willingness to learn new concepts can go a long way in shaping the career. A heavy focus on networking and good people skills are required to be successful. It is extremely important to have the highest standards of integrity and moral values to earn respect and be successful. BB Varghese will moderate the panel discussion “Assessing and Mitigating Cargo Risk in Today’s ‘New Normal’” on Tuesday, Oct. 25, at Breakbulk Middle East 2016 in Abu Dhabi.

ISSUE 4 / 2016

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VIEW FROM THE TOP Dynamar Ranks Breakbulk Carriers Amid ‘Opaque’ Outlook

Dynamar B.V.’s biennial study on the breakbulk industry is an exhaustive analysis of breakbulk, heavy-lift and project vessel operators and services. Here and in Issue 5 2016, Breakbulk will offer exclusive content from Breakbulk IV – Operators, Fleets, Markets, the latest edition of the study. This issue features a market outlook and a ranking of leading breakbulk operators, written by Dirk Visser, author and managing editor for Dynamar.

72 BREAKBULK MAGAZINE www.breakbulk.com

TOP 15 BREAKBULK OPERATORS In ranking the leading breakbulk operators, Dynamar’s biennial report, Breakbulk IV – Operators, Fleets, Markets, also includes a wealth of information on each of the shipping lines. What follows is basic information on ownership, markets, trade lanes and services taken from the carriers’ section of Dynamar’s report and supplied exclusively to Breakbulk.

1. GEARBULK POOL Gearbulk (UK) Ltd., Tooley Street, 2nd Floor West, 1 London Bridge, London SE1 9BG UK Phone: +44 20 790 6900; www.gearbulk.com Ownership: Bermuda-based Gearbulk Pool Ltd. is the main operating company of the Gearbulk group, which is headed by Gearbulk Holding AG. Gearbulk Pool’s day-to-day operations are managed by Gearbulk (UK) Ltd., as agent of Gearbulk Management Ltd. of Bermuda, which in turn is the manager of Gearbulk Pool Ltd. The Gearbulk group is jointly owned by the Kristian Gerhard Jebsen family (51 percent), and Mitsui OSK Lines of Japan (49 percent).

Market and trade lanes/services: Gearbulk’s fleet primarily operates under up to 10-year contracts of affreightment, mainly related to carriage of forest products. The company also provides landside storage and logistics for this segment. Gearbulk caters to other cargoes backhaul, including unitized goods such as non-ferrous metals, granite, granulates in bags, pipes and tubes, iron and steel, coils and plates, wheeled cargoes, project equipment and windmill blades and yachts. Trade lanes covered are: North Europe-ECNA-ECSA-Caribbean-Middle East; Med-ECSA; South Africa-North Europe; Middle East-Pakistan-India-ChinaKorea-Southeast Asia-Oceania-South Africa; China-Korea-Southeast Asia-Oceania-Middle East-Indian Subcontinent; ECSA-WCSA; WCNA; Japan-Oceania; Oceania-Japan-China-KoreaSoutheast Asia; ECNA/US Gulf-Caribbean-North Europe-ECSA-WCSA; WCNA-ECSA-WCSA; ECSA-North Europe-Med-Asia-ECNA-US Gulf-Caribbean-China-Korea-Southeast Asia; WCSA-North Europe-China-Korea-Southeast Asia.

2. SAGA-WELCO Saga Welco AS, PO Box 104, Borgheim, Tenvikveien 373-375, N-3140 Nøtterøy, Norway Phone: +47 33 01 88 00; Fax: +47 33 01 88 88; www.sagawelco.com

LEGEND: ECSA: East Coast South America; WCSA: West Coast South America; ECNA: East Coast North America; WCNA: West Coast North America; Med: Mediterranean ISSUE 4 / 2016

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T

he current state and outlook of the breakbulk, project and heavy-lift markets remain opaque. Sharply fallen oil prices, however pleasant for a carrier’s operating costs, have created havoc. Many future projects have been put on hold with no new projects initiated.

On the other hand, the markets for renewable energy, and wind energy in particular, continue to develop and grow. In 10 years’ time, the North Sea might well be covered with huge wind turbine parks not too dissimilar to the current situation in the southern Baltic area. China and the U.S. are also increasingly making strides to switch to less polluting sources for power generation.

On the basis of its 2020 targets, the Global World Energy Council, or GWEC, projects that wind power installations will nearly double in the next five years, led by China, with Europe and the U.S. making notable contributions. The expected, perhaps even unavoidable emergence of the African and Latin American markets,

Demand for steel in China has been decreasing and it is believed that the country’s annual demand will continue falling until 2017, before stabilizing at about 10 percent below the 2013 market. Demand is growing from emerging South Asian economies, but the resulting volumes cannot be compared with China’s previous imports.

U.S. steel exports have dropped quite extensively, and have been impacted by Mexico’s decelerating economy because of the low oil prices and prevailing signs of recession in Canada. The slowdown in the iron and steel trade, including demand for scrap, will have an adverse effect on the demand for breakbulk and dry bulk tonnage alike into 2017, but hopefully no later.

SUSTAINABLE COMPETITION?

Yet despite all the negatives set out above, cargo volumes can still be found. However, freight rates have fallen to totally uneconomic levels because of fiercer-than-ever competition from the dry bulk and container segments. Carriers are self-inflicted with overbuilding of capacities in expectation A meaningful recovery of of markets that haven’t been realized. the general market is not Some recent gains to the bellwether Baltic Dry expected as there has been Index have been the result of short-term factors, and no significant recovery to a meaningful recovery of the general market is not the basic fundamentals. expected, as there has been no significant recovas well as elsewhere in Asia (India, ery to the basic fundamentals and Indonesia, Vietnam) should be major there has been no substantial decline sources of growth with respect to in tonnage overcapacity. wind power plants in the 2020s.

Deutsche Bank sees no meaningful But everything has its downside, recovery before 2019, despite continuand more wind turbines may ultimately ous higher scrapping levels. A total of mean less oil and gas projects. Another 145 dry bulk carriers of all types were question is where the production of scrapped in the first quarter of 2016. turbines, towers, nacelles, hubs and Their total 12 million deadweight tons blades will take place. In other words, represented just 1.5 percent of the how renewable energy from windmills world total capacity. Trading house will translate into ocean transport, Cargill, controlling a fleet of about especially since somewhat low-tech 500 bulk vessels, recently said that at production of the voluminous blades least 1,000 ships should be scrapped in tends to be situated as close as possible order to secure a badly needed balance to the installation spot. between supply and demand.

74 BREAKBULK MAGAZINE www.breakbulk.com

Ownership: Saga Welco AS was established in 1991 as Saga Forest Carriers International AS. It changed to its current name in October 2014, reflecting a shareholding change at the same time. It is a 50/50 joint venture between NYK Holding (Europe) B.V. and Masterbulk Pte Ltd. These two companies are ultimately owned by Nippon Yusen Kaisha (NYK) of Japan and Bergen, Norwaybased Westfal-Larsen group, respectively.

Market and trade lanes/services: Saga Welco focuses on the forest products transport markets, in particular carrying lumber, pulp and paper. Wood pulp is the single-largest commodity shipped. The vessels are well suited for the shipment of project cargoes, containers, steel coils, aluminum, ores and grains, unitized loads and bulk. Origins and destinations served include Europe, North and South America and the Far East. Contract carryings of forest products in semi-liner services are combined with tramp-style operations for other cargoes. Saga Welco trade lanes, sorted by outbound-area are: North Europe-ECNA-ECSA; Europe/Med-Africa; ECSA-Europe-Far East-WCNA; WCNANorth Europe; ECNA-ECSA; Far East-WCNA (Trans Pacific Steel Service)-ECSA (via Panama).

3. COSCOL COSCO Shipping, Ltd., Guangzhou Ocean Plaza, 20 Huacheng Avenue, Zhujiang New Town, Guangzhou 510623 Phone: +86 20 3816 1888; Fax: +86 20 3816 2888; www.coscol.com.cn Ownership: COSCO Shipping Co. Ltd. (Coscol) is the breakbulk and heavy-lift arm of state-controlled China Cosco Shipping Corp., the recent merger between China Ocean Shipping (Group) Co. (of which Coscol formed part) and China Shipping (Group) Co. Coscol was formed in December 1999 by five other group members led by Guangzhou Ocean Shipping Co. Market and trade lanes/services: Coscol deploys its multipurpose fleet on contract and spot basis in worldwide tramping and in semi-liner services, the latter, carrying such project items as bridge cranes, dredgers, equipment sets and locomotives next to a range of more traditional breakbulk cargoes and also bulk parcels. Semi-liner services cover the following trades and average frequencies: Far East-Africa, up to six sailings/month; Far East-Americas, up to three sailings/month; Far East-MediterraneanNorth Europe, up to five sailings/month; Far East-Middle East, up to four sailings/ month; Far East-South Asia, up to 10 sailings/month.

LEGEND: ECSA: East Coast South America; WCSA: West Coast South America; ECNA: East Coast North America; WCNA: West Coast North America; Med: Mediterranean ISSUE 4 / 2016

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TOP 15 BREAKBULK CARRIERS Multipurpose ships (including open hatch units) of more than 5,000 dwt, ranked by deadweight capacity and including heavy-lift capability (as of February 2016).

BREAKBULK OPERATOR

EXISTING FLEET Ships

1 Gearbulk Pool 2 Saga-Welco 3 Coscol 4 Grieg Star 5 BBC Chartering 6 Thorco 7 Spliethoff 8 Chipolbrok 9 AAL 10 Swire Shipping 11 MACS 12 Pacific Carriers 13 Rickmers Linie 14 King Ship HK 15 Intermarine TOTAL

TOTAL FLEET

BY VESSEL TYPE

General Cargo Ships Open Hatch Cargo Ships TOTAL Share Top 15

Total dwt

Total HL Avg. age

ON ORDER Ships

Total dwt

Total HL Avg. age

Dwt share

HL RANK

54 2,924,000 2,200 2002 2 108,000 100 2016 3.7% 13 52 2,573,000 2,800 2002 2 104,000 100 2017 4.0% 11 58 1,501,000 15,100 2007 9 276,000 4,800 2016 18.4% 2 30 1,437,000 2,600 2004 - - - - - 12 120 1,400,000 44,200 2008 6 83,000 4,200 2016 5.9% 1 71 965,000 9,300 2009 2 34,000 200 2017 3.5% 7 49 786,000 8,700 2002 - - - - - 8 23 656,000 11,300 2004 3 96,000 2,100 2016 14.6% 5 19 512,000 10,600 2012 - - - - - 6 16 404,000 1,200 2005 - - - - - 20 12 395,000 1,600 2005 - - - - - 16 14 361,000 1,400 2006 - - - - - 19 12 357,000 6,200 2005 - - - - - 9 11 355,000 1,500 1996 - - - - - 18 32 340,000 14,300 2007 21 267,000 14,500 2016 78.5% 3 573 14,966,000 133,000 2006 45 968,000 26,000 2016 6.5%

EXISTING FLEET

ON ORDER

Ships Total dwt Avg. Age Ships Total dwt Avg. Age 3,982 42,655,000 1998 201 2,768,000 2016 297 13,104,000 2001 25 1,182,000 2017 4,279 55,760,000 1999 226 3,951,000 2016 13.4% 26.8% - 19.9% 24.5% -

Share 6.5% 9.0% 7.1% -

Source: Breakbulk IV - Operators, Fleets, Markets, Dynamar B.V., June 2016, www.dynamar.com

Overall rates for the smaller handysize-handymax vessel segments have improved because of an increase in the minor bulk trade and low availability of vessels, especially on the transatlantic, which has helped overall market sentiments to improve.

Although the expected decline in Chinese steel exports will have a negative impact, this will hopefully be outdone by a sustainable growth of bauxite exports from Brazil and Guinea to that country.

If the problem with the breakbulk market is not so much a lack of cargo, but rather problems with competition among breakbulk operators with falling demand causing overcapacity, then how sustainable is that competition?

Vehicle carriers and containership operators serve the consumer segment. This strongly depends upon the whims of the economy, impacting

their core cargoes. When down, the interest to fill their ships with breakbulk cargoes amplifies, and vice versa.

The ongoing decline of the conventional reefership fleet may be positive for the breakbulk operator, though the effect is minor. Much more menacing to the breakbulk sector is the huge bulk ship overcapacity, with the types of vessels excessively competing for neo-bulk business: • Handysize/handymax bulk carriers are competing for neo bulk parcels in particular, but are also looking at projects, both representing breakbulk’s mainstay. Usually these vessels have very restricted crane capacities for handling project cargoes, requiring the use of quay cranes or even more expensive floating cranes. And let’s face it, bulk carriers are not built for the carriage of project cargoes.

76 BREAKBULK MAGAZINE www.breakbulk.com

4. GRIEG STAR Grieg Star Shipping A/S, Grieg-Gaarden, C. Sundtsgate 17/19, P.O. Box 781 Sentrum, 5807 Bergen, Norway Phone: +47 55 23 96 00; Fax: +47 55 23 25 30; www.griegstar.com Ownership: Grieg Star Shipping AS was established in 1962 as Star Shipping AS. Initially jointly owned by Westfal-Larsen’s Masterbulk and the Grieg family, the latter took control in 2008 and changed the name to Grieg Star Shipping. Grieg Star Shipping is a 100 percent subsidiary of Grieg Star Group AS, whose ownership is shared between Grieg Maturitas AS (75 percent, the holding company for the whole Grieg group, owner of the Star logo) and the Grieg Foundation (25 percent).

LEGEND: ECSA: East Coast South America; WCSA: West Coast South America; ECNA: East Coast North America; WCNA: West Coast North America; Med: Mediterranean ISSUE 4 / 2016

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Market and trade lanes/services: Grieg Star primarily serves the forestry products markets and trades between the U.S. (all coasts) and North Europe, as well as the Far East. Routes between Chile and the Mediterranean, as well as Brazil-Far East were added in 2010. For its backhaul routes, Grieg Star also caters to dry bulk and breakbulk, including cement, fertilizers, grains and sugar, unitized cargoes, construction, granite blocks, iron and steel including coils and slabs, logs, machinery, non-ferrous metals, pipes and tubes, and project cargoes. Trade lanes are Brazil-Mediterranean; ECNA-US Gulf-; Far EastNA all coasts; South East Asia-Europe; WCNA-Far East; ECNA-US Gulf-Far East-Med-North Europe; Chile-Mediterranean; North Europe-NA all coasts; Med-Brazil-ECNA-US Gulf.

Credit: Hansa Heavy Lift

16-25 RANKED BREAKBULK OPERATORS

BY DEADWEIGHT CAPACITY

16 Hansa Heavy-Lift 17 PIL 18 Hong Union 19 ESLSE 20 GMB Maritime 21 Nordana P&C 22 NYK BPC 23 Atlantic Ro-Ro 24 Westwood 25 ECL

BY HEAVY-LIFT CAPABILITY

16 MACS 17 ESLSE 18 King Ship HK 19 Pacific Carriers 20 Swire Shipping 21 Atlantic Ro-Ro 22 ECL 23 Hong Union 24 GMB Maritime 25 Westwood

Source: Breakbulk IV - Operators, Fleets, Markets, Dynamar B.V., June 2016, www.dynamar.com

As soon as the bulk market recovers, bulk carrier operators will lose their interest in breakbulk.

• Container ships are faster and sail more frequently than breakbulk vessels. Their fixed scheduled routes may have advantages for one shipper, but not for others where a necessary port is not on their schedule. Deviating a box ship is a costly affair and transshipment of high-value project cargoes is out of the question. Apart from constrictive container shipping schedules, cargo weight is also restricted to the capacity of the shipto-shore gantry cranes (usually about 45 tons, sometimes up to 100 tons), unless additional money can be spent on hiring a mobile harbor crane or a floating crane.

As soon as the container trades recover, carriers currently chasing breakbulk and project cargoes will lose their appetites. That said, box lines that have traditionally carried breakbulk will continue to do so, but definitely at higher rates than today once the situation of overcapacity is removed.

• Car carriers are something different. The modern, ever-larger pure car-truck carrier, or PCTC, is a formidable breakbulk carrier with its increasing number of strengthened (10 tons per square meter) and higher (up to seven-meter) main decks. Their competition in the multipurpose segment will not go away. Car carriers are operating along fixed routes but with more flexibility to deviate than

78 BREAKBULK MAGAZINE www.breakbulk.com

5. BBC CHARTERING BBC Chartering & Logistics GmbH & Co. KG, Hafenstrasse 12, D26789 LEER, Germany Phone: +49 491 925 2090; Fax: +49 491 925 2099; www.bbc-chartering.com Ownership: BBC Chartering & Logistics GmbH & Co. KG (BBC) is part of the privately owned Briese group of companies, led by Briese Schiffahrts GmbH & Co. KG. BBC is the chartering and operating arm of the Briese group, as well as of a number of other owners, of which W. Bockstiegel Reederei GmbH & Co. KG of Emden is the largest.

BBC’s direct parent is Northsea GmbH. Market and trade lanes/services: BBC targets shippers in the mining industry, dry bulk and new bulk cargoes and metals including steel, renewable energy including wind turbines, towers and blades, heavy industries and industrial plants, oil and gas, and vehicles. The portfolio of semi-liner services are: BBC Inter-Asia, BBC trans-Pacific Service, BBC Euro-Asia Express Line Eastbound, BBC Euro-Asia Express Line Westbound, BBC South America-Middle East, BBC Americana Line Far East Service, BBC Andino Express Line Far East, BBC Andino Express Southbound, BBC Andino Express Line European Service, BBC Americana Line European Service, BBC Russian/Caspian Service, BBC Americana Line Southbound, BBC American Line Northbound, BBC American Line-Med Service; BBC Gulf Line, Caytrans BBC Northbound; Caytrans BBC Southbound. Services vary between weekly and monthly subject to demand.

6. THORCO Thorco Shipping A/S, Tuborg Parkvej 10, DK-2900 Hellerup, Denmark Phone: +45 63 20 3000; www.thorcoshipping.com

LEGEND: ECSA: East Coast South America; WCSA: West Coast South America; ECNA: East Coast North America; WCNA: West Coast North America; Med: Mediterranean ISSUE 4 / 2016

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ORDERBOOK VS EXISTING FLEET The world fleet’s 2.8 million dwt capacity on order reflects a share of 38 percent of the total 7.2 million dwt of the existing world Breakbulk fleet of vessels older than 25 years of age.

EXISTING BREAKBULK FLEET BY PERIOD OF BUILT AND AVERAGE AGE Period built <1970 <2000 2000-2004 2005-2009 2010-2014 2015-2016/2

Ships Total dwt Avg. dwt Shares total fleet Avg. year 295 2,277,000 7,700 5.3% 1967 1.252 12,284,000 9,800 28.8% 1997 427 4,977,000 11,700 11.7% 2002 1,018 9,577,000 9,400 22.4% 2007 940 12,627,000 13,400 29.6% 2012 50 957,000 19,100 2.2% 2015

GLOBAL BREAKBULK FLEET: EXISTING – >25-YEAR-OLD – ORDERBOOK Parameters Ships Total dwt Avg. dwt Shares total fleet Avg. year Existing world fleet 3,982 42,699,000 10,700 100.0% 2000 <1991 fleet (>25 years old) 832 7,236,000 8,700 16.9% 1981 Orderbook 2016/2-2019 201 2,768,000 13,800 38.3% 2016 Excludes open-hatch carriers Source: Breakbulk IV - Operators, Fleets, Markets, Dynamar B.V., June 2016, www.dynamar.com

containers. Frequencies may be lower and transit times slower, but there is another important weak point: car carriers cannot be served with cranes; they depend on the capability of their quarter ramps for the accommodation of heavy-lifts. Ramp capacities hover around 100 to 200 tons, up to maximum 320 tons for a small number of vehicle carriers.

Sometimes it seems as if there are as many niches as there are operators. All these niches, within which traditional general cargo behaves differently from projects, have their own dynamics and cycles and therefore there is just no overall valid “market” picture. One may do well while the other suffers. In all, it continues to be difficult to generally apply forecast growth figures on the breakbulk sector. Drewry estimates an average annual increase of 2.7 percent per year until 2020 with overall subdued growth through 2017.

Ultimately the best option remains the multipurpose/heavy-lift vessel for the carriage of breakbulk and project cargo. Bulk carriers and box ships are generally of a simpler design than many of the modern breakbulk vessels, or miss the hoisting capabilities.

The modern multipurpose unit typically has very flexible hold and deck

configurations, including adjustable length or height, or removable tweendecks and even triple decks, or deck pontoons. Some have the ability to sail with open or closed hatches. The longest hatches measure more than 50 meters and there are ships that can stow cargoes of up to 135 meters long on deck.

Dynamar’s report provides an overview of important breakbulk and project shipping markets, sorted by major cargo segment, complemented by the main trade areas (destinations), with notes on developments, expectations, facts, findings, options and trends relevant to each cargo segment. The full publication, Breakbulk IV – Operators, Fleets, Markets, is available from Dynamar at www. dynamar.com/publications/159.

Dirk Visser, senior shipping consultant and managing editor of Dynamar BV – Shipping Information and Consultancy, is a 30-year veteran of the liner shipping and forwarding industry in the Netherlands.

Since 1999 he has been responsible for the publications and consultancy sections of Dynamar, including the DynaLiners portfolio of news and commentary, and Dynamar’s biennial flagship breakbulk publication.

80 BREAKBULK MAGAZINE www.breakbulk.com

Ownership: In 2003, then Clipper Elite Carriers acquired Thor Chartering A/S. In the same year former executives of Thor Chartering launched Thor Shipping A/S, also to provide project and breakbulk shipping services. In December 2009, to prevent confusion Thor Chartering changed its name to Thorco Shipping A/S. In July 2013 Thorco Shipping merged with Clipper Projects.

Market and trade lanes/services: Cargo types carried include: aircraft, bagged items, coils, conduit pipes, construction, craft, crane parts, food aid and similar, iron rods and wire, locomotives, machinery, modules, oil and gas implements, pipe line, pipes and tubes, project items, railway carriages, road building equipment, steel plates and steel products. It may also take dry bulk on positioning trips. Thorco serves the project and breakbulk markets on a tramp basis along with semi-liner services: From Europe to Sub-Saharan Africa, Red Sea, Middle East/Gulf, India, U.S. East-Gulf coasts, Far East and East Coast South America; from Mediterranean to U.S. Gulf-Caribbean, ECSA; From the Far East to Europe, East Africa, Southern and West Africa; U.S. Gulf-West coasts, ECSA-WCSA, U.S. West Coast, India West Coast, Middle East/Gulf, Australia; From North America to Europe/Mediterranean, Far East.

7. SPLIETHOFF Spliethoff’s Bevrachtingskantoor B.V., Radarweg 36, 1042 AA Amsterdam, the Netherlands Phone: +31 20 4488 400; Fax: +31 20 4488 500; www.spliethoff.com Ownership: The Spliethoff group includes more than 100 interests and subsidiaries. Ocean-going operating companies are: BigLift Shipping B.V., BigRoll Shipping (joint venture), Bore Ltd., Sevenstar Yacht Transport B.V., Transfennica Oy, and Wijnne & Barends B.V. There are also numerous single-shipowning limited partnership companies.

Market and trade lanes/services: Spliethoff focuses on the non-containerized general cargo trades, and in particular those related to agricultural produce (bags and/or bulk), empty containers, forest products (paper, pulp, timber, major customers Norske Skog and StoraEnso), granite, machinery, projects of all kinds, steel and yachts. Spliethoff runs a number of more or less fixed frequency routes on a one-way basis, with no fixed ships sailing on those services. The company’s tramping department caters to suitable cargoes for a particular journey to a number of loading areas: Europe, including Baltic & UK to Med, Africa, ECNA, US Gulf, Great Lakes, Caribbean, Central America, ECSA, WCSA, Oceania; Med to Europe, ECNA, US Gulf; ECSA, WCSA; West Africa to Europe, ECSA-US Gulf; ECNA/ US Gulf, St. Lawrence to Med, Black Sea, Europe including Baltic & UK; ECSA to West Africa, Med, Europe including Baltic & UK; Far East to Europe including Baltic & UK, ECSA, Oceania; Oceania to Far East, East-Gulf coasts North America, Europe including Baltic & UK.

LEGEND: ECSA: East Coast South America; WCSA: West Coast South America; ECNA: East Coast North America; WCNA: West Coast North America; Med: Mediterranean ISSUE 4 / 2016

ocean services

twice-monthly; Europe/Med-Middle East/India Far East, monthly; North Europe-U.S. Gulf, monthly; US East/Gulf-Far East, monthly; and U.S. East/GulfEurope-Far East, monthly.

8. CHIPOLBROK Chinese-Polish Joint Stock Co. 26th-28th floor Gong Shan Lian Da Sha, 55 Yanan Road East, 200002 Shanghai, China Phone: +86 21 6336 0108; Fax: +86 21 6336 1997; www.chipolbrok.com.cn Ul. Slaska 17, 81-319 Gdynia, Poland Phone: +48 58 628 6525; Fax: +48 58 628 6555; www.chipolbrok.com.pl Ownership: Established in June 1951 as the Chinese-Polish Shipbrokers Company, Chipolbrok is a 50/50 partnership between the Ministry of Communications in China and Poland’s Ministry of Transport & Maritime Economy. In late October 2011, Chipolbrok acquired Shanghai HongFa Shipping.

Market and trade lanes/services: Chipolbrok initially had secure cargo volumes from Eastern Europe to China, while it also enjoyed a monopoly on certain Chinese export cargoes. Following the opening of Eastern Europe and China in the late 1980s, Chipolbrok is still the carrier of choice for North European shippers, with typical items including cranes, depots and warehouses, iron and steel, machinery, power stations, road and harbor structures, trucks and wind turbines and blades.

Chipolbrok operates two breakbulk-project semiliners services from Europe, one eastbound to Asia and another westbound to the U.S. Gulf and via the Panama Canal onwards to the Far East, with following frequencies: North Europe-Far East

9. AAL Austral Asia Line Pte Ltd., 9 Temasek Boulevard, 20-01 Suntec Tower 2, Singapore 038989 Phone: +65 6248 3688; Fax: +65 6334 2422; www.aalshipping.com/ Ownership: Trades as AAL or AAL Shipping, a 2008-established private Singaporean limited liability company, wholly owned by Schoeller Asia Holdings Ltd., which is part of Schoeller Holdings Ltd., incorporated in Cyprus.

Market and trade lanes/services: AAL focuses on heavy-lift and overdimensional cargoes in oil & gas, construction, wind energy, agriculture and leisure, carrying wind turbines up to complete wind farms, earth moving and mining equipment, rolling stock, yachts, unitized forest products, and general breakbulk and bulk. AAL’s liner division presently operates three scheduled multipurpose services: Asia-Australia East Coast (AUEC), swapping slots with Swire Shipping’s similar APA service two ships (each service/carrier), 21-day average frequency; North & South East AsiaAustralia West Coast (AUWC), one ship, average 40-day frequency; North East Asia-WCNA (Pacific), service initiated in early 2013, three

ships, average monthly frequency.

Other than scheduled services, AAL’s activities are split in two: A) Tramp & Projects Services: Since May 2015, AAL cooperates with Peter Döhle (a non-operating owner of, among others, multipurpose tonnage) with 26 vessels. AAL handles operations East of Suez and the Americas, and Peter Döhle handles Europe and Africa.

B) Semi-liner services: Launched in March 2016, also with Peter Döhle. In April, the duo operated semi-liner services along three routes: Intra-Asia; Far East-Middle East-Europe; and Far East-ECNAECSA.

10. SWIRE SHIPPING Swire Shipping, c/o The China Navigation Co Pte Ltd., 300 Beach Road, #27-01, The Concourse, Singapore 199555, Republic Singapore Phone +65 6603 9400; Fax +65 6603 9401; www.swireshipping.com Ownership: Swire Shipping is the liner division and the main brand under which The China Navigation Co. Ltd. (CNCo) UK, the wholly owned deepsea shipping (owning and operating) arm of London-based John Swire & Sons Ltd., operates its shipping services. Since January 2010, both The China Navigation Co, Hong Kong and Swire Shipping, Sydney head office functions have been consolidated into CNCO Pte Ltd, Singapore.

Market and trade lanes/services: Swire Shipping’s main shipping business is to connect Australasia, Papua New Guinea and the Pacific

DELIVERIES VS. SCRAPPING – GROWTH AND DECLINE Between 2000 and 2015, 2,505 breakbulk ships were scrapped while 2,422 vessels were delivered, resulting in an overall fleet reduction of 83 units or 5 million deadweight tons.

DELIVERIES Year

Ships

Total dwt

Avg. dwt

2000 113 1,182,000 2001 66 674,000 2002 71 902,000 2003 68 1,007,000 2004 107 1,187,000 2005 150 1,371,000 2006 178 1,689,000 2007 206 1,924,000 2008 239 2,138,000 2009 243 2,442,000 2010 242 3,024,000 2011 262 3,263,000 2012 227 3,026,000 2013 137 2,047,000 2014 72 1,266,000 2015 41 740,000 TOTAL 2,422 27,882,000

SCRAPPING Ships

Avg. yr. built

10,500 211 10,200 227 12,700 156 14,800 155 11,100 78 9,100 33 9,500 65 9,300 53 8,900 64 10,000 250 12,500 192 12,500 273 13,300 256 14,900 218 17,600 173 18,100 101 11,500 2,505

Total dwt

BALANCE

Avg. dwt

Ships

1975 2,690,000 12,700 1976 3,378,000 14,900 1976 2,195,000 14,100 1976 2,139,000 13,800 1975 861,000 11,000 1976 323,000 9,800 1974 844,000 13,000 1978 564,000 10,600 1975 807,000 12,600 1978 3,606,000 14,400 1978 2,320,000 12,100 1979 3,545,000 13,000 1982 3,681,000 14,400 1983 2,488,000 11,400 1984 2,033,000 11,700 1987 1,408,000 13,900 1979 32,882,000 13,100

-98 -161 -85 -87 29 117 113 153 175 -7 50 -11 -29 -81 -101 -60 -83

Source: Breakbulk IV - Operators, Fleets, Markets, Dynamar B.V., June 2016, www.dynamar.com 82 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 4 / 2016

Islands with the region’s main trading partners in the Far East with multipurpose and container shipping services. Cargo carried includes general, unitized cargoes (including heavy and bulky project lifts), breakbulk parcels (steel, forest products), bulk parcels, as well as containerized cargoes (general and refrigerated). Its eight direct trade lanes served with multipurpose ships are: Southeast Asia-New Zealand-Papua New Guinea-South Pacific (two sailings monthly); Northeast Asia-New Zealand-Papua New Guinea-South Pacific (two sailings monthly); Northeast Asia/Southeast AsiaAustralia/New Zealand-Papua New Guinea (APA) (sailings every five weeks); Northeast Asia-South Pacific Islands (monthly sailings); Southeast AsiaPapua New Guinea-Northern Australia (three weekly sailings); Southeast Asia-Indonesia-North Australia-Timor (sailings about every 18 days); Trans-Tasman-South Pacific (sailings about every 16 days); Australia-New Zealand-WCNA (sailings about every 35 days). Swire also operates another around five services in the area with full container ships only.

11. MACS MACS Maritime Carrier Shipping GmbH & Co., Große Elbstraße 138, 22767 Hamburg, Germany Phone +49 40 376 73 01; Fax +49 40 376 73 100; www.macship.com Ownership: In its current form, MACS was established in 1981. Through holding company Vineta GmbH it is ultimately controlled by the SchederBieschin family.

Market and trade lanes/services: MACS’s market is Southern Africa, providing multipurpose services with its main markets in Europe and US East and Gulf coasts. Services cater to containers, non-containerized general cargoes such as forest products, machinery and steel, as well as projects (mining industry), heavy-lifts, rolling stock and dry bulk parcels of 500 tons up to 10,000 tons (including coal northbound to Europe). The company offers three scheduled multipurpose services: MACS (North Europe-Southern Africa, two-three sailings monthly); GAL (U.S. Gulf-Southern Africa, one sailing monthly); MACS (Mexico-U.S.GulfNorth Europe, one sailing monthly)

12. PACIFIC CARRIERS Pacific Carriers Ltd., 07-02 Great World City, 1 Kim Seng Promenade, Singapore 237994, Republic Singapore Phone +65 6733 35 00; Fax +65 6737 39 66; www.pclsg.com; www.pacc.com.sg Ownership: Pacific Carriers Ltd. (PCL) was incorporated as a dry cargo shipbroker in 1973 and listed on the Singapore Stock Exchange in 1990.

It was privatized again in 2001 when it became wholly owned by Kuok (Singapore) Ltd., an investment holding company controlled by Robert Kuok, one of Malaysia’s wealthiest persons.

Through its parent company, PCL is affiliated to a substantial number of companies, including listed Malaysian Bulk Carriers Berhad, in which it holds 34.5 percent.

Market and trade lanes/services: PACC Breakbulk Express Service (PABX) offers a twice monthly multipurpose semi-liner service between

South East Asia and East Coast Mexico/US East/ Gulf coasts ports. The service is split into a rubber schedule (average two sailings monthly) and plywood schedule (one sailing monthly). US westbound (via Suez), cargoes include bagged cargoes, forest products, general cargo, palletized rubber, project cargo, steel coils/slabs and windmill towers. Asia eastbound takes mainly bulk grains to Malaysia and breakbulk upon inducement.

13. RICKMERS LINIE Rickmers-Linie GmbH & Cie KG, Neumühlen 19, 22763 Hamburg, Germany Phone: +49 40 38 91 77 200; Fax: +49 40 38 91 77 274; www.rickmers-linie.de Ownership: (Dynamar’s data does not reflect Rickmers-Linie’s acquisition of tramp and chartering specialist Nordana Project & Chartering, which took effect July 1.) Rickmers-Linie, founded in its present form in June 2000, is the breakbulk carrier of the greater Rickmers group, headed by Rickmers Holding AG. It acquired the operator from Hapag-Lloyd in 2000. Nordana has become an independent division of Rickmers-Linie under the NPC brand. The new NPC division operates an MPP fleet ranging from 8,000 to 21,000 deadweight tonnes and lifting capacity of up to 500 tonnes.

Market and trade lanes/services: Rickmers-Linie carries breakbulk, including projects, in a semiliner set-up, eastbound from Europe in particular.

Infrastructure and industrial projects in countries such as Saudi Arabia, India and China require scheduled though flexible services in addition to tailored tramp voyages. The company serves the project transportation requirements on behalf of turnkey projects including cement plants, petrochemical and power plants, water treatment installations and other industrial schemes for such companies as ABB, General Electric and Siemens.

Rickmers-Linie serves a number of worldwide trades, built around core routes: Europe-Far East via the (Eastabout) Round-the-world Pearl String Service (Europe-Middle East-Far East leg); Europe-Indian Subcontinent; Far East-North America-Europe via (Eastabout) Round-the-world Pearl String Service (Far East-North America leg); North America - Far East; South America - US Gulf; Far East - South America. In April 2016, Bahri Line (National Shipping Co. of Saudi Arabia/ NSCSA) and Rickmers-Linie signed a space charter swap agreement covering both carriers’ ships serving the US-Red Sea- Middle East trade.

14. KING SHIP HK King Ship (HK) Ltd., 16A EIB Centre, 40, Bonham Strand, Sheung Wan, Hong Kong, China, S.A.R. Phone: +86 25 8655 7018; Fax +86 25 8655 7208; www.kingshipltd.com Ownership: King Ship (HK) Ltd was registered in Hong Kong in January 2009. It is a subsidiary of Nanjing King Ship Management Co. Ltd. of Nanjing, China, which is affiliated with Ning Hang Shipping & Enterprise Co. Ltd., a private company in Kingstown, St Vincent and the Grenadines.

Market and trade lanes/services: King Ship is a

Credit: Intermarine non-containerized general cargo operator, which operates 11 ships catering to heavy-lift cargoes of 200 to 420 tons. King Ship HK deploys its ships upon inducement between numerous ports in China as well as South Korea, South East Asia, India/Pakistan and the Middle East/Gulf.

15. INTERMARINE Intermarine, LLC, 55 Waugh Drive, Suite 300, Houston, TX 77007 USA Phone +1 281 885 3500; Fax: +1 281 872 4444; www.intermarineusa.com Ownership: In August 2012, through a stock transaction, Intermarine LLC of the U.S. and Scan-Trans Holding A/S of Denmark merged operations under the Intermarine brand name.

Intermarine was founded in 1990 by Roger Kavanagh, an executive experienced in marine transport of industrial equipment. Scan-Trans was founded in 1993 and registered in 1997 as Scan-Trans Holding A/S, of which subsidiary Scan-Trans Chartering ApS was the main operating company. Intermarine is considered the lead company and managing agent of a group of multipurpose/project/heavy-lift shipping companies: Industrial Maritime Carriers LLC, Linea Naviera Paramaconi SA, US Ocean LLC, and Industrial Terminals Houston.

Market and trade lanes/services: Intermarine provides transport of breakbulk, project including heavy-lift cargoes on a worldwide basis, but primarily between U.S. Gulf ports and South America. Gulf and Caribbean oil and gas are among its leading customers as are infrastructure companies building out facilities in oil and gas, mining, water, wind and power energy elsewhere.

It also operates upon inducement between the Far East, India and the Middle East moving project cargoes such as components for chemical and petrochemical plants, earth moving equipment, locomotives, mining equipment, pipes and tubes, power generation equipment and railcars.

Semi-liner routes connect U.S. Gulf ports with the Caribbean, East and West coasts of South America and West Africa. BB

LEGEND: ECSA: East Coast South America; WCSA: West Coast South America; ECNA: East Coast North America; WCNA: West Coast North America; Med: Mediterranean www.breakbulk.com BREAKBULK MAGAZINE 83

ocean services

THE SUPER HIGHWAY Latest Generation Of Vehicle Carriers Drive Innovation

BY MARK WILLIS

D

riven by rapid technological development, enhanced household purchasing power, and a new culture of consumer spending, the global automobile industry witnessed rapid exponential growth from the 1950s onwards, with expanding cross-border trade and supply-chains creating the need for more efficient and cheaper methods of cargo transportation to deliver vehicles to North American 84 BREAKBULK MAGAZINE www.breakbulk.com

and European consumer markets. The fleet of ships capable of carrying automobile cargoes increased in number and size, leading to the first generation of pure car carrier, or PCC, and subsequent pure car and truck carrier, or PCTC. Distinctively box-shaped to cater for multi-deck layers and maximize space efficiency, these specialized vehicle-carrying vessels transport many thousands of cars and trucks vast distances, saving costs for producers and consumers through their economies of scale.

But there’s been another important

benefit: modern-day PCTC carriers bring additional cargo safety advantages, according to Gabriela Stojicevic, head of communications at Höegh Autoliners, a global provider of roll-on, roll-off transportation services, specializing in the automotive industry.

“PCTCs in WWL’s HERO range general provide a requires less ballast safe transportation water, increasing mode where cargo efficiency. is always stowed Credit: WWL inside the vessel.

This way the cargo ISSUE 4 / 2016

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The next generation of PCTCs have been designed with the expanded Panama Canal in mind. Box-shaped ships maximize space efficiency.

Credit: Höegh Autoliners

able to handle carriers up to 366 meters long and 49 meters wide. According to Panama Canal Authority, almost 90 percent of the existing global fleet will be able to navigate the updated canal.

NEXT GEN CAR CARRIERS is never exposed to sea water, which can cause corrosion,” she said.

With the exponential growth of the fleet of these specialized vehicle carriers, shipping groups have moved to update fleets and increase deck space with an ever-larger and more flexible range of PCC, PCTC and ro-ro vessels, making use of the expanded Panama Canal and increasing opportunities for the auto industry.

Previously constrained by a more than 100-year-old system of locks, the man-made waterway linking the Atlantic and Pacific oceans was officially opened in June 2016 after a more than US$5 billion overhaul, and will now be 86 BREAKBULK MAGAZINE www.breakbulk.com

In anticipation of the Panama Canal expansion, Wallenius Wilhelmsen Logistics, or WWL, provider of rolling cargo logistics and shipping services, developed a new generation of vehicle and rolling equipment carrier with design modifications that take advantage of the canal changes.

With ownership split between the Norwegian Wilh. Wilhelmsen group and Sweden’s Wallenius Shipping, WWL operates one of the world’s largest fleets of PCTC and ro-ro vessels. As of mid-2016, its fleet stood at more than 50 PCTC and ro-ro vessels. It is further extended through sister company, EUKOR Car Carriers of South Korea.

Lars Dessen, head of vessel design

at Wilh. Wilhelmsen ASA, the shipowning component of the Wilhelmsen group, has been responsible for designing PCTC and ro-ro vessels destined for the WWL fleet for the past 16 years.

His role covers the processes involved in initiating the design of new vessel contracts, yard tendering and selection, specification negotiations and plan approval.

The latest generation of postLars Dessen Panamax vessels that Dessen and his Wilh. Wilhelmsen ASA team at the Wilh.

Wilhelmsen ASA Technical Department have been responsible for is known as HERO series, standing for high efficiency ro-ro. Four new HERO ships were delivered to WWL in 2015-2016, with four ISSUE 4 / 2016

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similar vessels scheduled to be delivered in 2016-2017 to partner Wallenius of Sweden.

Dessen outlined how the advantages associated with this new fleet of vessels are chiefly derived from the fact that they have a wider beam than before.

“The most common, older PCTC design is 200-meter length overall, 32.26meter beam and a capacity of around 6,500 RT.” RT is a unit of measurement relative to the about 4 meters of lane space required to store one standard car.

“The LOA of only 200 meters is a result of Japanese port terminal restrictions and operational restrictions on the inland seas of Japan,” he said.

“With the new Panama Canal where the beam restriction is 49 meters, the maximum capacity sweet spot for a modern PCTC of about 8,000 RT can be achieved within an LOA of 200 meters.

Our latest series of post-Panamax ships has a beam of 36.5 meters,” added Dessen.

The extra stability provided by the wider shaped new HERO range means there is a reduced requirement to carry water ballast, which in turn gives an efficiency benefit. Less ballast also means reduced draft, allowing the vessels to

dock at shallower ports and therefore operate across a wider geographical scope.

“With this new series, instead of just building an ever-larger vessel, the focus has been on flexibility and its first cousin, effiRoger Strevens ciency,” according WWL to Roger Strevens, vice president and global head of key accounts at WWL. “For example, there are five hoistable decks, which help the vessel adapt to the profile of cargo that is in the market. Doing that means you can utilize as much of the available space in the vessel as possible and utilization is key to efficiency,” he said.

Other factors that contribute to exceptional cargo carrying flexibility are the high ramp strength (now 320 tons) and 6.5-meter-tall main decks – both factors of key interest to breakbulk customers, according to Strevens.

On the technical side, an advanced engine control system allows optimum efficiency to be reached across a broad band of speeds, rather than a particular design speed, as tended to be the case previously.

FLEXIBILITY NECESSARY Strevens also outlined how flexibility has become steadily more important due to two tough realities of today’s ro-ro industry.

“First, the manufacturing base has fractured; more different types of vehicle are produced in more different countries than ever before. Filling a vessel with just one type of cargo in one port is unusual nowadays,” he said.

“Second, industry segments tend go through cycles, however those cycles are generally asynchronous, so being able to cater to a wide range of segments helps keep the decks full. In short, flexibility is fitness for fight.”

Alongside its marine operations, WWL has also leveraged its existing participation in global supply chains by expanding its overland services for auto exporters over the past decade.

LARGER SHIPS, LARGER LOGISTICAL CHALLENGES The arrival of the latest pure car and truck carriers, or PCTCs, carrying cargo volumes up to one-third larger than older fleets, presents a set of new logistical challenges and opportunities.

Key challenges relate to supplyside bottlenecks, and in particular vehicle storage and hinterland travel infrastructure surrounding car terminals, with many port facilities planning to upgrade existing infrastructure in order to maintain or increase vehiclehandling volumes over the coming years.

With a rising number of new car carriers calling at their facilities, Associated British Ports, or ABP, has witnessed a consistent double-digit annual increase in the number of vehicles handled by its facilities in recent years, according to Ann-Maree Andritsakis, ABP’s communications coordinator.

In light of this trend, ABP has plans 88 BREAKBULK MAGAZINE www.breakbulk.com

in place to build additional multistory car parks in Southampton and new compounds in its Humber ports, with investments likely to be in the region of £80 million to £100 million in the sector by 2020-21.

Robert Jan Timmers, business developer for breakbulk, Port of Rotterdam Authority, outlined the opportunities presented by the larger volume of vehicles carried by the latest PCTCs now frequently calling at Rotterdam with Japanese and Korean brand vehicles on a regular basis.

With the capacity to handle 450,000 cars annually and storage space for 42,000 vehicles, Rotterdam Car Terminal, operated by C.RO Ports, is already capable of docking automobile carriers of any size, with the greater width and cargo-carrying capacity of the new PCTC vessels already compatible with existing infrastructure.

According to Timmers, however, there are plans in place to upgrade the terminal and port infrastructure in an effort to ease any possible future supply-side bottlenecks, boost cargo volumes moving through Rotterdam, and improve the speed with which vehicles arrive at destination markets in Germany, Switzerland, Austria and the Czech Republic.

“C.RO Ports is focused on expanding the volume of new vehicles passing through the terminal and, based on this, new investments will take place on the terminal. There will also be a focus on the hinterland transportation infrastructure, with greater rail capacity being created at the terminal,” Timmers said.

“We would like to attract more car carriers and ro-ro services into the port of Rotterdam, and divert cargoes from competing ports,” he said.

ISSUE 4 / 2016

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“WWL has morphed into a full logistics company, with a third of our revenues now generated by land-based activities. As well as our shipping operations, we move and process several million cars inland a year,” said Strevens.

Other shipping firms and liners have also been moving to develop their ro-ro and PCTC carrying capacity in recent years, including Höegh Autoliners, which has so far received four out of six new PCTC vessels scheduled for completion by the end of 2016.

At 36.5 meters wide, just short of 200 meters long, and with a deck space of 71,400 square meters, Höegh’s New Horizon series was designed specifically with the enlarged Panama Canal in mind, according to the firm’s head of communications, Gabriela Stojicevic.

“The New Horizon class post-Panamax vessels are post Panama [Canal] vessels, meaning they are wider than the traditional PCTCs. With a wider Panama Canal, we saw the possibility to build the vessels wider and thus add capacity while keeping to 200 meters’ length,” she said.

“They have a capacity to take in 8,500 car equivalent units. This makes them the world’s largest PCTCs,” added Stojicevic.

Consistent with the latest WWL fleet, Höegh’s New Horizon vessels also benefit from increased flexibility and

THIS PAGE:

PCTC sizes may have reached a plateau, with increasingly globalized supply chains restricting further growth.

Top: WWL Right: Höegh Autoliners

90 BREAKBULK MAGAZINE www.breakbulk.com

a carrying capacity beyond the pure car and truck cargoes associated with traditional, older PCTC carriers. With enhanced ramp and deck strength, alongside five out of 14 hoistable decks, Höegh’s new PCTC series cater for cargo up to 375 tons and 6.5 meters in height.

Another feature of the advanced PCTC vessels is fuel efficiency and lower CO2 emissions. An optimized hull design and efforts to reduce heavy sea and wind resistance enables them to meet tougher environmental standards and regulations.

The new generation of wider, and inherently more stable vessels also has fewer ballast carrying needs, and a cor-

responding increase in fuel efficiency.

Höegh’s New Horizon series, for example, is estimated to emit 50 percent fewer CO2 emissions per car transported than the standard, older car carriers.

But ships sizes may have reached a plateau. The port terminal and operational restrictions on the inland seas of Japan limiting vessel length to 200 meters are just one factor limiting further growth.

The increasingly globalized nature of vehicle supply chains may also hold back the push for even larger vessels, with underdeveloped port infrastructure and shallower waters in the emerging market economies where many low value-added manufacturing operations are now concentrated.

To increase the overall efficiency of auto industry global supply chains and the delivery of vehicles to end market users, the effectiveness of port terminal management and infrastructure – notably regarding the capacity to handle increased cargo volumes of the latest generation of larger vessels – has therefore become increasingly fundamental to vehicle carriers and the wider auto industry. BB Mark Willis is a Dublin, Ireland-based freelance journalist specializing in politics and economics.

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trade notes

GREEN MACHINES Time Is Ripe For A Sustainability Initiative

BY MICHAEL KING

N

ot so very long ago, sustainability was the catch-all buzzword that companies large and small aspired to.

Green credentials, local community support, corporate philanthropy … much fell under the sustainability umbrella.

But what a difference a few years make. In contacting specialist carriers and freight forwarders for this article, 92 BREAKBULK MAGAZINE www.breakbulk.com

it was striking how few understood the concept of sustainable shipping and supply chains. Some admitted that even where they had a committed Corporate Social Responsibility policy and/or team, they either did not want to comment on the environment, or that sustainability did not apply to the internal breakbulk and project divisions.

One of the world’s largest transport companies with a major forwarding arm, said that while it had a very strong Corporate Social Responsibility, or CSR, policy

Norway-based Grieg Star is committed to zero emissions from its operations in the foreseeable future.

Credit: Grieg Star

covering all its energy and environmental activities – one which it did much to publicize especially related to reducing the carbon footprint of both its own activities and its customers – there were no project contracts in the pipeline or completed that were suitable to discuss.

A specialist shipping line that had previously been at the forefront of sustainability said it was not prepared to talk about its CSR policies, and had withdrawn from a high profile “green” shipping initiative. A spokesman refused to explain why.

A spokesman for a specialist forwarder bluntly put his inability to comment on sustainability down to cost-cutting. “Honestly, there are no green initiatives that I am aware of at the moment on major projects,” he said. “It is all about cost ISSUE 4 / 2016

trade notes

reduction, optimization and savings. If this happens to include a green Initiative at no cost then great, but I do not believe it is a driver at this present time.

“I remember there were some talks about this when the oil price was high and everybody had plenty of work, but nobody ever wanted to pay more for a ‘green’ logistics solution.”

When typhoon Haiyan wrecked 30,000 fishing boats in the Philippines in 2013, Grieg Foundation donated to help local fishermen build new fiberglass boats.

Credit: Grieg Star

SUCCESS AND LONGEVITY

SUSTAINABILITY STILL MATTERS For some in the breakbulk industry it was the increasing number of wind turbines destined for the North Atlantic.

For others it was the volume of thermosolar generators going to the Middle East, or the environmental protection cargoes, like flue-gas desulfurization towers, going to China. But for many it was simply the declining number of conventional power generation affreightments that first alerted them to a new sentiment emanating from some of their key stakeholders: that sustainability mattered. What’s changed?

Nothing, according to Ian Petty, general manager of Sustainable Shipping Initiative, or SSI. “Shipping across the board is facing increased attention to its social and environmental performance and the breakbulk sector is no exception.

According to International Maritime Organization estimates, in its 2014 Greenhouse Gas report, shipping is responsible 94 BREAKBULK MAGAZINE www.breakbulk.com

“From our experience, we know that there are plenty of opportunities for shipping to contribute to carbon reduction. For example, changes in vessel design and operation – such as new propellers and premium hull coatings – are data verified, cost effective, and available right now to be retrofitted or installed on newbuilds,” Petty said.

To take one example, through CNCo’s proactive approach to drive and enhance sustainability within its operations, from optimizing vessel speed and fuel consumption, to trim optimization, and Ship Energy Efficiency Management Plans, the company achieved a combined liner and breakbulk Energy Efficiency Operational Indicator equating to a normalized reduction in CO2 emissions of 8.6 percent in 2015.

“But equally importantly, by implementing those initiatives as well as harnessing efficiencies during day-today operations, they saved nearly US$5 million, or 5 percent of overall annual fuel costs,” Petty said. This achievement was also recognized by the Singapore Environmental Council as a merit winner of the SEC-MPA’s Singapore Environmental Achievement Award.

Ian Petty

Camilla Grieg

Sustainable Shipping Initiative

Grieg Star

for emitting nearly 940 million metric tons of CO2 annually, or about 2 percent of carbon emissions globally. And in contrast to dramatic reductions forecast in almost every other industry, shipping’s emissions are also predicted to grow 50 percent to 250 percent by 2050.”

SSI’s membership includes two members that have breakbulk and project cargo operations: China Navigation Co., or CNCo, and Maersk Line.

Other breakbulk operators have similarly bucked the trend of shunning sustainability in a down market.

Norway-headquartered Grieg Star pits success and longevity against a concomitant commitment to sustainability.

“The company has always felt an obligation towards society, but it is difficult to pinpoint a date and time for when we started to take an interest in sustainable business practices,” Camilla Grieg, CEO, told Breakbulk. “I think it is something that has grown on us over the last couple of decades. It is, however, obvious that the single-biggest threat to society in the future is the climate changes and environmental threats.

“It is simply good business to do what we can to keep the planet healthy. It does cost us more, but we look at this as an investment. The return is the possibility to continue to do business and build something good for the generations to come.”

The company publishes a corporate responsibility report each year and is ISSUE 4 / 2016

committed to zero emissions from its operations in the foreseeable future.

Key to this is reducing the fuel usage of its ships. The company’s 42-vessel fleet carries some 13 million tons annually, of which 60 percent is parcel and breakbulk cargo and 40 percent is dry bulk cargo. In 2015, the company burned 116,979 tons of heavy fuel oil, emitting 522,269 tons of CO2. After capping its emissions between 2007 and 2015 under the Energy Efficiency Operational Indicator, the 2015 goal was to reduce emissions measured by EEOI by 20 percent. In the end, emissions were cut by 19 percent, a shortfall primarily due to less use of eco-speeds as bunker prices fell.

Grieg Star has ambitious plans to further cut emissions through to 2050 with new targets in place to reduce sulfur and nitrogen oxide emission as well as emissions to water, the latter target likely to become easier to attain industry-wide once the International Convention for the Control and Management of Ships’ Ballast Water and Sediments is adopted and enters into force a year later. Grieg Star has already started installing the necessary equipment on its vessels to ensure compliance, and has also taken steps to reduce emissions on land by better managing waste onboard and by recycling waste at its offices wherever possible.

THINKING FORWARD The company has also invested in new battery technology which recharges cranes as cargo is lowered in much in the same way as an electric car charges its battery when braking. This reduces CO2, SOx, and NOx emissions and improves local air quality as well as speeding operations and cutting time in port.

Grieg Star has also entered into a partnership with multiple stakeholders to set up a new center – Smart Maritime – designed to become a world leader in reducing fuel usage and harmful emissions to the environment.

Located alongside Marintek in Trondheim, Norway, chair of the board is the head of Grieg Star’s

NO NEED FOR SPECIFICS ON SUSTAINABILITY The International Maritime Organithe project will be to help beneficiary zation, or IMO, does not have a specific countries limit and reduce greenhouse regulation covering sustainable shipgas emissions from their shipping ping. Instead it is part of an overarching sectors through technical assistance strategic aim and is covered by a patch- and capacity building,” said the IMO work of initiatives and rules which must spokesperson. then be adopted by member states.

“It will encourage the uptake of “You could argue that the whole innovative energy-efficiency technolorange of safety and prevention of polgies among a large number of users lution regulations support sustainable through the widespread dissemination shipping – keeping damage to the envi- of technical information and knowronment to the minimum and therefore how. This will heighten the impact of supporting sustainability,” said a technology transfer. We have received spokesperson. “The 43 expressions of technical cooperainterest to host the tion program is also Maritime Technol“You could argue that aimed at building ogy Cooperation the whole range of capacity to support Centers and cursustainable shipping. safety and prevention rently a short list is “Sustainable shipbeing drawn up.” of pollution regulations ping is built into the Other key legsupport sustainable IMO mission stateislation with strong ment and strategic environmental shipping – keeping plan, though you focus includes the damage to the might not find a speInternational Safety cific regulation which environment to the Management Code says ‘you must be minimum.” – IMO spokesman covering ship mansustainable/green’ in agement, ballast general terms.” water legislation One major IMO and, in terms of carproject is the GEF-UNDP-IMO Global bon footprint, Energy Efficiency Design Maritime Energy Efficiency PartnerIndex requirements for new ships ship Project, or GloMEEP, which aims aimed at reducing carbon footprints. to build understanding and knowledge In addition, the Ship Energy Efficiency of technical and operational energyManagement Plan, or SEEMP, has been efficiency measures to “lead maritime developed as an operational meatransport into a low-carbon future.” sure that establishes a mechanism to This two-year project involves 10 improve the energy efficiency of a ship. lead pilot countries – Argentina, China, “The SEEMP also provides an Georgia, India, Jamaica, Malaysia, approach for shipping companies to Morocco, Panama, Philippines and manage ship and fleet efficiency perSouth Africa – and aims to create formance over time using, for example, global, regional and national partnerthe Energy Efficiency Operational Indiships to build the capacity to address cator, or EEOI, as a monitoring tool,” maritime energy efficiency. The first the spokesperson told Breakbulk. national workshop under the project “The guidance on the development was held in December 2015. of the SEEMP for new and existing Another major initiative is an ships incorporates best practices for ambitious €10 million IMO-European fuel efficient ship operation, as well as Union Project on Capacity Building guidelines for voluntary use of the EEOI for Climate Change Mitigation in the for new and existing ships.”

Maritime Shipping Sector. This fourBoth the EEDI and SEEMP aim to year project aims to establish a global improve fuel efficiency and reduce CO2 network of Maritime Technology which in turn helps the broader sustainCooperation Centers. “The goal of ability of shipping. www.breakbulk.com BREAKBULK MAGAZINE 95

trade notes

project department, Vice President Jan Øivind Svardal. The vision of the center is to enable the Norwegian maritime cluster to be a world leader by 2025 in environmentally friendly shipping through the deployment of innovative technologies which are not only cost-, energy- and emission-efficient, but which also could benefit the bottom line of the maritime industry through studying, for example, hull and propeller optimization, power systems and fuel, and improvements in environmental and economic due diligence.

“Our contribution is both financial and by providing equipment, vessels and man power to drive the research forward,” said Camilla Grieg. “We believe this kind of partnership is vital to secure the future for our business and the environment.

“The obvious benefits of a more sustainable business are of course reduced emissions to air, sea and land. That benefits us all: customer, employee and owner.

We hope our customers appreciate our efforts, and that our employees take pride in what they do and achieve. But appreciation and pride is not why we do this – those are just pleasant side effects.”

OUTSIDE OF THE BOX Not all sustainability efforts need to be undertaken by a freight forwarder, carrier or engineering, procurement and construction management firm directly; sometimes giving up space on a ship or other means of breakbulk transportation can count towards sustainability goals.

Multipurpose vessel operator AAL not only has an active Corporate Social Responsibility program, which includes a range of sustainable shipping initiatives, it is also an active participant in 96 BREAKBULK MAGAZINE www.breakbulk.com

usually involves working with commercial shipping companies to reduce costs and Credit: AAL in its most recent project, AAL towed a plankton sampler on its normal routes to give a cost effective yet accurate picture of maritime health.

Kyriacos Panayides, AAL managing director, said the company got involved in the SAHFOS project after the charity approached the company’s managers. AAL’s regular Pacific sailings were the lure.

“We immediately agreed to help, as we felt it was an extremely worthwhile maritime environmental study,” said Panayides.

“Following a briefing, our own officers and crew were responsible for physically setting up the plankton recorder itself at the bow of the AAL Melbourne and monitoring its proper operation. We really liked the idea of doing something that engaged our officers and crews and allowed them to feel personally invested in helping the study go forward – we all enjoyed being part of it.”

AAL’s crew helped to install and run the plankton data project for SAFHOS.

Jan Øivind Svardal

Kyriacos Panayides

Grieg Star

AAL

SAHFOS, or Sir Alister Hardy Foundation for Ocean Science, an international charity operating the Continuous Plankton Recorder Survey, or CPR. The CPR Survey is the longestrunning marine biological survey in the world, with the data recording unit towed some 6.5 million nautical miles to date, allowing 5,500 samples of plankton to be analyzed each year. The indexes generated from the samples allow an accurate picture to be generated of changes in the temperature and pH of the marine environment – a key component of future ocean management strategies. Collecting samples

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trade notes

SAHFOS APPRECIATION

The efforts of the crew of the AAL Melbourne in collecting samples last year were of huge benefit, according to Sonia Batten, SAHFOS spokesperson.

“Climate variability, long-term climate change, fishing pressures, pollution and so on all change the marine ecosystem, so ongoing work is needed to record those impacts as they happen, and then work to understand their consequences for the ocean life we all value,” she said.

“As much as possible we want to keep monitoring on the same, or similar, routes because it rules out one source of variability in what we measure, and that’s one reason I was so pleased when AAL came on board.

“We had a 15-year time series of that trans-Pacific route from 2000 to 2014, and when the previous company ceased operating, I was left with at best a gap

98 BREAKBULK MAGAZINE www.breakbulk.com

in coverage, but the worst case was an end to the time series altogether.

The AAL Melbourne meant that we continued to collect data in 2015 and going forwards.”

While the research continues, Batten said data Sonia Batten collected from the SAHFOS Pacific has so far showed that plankton changed their population structure and seasonal timing in response to warmer or cooler than average conditions. Warm water species go further north when its warm, and the organisms peak earlier. “That could have serious implications for fish that are expecting

to find a certain type of food in a certain place at a certain time,” she said.

SAFHOS is keen to extend its research into the Arctic as an area that’s being impacted more than most areas by climate change.

Panayides said AAL had also supported other organizations over the past two decades, primarily through donations and sponsorships. The company recently commissioned a global study through its marketing and communications and QHSE departments to plan a longer-term and wider strategy for its CSR policy.

“Although the study is still ongoing, it will comprise of a centralized global fund raising campaign for an appointed charity, plus smaller regionalized campaigns to be activated by our regional hub offices,” he said. “These will be for the benefit of local environmental foundations and groups.

We are keen to give something back to

ISSUE 4 / 2016

those regions that support our operations and whose communities make up our local teams.

“It’s obviously quite a big project and needs a great deal of organization and moderation, but our teams are already quite excited about doing their respective parts.” Sustainability and environmental care will feature as an important part of this new CSR activity, he added.

conditions, fuel efficiency, environmental and similar factors are likely to be favored by customers and suppliers, including ports, financiers and insurers; today, and tomorrow.” BB

Michael King is an Asia-based specialist transportation and logistics journalist and consultant.

MORE NEEDS TO BE DONE While SSI’s Petty is encouraged by what he calls “enlightened businesses” taking sustainability seriously, he said that more needs to be done, and the uptake needs to encompass more of the industry. While low freight rates make sustainability less attainable, it should not be brushed aside completely.

“The breakbulk sector plays a critical, leading role in the global economy,” he said. “If it’s to retain that position, it will need to do more to reduce its greenhouse gas intensity, earn the reputation of being a trusted and responsible partner in the communities where it lives, works and operates, and proactively contribute to the responsible governance of the oceans.”

Acknowledging that financing can be the most sizable obstacle to adopting new innovations to improve ship efficiency, SSI’s members and partners have investigated means to improve access to finance in a way that de-risks the investment for ship owners, facilitates transparent negotiations, drives efficiency savings and rewards owners – yet still provides attractive returns for lenders.

The result has been a conceptual financial model Save as you Sail, or SAYS, which enables owners, charterers and financiers to model returns on investment and profits from more efficient vessels. It also comprises a set of legal considerations for third-party financing of the retrofit costs in the short-term time charter market. It’s just another tool in the sustainability toolbox and one that could ultimately improve business.

“If you’re not already adding sustainability criteria into your decision-making you are very likely to be missing significant opportunities for your business,” Petty warned. “Companies which can demonstrate a strong record on working

If it’s big and heavy, the Port of Lake Charles makes easy work of it.

Huge industrial plant components and oversize equipment arrive regularly at the Port by ship for transport to sites throughout the United States.

And overdimensional cargo manufactured in the U.S. is loaded aboard vessels at the Port of Lake Charles to ship out to world destinations.

The cargo-handling capabilities of the Port of Lake Charles and its strategic mid-Gulf location make it an easy choice for the region’s inbound and outbound project cargo.

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cargo lens

BREWING A REVOLUTION Craft Breweries Multiply, Along With Project Cargo Opportunities

BY ALAN M. FIELD

Credit: Shutterstock

A

100 BREAKBULK MAGAZINE www.breakbulk.com

ll across the U.S., craft breweries are on a roll. The number of craft brewers grew 15 percent to 4,225 breweries in 2015, as their share of the overall American brewery industry more than doubled from 5.7 percent in 2011 to 12.2 percent last year.

The prospects for growth continue to be bright, as more and more Americans, bored by conventional big-brand brews, turn to innovative products developed by the country’s small-scale craft breweries.

According to the Brewer’s Association, the trade organization that represents U.S. craft brewers, new craft brewers are entering the competition at the rate of two firms per day.

“It’s been a pretty good decade for craft brewers,” said Brewers Association economist Bart Watson.

A case in point is San Diegobased Ballast Point Brewing Co., founded in 1996, where sales volume is expected to double this year to almost 4 million cases, with net revenues hitting US$115 million, according to Constellation Brands, which acquired

Ballast Point last November for about US$1 billion.

All of this new activity is providing plenty of growth opportunities for heavy haul firms that specialize in providing transporting and logistics services for oversize cargo. One such firm is Triple R Transportation, based in Chadds Ford, Pennsylvania.

Last year, Triple R handled major shipments of brewing tanks for several major craft breweries around the U.S. “Triple R is very concentrated in the heavy haul industry, and the beer sector is one of its niches, based on our knowledge about how to do these tanks,” said Brett Robbins, vice-president of Triple R. He explains that many American craft breweries want to open their own brewing facilities on the U.S. East Coast, so they can “have a fresher beer to accommodate the production. It is much cheaper for them to ship to the East Coast if the brewery is on the East Coast.”

The tanks, which are used not only as fermenters for beer but also as cold storage of the beverages, are manufactured mostly in ISSUE 4 / 2016

Exactly the point T

he Port of Brownsville is the point where more steel crosses the border into Mexico than any other U.S. port.

More to the point, it’s the largest landowning port in the nation with 40,000 acres ripe for development. The U.S. LNG industry gets the point, too. Three LNG exporters are in the permitting process to build billions of dollars of infrastructure at the Port of Brownsville. Also pointing in the right direction is new legislation benefiting wind energy equipment providers and new unencumbered crude oil exports. The point is, the Port of Brownsville serves a growing consumption zone of more than 10 million people within a three-hour drive on both sides of the border with a costsaving heavy haul corridor and efficient rail.

It’s the most important international cargo transfer point on the Gulf of Mexico. The port that works – the Port of Brownsville.

Get the point?

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The port that works

cargo lens

20,000-gallon beer fermentation tanks sit on the quay at Port of Indiana-Burns Harbor before transportation to a Midwest craft brewery.

Credit: Ports of Indiana

Germany. Triple R’s Robbins notes that after crossing the Atlantic, each shipment of equipment arrives in the closest port to the destination brewery or to the port that is most suitable based on the proximity and routing. “We are asked [by the brewers] to bring the largest tanks that we can physically get to the brewery.” For example, Triple R experts recently traveled to a brewery in Canada to figure out the maximum size of tanks it could get there. The brewery was asking for tanks that were 20 feet, but when that turned out to be unfeasible Triple R suggested a smaller tank, maximizing the tank size while overcoming all obstacles.

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ROUTE LESS TRAVELED

The ultimate routing for such shipments often turns out to be surprising. On one occasion, for instance, Triple R did a job for a brewery located in Ohio, so “you might think that the best option would to bring it to an East Coast port,” Robbins said. “But in this case, we actually brought tanks to a southern port, rather than a typical East Coast port, allowing us to supply the brewery with larger tanks.”

Dealing with utilities can be another major challenge and can be just as costly as the loads themselves. This means dealing with existing wires and power lines, and cutting and trimming trees. Sometimes cable TV wires have to be moved in order to clear the route entirely.

To minimize risks, Triple R likes to haul the beer tanks on a perimeter frame on the lowest-possible trailer and supply the breweries with as many tanks as the company can deliver in a single day.

Adding to the challenges, the tanks are made of stainless steel, can cost as

much as US$100,000 each, and, because of their size, are extremely fragile. For bracing, the trucking firm uses saddles to secure these large tanks.

“It takes a lot of planning to lift it off the ship and lift it off the spreader bar.

You can damage them if you don’t pick them right,” said Robbins.

This type of cargo can come into the U.S. from any of the major Atlantic, Pacific or Gulf coasts ports, noted Jody Peacock, vice president at Ports of Indiana, which operates three ports in the state: Burns Harbor, Jeffersonville, and Mount Vernon. Last year, Lagunitas Brewing Co. in Chicago, one of the largest craft breweries, received 20 brewing tanks made in Europe through IndianaBurns Harbor, following on from a delivery of 29 such tanks the previous year. Last year, Indiana Burns Harbor has also handled 12 brewery tanks made in Europe for Bell’s Brewery in Kalamazoo, Michigan, and four more tanks for Revolution Brewing in Chicago.

ISSUE 4 / 2016

LEFT: Brewing tanks are discharged directly onto waiting trucks. / Credit: Triple R Transportation RIGHT: The Federal Kivalina transitions the Montreal Seaway, heading for the Great Lakes from Antwerp. / Credit: Ports of Indiana

The breweries chose not to use coastal Saint Lawrence Seaway and the Great ports – which could have complicated the Lakes. This routing means haulers do transportation – for those deliveries. “If not need to worry about driving oversize you bring it to a coastal port, and then this loads across 10 states to get to the Ameriis going to, say, the local Chicago market, can heartland. you are talking about a masPURSUING sively long barge service, PROJECT CARGOES for example, up from New Orleans and ridiculously difMichel Tosini, execuficult loading,” Peacock said tive vice president of Federal “With these oversize cargoes, Marine Terminals, which there are massively difficult operates stevedoring facilities issues to deal with. Permits, at Burns Harbor and 11 other power lines over bridges, North American ports, notes overpasses – it is ridiculous that the traditional cargo on just to think about the amount the Great Lakes has been steel. of nightmares.

“For as long as the St. “A lot of people look at Lawrence Seaway has been Indiana and say, ‘Isn’t it open, steel has been the far challenging to operate a port dominant type of cargo carthat is hundreds of miles ried. That commodity has from an ocean? But we flip fluctuated, especially in the that around, and say that we last 10 or 15 years, dramatihave a tremendous advancally from very high years of tage, especially as it relates tonnage to very low years of to project cargo and, in this tonnage. It was a conscious Lagunitas Brewing case, beer tanks. We can decision, not only from the Co., Bell’s Brewery offer a more efficient way to steamship side and terminal and Revolution all had move those cargoes into the side, to try to diversify our beer tanks delivered heartland of the country, cargo – more so in the last to the U.S. from as close as possible to the 10 years. Rather than just Europe via Indianaactual receiver.” the traditional steel carBurns Harbor.

Project cargo vessels goes, which are still there, carry such shipments all the we’ve really gone after other way from Europe to the Port of Indianakinds of breakbulk and project cargoes Burns Harbor, which is only 45 miles by – including a lot of wind energy comporoad to Chicago. By that point, the cargo nents,” Tosini said. has crossed the North Atlantic, come At Burns Harbor, brewery equipup the St. Lawrence River, and into the ment still comprises only a tiny share

of general cargo – perhaps 1 percent – compared with much higher volumes of lumber and steel, grain, chemicals, fertilizers, and other major cargoes. But while brewing tanks are still a small niche at Burns Harbor, they deserve attention because of the fashionable nature of the product, and their potential for further growth.

Peacock said that craft brews seem to be “the thing,” much like wind energy equipment was a few years ago, “when so many wind farms were going up, and there weren’t enough ports to handle all the blades [and other related components]. Now, in the last two years, we’ve seen brewery” activity that mirrors that phenomenon in the world of alternative energy.

When all is said and done, the best thing about craft brews is their unique appeal as a product. “We are all beer enthusiasts,” concludes Robbins. At Triple R, “we take pride in what we do, and it is special to think that you get to help deliver a tank that brews one of your favorite styles of beer. We think of ourselves as almost an extension of the brewery, because not only do we want to deliver it; when one of their tanks is in our possession, we treat it like it’s our own.” BB International news correspondent Alan M. Field has reported on trade, logistics and related technologies from numerous countries in North America, Latin America and East Asia (Japan, Taiwan and Korea) over the past two decades. www.breakbulk.com BREAKBULK MAGAZINE 103

port profile

NEW ORLEANS JAZZ Helm Changes Hands, Breakbulk Focus Remains

BY PAUL SCOTT ABBOTT

A

s Gary LaGrange prepares to step from the helm at the Port of New Orleans – but by no means retire from the industry – efforts are afoot to develop a new terminal that would further fortify the Mississippi River port’s breakbulk cargo muscle.

The idea of a dedicated breakbulk facility on a former shipyard property upriver from existing docks is certainly 104 BREAKBULK MAGAZINE www.breakbulk.com

something to get jazzed about, and putting the terminal’s development formally in motion by the time LaGrange retires from Port NOLA in April 2017 would augment an extraordinary legacy.

The new terminal, to buttress Port NOLA’s already impressive breakbulk offerings, is not yet a done deal. But a soon-to-be-completed port master plan is expected to favor it, while a separate KPMG financial feasibility study already has begun looking for privatesector partners.

“I’ve always said in my 41 years as a

port director that anybody can be a port director – all it takes is money,” said LaGrange, who began his career as the first director of the shallow-draft Port of West St. Mary in South Louisiana shortly after his 1975 graduation from the then University of Southwestern Louisiana, now the University of Louisiana at Lafayette.

LaGrange, who has been president and CEO at the Port of New Orleans since 2001, following stints leading the Port of South Louisiana and the Mississippi State Port Authority at Gulfport, ISSUE 4 / 2016

OPPOSITE PAGE: A 718-ton, 164-foot-long

absorption tower is moved from ship to barge under the eye of Coastal Cargo stevedores at Port of New Orleans’ Louisiana Avenue Terminal.

THIS PAGE: At the Port of New Orleans,

massive coke drums are discharged from an Intermarine vessel to a barge for transport to a refinery being built up the Mississippi River.

Credit: Port of New Orleans

seems confident that the attractiveness of the shuttered Avondale shipyard site – or at least a 33-acre portion of it – will be sufficient to bring in the requisite private investment.

EXUDING BREAKBULK POTENTIAL

Huntington Ingalls Industries, which has owned the 278-acre former shipyard site following spinoff from Northrup Grumman, wasn’t successful last year in advancing a joint venture for redevelopment with Houstonbased midstream energy firm Kinder Morgan, and it has since sought a seller willing to take the Gary P. LaGrange entire property. But Port of New Orleans no one has offered the US$100 million to US$150 million asking price.

LaGrange said he believes about 33 acres of the property, including two berths on 2,000 linear feet of waterfront, could be had for about US$30 million.

“That would allow you to bring two ships in right away, and you could begin

a breakbulk operation utilizing some of the laydown area in the balance of the 250 or so acres on the other side of the levee,” LaGrange said.

One use, he said, could be for bringing in and storing steel billets and nonferrous goods traded on the London Metals Exchange, or LME, for which the Port of New Orleans was certified for deliveries and warehousing in 1998.

While subject to cyclical downturns, LME business has largely flourished at Port NOLA, including at the port’s surge-controlled France Road wharf on the Industrial Canal.

In calendar year 2015, the port’s LME imports, led by a more than doubling of zinc volumes, were up 44 percent, to 499,287 tons from 345,886 tons in 2014.

For the same years, Port NOLA’s total import tonnage for steel, following an industrywide trend, slipped 7 percent to 3.27 million from 3.54 million tons, while forest product imports rose 22 percent to 157,981 tons from 129,499 tons, and natural rubber handled inched up 3.4 percent to 364,265 from 352,191 tons.

TAKING OVER THE REINS Brandy D. Christian, who has been chosen to succeed LaGrange, is equally excited about the promise the Avondale site holds for LME activity in particular.

“We’ve obviously seen great success with it around the New Orleans terminals but also throughout the rest of our jurisdiction, including Jefferson Parish, with a number of London Metals Exchange warehouses across the city and parishes,” said Christian, who joined Port NOLA in January 2015 as chief operating officer after 15 years at Southern California’s Port of San Diego, last as vice president of strategy and business development. “LME has been a real positive for the port.”

Christian said tracts situated back from the waterfront, which include several now-abandoned high-end warehouses, could be ideal for valueadded services related to imports and exports, perhaps using inbound raw products such as steel and rubber in light manufacturing of goods both for local consumption and outbound shipment.

In addition to metals, LaGrange envisions rubber, coffee and plywood among other commodities that may be moving through and being stored at the Avondale site.

The shipyard property is already served by one Class I railroad – Union Pacific – and a less-than-a-mile extension of the New Orleans Public Belt Railroad would bring ready access to five more Class I railroads. The site is on the Mississippi River’s West Bank, just upriver from the Huey P. Long Bridge, about 10 miles upriver from the port’s Napoleon Avenue Container Terminal on the East Bank.

“It’s not a suitable location for containers, but it is a very suitable location for breakbulk activity,” LaGrange said of the Avondale site, noting the height of the bridge is insufficient to permit passage of large container ships. www.breakbulk.com BREAKBULK MAGAZINE 105

port profile

WAITING IN ANTICIPATION

Later this year, when Moffatt & Nichol completes the port-wide master plan, port executives anticipate huddling with leaders of Huntington Ingalls and Jefferson Parish, in which the site is located.

Indeed, no one is more raring to see the shipyard property put back in use than Jefferson Parish officials. For many of its 77 years in design, building and repair of ships for the U.S. Navy and other commercial customers, the Avondale shipyard was one of Louisiana’s largest employers, often with more than 6,000 workers.

While the site may never again directly employ that many people, LaGrange said he sees it holding great promise for current and future breakbulk tenants of the port.

“It would make for a great push, even more so, into the breakbulk world than exists now, in and along the Mississippi corridor,” he said.

“Space is one of the big needs for the Port of New Orleans,” LaGrange said, adding that the port’s six current breakbulk facilities, under operators Ports America, Coastal Cargo, Empire Stevedoring and Seaonus, are “very adequate and plentiful for now.”

Christian said: “We have some great breakbulk tenants here. They’re looking to expand.

“We’re very fortunate, because we have Jefferson Parish right next door, where Avondale is, and they’re very

eager to see additional port growth in their jurisdiction as well. So I think that’ll be a big focus for us.”

WELL CONNECTED Meanwhile, LaGrange continues to focus for the coming months on moving Port NOLA forward in the breakbulk realm and on other fronts, extolling the benefits of being served by the six Class I railroads, located proximate to Interstate highway crossroads and, perhaps most of all, propitiously situated at the gateway to nearly 15,000 miles of inland waterways.

“By virtue of the Mississippi River, we feel as though we offer a huge breakbulk advantage when you bring products in like steel or even project types of cargo that are manufactured overseas and go over the side onto barge, because of the 14,500-mile network of navigable waterways that we can reach from here in 33 different states,” he said. “The sky’s pretty much the limit here when it comes to breakbulk and neo-bulk.”

Interestingly enough, a breakbulkrelated development – the George W Bush administration’s placing of big tariffs on steel imports in 2002 – was, according to LaGrange, what precipitated the present diversification strategy at the Port of New Orleans.

Under LaGrange’s leadership, the port has developed modern container, cruise and refrigerated terminals. Most recently, the port in April dedicated a US$25 million intermodal facility for efficiently

PORT IN NUMBERS

moving containers from the Napoleon Avenue terminal berths to inland destinations via the six Class I railroads.

Being CEO of the Port of New Orleans hasn’t always been easy – especially when Hurricane Katrina devastated New Orleans in 2005. But LaGrange gained global renown at the forefront of recovery efforts, getting the port back up and running just 12 days after disaster hit.

STILL IN THE GAME LaGrange, who has served on a host of prestigious boards and earned a wall-full of honors, may be leaving Port NOLA in April, but he has no designs on departing the maritime transportation industry.

“Retiring? Are you kidding me, man?” LaGrange said. “I’ll be just as busy, if not busier.”

LaGrange said he already has been voted to take over as executive director of the not-for-profit Ports Association of Louisiana. He said he plans to remain active in the American Association of Port Authorities, which he chaired in 2004-05, continue to serve on the U.S. Department of Transportation’s Marine Transportation System National Advisory Council and, in his role on the board of directors of New Orleans-based Delgado Community College, initiate a two-year maritime degree program at a 19,000-student institution and “maybe teach a few courses wherever there’s a need for an old adjunct professor.”

“I’m 70,” he said, “but I feel like I’m 50. I’m full of energy. My health is good.

Why should I quit? There’s no reason to quit. I’ve got too much gas left in the tank and too much to contribute.” BB

1.6 MILLION SQUARE FEET 9,541,260

of transit shed area for the temporary storage of breakbulk cargo

total general cargo (breakbulk and container) in short tons in calendar 2015

A veteran transportation writer for the past 40 years, U.S.-based Paul Scott Abbott specializes in maritime topics.

13,511 FEET of berthing space

available at six facilities tailored to breakbulk cargo Source: Port of New Orleans Illustration by Catherine Dorrough; source photo via Empire Stevedoring 106 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 4 / 2016

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carrier profile

PLACE YOUR BETS Zeaborn Wagers On Breakbulk Revival

BY MALCOLM RAMSAY

Credit: Shutterstock 108 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 4 / 2016

W

ith the breakbulk sector facing some of the most difficult operating conditions in recent years, the outlook from the majority of operators is pervasively downbeat.

Weak margins, low freight rates and poor productivity have led many firms to initiate cost-saving programs and reduce fleet size. But one company bucking this trend has been German shipper Zeaborn.

Breakbulk talked with Ove Meyer, managing director and co-founder of Zeaborn, to understand some of the drivers the firm sees for the breakbulk sector and how the dynamics in the industry are changing.

“There is certainly a lot of stress in the sector at the moment, but we believe there are definite opportunities and are very much on the lookout for acquisitions,” Meyer said.

“We are keen to not only expand our fleet, but also find technical and commercial management teams that can create opportunities. We are currently working on potential corporate acquisitions and strategic partnerships, but we can’t give details as yet,” he said.

CONTINUED FLEET EXPANSION Over the last 12 months, management at Zeaborn have pursued a relatively aggressive acquisition and expansion program in the multipurpose shipping sector through direct purchasing of vessels, cooperation agreements and corporate acquisitions.

The firm operates a fleet of 32 multipurpose vessels and two small dry bulk vessels that range in capacity from 7,700 to 22,000 deadweight tons. This fleet includes 31 vessels under commercial management and 11 vessels under technical management.

Recent investments have included: • A 50 percent stake in EMS ConBulk in January 2015.

• Ownership of shipping-related companies of the HC Group.

• A cooperation agreement with Carisbrooke Shipping for commercial management of vessels.

Zeaborn founders Jan-Hendrik Többe and Ove Meyer. / Credit: Zeaborn

• A newbuild program underway in China with six vessels ordered.

“Our target owned fleet is around 30 vessels within the 10,000-to-15,000 deadweight ton category. These will range in capacity from two times 80 tonne lifting gear up to 500 tonne combined lift capability,” Meyer said.

Headquartered in Bremen in the north of Germany, Zeaborn’s acquisitions are entirely financed by the company or via senior bank loan, giving the firm flexibility in its approach.

The six newbuild vessels Zeaborn ordered are committed to Intermarine on a time-charter basis and represent some risk exposure for Zeaborn. However, Meyer is optimistic about the opportunities developing in the market should the Intermarine contract expire.

“We see a need for next generation multipurpose vessels, and have a good exchange of ideas with companies in the industry to get an idea of what will be required,” Meyer said. “Our newbuilds have modified outreach, improved gears and larger hold sizes to help to accommodate the latest module sizes that will be coming.”

OIL RECOVERY

One of Meyer’s reasons for optimism in the face of current depressed market conditions is anticipation of a cyclical return for investment irrespective of oil prices.

With the recent slump in breakbulk demand driven, to a large degree, by the sharp fall in oil prices over the last year, the number of offshore oil and gas projects that are progressing to completion in 2016 has stuttered to a halt.

“The outlook for the sector is historically weak and I see no change in the third or fourth quarter this year.

There is a lack of volume, and in some geographical areas we find cases where freight rates don’t even cover loading and discharge costs. But for the oil and gas sector we expect a recovery in one and a half to two years,” Meyer said.

“This is driven not just by oil prices, but cyclical replacement, which requires reinvestment to be taken. The gas sector is already showing signs of returning to growth and we expect that to grow significantly in the midterm future,” he said.

If this cyclical investment is further boosted by a rise in oil prices from late 2017 onwards Meyer expects this could www.breakbulk.com BREAKBULK MAGAZINE 109

carrier profile

provide a significant boost for breakbulk demand that may catch competitors without sufficient capacity.

Meyer added that the need to replace aging assets is of significance, not just in driving demand for breakbulk transport, but also in creating opportunities within the existing fleet.

“Shrinking fleet structure will have some effect in the next one to two years with many multipurpose vessels being ready to go out of operations because of age or technical shape,” Meyer said.

‘OVERAGING’ AN OPPORTUNITY The effect of technical “overaging” due to low maintenance will become a more serious problem for operators and customers. Technical managers on behalf of the single vessel companies across the board have tried to reduce operating expenditure to avoid going into debt default and 110 BREAKBULK MAGAZINE www.breakbulk.com

Distressed assets in this has impacted the market present the maintenance “a major opportuof vessels, Meyer nity,” according to said.

Zeaborn.

With freight rates plummeting, Credit: Zeaborn many technical managers have not only sought to cut component maintenance costs, but also crewing has been reduced to lowest possible levels, which in turn impacts the condition and performance of ships.

While this is seen as a negative for many operators, Meyer views the current market as a buying opportunity reinforced by new requirements from banks and shareholders for transparency and efficiency.

The need for full, modern systems reporting packages and accounting structures, combined with structural legal requirements mean that many

smaller players are now finding operating costs prohibitive. By positioning Zeaborn to deliver transparent and efficient reporting and operating requirements the firm aims to offer new life for these fleets at lower price points.

“In terms of acquisitions and management, these new requirements have helped strengthen Zeaborn’s position,” Meyer said, adding that a wide skills base across the multipurpose sector has helped to differentiate the firm.

FAVORABLE GREEN WINDS While other industries have benefited from a shift to renewable investment in recent years, a convergence of factors have limited performance in the breakbulk sector. Although volumes for wind projects, and offshore in particular, have risen sharply, many multipurpose shippers have seen traditional breakbulk cargoes – such as turbine blades, nacelles and other large ISSUE 4 / 2016

br

ea

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KINKAI, LTD. • MORAN TOWING CORPORATION • MORRIS EXPORT SERVICES • MOUNTAIN CRANE • MSC MEDITERRANEAN SHIPPING COMPANY (USA) INC. • MULTIPORT SHIP AGENCIES NETWORK • NATIONAL AIR CARGO • NATIONAL OILWELL VARCO • NAVICO CHARTERING INC • NAVIEROS & CONSIGNACIONES, S.A. DE C.V. • NCSG CRANE & HEAVY HAUL SERVICES • NEFAB PACKAGING • NEK GROUP • NEW ENGLAND STEAMSHIP AGENTS, INC. • NHH SERVICES, LLC • NHS - NOVA HESSE-NOORD NATIE STEVEDORING NV • NICKEL BROS INDUSTRIAL MOVING • NOBLE ENERGY INC. • NOOTER ERIKSEN INC. • NORD-SUD SHIPPING, INC. • NORFOLK SOUTHERN • NORTH CAROLINA STATE PORTS AUTHORITY • NORTHWEST LOGISTICS HEAVY HAUL • NORTHWEST SEAPORT ALLIANCE • NORTON LILLY • NORTON LILLY INTERNATIONAL • NOVATECH • NOVATECH APS • NPC PROJECTS AS • NUCOR • NYK BULK & PROJECTS CARRIERS LTD • ODESSA PUMPS • OMEGA MORGAN • ONCOR ELECTRIC DELIVERY • OPERADORA PORTUARIA CENTROAMERICANA S.A. DE C.V. • ORION SLM • OSOAN GHANA, LTD. • OSPREY LINE, LLC • OXBO MEGA TRANSPORT SOLUTIONS • PALERMO PORT SOCIETY • PALLETIZED TRUCKING INC. • PALMETTO RAILWAYS • PANALPINA, INC. • PANAMA CITY PORT AUTHORITY • PARSONS BRINCKERHOFF • PASHA HAWAII • PASHA STEVEDORING • PASHA STEVEDORING & TERMINALS • PEOPLEREADY • PERKINS SPECIALIZED TRANSPORTATION CONTRACTING, INC. • PHILADELPHIA REGIONAL PORT AUTHORITY • PHOENIX INTERNATIONAL • PIAZZA TRUCKING • PORT CANAVERAL • PORT CONTRACTORS, INC. • PORT EVERGLADES • PORT FREEPORT • PORT MANATEE • PORT OF ALBANY • PORT OF ANTWERP • PORT OF BALTIMORE • PORT OF BEAUMONT • PORT OF BELLINGHAM • PORT OF BILBAO • PORT OF BROWNSVILLE • PORT OF CLEVELAND • PORT OF COEYMANS • PORT OF CORPUS CHRISTI • PORT OF EVERETT • PORT OF GALVESTON • PORT OF HOUSTON AUTHORITY • PORT OF LAKE CHARLES • PORT OF LONG BEACH • PORT OF LONGVIEW • PORT OF LOS ANGELES • PORT OF MARSEILLE FOS • PORT OF NEW ORLEANS • PORT OF OLYMPIA • PORT OF PALM BEACH • PORT OF PASCAGOULA • PORT OF PORTLAND • PORT OF PRINCE RUPERT • PORT OF ROTTERDAM • PORT OF SAN DIEGO • PORT OF SAN FRANCISCO • PORT OF STOCKTON, CALIFORNIA • PORT OF VANCOUVER • PORT OF VANCOUVER USA • PORT OF VIRGINIA • PORT TAMPA BAY • PORTREP CONSULTING GROUP, LLC • PORTS AMERICA • PORTS OF INDIANA • PORTUS • POSEY INTERNATIONAL • PRECISION SPECIALIZED DIVISION INC. • PREMIER BULK STEVEDORING • PROJECT LOGISTICS PROFESSIONAL • PSC CRANE & RIGGING • PUERTO DE BARRANQUILLA • Q-LINE TRUCKING LTD. • QC LOGISTICS • QINGDAO YUEDASITE RIGGING CO., LTD • QSL - QUEBEC STEVEDORING COMPANY, LIMITED • QUEBEC STEVEDORING COMPANY, LIMITED • R. STIGLICH S.A. • R.H. SHIPPING & CHARTERING • R&L TRANSPORT, C.A. • RAILWAY INDUSTRIAL CLEARANCE ASSOCIATION (RICA) • RANGER LIFT TRUCKS • RE-TRANS INTERNATIONAL • RED FLAG CARGO • REDBACK INDUSTRIES • REDHOOK TERMINALS • RELIANCE AGENC. SERV. PORTUARIOS • RICA-HLI • RICA-HLI LOGISTICS • RICA-KASGRO RAIL • RICA-TRANSPORTATION CONSULTANT • RICHARDS TRANSPORT • RICHARDSON STEVEDORING & LOGISTICS SERVICES, INC. • RICKMERS-LINIE • RICKMERS-LINIE (AMERICA) INC. • RICKMERS-LINIE & NPC PROJECTS • ROANOKE TRADE • ROCK-IT CARGO LLC • ROLL GROUP • ROLLIT CARGO NV • ROYAL SMIT TRANSFORMERS B.V. • RUBB BUILDING SYSTEMS • RUKERT TERMINALS CORPORATION • RUSLAN INTERNATIONAL LTD. • RYANO LOGISTICS & PROJECTS • SACKSON LOGISTICS & FREIGHT CONSULT GHANA • SACKSON LOGISTICS & FREIGHT CONSULT GHANA, LTD. • SAFE CARGO • SAGA WELCO • SAILBOND LOGISTICS • SAIPEM • SALZGETTER MANNESMANN INTERNATIONAL • SALZGITTER MANNESMANN INTERNATIONAL GMBH • SANTINI EXPORT PACKING CORPORATION • SARENS GROUP • SARJAK CONTAINER LINES PVT. LTD. • SASPAK CARGO (PVT) LTD • SCHEUERLE FAHRZEUGFABRIK GMBH • SCHUMANN CONSULTING GROUP LLC • SEA CARGO AIR CARGO LOGISTICS, INC. • SEA MARINE TRANSPORT LLC • SEAONUS • SEAONUS & PORTUS • SEAPORTS OF NIEDERSACHSEN GMBH • SEASPAN ULC • SENNEBOGEN LLC • SENTINEL CORROSION SERVICES • SHANGHAI UNION LASHING CO. LTD • SHANGHAI UNION LASHING CO., LTD • SHAWCOR • SHELL • SHELL CANADA LIMITED • SHELL CHEMICAL COMPANY • SHELL EXPLORATION & PRODUCTION COMPANY • SHELL GLOBAL SOLUTIONS US INC. • SHELL INTERNATIONAL EXPLORATION & PRODUCTION • SHELL UPSTREAM AMERICAS • SHENZHEN HUAYUAN INTERNATIONAL LOGISTICS CO., LTD • SHIPPERS PRODUCTS • SIEM CAR CARRIERS • SIEMENS • SIEMENS - POWER AND GAS • SIEMENS ENERGY • SIEMENS-POWER AND GAS • SINGLE POINT LOGISTICS • SLADE SHIPPING, INC. • SMT SHIPPING • SNC-LAVALIN - PRODUCTION&PROCESSING SOLUTIONS, O&G • SOLAR TURBINES INC. • SONCHIA CHARTERING OF COLORADO, INC. • SOUTH ATLANTIC GULF COAST DISTRICT ILA • SOUTH CAROLINA PORTS AUTHORITY • SOUTH CAROLINA STATE PORTS AUTHORITY • SOUTH JERSEY PORT CORPORATION • SOUTHEASTERN SHIP TERMINAL • SPECIALIZED CARRIERS & RIGGING ASSOCIATION (SC&RA) • SPLIETHOFF GROUP (SPLIETHOFF & BIGLIFT) • SPRAGUE OPERATING RESOURCES • SPRAGUE OPERATING RESOURCES LLC • SPRUNG STRUCTURES • SQUAMISH TERMINALS • SRT TRANSPORTATION SOLUTIONS • SSA MARINE • ST. LAWRENCE SEAWAY MANAGEMENT CORPORATION • STATE SERVICE HOLDINGS • STEELRIVER • STEVENS TRANSPORTATION LLC • STEWART WORLD PORT • STRANG SYSTEMS • SUBSEA7 • SUPER HAROON GOODS TRANSPORT COMPANY • SWAN TRANSPORTATION SERVICES LTD • SWAN TRANSPORTATION SERVICES, LTD • SWIRE SHIPPING INC. • T. PARKER HOST INC. • TAL INTERNATIONAL CONTAINER CORP. • TAM INTERNATIONAL INC. • TATA INTERNATIONAL • TATA STEEL INTERNATIONAL • TAUREL CIA & SUCRS, C.A • TAYLOR MACHINE WORKS, INC. • TECHNIP USA INC. • TECON SALVADOR • TENARIS USA • TERAS CARGO TRANSPORT (AMERICA), LLC. • TEREX PORT SOLUTIONS • TERMINAL LINK • TEXAS TERMINALS • TFW DWC LLC • TGP LOGISTICS INC • TGS CEDAR PORT PARTNERS • THE DIPLOMAT GROUP LLC - DFS • THE NORTHWEST SEAPORT ALLIANCE • THE ROBBINS COMPANY • THERMAL ENGINEERING INTL - BABCOCK POWER • THORCO SHIPPING • THYSSENKRUPP STEEL NORTH AMERICAS INC • TOTE MARITIME • TOTRAN TRANSPORTATION SERVICE LTD. • TRADELOSSA • TRAK TRANSPORTACIONES SA DE CV • TRANS AMERICAN TRUCKING & WAREHOUSE • TRANS GLOBAL PROJECTS • TRANSACTION PACKING, INC. • TRANSMARINE NAVIGATION CORP • TRANSPAC MEXICO • TRANSPAK • TRANSPORT BELLEMARE INT’L INC. • TRANSPORT BELLEMARE INT`L INC. • TRITON TRANSPORT LTD. • TRUEBLUE • TULSA PORT OF CATOOSA • UNIFIED LOGISTICS HOLDINGS, LLC • UNION PACIFIC • UNITED HEAVY LIFT - AMERICAS • UNIVERSAL AFRICA LINES (UAL) • UNIVERSAL LANDSEA TRANSPORT, INC. • UTC OVERSEAS, INC. • VALUE FREIGHT (MUMBAI) PVT LTD • VANBREDA RISK & BENEFITS • VANTAGE LOGISTICS CORP. • VERICLAIM, INC. • VERSTEGEN GRIJPERS B.V. • VICTORIA PROJECT CARGO • VIMAR GLOBAL • WAGENBORG SHIPPING B.V. • WAIVER LOGISTICS LTD. • WALLENIUS WILHELMSEN LOGISTICS • WATCO COMPANIES, LLC • WCS PERMITS • WEATHERFORD INTERNATIONAL • WECO RORO • WEEKS MARINE INC. • WEISS-ROHLIG USA LLC • WELL VERSED CONSULTING, INC. • WEST COAST PACKER & PORT SERVICES, LTD. • WESTINGHOUSE ELECTRIC COMPANY • WESTROCK • WOOD GROUP MUSTANG • WORLD LOGISTICS SERVICES CORPORATION • WORLD TRADE DISTRIBUTION • WS MARITIME SERVICES • XL SPECIALIZED TRAILERS • XLPROJECTS • YARD MULE SPECIALISTS, INC. • YUSEN LOGISTICS (AMERICAS), INC. • ZILKHA BIOMASS ENERGY • ZMAC TRANSPORTATION SOLUTIONS • ZUIDNATIE NV (AS OF AUGUST 15, 2016)

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WHO WILL YOU MEET

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AT BREAKBULK AMERICAS?

The largest exhibition in the Americas for the project cargo industry

See a comprehensive preview of the event, including a handy checklist to track your meetings.

breakbulk.com/americas-preview

SEPTEMBER

26-29 2016

at the

GEORGE R. BROWN CONVENTION CENTER in

HOUSTON,

TEXAS

carrier profile

ZEABORN IN NUMBERS Zeaborn splits its multipurpose activities according to six verticals.

8%

vehicles

13%

mining and civil engineering

17%

bulk metals

30%

general heavy-lift

21%

green energy

19%

oil and gas

components – being shipped by bulk, container or roll-on, roll-off ships instead.

“In the offshore wind sector the trend towards larger and larger turbine sizes is a real positive for the multipurpose sector. Whereas container and bulk operators have managed to take some business recently, the larger turbine sizes will prove impossible to lift and carry without a multipurpose vessel, and this will help to drive up demand,” Meyer said.

Zeaborn splits its multipurpose activities according to six verticals of which general heavy-lift accounts for the largest share at about 30 percent. The remaining verticals are green energy

112 BREAKBULK MAGAZINE www.breakbulk.com

which accounts for around 21 percent, oil and gas at about 19 percent, mining and civil engineering at 13 percent, bulk metals at 17 percent and vehicles account for the remaining 8 percent of demand.

“Of these, we see green energy and general heavy-lift showing the greatest potential for recovery and in the longer term oil and gas as well,” he said.

FACING FINANCIAL CUTS As multipurpose volumes slowly pick up over the medium-term, Zeaborn sees demand for vessels improving, but the current global asset base still faces a number of challenges in order to realize potential.

Given the current underutilization of multipurpose ships many vessels that have next to no operational value at present are nonetheless sitting on balance ledgers at unrealistic valuations, according to Zeaborn.

“On the asset side the number of distressed assets in the market at present is a major opportunity. Many of these are on paper at above-market value and will require serious restructuring or insolvency. But banks are reaching their limit to take the haircut necessary at the moment,” Meyer said.

The resistance of banks to avoid taking a hit on their asset portfolios is something Meyer expects to change over the next three years as vessels enter the later stage of their lifecycle.

“It will be interesting to see what happens in the next three years as many banks need to have a change of mentality if they want to realize any return from these assets. The average age of multipurpose vessels on the seas is already 15 years and if these underutilized ships are not divested in the next three years they will be essentially worthless.”

With several years of difficult operating conditions predicted, Zeaborn is well aware of the high-risk nature of the market, but sees great opportunities for

ISSUE 4 / 2016

those companies that can manage their costs efficiently.

“It is about finding the right balance in risks and the flexibility in the business model between time charter and own-risk as well as having the right technical management and skills to adapt,” Meyer said.

The fact that many of Zeaborn’s competitors are underperforming will make it easier for firms like Zeaborn to acquire the fleet they need, he added.

With growth in component size for large-scale energy and infrastructure projects helping to shift demand back towards dedicated multipurpose shipping Zeaborn does not expect the need for responsive fleets to diminish.

“With all the talk of recession and unprofitability, people can forget that the world economy as a whole is growing and world demand is growing and that creates opportunities for operators that are positioned to take advantage,” Meyer said.

Based in the UK, Malcolm Ramsay has a background in business analysis and technology writing, with an emphasis on transportation and ports.

SHIFTING GLOBAL DYNAMICS ALTER OPTIONS While the slowdown in breakbulk demand has been felt widely throughout the globe, the changing market forces between geographical regions has had unforeseen effects on multipurpose rates, offering both risks and opportunities.

Zeaborn sees Asia as the only stable market at the moment, but even there, prospects are changing.

“Whereas we used to see traffic to and from Asia worldwide, we have recently seen a huge change. The major trade is now from Asia to the U.S. Gulf, but this creates huge problems for the return leg,” Zeaborn’s Ove Meyer said.

“One of the big issues for the sector at the moment is that in many cases vessels are stranded there with no onward contract, or have to be returned to Asia under ballast, cutting into costs.”

Past routes that took vessels from China via the Gulf to South America and then on to Australia before returning to China are now harder to find, resulting in a higher breakeven point for cargo carriers.

With hub operations in Venezuela drastically curtailed and low demand

New York City: (718) 392-0800 Long Island: (516) 937-1523 New Jersey: (973) 391-9700

for onward journeys from the U.S. Gulf, Zeaborn expects new routes will have to emerge as Latin America stagnates.

“We see Brazilian import still weak, and while there is some sign of growth in wind energy in South America, we don’t expect any significant uptick across the region at the moment,” Meyer said.

Africa and Australia, both of which were until recently powerhouses for energy infrastructure growth, have also suffered in recent months due to the collapse in oil prices. But in these regions Zeaborn sees potential for a return to growth in the longer term.

“There is big potential for Africa and Australia if the oil prices recover, but a lot also depends on efforts in the oil and gas industry to increase efficiency,” Meyer said.

“Production costs have already been significantly reduced and the big question at the moment is whether players see sense in replacing aging facilities that are still producing. If those reinvestments to build new facilities take place that will be a huge driver for breakbulk operators.” BB

Connecticut: (203) 785-8000 Rhode Island: (401) 349-2755 Massachusetts: (617) 888-8636

www.baycrane.com info@baycrane.com www.breakbulk.com BREAKBULK MAGAZINE 113

case study

UNCONVENTIONAL COVER Temporary Storage Pushes Design Boundaries

Temporary and semi-permanent cargo storage structures vary greatly in dimensions, materials and cost. Larger, wider designs of temporary structures are in great demand.

Credit: Norseman Structures

114 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 4 / 2016

BY LORI MUSSER

F

rom amphibious mobile abodes to foam-coat pop-up retail stores, alternatives to permanent structures abound. That is particularly true in the breakbulk and project cargo sectors, where cost and speed to build-out are winning converts to large-scale temporary and semipermanent structures for cargo storage and protection.

Rubb Inc. pioneered the manufacture of fabric structures in Norway in 1968 and has fanned out globally. Chuck Auger, marketing manager of Rubb USA, said that larger, wider designs are in great demand. He said, in the past, width had been a constraint, but, “we just cracked that barrier with a building that opened a few weeks ago; it is 300 feet wide.”

Temporary structures are used by diverse industries, and in diverse locales – from boreal forests to deserts, and from the Arctic to typhoon belts, as membrane buildings have proved to be surprisingly adaptable to harsh environments.

Last year, a Rubb structure used by ADS Inc. survived super-typhoon ChanHom in Okinawa. ADS’s David Wilde reported: “Peak gusts were clocked between 80 and 110 miles per hour …

There is absolutely no sign of any damage or wear, and there are no issues to report.” The 50-foot by 60-foot “Rubb BVR” was engineered to withstand wind gusts of up to 212 miles per hour.

In June 2016, Rubb USA completed a 32-foot by 97-foot structure for the National Science Foundation at CH2M Polar Hill Services’ Summit Station in Greenland. Located on an ice cap with an altitude of 10,600 feet and an air temperature that can fall below -100 degrees Fahrenheit, Summit Station was a supply chain challenge. The building was delivered on a U.S. Air Force C-130 equipped with skis. The structure’s cladding is R-35 rated “Rubb Thermohall” with eight inches of Temporary buildings high density insuare being built in an lation. The PVC expanding variety of sheets were pulled styles and profiles. onto the frame by Credit: Rubb Inc. snowmobile.

DIFFICULT TO DEFINE

With no hard-and-fast definition in place, temporary and semipermanent cargo storage structures vary greatly in dimensions, materials and cost. Tension membrane/fabric structures are perhaps the most familiar, but structures built of aluminum and other materials are also widely available.

Because the industry is not clearly defined, public perceptions are hazy.

There are a handful of associations that work to educate and elevate standards and integrity, such as Canada’s Membrane Structures Manufacturers Association.

Some industry observers feel the sector is more about moveable structures than temporary ones. This makes sense in locales where property tax laws are kinder to real estate that is not defined as permanent, and for applications such as mobile military equipment covers.

The quandary created by the ersatz “temporary structure” brand stems from the fact that most industry participants design strong, reliable and durable products perhaps more appropriately categorized as “rapid install.” Further, individual manufacturers often make a variety of products, or make products that blur the lines between membrane and conventional buildings, or between temporary and permanent structures.

Craig Stewart, director of marketing for Saskatoon-based Norseman

Structures, confirmed: “There is a new leaning toward the hybrid approach, such as a structure with steel sidewalls and a fabric roof.”

While brick-and-mortar facilities will always have a solid place in supply chain management, temporary structures have a place too. Project bids, finances, environmental regulations, or other regulatory stipulations may necessitate a temporary structure. Stewart said projects may require a “pack in, pack out” logistical proposition.

Of course, a temporary structure may simply be a sound business decision.

In general, membrane buildings are built in an expanding variety of styles and profiles. They can accommodate tunnels, doors, windows, ventilation, pipes, ducts, conveyors and mechanical systems. Foundation work is often minimal – they can be built on slabs, piles, blocks, posts or beams.

A DEEPER LOOK At first blush, outsiders might be tempted to judge temporary structures harshly. However, on numerous elements they outperform conventional counterparts, according to Rubb’s Auger. They offer speedy construction and, typically, a clearspan interior space. Membrane structures also offer natural diffused lighting and a unique response to fire that can be a selling point. Fabric buildings can be used to keep cold out, or in, and are stepping into the cold storage arena.

www.breakbulk.com BREAKBULK MAGAZINE 115

case study

BRIDGING THE FLEXIBLE STORAGE GAP The membrane structure industry continues to redefine itself with new designs and innovations.

In Montreal, SSLC, a consortium of SNC-Lavalin, Flatiron and Dragados Canada, contracted Norseman Structures to provide eight buildings to cover the casting and curing of concrete piers for the new Champlain Bridge. The new bridge, built alongside the existing 1960s bridge, includes multiple corridors for vehicular traffic, pedestrians, bicyclists and future light rail transit.

Here, four 50-foot-wide by 48-foot-long and four 55-foot-wide by 50-foot-long steel-framed, fabriccovered buildings totaling 20,000 square feet of covered clearspan were custom designed to mount on rails. They were rolled and nested within each other affording easy access to the piers for large equipment, and allowing SSLC to avoid costly construction delays due to cold winter temperatures.

The buildings were delivered in December 2015, and bridge construction was completed in April 2016.

Elsewhere in Canada, Norseman was chosen by Encana/Veresen to supply five structures to develop the Cutbank Ridge natural gas processing plant in Dawson Creek.

The structures included two heated units used for material storage, two for cold storage, and one for emergency equipment storage.

HVAC, insulation, electrical, pallet racking and appropriate foundational elements – in this case, a concrete

block and screw pile foundation – were part and parcel of the project to meet extensive Health, Safety & Environment requirements. In a twist, Encana required flexible financing in the form of a lease agreement.

In the UK, Spaciotempo recently provided a temporary solution for an import cargo testing and storage facility at the Port of Felixstowe, during ramp-up for a permanent facility.

The 25-meter-by-25-meter storage structure was linked to five retractable tunnels that could be operated independently, providing a versatile protective environment.

The structure featured hardpressed aluminum with a snow and wind load equivalent to that of permanent buildings, according to Spaciotempo. It also offered a rigid PVC cavity wall system, a double-skinned insulated roof, and rollershutter doors.

In a similar application, Spaciotempo provided an on-site storage solution to UK-based Sterling Solutions, a communications and print materials company that wanted to control logistics and storage of highend rolled paper. Their Spaciotempo solution, this time a PVC-coated fabric structure, maximized storage height of reeled paper stock.

In the U.S., at the Port of Freeport, Texas, ClearSpan was recently tasked with providing covered marine cargo and personnel space that would meet the test of heavy seasonal weather. To meet the brief, it provided its “Hercules Truss Arch Building” in a 72-foot wide by 120-foot long configuration.

A solution was needed to address the costs related to shutting down during inclement weather costs. The Red Hook facility has withstood three major storms since installation.

Installation time for a temporary structure is sometimes measured in days, a timeframe of particular interest to disaster response planners. UK-based Spaciotempo sells a range of off-the-shelf temporary modular buildings, called TempAstor, that are marketed as instant storage – with ordering and installation promised within 48 hours.

For fabric structures, many companies fully or partially pre-manufacture supports, and the lightweight membrane installs quickly. This allows buyers to save on construction costs, according to Geoff Ching, national sales manager of Connecticut-based ClearSpan Fabric Structures.

Light transmission through the membrane is a key benefit. During visits to conventional facilities, Auger said he has been struck by working environments that are sometimes incredibly dark: “Our fabric roofs are so translucent that you don’t have to turn on the lights.” In additional to savings on lighting, the health and safety benefits of naturally lit working conditions may be an important consideration.

Fabric also provides acoustical advantages, and it filters out ultraviolet rays, which is beneficial to cargoes jeopardized by photo-degradation, such as high-end paper products.

Most conventional buildings require interior supports that can limit available floor space and storage area, and interfere with machinery movement and stacking; a membrane structure’s clearspan floor space can improve operational efficiency.

Despite the “temporary” nomenclature, fabric and other quick-to-install buildings are usually very durable. Permanence hasn’t been an issue for Sprague Energy’s fabric structures at the Port of Portland, Maine – the oldest is more than three decades old, and it is still flying its original skin, although assistant terminal manager Jeff Brawn said it may be time to consider a new membrane.

SWITCHING USES The original Champlain Bridge. Norseman will provide eight buildings to cover the casting and curing of concrete piers for the new bridge.

Credit: Shutterstock 116 BREAKBULK MAGAZINE www.breakbulk.com

The use of temporary or semipermanent structures can expedite the return of a project site to another use. Similarly, the design and material choice for temporary structures can offer energy efficiency through translucence and provide energy offsets and financial savings.

According to Stewart, industries like agriculture, mining and oil and gas ISSUE 4 / 2016

sometimes pick up a temporary building after a period of time, move it out, and leave things almost as initially found. Like the conceptual Jagnefalt Milton “Switching City” – a metropolis created on the dimensions of railway cargo that is rolled in and out by rail according to seasonal needs – the advantages of temporary buildings show great potential to streamline dismantling at project sites.

Perhaps the most important consideration in choosing a temporary building is cost.

Stewart said that overall project cost is almost always less than that of conventional buildings; savings accrue from speed and cost of construction, cost of foundation, and cost of ongoing maintenance, which is reportedly minimal.

Fabric structures serve breakbulk and project cargo needs at many points along supply chains, but not all. Fixes for this are in the works.

Structural widths are increasing and manufacturers are building height, adding mezzanines and topside crane rails.

Brawn said: “One of our buildings has a 42-foot height – the sky’s the limit.”

Also, while membrane buildings work well in fenced or secured complexes such as ports, they can be cut open with a pocket knife. Norseman’s Stewart acknowledged the security concern. He said: “You can design around that, but it can’t be a bank. Fabric buildings are typically made more for industrial than commercial applications.”

They can also be punctured by equipment, cargo or debris. The fabric buildings at Sprague Energy, which handle baled wood pulp, rolled newsprint and other commodities, occasionally require patches. However, Brawn said: “It can take a few years to even get a pinhole. In a few minutes, with a piece of fabric and some 3M spray glue, you can fix it up like a Band-Aid, and the patches hold up nicely.”

The steel superstructures for membrane buildings typically serve well, with the exception of applications in highly corrosive environments. Recognizing an opportunity, Norseman has developed a

Fabric buildings are typically made more for industrial than commercial applications.

Credit: Rubb Inc.

steel-coating solution for the most corrosive environments and is standing behind the new product with a 25-year warranty.

Likewise, Auger said that one of Rubb’s market advantages has long been its hot dip galvanization – steel is first fabricated into trusses, legs, etc., and then sent out for galvanization, ensuring no welds are exposed and thereby thwarting rust.

ADDING TO THE LINE There are also expanding options in temporary structures addressing temperature, humidity, access, portability, design, finance, re-use, and aesthetics, as manufacturers present a plethora of innovative products to meet specialized demand.

They present new materials, new designs and other value-added propositions. Ching said ClearSpan’s latest Hybrid Building combines steel sides and end walls with a fabric cover, its Commodity Building offers open sidewall access up to 14 feet high for trucks and loaders (as well as concrete dividers to keep aggregate materials separate) and its Monoslope Building has a lower roof pitch and steel

roofing. Auger added that Rubb is also lining up new products, and is looking far afield to new geographical markets.

Some clients have concerns about the look of temporary structures as their bland aesthetics don’t suit every site.

Stewart said Norseman is on top of that concern: “We can print anything on PVC and there is an important niche for that.”

Landscaping and hybrid designs also address aesthetics.

However, despite remarkable accomplishments, concerns remain and the industry has some ways to go to alleviate concerns related to snow slides off roofs, interior sweating and dripping, loss of translucence when insulated, and loosening fabric.

But the biggest issue facing the industry may well be the enduring term “temporary structure,” which conjures up images of glorified tents.

“We need a new way to describe these things to change perceptions from the get go,” Stewart said. But, he added, there is a tried-and-tested fix for the image issue: you only need to step inside a fabric building to see that they are “not like anything you imagined.” BB Based in the U.S., Lori Musser is a veteran shipping industry writer. www.breakbulk.com BREAKBULK MAGAZINE 117

best practices

SHUNTING SAFETY FORWARD Rail Industry Must Get On Track With HS&E

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t this year’s annual Railway Industrial Clearance Association, or RICA, conference in Nashville, Tenn., UTC Overseas proposed the formation of a new RICA Health, Safety & Environment Committee.

Formed in 1969, RICA today includes more than 400 members representing all aspects of logistics-related rail movement of dimensional cargoes: major, regional and short-line rail operators, shippers, riggers, port authorities, expeditors, project cargo logistics experts, heavy haul motor carriBY MARCO POISLER ers, barge and UTC OVERSEAS steamship lines and consultants.

The association helps members share ideas and resources, and provides educational programs. Its goals include problem solving in the transport of large, heavy cargoes including addressing centers of gravity, unusual shapes and specialized lashings. It seeks to improve professional standards and cooperation among members, and find common solutions for transport challenges through newsletters, committees and professional interchanges, as well as the annual meeting.

A new standing RICA Health, Safety & Environment, or HS&E, committee is a natural step for the organization and its members. HS&E issues are vital to planning and executing the transport of 118 BREAKBULK MAGAZINE www.breakbulk.com

the challenging cargoes we deal with.

Success in HS&E reduces and eliminates costly errors that can negatively impact an entire project and all parties involved.

DEALING WITH INCREASED COMPLEXITY Today, we all deal with ever-larger and heavier cargoes, and use ever more complex systems and equipment to handle them. With rising cargo values, the costs of even a single failure grow ever more expensive: lost worker days, increased health and insurance claims, expensive cleanups, and pressure for more expensive and time-consuming regulations to name a few. RICA’s long history of successful idea sharing, education and training, as well as a membership that includes a true crosssection of the project logistics industry, makes it a natural base for forming such a committee.

Our proposal suggested: • Forming the committee with the goal of ensuring that all activities of its members are conducted safely, reliably and with integrity.

• Focus on the health and safety of members, contractors, customers and the public.

• Protect the environment and reduce risk.

• Protect physical assets from damage or loss.

We proposed the formation of a committee to represent RICA’s diverse membership that meets periodically. Its proposed goals are to: • Seek best practices across all transport modes that interface with over-dimensional/overweight rail transport and encourage personal responsibility in HS&E.

• Continually monitor all work for safety, while protecting staff.

• Report all incidents, regardless of severity, and to strive for an accidentfree workplace – vital to the continuous improvement process.

• Identify risk at each phase: design, engineering, construction, planning, implementation and operation.

• Prepare plans for emergencies and security threats (and support railroads’ emergency plans).

• Encourage a culture of continuous learning and improvement.

The proposed committee would not formulate specific rules and regulations.

Instead, it would gather information and formulate recommendations for changes to be reviewed and implemented by all railroads through their existing rules and standards process.

There is a need for updated – and in some cases new – industry standards in such areas as open-top loading regulations, the increased use of Schnabel cars, bolster loading, center of gravity compensation, and lashings and tie-downs.

New regulations are needed for the next generation of specialized railcars, including 16- and 20-axle designs, drawing on the detailed technical drawings and data on car design and operation built into such cars.

The proposed committee could also help railroads enhance the training and certification of rail inspectors and state safety and railcar inspectors to encompass the new challenges we all face. One benefit could be the establishment of a single, nationally recognized training standard that would remove the need to re-inspect loads as they move from one jurisdiction to another.

ISSUE 4 / 2016

An 800-ton phase-shifting transformer travels from China’s Baoding Transformer Works to Rocky Mountain Power in Utah. UTC shipped the transformer to Houston and moved it to New Mexico by train. The final leg was made by road.

Credit: Doug Webster Sonoma CRN for UTC Overseas

IMPORTANCE OF METHOD STATEMENTS Finally, we suggested the expanded use of method statements by all parties in these challenging projects. They provide a single document covering contact information for all parties involved, scope of work for each party, risk analysis and hazard mitigation, safety plans and standards, a sequence of steps to be taken, equipment to be used, and personnel required to execute the plan.

Many projects today are part of larger original equipment manufacturers and

engineering, procurement and construction company undertakings involving global sourcing, multiple transport modes, demanding delivery timetables, and coordinated against a construction master plan. That is why the use of method statements becomes ever more important. It is also why we must all focus continually and collectively on HS&E issues to achieve overall success and avoid added costs and delays.

Implementing our proposal would require participation and input from all sectors of RICA including the board and its members. Many questions need to be resolved, such as the designation of a governing authority to interface with the group, use of method statements, and standards for submission of clearance and tie-down drawings.

However, we are confident that a new RICA HS&E committee would be a real asset in further concentrating our collective focus on these important issues.

The response from those who spoke to

us after our presentation was positive.

Past president Bob Felix and incoming president Justin Gilmet have since commented: “HS&E issues are something all our members and their companies work on every day. UTC has taken a leadership role in addressing the HS&E issue as part of RICA’s goal of continual improvement. We believe their ideas are worthy of careful consideration by the full board and our membership.”

Jim Lange, director of UTC’s rail division, added: “An HS&E committee would allow railroads and the RICA membership to jointly approach safety in today’s project cargo market, and create an avenue for shippers, such as EPCs and OEMs, to join with rail logistics providers and the railroads in the pursuit of best-in-class standards for over-dimensional rail freight.” BB Marco Poisler is executive vice president at Houston, TX-based UTC Overseas. www.breakbulk.com BREAKBULK MAGAZINE 119

thought leaders

STATE OF FLUX More Questions Than Answers On Britain’s EU Departure

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n defiance of UK Prime Minister David Cameron, the business establishment, City of London, a near unanimity of leading international economists, and the country’s closest political allies, the British electorate voted to terminate the country’s 43-year membership of the European Union on June 23 – so-called “Brexit.”

The increased uncertainty provided by

BY MARK WILLIS Brexit, and the vote’s widely projected negative impact on UK business investment and longer-term economic outlook, comes at a particularly inopportune moment for project cargo and shipping operators, with international trade in the doldrums.

Further bad news for participants in global supply chains, the World Trade Organization has highlighted that the recent international trade hiatus has coincided with widening protectionism over the last 12 months, with national governments moving to shelter domestic firms from foreign competition 1.48

TAKING A POUNDING

1.43

GBP falls against the U.S. dollar post-Brexit.

through import tariffs, non-tariff barriers and subsidies.

Crucially for businesses operating across international borders, the Brexit vote is a further sign that global political volatility has risen markedly over the last several years on the back of elevated dissatisfaction with established political parties. A perceived unequal distribution of the proceeds of globalization, alongside stagnant or falling real wages has also given voice to a new generation of political populists and reinvigorated nationalism, as highlighted by Britain’s recent referendum campaign.

With these phenomena trending throughout much of the industrialized world, there is an elevated prospect that this rise in nativist politics will more and more encroach on international trade over the coming years, stalling, if not reversing, more than 30 years of everrising economic interdependency and cross-border trade.

Initial shockwaves notwithstanding, the likelihood of British voters electing to leave the European Union was perhaps always greater than forecasted by opinion polls and political analysts.

In contrast to the majority of other member states, the UK has long displayed a decidedly ambivalent, semi-detached attitude towards the EU, suspicious of the bloc’s centripetal tendencies towards “ever-closer union,” and the pooling of sovereignty required for access to the European single market.

A prevailing distrust with mainstream politics, alongside concerns of increased immigration and income inequality, and a visceral hostility to Brussels within

swathes of the UK media were other important further factors behind the Brexiteers’ recent victory.

Two months after the vote, the only post-referendum certainty is that Britain’s 43-year EU membership that has shaped two generations of economic and foreign policy will soon be over. Following the resignation of Cameron, new British Prime Minister Theresa May looked to formally commence negotiations with the 27 remaining EU states over the terms of Brexit towards the end of this year or in early 2017.

UK RECESSION ON THE CARDS With the referendum result already leading to financial market instability and a sharp depreciation in the value of the British pound, firms now forecasting a Brexit-induced UK recession and a more modest longer-term economic outlook include Blackrock – the world’s largest asset manager – Barclays, and the Economist Intelligence Unit.

The hit to business and consumer confidence in particular is expected to undermine short-term economic growth, with many firms already thought to have suspended investment plans in the run-up to the June referendum. Further delaying or cancelling of projects is inevitable following the Brexit vote.

A survey by Deloitte of leading chief financial officers in the weeks following the Brexit vote highlighted an immediate, dramatic collapse in business sentiment. According to the survey: “Perceptions of uncertainty have soared in the wake of the vote to

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Anti-Brexit protesters demonstrate at the gates of Downing Street in central London after the UK voted to leave the European Union on June 23 – the so-called “Brexit”.

Credit: Isabel Infantes/ZUMA Press/Newscom

levels associated with the euro crisis five years ago. The spike in uncertainty has had a toxic effect on business sentiment, with optimism dropping to the lowest level since the survey started in 2007, lower than in the wake of the failure of Lehman Brothers in late 2008.”

Multinational firms operating in Britain for the tariff-free access it brings to wider-EU markets are most likely to halt investment and job creation pending clarity on a new UK-EU relationship.

Crucially for the project cargo sector, weaker GDP growth over a protracted period of time is likely to translate into lower government tax revenues and fewer resources available for the type of public investment in large-scale infrastructure projects, such as ports, railways and airports, crucial to driving economic output over the next decade and beyond. Private sector investors in UK infrastructure, which typically rely on long-term economic prospects, may also balk at future spending due to increased uncertainty.

Notwithstanding the UK’s deteriorating immediate economic prospects, it is the medium to long-term investment outlook that is arguably a more pressing concern to the project cargo and shipping community. Detailed clarity over the referendum’s consequences – beyond May’s glib political statement that “Brexit means Brexit” – and new relationships between Britain and the remaining EU states will be crucial in determining the impact of Brexit for firms operating within European and global supply chains.

TAPPING EMERGING MARKETS Supporters of leaving the EU have long highlighted the capacity to forge extra-European free trade agreements as a key benefit of increased economic sovereignty. Equipped with a package of new free trade agreements, the UK could be better placed to tap into faster growing developing economies within Asia, Latin America and Africa.

However, other European members, notably Germany, have successfully combined strengthening trade ties with Asian markets in conjunction with EU membership over the last decade, in stark contrast to a UK economy that until recently exported more goods and services to neighboring Ireland than to Brazil, Russia, India and China combined. Negotiating bilateral free trade agreements is also a notoriously drawn-out affair, with the China-Australia Free Trade Agreement having taken more than a decade from the initial round of discussions to implementation in 2015.

As the destination for almost half of

the UK’s exports, it is the post-Brexit trading arrangement with the remaining 27 EU members and level of access to the bloc’s single market for trade in goods and services, rather than new arrangements with China or the U.S., that will ultimately determine Britain’s economic fortunes over future decades. The details of this new agreement will therefore have the greatest potential to disrupt regional trade, with far-reaching ramifications for project cargo and shipping operators.

With regards to the outcome of what are likely to be potentially antagonistic divorce proceedings, the immediate post-Brexit months have been extremely discouraging, with political obstacles in Britain and the EU precluding the resolution of a swift deal. Project cargo business operating in EU markets may therefore have to prepare for a period of protracted uncertainty over the next several years. BB Mark Willis is a Dublin, Ireland-based freelance journalist specializing in politics and economics.

Source: Oanda

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thought leaders

CRIME, SECURITY AND LIABILITY Project Cargo Firms Exposed to Cyberattacks

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ransportation and logistics professionals increasingly use automation to expedite the everyday process of moving cargo through the supply chain.

What were once time-consuming, tedious and manual processes are now completed with the touch of a button.

Improved computers, high-speed internet and ever-changing software integrations make it all happen.

In today’s

BY LA DONNA LOGAN automated environment, ROANOKE TRADE you can track and locate freight faster than you can dial the number of the carrier handling the move.

However, as with all luxuries, these time-saving tools come at a cost.

When data is transferred through the supply chain, it may pass through numerous websites, servers, PCs, clouds and third-party vendors, which expose each company involved to potential data breaches. Just consider how many emails alone are sent externally over the course of one shipment.

In addition, the advances in technology that allow live tracking and tracing capabilities (bar codes, RFID tags and GPS, for example) also allow thieves access to that same information. The

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data spans companies and countries and regardless of protocols and security measures each company has taken, no system is impervious to a cyberattack. In the project cargo industry, a data breach can occur anywhere and anytime.

Data thieves are relentless and their attacks have become more sophisticated and include the use of malware, multiple forms of intrusive and malicious software and email scams. While certain malware attacks have been reduced due to the addition of spam filters, ransomware is still problematic.

Ransomware is embedded in an email attachment or hyperlink which seems legitimate, but when opened, it encrypts digital files and demands a ransom, usually via bitcoin, to release them. It is untraceable and there is no guarantee of the return of your files should the ransom be paid.

Business email compromise scams are more difficult to recognize as attachments are not required, it is simply a conversation from a recognized internal email address. Cyber criminals use company websites and social media to access specific information and the company’s hierarchy. An email from someone with an important title making an urgent request is often successful, as the thieves use psychological manipulation combined with a sense of urgency.

LIMIT EXPOSURE Understanding exposure to cyber crime and ensuing liability is vital for a company. Whether it is a computer

virus, a stolen laptop or theft of confidential information from a company server, if a data breach results in the theft and/or use of intellectual property, a business can expect considerable financial losses. These incidents may initiate a regulatory investigation, require the need for forensic analysis as well as generate claims for expenses and losses. There is also potential for business interruption expenses, crisis management and legal defense.

While working through the breach, the uncomfortable task of notifying all affected parties may be also required.

Cyber crime will continue and cyber security is not guaranteed, therefore cyber liability is something each link in the project cargo supply chain should guard against. This carries true for forwarders, shippers, vendors, carriers and anyone else who has a hand in the shipment regardless of the magnitude of involvement.

Multiple U.S. government agencies as well as foreign governments have special divisions solely focused on cyber crime. One agency advises to have procedures in place that include training employees to understand how to recognize a potential threat and what measures to take if one occurs. They also recommend IT departments should have prevention controls in place and continually monitor activity.

Another agency has a division dedicated to cyber insurance, as each company must protect themselves in the event you become a victim of a data breach. This form of coverage is crucial due to the effects a data breach will have on your company. Every company has exposure, therefore making sure you have sufficient measures in place to protect against an attack and any fallout will provide both protection and coverage. BB La Donna Logan is marine manager at Roanoke Trade, a division of Roanoke Insurance Group Inc., specializing in insurance and bond services for international trade and transportation.

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PORT OF VANCOUVER USA The Route to Success In 1804, Lewis and Clark formed an expedition to find a viable route to the Pacific Ocean and open up possibilities for commercial trade. Through its prime location, logistics expertise and long-term connections with the people and resources that streamline importing and exporting, the Port of Vancouver USA is carrying on this tradition – making it infinitely easier, faster and more cost-effective to ship goods to and from the U.S. Midcontinent and Pacific Rim.

The Advantaged Supply Chain™ – the most direct route from the Pacific Rim to the U.S. Midcontinent and Canada Efficient trade routes have never been more critical as shippers seek to cut costs and save time. That’s why many are partnering with the Port of Vancouver USA. Located only 106 river miles inland from the Pacific Ocean, the port is situated on a 43-foot (13.1 meters) deep draft shipping channel with berths capable of handling

Panamax-sized vessels. It specializes in handling break bulk, RoRo, bulk and project cargos, with dedicated facilities for handling wind energy components, automobiles, grains, pulp, mineral ores, and agricultural commodities, among others. Long term agreements with shippers, OEMs and stevedores ensure shipments can be scheduled at an agreed-upon rate so cargo efficiently and reliably reaches its destination.

The port’s strategic advantage is that it can offer its customers the Advantaged Supply Chain, the most efficient, direct, uninterrupted route between the Pacific Rim and the U.S. Midcontinent and Canada. Customers save almost half the time – and thousands of dollars – compared to shipping through Gulf ports.

Two Class 1 railroads – BNSF Railway and Union Pacific Railroad – transit the Port of Vancouver, offering costeffective rates. The port has nearly completed its West Vancouver Freight Access rail expansion, a $275 million

project that will more than triple the port’s rail capacity and reduce regional rail congestion by as much as 40 percent on BNSF’s main north-south and east-west rail lines. This allows the port’s capacity to grow from 55,000 to 400,000 railcars per year.

Location near key freight corridors, including I-5 and I-84, provides quick access to major north-south and eastwest routes. Transloading cargo to barges on the Columbia River ensures efficient movement of freight and access to inland ports.

“We’ve made numerous strategic moves in the last several years to invest in the equipment, people, facilities and infrastructure to ensure our customers can get their products to market stressfree,” said Alastair Smith, chief marketing and sales officer at the Port of Vancouver.

Companies that partner with the Port of Vancouver USA not only save time, they also cut costs and ship smarter, taking the worry out of shipping across the continent or across the ocean.

Visit our booth #337 at Breakbulk Americas or call Heinz Lange, Sales Director, at 360-213-1253

EFFICIENCY ON THE DOUBLE.

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20 120

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610K SQ. FT. WATERFRONT WAREHOUSING

Get to know the port that works smarter—and harder—for you.

Contact Heinz Lange at hlange@portvanusa.com or 360-693-3611 to learn more, or visit portvanusa.com.

Need heavy lift? Ample storage? Rail capacity?

We can handle it.

As the West Coast’s breakbulk experts, we offer two Liebherr mobile harbor cranes and extensive warehouse and laydown capacity–including a new 124,000 sq. ft. warehouse coming soon–and future capacity of 400,000 rail cars per year. With a skilled workforce and the ultimate in efficiency, we have what it takes to save you time. And money.

THE PORT OF

Possibility

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ALMAJDOUIE LOGISTICS Named ‘2016 Logistics Service Provider of the Year, KSA’ 10TH FEBRUARY 2016, DAMMAM, SAUDI ARABIA:

Frost & Sullivan hosted the Best Practices Awards ceremony at its global conference - Growth Innovation Leadership 2016 (GIL) Middle East, acknowledging outstanding performances by companies from diverse industries.

The global research and consulting organization with more than 55 years of history announced Almajdouie Logistics as the ‘2016 Logistics Service Provider of the Year, KSA’.

The ‘GIL 2016 Middle East’ executive event took Mr. Baheej I. place at the Holiday Inn, Biqawi, CEO of Almajdouie Al Khobar. At the conferLogistics, stated in a oneence, Frost & Sullivan on-one interview with We have just recognized Almajdouie Frost & Sullivan, “We have celebrated our Logistics’ achievements just celebrated our 50th 50th anniversary… in continually enhancing anniversary… The golden services, meeting clients’ jubilee reminded us of the The golden jubilee expectations and latremarkable success story reminded us of est technologies in the of Almajdouie enterprise’s industry. The event hosted establishment. In 1965, the remarkable global C-level participants, Sh. Ali Almajdouie founded success story senior analysts and excluthis enterprise with a single of Almajdouie sive invitees discussing truck land transport while featured business develsimultaneously providing enterprise’s opments and future techcustoms clearance servic  establishment.         nologies and Mega trends This story seems more            es.  impacting industries. and more like a distant

  

                                               

memory with the increasing developments amounting to our diverse and integrated logistics and supply chain services, provided not only in Saudi Arabia, but also across the GCC.”

A recipient of another international award, Almajdouie sets forth with its mission in delivering innovative services to maintain reliability upholding to exceed clients’ expectations.

    

recruitment

EXPECT THE UNEXPECTED Project Logistics Managers Must Be Ready for Surprises

BY PAUL SCOTT ABBOTT

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n a business bringing new challenges each day, project cargo logistics professionals must possess a varied skill set, communicate effectively and, perhaps above all, be flexible.

For companies employing these project managers, the challenges come in providing an attractive work environment that offers opportunities for individual advancement while supporting corporate values.

Whether directing supply chains for manufacturers of oversize equipment or heading logistics for global engineering firms, those who hire and manage

project cargo shipping talent recognize the specialized nature of a field in which classrooms simply don’t fully prepare the workforce for project management and its recurrent surprises.

“There’s not a school you can go to to learn project logistics,” said Dennis M. Mottola, manager of the Houston-based global logistics unit of Bechtel Corp., the largest U.S. construction and civil engineering company.

Noting the proliferation of higher education programs offering supply chain management curriculums focusing on shipping retail goods in containers, Mottola said, “Project logistics is learned on the job.”

Mottola, in his 20th year with Bechtel, said the art of shipping highvalue items 10 stories tall and weighing

as much as 800 tonnes typically is taught after a new hire comes aboard.

“What you can task people with right out of school is minimal,” he said. “Managing project cargo moves requires both commercial and technical skills, as well as the ability to navigate regulations applicable to the transport, export and import of project cargo. Achieving successful delivery outcomes requires knowing the right questions to ask and where to turn to if you don’t have all the answers in decision making. We look for colleagues of the highest integrity, skilled in deal-making, innovative and having a passion for their work.”

Even then, according to Mottola, the unpredictability of the business makes agility essential.

“Anyone who has been involved in managing project logistics for even a short while knows to expect the possibility of something different every day,” he said.

“Variability is inherent in global project cargo logistics. Expect the unexpected, and anticipate being challenged every day.”

At Bechtel, getting and keeping top talent is a product of solid corporate culture, Mottola said.

“The best talent is drawn to our vision for the future – what we aspire to do, our values, what we believe in – such as safety, ethics and excellence, and our covenants – how we interact with each other, our customers

Jacksonville’s terminals handle heavy-lift, breakbulk and ro-ro cargoes and containers.

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and suppliers,” he said. “We want to be the employer of choice by offering a challenging and rewarding work environment that attracts the best talent and which we are proud to be part of every day.

We retain our talent by living our vision, Dennis M. Mottola values and covBechtel Corp. enants, our culture, and by striving to be the best in the business in managing project cargo logistics.”

Mottola said he succeeds in keeping his team members from jumping the proverbial ship “by living our culture, striving to be the best, demonstrating the value our team delivers in managing logistics for Bechtel, and having some fun along the way.”

LINES OF COMMUNICATION For DeLores M. Ross, transportation and logistics supervisor at Mitsubishi Hitachi Power Systems Americas’ Savannah Machinery Works in Pooler, Georgia, the ability to communicate is seen as critical for project managers. For her, it is important to have open lines of communication with all of the key players, including steamship lines, stevedores, terminals and carriers, to ensure shipments proceed without incident.

Such communications make it easier to deal with inevitable surprises.

“Handling project cargo requires adaptability,” Ross said. “No two shipments are ever the same.” For instance, Mitsubishi Hitachi Power Systems Americas manufactures and services power generation units. “And although the units may be similar, one must be able to adapt to the varied circumstances in shipping. This makes the job challenging, but immensely rewarding,” she said.

Ross said her company, which was formed in 2014 via the merger of thermal power generation systems businesses of Mitsubishi Heavy Industries and Hitachi, looks to keep accomplished project managers not only with competitive pay and benefits, but also by encouraging personal growth.

“MHPSA offers employees great career incentives, including a leadership program that promotes career development, but more importantly personal growth and development,” she said. The company seeks to keep Jeff Tindel a cohesive team by Heatcraft Refrigeration recognizing that, Products when a team member has a personal sense of fulfillment and a balanced lifestyle, they will take ownership of their duties and responsibilities and strive to make the company successful.

Jeff Tindel, director of inside sales and logistics at Stone Mountain, Georgia-based Heatcraft Refrigeration Products, said his company, which provides climate-control solutions for commercial refrigeration and industrial

escape the doldrums of day-to-day running the business and helps to provide perspective and relevance.

Of course, a fair salary and a benefits package is important, but company reputation and standing in the market also strikes a chord. “We market our company as the market leader in share, size, product leadership and so on, holding proven long-term growth and commitment to people. More and more people seek a solid company that will provide sustained employment and career growth. We have never had a layoff and are clearly in the game for the distance.”

Each employee has an individual development plan, co-orchestrated by the leader and employee and reviewed twice a year. Elements may include off-site training, college coursework, site visits to plants and terminals, cross-training job shadowing in other functions, and assignment and cultivation of formal mentorships.

Additionally, employee satisfaction surveys are conducted every two years,

When a team member has a personal sense of fulfillment and a balanced lifestyle, they will ... strive to make the company successful. applications in more than 70 countries, takes a similar approach to melding individual and corporate accomplishments.

“Our team and each individual owns the service and owns the process,” he said. “They have team and individual objectives and KPIs [key performance indicators] each year, and performance to each directly affects their salary increases and promotions. My style is complete engagement and participation, so the team’s input and participation in decisions is needed, expected and appreciated in all of the business of logistics – carrier selection and/or dismissal, quarterly carrier performance reviews, one- to three-year strategy, tactical decisions, mode decisions, distribution decisions, solutions to systemic issues, and so on.”

Tindel said members of his logistics team participate in all carrier interface and planning, which allows the team to

with management paying attention and acting.

“We also celebrate success often,” Tindel said. “We drive for sustainability with high employee involvement and pride, and we are heavily involved in community support and philanthropy with high employee participation.”

Other essential skills include the ability to think on one’s feet through fast-paced and creative problem-solving and execution; ownership and followthrough, in light of numerous varied steps and handoffs in any given delivery; and building relationships through attention to detail, sense of urgency, and strong and effective communication skills with many types of stakeholders.

A veteran transportation writer for the past 40 years, U.S.-based Paul Scott Abbott specializes in maritime topics. www.breakbulk.com BREAKBULK MAGAZINE 129

recruitment

The skills required for a project cargo manager in this industry are many and varied. A few that top employers’ wish lists are: » Able to determine scope. » Perform scheduling functions. » Engage in risk management and evaluation. » Conduct cost-benefit analysis. » Evaluate quality. » Design and enter into contracts for performance of services. » Able to perform general logistics functions.

Those engaged in management of project cargo moves need to be prepared for a different day every day.

Gregory Gowans, Houston-based

director of logistics and expediting for CH2M, a multibillion-dollar global engineering company known until recently as CH2M Hill, said that becomes selfevident on the second day.

“People who excel in this area have the ability to be flexible and agile – the ability to switch gears, the ability to focus on something, leave something and come back regularly, re-evaluate priorities and move willingly between them.

“A type of mindset that says, ‘I have my list of things and I need to complete them in this order’ – that OCD-type comfort zone – doesn’t really fit here, because there will be surprises and there will be changes. It’s a dynamic environment. Plans must include provision for change.

“The preparation,” Gowans said, “is in engaging the individuals to understand that that’s a natural effect, that change is going to happen. Replanning

has to be performed. Re-evaluation may be necessary in order to be successful. It’s not a negative to have to change something or to adopt or to adapt or to modify.”

Gowans, who spent 14 years in logistics positions with Chicago Bridge & Iron Co. and Alstom Power before joining CH2M in 2012, said external factors beyond internal control may range from weather changes to equipment failures to new technologies introduced after initial planning is done for a long-lead-time project. BB

Credit: Shutterstock

A SHOPPING LIST OF SKILLS

DELIVERING GLOBAL LOGISTICS SOLUTIONS AROUND THE WORLD

miq.com

130 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 4 / 2016

INDEX Breakbulk cargo is an eclectic mix, encompassing forest products, steel, pressure vessels, windmill blades, rolling stock and out-of-gauge items.

With this in mind, BREAKBULK INDEX data ranges from steel production to details of planned capital projects.

The global nature of today’s breakbulk and heavylift sectors requires transportation professionals to be on top of economic trends worldwide, which calls for inclusion of focused macro-economic data on prices and events that affect EPCs, the breakbulk community and the multipurpose fleet.

PIRACY WEST AFRICA MARITIME SECURITY INCIDENTS Incidents from Senegal to Angola have increased since December 2015 with 78 attacks in the first seven months of 2016. Efforts to combat piracy off the Horn of Africa have been largely successful, with only a single hijacking in November 2015.

Total Failed Attacks Hijacking Attempts Theft Robbery

November ‘14 13 December 9 January ‘15 3 February 7 March 1 April 4 May 9 June 6 July 8 August 5 September 0 October 1 November 2 December 7 January ‘16 11 February 8 March 7 April 19 May 13 June 9 July 11

5 2 2 4 1 0 0 1 1 1 0 1 2 1 4 2 3 5 2 4 1

7 1 0 5 1 1 1 0 0 2 1 0 0 0 0 4 0 0 5 0 4 3 1 1 2 1 4 3 0 1 0 0 0 0 0 0 0 0 0 2 1 3 4 0 3 4 0 2 2 0 2 12 1 1 9 1 1 1 0 4 4 2 4

Note: “Failed” includes attempted robberies/thefts as well as hijackings. “Hijackings” include kidnappings from vessels.

SOUTHEAST ASIA MARITIME SECURITY INCIDENTS After a relatively quiet first quarter, attacks have increased into the summer months, totaling 31 in the second quarter.

Total Failed Attacks Attempts Hijacking Theft Robbery

October ‘14 26 7 November 20 9 December 16 7 January ‘15 18 6 February 11 3 March 15 6 April 16 9 May 22 7 June 18 4 July 12 4 August 25 12 September 22 5 October 20 11 November 8 5 December 10 2 January ‘16 5 2 February 1 0 March 5 1 April 12 5 May 12 4 June 7 1 July 10 2

4 8 7 0 5 6 1 3 5 2 4 6 2 3 3 2 2 5 1 4 2 2 11 1 3 5 6 0 5 3 2 3 8 1 7 9 0 5 4 0 1 2 1 6 1 0 2 1 0 1 0 1 2 1 2 5 0 1 6 1 2 2 2 2 3 3

Note: “Failed” category is for attempted robberies/thefts, not hijackings.

Source: Risk Intelligence, www.riskintelligence.eu

www.breakbulk.com BREAKBULK MAGAZINE 131

bb index

FOREST PRODUCTS: PULP INDEX EUROPE Pulp prices cost, insurance and freight to main European ports were normalized to 100 in January 2000 and are based on average euro prices of northern and southern bleached softwood and eucalyptus kraft and northern bleached hardwood kraft pulp weighted by production volume.

150 125 100 75 50 25 0

JFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJ 2010

2011

2012

2013

2014

2015

2016

NORTH AMERICA Delivered pulp prices were normalized to 100 in January 2000 and are based on average US$ prices of northern and southern bleached softwood kraft, bleached eucalyptus kraft, and northern bleached hardwood kraft pulp weighted by production volume.

200 150 100 50 0

JFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJ 2010

2011

2012

2013

2014

2015

2016

ASIA Pulp prices cost, insurance and freight to main East and Southeast Asian ports were normalized to 100 in January 2003 and are based on average US$ prices of northern, southern and Russian bleached softwood, radiata, eucalyptus and mixed tropical hardwood pulp weighted by production volume.

250 200 150 100 50 0

JFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJ 2010

2011

2012

2013

2014

2015

2016

Source: RISI, www.risi.com

EUROPEAN FREIGHT FORWARDING INDEX The index, based on European forwarders’ actual and expected freight volumes, dropped sharply to 38 in July, compared to 54 for the same month last year. Values below 50 on the zero-to-100 scale indicate a decline.

100 90 Actual

80

Forecast

70 60 50 40 30 20 10 0

MJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJA 2010

2011

2012

2013

2014

2015

2016

Source: Danske Market Equities, www.danskebank.dk 132 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 4 / 2016

WIND POWER

// GLOBAL WIND ENERGY 2016-2020

ANNUAL MARKET FORECAST BY REGION 2015-2020 The wind industry continues to diversify geographically, with significant new activity outside of Europe, Asia and the Pacific.

2015 2016 2017 2018 2019 2020

CUMULATIVE MARKET FORECAST BY REGION 2015-2020 GWEC sees continued dominance by Asia, having surpassed Europe in terms of cumulative installed capacity at the end of 2014.

2015 2016 2017 2018 2019 2020

Europe 13.8 13.0 13.5 14.5 14.5 15.0 North America 10.8 10.0 1.0 12.0 13.0 14.0 Asia 33.6 34.5 35.0 35.5 36.0 36.0 Latin America 3.7 4.5 5.5 6.0 7.0 8.0 Pacific 0.4 0.5 0.5 1.0 1.0 1.5 Middle East / Africa 0.8 1.5 2.5 3.0 4.0 5.0

Europe 148.1 161.1 174.6 189.1 203.6 218.6 North America 88.9 98.8 109.8 121.8 134.8 148.8 Asia 175.6 210.1 245.1 280.6 316.6 352.6 Latin America 12.2 16.7 22.2 28.2 35.2 43.2 Pacific 4.8 5.3 5.8 6.8 7.8 9.3 Middle East / Africa 3.3 4.8 7.3 10.3 14.3 19.3

in gigawatts

in gigawatts

FIVE-YEAR FORECAST 2015-2020 After growth flattens in 2016, GWEC anticipates a more moderate growth rate through 2020.

Cumulative (gigawatts) Cumulative capacity growth rate (%) Annual installed capacity [GW] Annual installed capacity growth rate (%)

2015 2016 2017 2018 2019 2020 432.9 17.10% 63 21.90%

496.9 14.80% 64 1.60%

564.9 13.70% 68 6.30%

636.9 12.70% 72 5.90%

712.4 11.90% 75.7 5.10%

791.9 11.20% 79.7 5.30%

Source: Global Wind Energy Council

www.breakbulk.com BREAKBULK MAGAZINE 133

bb index

EASE OF DOING BUSINESS LEADING COUNTRIES, RANKED

ECONOMY

D C E PE O N A L RM S ING T IT RU W S C IT TI H O N G EL ET EC T I TR NG IC IT Y RE PR G O IS T PE E R T RI Y NG G ET TI N G CR ED IT PR M O IN IN TE VE O C S T RIT TIN O Y G RS PA YI N G TA X ES T A RA CR D O IN SS G BO RD ER EN CO F S N OR TR C I N A C G TS RE IN S SO O L LV VIN EN G C Y

RANK

S A TA BU R T SI IN N G ES S

Economies are ranked on their ease of doing business. A high ease of doing business ranking means the regulatory environment is more conducive to the starting and operation of a local firm. The rankings are determined by sorting the aggregate distance to frontier scores on 10 topics, each consisting of several indicators, giving equal weight to each topic. The rankings for all economies are benchmarked to June 2015.

1 Singapore 10 1 6 17 19 1 5 41 1 27 2 New Zealand 1 3 31 1 1 1 22 55 15 31 3 Denmark 29 5 12 9 28 20 12 1 37 9 4 Korea, Rep. 23 28 1 40 42 8 29 31 2 4 5 Hong Kong SAR, China 4 7 9 59 19 1 4 47 22 26 6 United Kingdom 17 23 15 45 19 4 15 38 33 13 7 United States * 49 33 44 34 2 35 53 34 21 5 8 Sweden 16 19 7 11 70 14 37 17 24 19 9 Norway 24 26 18 13 70 14 14 45 8 6 10 Finland 33 27 16 20 42 66 17 32 30 1 11 Taiwan, China 22 6 2 18 59 25 39 65 16 21 12 Macedonia, FYR 2 10 45 50 42 14 7 26 26 37 13 Australia 11 4 39 47 5 66 42 89 4 14 14 Canada 3 53 105 42 7 6 9 44 49 16 15 Germany 107 13 3 62 28 49 72 35 12 3 16 Estonia 15 16 34 4 28 81 30 24 11 40 17 Ireland 25 43 30 39 28 8 6 48 93 20 18 Malaysia 14 15 13 38 28 4 31 49 44 45 19 Iceland 40 45 8 15 59 20 36 64 35 15 20 Lithuania 8 18 54 2 28 47 49 19 3 70 21 Austria 106 47 17 26 59 36 74 1 6 18 22 Latvia 27 30 65 23 19 49 27 22 25 43 23 Portugal 13 36 25 27 97 66 65 1 20 8 24 Georgia 6 11 62 3 7 20 40 78 13 101 25 Poland 85 52 49 41 19 49 58 1 55 32 26 Switzerland 69 56 5 16 59 105 19 40 46 44 27 France 32 40 20 85 79 29 87 1 14 24 28 Netherlands 28 85 43 30 79 66 26 1 91 11 29 Slovak Republic 68 84 48 5 42 88 73 1 63 33 29 Slovenia 18 71 35 36 126 7 35 1 117 12 31 United Arab Emirates 60 2 4 10 97 49 1 101 18 91 32 Mauritius 37 35 41 99 42 29 13 66 27 39 33 Spain 82 101 74 49 59 29 60 1 39 25 34 Japan * 81 68 14 48 79 36 121 52 51 2 35 Armenia 5 62 99 14 42 49 41 29 28 71 36 Czech Republic 93 127 42 37 28 57 122 1 72 22 37 Romania 45 105 133 64 7 57 55 1 34 46 38 Bulgaria 52 51 100 63 28 14 88 20 52 48 38 Mexico * 65 67 72 106 5 57 92 59 41 28 40 Croatia 83 129 66 60 70 29 38 1 10 59 41 Kazakhstan 21 92 71 19 70 25 18 122 9 47 42 Hungary 55 88 117 29 19 81 95 1 23 65 43 Belgium 20 54 53 132 97 57 90 1 53 10 44 Belarus 12 34 89 7 109 57 63 25 29 69 45 Italy 50 86 59 24 97 36 137 1 111 23 46 Montenegro 59 91 163 79 7 36 64 42 43 36 47 Cyprus 64 145 67 92 42 25 44 43 143 17 48 Chile 62 24 51 56 79 36 33 63 56 58 49 Thailand 96 39 11 57 97 36 70 56 57 49 50 Peru 97 48 64 35 15 49 50 88 69 7 134 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 4 / 2016

ECONOMY

51 Russian Federation * 52 Moldova 53 Israel 54 Colombia 55 Turkey 56 Mongolia 57 Puerto Rico (U.S.) 58 Costa Rica 59 Serbia 60 Greece 61 Luxembourg 62 Rwanda 63 Azerbaijan 64 Jamaica 65 Bahrain 66 Kosovo 67 Kyrgyz Republic 68 Qatar 69 Panama 70 Oman 71 Bhutan 72 Botswana 73 South Africa 74 Tunisia 75 Morocco 76 San Marino 77 St. Lucia 78 Tonga 79 Bosnia and Herzegovina 80 Malta 81 Guatemala 82 Saudi Arabia 83 Ukraine 84 Brunei Darussalam 84 China * 86 El Salvador

41 26 56 84 94 36 51 121 65 54 80 111 7 9 140 47 35 109 44 149 91 143 120 103 43 113 67 53 175 132 101 130 30 74 136 125

D C E PE O N A L RM S ING T IT RU W S C IT TI H O N G EL ET EC T I TR NG IC IT Y RE PR G O IS T PE E R T RI Y NG G ET TI N G CR ED IT P M RO IN IN TE VE O C S T RIT TIN O Y G RS PA YI N G TA X ES T A RA CR D O IN SS G BO RD ER EN CO F S N OR TR C A IN C G TS RE IN S SO O L LV VIN EN G C Y

S A TA BU R T SI IN N G ES S

RANK

119 29 8 42 170 104 21 28 96 91 127 42 38 69 54 2 98 36 52 79 25 134 44 59 135 57 164 7 49 23 53 7 139 63 73 59 60 47 144 79 14 28 89 167 37 118 12 2 114 110 22 109 72 80 122 7 9 77 25 109 136 124 32 28 20 160 6 28 8 111 28 133 70 32 84 19 46 60 33 126 79 50 51 79 97 122 70 70 90 168 101 59 57 38 86 126 29 55 76 109 64 10 80 181 50 26 104 152 22 61 154 42 171 119 97 42 83 86 96 174 106 21 75 15 17 24 31 79 140 137 61 19 21 68 148 79 176 92 43 79 156 107 71 15

66 47 170 5 51 36 78 33 67 60 8 103 58 77 29 14 136 110 180 30 20 61 62 36 124 8 91 74 80 89 88 134 93 100 7 166 80 67 124 87 81 143 23 73 50 47 66 27 132 54 122 21 1 17 80 88 48 156 127 72 36 34 94 40 84 57 146 146 107 35 111 8 85 101 85 57 67 71 48 163 36 138 83 137 126 122 1 119 112 51 66 166 54 148 132 134 10 69 70 105 115 28 21 50 189 81 71 51 128 56 14 20 130 119 41 105 81 91 81 57 105 62 102 59 130 122 32 18 82 106 66 83 72 67 109 115 82 87 97 131 66 154 28 66 38 36 25 39 61 83 174 50 78 173 153 99 3 150 86 189 88 107 109 98 141 134 16 121 113 98 134 132 96 7 55 155 162 46 109 79

* The rankings of economies with populations more than 100 million as of 2013 (Japan, Mexico and the United States) are based on data for two cities.

Source: 2016 The World Bank, International Finance Corp., www.doingbusiness.org/rankings

since 1984 Weekly Direct from Panama City, FL | Tampa, FL | Houston, TX Altamira, MX Progresso, MX

Weekly container and breakbulk service Oncarriage to Ciudad del Carmen, Campeche, Yucatan, Tabasco & Quintana Roo 800-858-4280 • www.lineaships.com

www.breakbulk.com BREAKBULK MAGAZINE 135

bb index

ECONOMY, LATIN AMERICA GDP FORECAST Economists report that Latin America’s overall GDP growth dipped to -0.2 percent in 2015 but is expected to rebound in 2017.

8% 6% 4% 2% 0% -2% 2015

-4%

2016*

-6%

2017*

-8%

UR UG UA Y VE NE ZU EL A

PE RU

PA RA GU AY

PA NA MA

NIC AR AG UA

ME XIC O

HO ND UR AS

GU AT EM AL A

CH ILE CO LO MB IA CO STA RIC A DO M. RE PU B. EC UA DO R EL SA LVA DO R

BR AZ IL

BO LIV IA

AR GE NT INA

-10%

*Forecast

INFLATION FORECAST While Latin American inflation rates vary widely by country, the continent is projected to increase 44 percent in 2016 before settling back to single digits in 2017.

40%

487.3%

35% 30% 2015

25%

2016*

20%

270.9%

2017*

15%

159.7%

10% 5%

UR UG UA Y VE NE ZU EL A

PE RU

PA RA GU AY

PA NA MA

NIC AR AG UA

ME XIC O

HO ND UR AS

GU AT EM AL A

CH ILE CO LO MB IA CO STA RIC A DO M. RE PU B. EC UA DO R EL SA LVA DO R

BR AZ IL

BO LIV IA

AR GE NT INA

0%

*Forecast

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.

0 -10 -20 2015

-30

2016* 2017*

-40 -50

UR UG UA Y VE NE ZU EL A

PE RU

PA RA GU AY

PA NA MA

NIC AR AG UA

ME XIC O

HO ND UR AS

GU AT EM AL A

CH ILE CO LO MB IA CO STA RIC A DO M. RE PU B. EC UA DO R EL SA LVA DO R

BR AZ IL

BO LIV IA

AR GE NT INA

-60

*Forecast Source: Consensus Economics, www.consensuseconomics.com 136 BREAKBULK MAGAZINE www.breakbulk.com

ISSUE 4 / 2016

F R E E

Harnessing Wind Industry’s Repowering Drive

SECOND

WIND

Lesson In Banking ■ Back To The Future ■ Breaking The Mold ■ Crunch Time

NOVEMBER/ DECEMBER 2015

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after dark

MUSCLING IN

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2016

SUPPLE

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!

ARCTIC INTEREST MELTS AWAY ■ BRAZIL’S FALL FROM GRACE ■ BREAKBULK EUROPE PREVIEW

ISSUE 2 / 2016

PROJECT CARGO CASE STUDIES REGIONAL REPORTS

A N FOR UBER- ST Y LE SERV ICE IS UP THE CREATED FOR HEAVY LIFTING

CHALLENGE? DRON E S T R A NSPORT WE

OOG CARGO

COULD

PROSPECTING 3 D PR I N TFOR OPPORTUNITIES IN 2016

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N ET-

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WOR K S

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photo contest

ON THE WATERFRONT PHOTO CONTEST WINNER:

BBT Logistics, Inc.

LOCATION: Newark, New Jersey, USA YEAR: 2016 DESCRIPTION: This John Deere 330LC was loaded, lashed, and secured at BBT Logistics, Inc. and set to go on a ZIM vessel destined for Jamaica – Port of Kingston.

NEXT ISSUE: Treacherous Transport / Submission Deadline: September 8 / Submit entries at breakbulk.com/treacherous-transport-enter

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ISSUE 4 / 2016

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