editorial
COMING IN FROM THE COLD
T Gary Burrows
hat multipurpose vessel operators are struggling is hardly news. Ever since the recession, MPV carriers have been watching for evidence of a turnaround like children with noses pressed against windowpanes, searching for signs of winter’s first snowfall. In Carly Fields’ cover story though, (“Muscling In,” page 10) she reports that equally suffering container lines, including industry behemoth Maersk, are looking to horn in on breakbulk business to mitigate their own bleeding bottom lines. Meanwhile, all carriers keep building new ships, adding to the capacity glut, while new MPV entrants like d.ship scoop up second-hand ships, and partnerships are formed to pool resources in an attempt to live within razor-thin margins. Drewry Shipping Consultants’ Susan Oatway, in her analyses shared with Breakbulk in recent years, has sought the silver lining, seeing the potential for improvement on the horizon. However, in this issue there’s no pretense; only cold assessment. “Drewry has become increasingly pessimistic” for the MPV sector, not anticipating a turnaround until 2017 at the earliest (“A Little Lift,” page 20). Expectations continue for mergers and liquidations among carriers; rumors begin, hedging bets as to which ones are at risk of failing. All of this would normally bring glee from shippers equal to kids on a snow day. In the long-waged tug of war over rates, the carriers’ plights
8 BREAKBULK MAGAZINE www.breakbulk.com
would motivate shippers to give a vigorous yank on the rope. Each side has an elephant’s memory of when times were hard and the adversary showed no mercy. As 2015 turns to 2016, shippers have troubles of their own, however. Falling oil and gas prices have forced one of heavylift’s and project cargo’s core industries to scale back on plans, and that loss of business ripples outward impacting all. To flip a cliché, evaporating oil and gas prices are sinking all boats. CB&I’s Doug Hickey points out in a sidebar to Fields’ feature that there’s little upside for EPCs and shippers to low-ball carriers on rates. Carriers already warn that low margins are keeping them from maintaining their ships. Why risk the safety of your cargo, or have it hung up with an arrested vessel? This was a common theme among Breakbulk Americas sessions and shared by top executives at the VIP Leadership Summit: relationships carry the day (see event coverage, pages 107-120). Calls for collaboration have long been industry lip service – delivered by the side on the short end of the rate stick – and usually followed with a chorus of Kumbaya. But given the current environment, with no one holding the upper hand, it’s a matter of survival. Being able to serve customers through an effective, reliable partnership during the worst of times will pay dividends down the road. It’s better to nurture relationships in order to weather the storm until business finally heats up again.
EDITORIAL DIRECTOR Gary G. Burrows / +1 904 535 5460 gburrows@breakbulk.com NEWS EDITOR Carly Fields carly@breakbulk.com DESIGNER Catherine Dorrough REPORTERS Alan M. Field Mary Shacklett Lori Musser 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 87 381 4021 amcentyre@breakbulk.com ACCOUNT MANAGERS Kathleen Pinson / +1 678 954 0552 kpinson@breakbulk.com Manager for West, East & North Africa Kingsley Ekweariri / +353 89 952 4754 kekweariri@breakbulk.com
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NOVEMBER-DECEMBER 2015