breakbulk magazine july/august 2015

Moving Targets n All in the Energy Mix n Solving a Global Puzzle n Starting From Scratch

JULY/AUGUST 2015

ON CHINABANKING

China Expands Influence with New Formula for Asian Infrastructure

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contents

JULY-AUGUST 20154 BREAKBULK MAGAZINE www.breakbulk.com

6 Editorial n 66 Airbus, DHL Showcase Multimodal Approach n 80 Wheels of Commerce n 82 Synthetics vs. Steel

88 Breakbulk Europe Recap n 102 Breakbulk Index n 106 The Slow Season

cover story

16 SECURITYMOVING TARGETS

Don’t Discount the Ongoing Piracy Threat

26 ENERGY FORECASTSALL IN THE

ENERGY MIXRace is on Between Demographics,

New Technologies

36 CARRIER PROFILESOLVING A

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Makes Logical Sense

44 MARKET SPOTLIGHTCARVING A

GLOBAL FUTURETimber No Longer Comes

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62 MIDDLE EASTDRIVING REGIONAL

DEVELOPMENTAbu Dhabi’s Industrial Growth

Mirrors Cargo Volumes

74 INFRASTRUCTURE STARTING FROM

SCRATCHAfrican Projects Test Limits

of Infrastructure

8 BANKING ON CHINA

China Expands Influence With New Formula

For Asian Infrastructure

Cover image design: Catherine Dorrough / Source: Shutterstock

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editorial

Some 50 years ago, car rental company Avis took an unconventional route in an advertising campaign. Champion-ing itself as an underdog to market

leader Hertz, Avis’ slogan was “When you’re only No. 2, you try harder. Or else.”

By narrowing margins, China is con-sidered the world’s No. 2 economy, trailing the U.S. Burgeoning exports and aggressive expansion into foreign markets fueled China’s meteoric double-digit economic growth. That growth has floated back to earth, but its efforts have not waned; instead it has shifted gears to a new normal, with steady, less robust growth tied to its internal consumption engine.

In this issue, Eric Johnson explores the Beijing government’s new infrastructure and trade initiatives: the Asian Infrastructure Investment Bank, or AIIB, a multinational financing vehicle, and its One Belt One Road initiative targeting central and Southeast Asia through bilateral deals with dozens of countries (“Banking on China,” page 8). Western business leaders are enthused that this dual-pronged effort will support underdeveloped Asia while opening foreign companies’ access to China’s market.

That enthusiasm doesn’t appear to be shared by the U.S. government, which refused to join as a founding member of AIIB, perhaps seeing it as unwelcome competition to the U.S.-led World Bank, despite both hav-ing the same alleged altruistic motives for world economic growth and development.

That would be yet another recent example of the U.S. putting politics over its self-touted role as a driver of economic growth.

On July 1, the charter lapsed for the Export-Import Bank of the United States, when Congress failed to extend the bank’s authority. Minus a charter, Ex-Im can’t authorize new transactions, only maintain pre-existing loans and guarantees.

The Ex-Im Bank and its guarantees have proven vital to U.S. businesses looking to sell abroad. Export credit agency support is often the required ante for public and private foreign business opportunities. If U.S. com-panies can’t get into the game, competitors from other companies are well placed to take their seats. Besides Ex-Im Bank, there are 85 export credit agencies operating in nearly 60 countries around the world.

Near the front of the pack is China, whose lending institutions sup-ported about US$58 billion in export credits in 2014. By comparison, Ex-Im Bank financed the sale of US$27.5 billion in exports through more than 3,700 transactions, including nearly

US$16.6 billion in manufacturing exports.Despite the obvious benefits Ex-Im Bank

provides U.S. businesses, its reauthorization is just another can Congress has been kicking down the road. Ignoring overwhelming sup-port from businesses and trade agencies such as the U.S. Chamber of Commerce, conser-vatives decry the bank’s loan guarantees as nothing more than corporate welfare.

William G. Schubert, a former U.S. Maritime Administrator under George W. Bush, detailed Ex-Im Bank’s role in our January-February issue (“Banking on Ex-Im Bank,” page 32). And in a recent letter to the Houston Chronicle, he called out those in the beltway that “would rather kill a critical exporting tool and the thousands of jobs it supports, than stand up to their misguided financial contributors.”

Senate Majority Leader Mitch McCon-nell, R-Ky, said the Senate would vote on renewing the bank this summer. In irony of ironies, that vote could come as an amend-ment to a transportation funding bill. Amid the nation’s crumbling infrastructure and vast business potential for resurrecting U.S. transportation, energy and essential sys-tems, Congress has repeatedly proven itself incapable of action for decades on a mean-ingful transportation bill.

With its latest initiatives, China has its infrastructure goals covered, as its economic efforts amplify the belief that its move from the world’s No. 2 economy to No. 1 is merely a question of not if, but when.

Maybe when the U.S. finds itself in the backseat, it may motivate its government to trade political antics for tangible action.

Or else.

INITIATIVE VS. INERTIA EDITORIAL DIRECTORGary G. Burrows / +1 904 535 [email protected]

NEWS EDITORCarly Fields [email protected]

DESIGNERCatherine Dorrough

REPORTERSAlan M. Field Herman K. TrabishEric Johnson Mark WillisMary Shacklett BREAKBULK EDITORIAL BOARDJohn AmosAmos LogisticsEd BastianBBC CharteringMurray CooperMcDemott International Inc.Etienne de VelFednav BelgiumDennis DevlinPanalpinaJohn HarkBertling Project LogisticsDennis MottolaBechtel Corp.William MoyersoenArcelorMittal Antwerp LogisticsAlbert PeggAntwerp Port AuthorityDirk VisserDynamar D.V.Grant WattmanAgility Project Logistics

MANAGING DIRECTORAlli McEntyre / +353 87 381 4021 [email protected]

ACCOUNT MANAGERSKathleen Pinson / +1 678 954 [email protected] for West, East & North Africa Kingsley Ekweariri / +1 353 89 952 4754 [email protected]

HEADQUARTERSClifton HouseLower Fitzwilliam StreetDublin 2 Ireland

To subscribe, [email protected], or call frominside the US +1 855 613 8186between 8:00 am and 5:00 pm CST.

A publication of ITE Group plcTransport & Logistics business105 Salisbury RoadLondon NW6 6RG, UK.

Gary Burrows

Sarens has been providing engineered transport, specialized rigging and heavy lift services for 60 years, building a thriving global enterprise that today operates in 60 countries on 6 continents. Sarens’ success is built around an unwavering commitment to safety, engineering creativity, and operational excellence. With state-of-the art design tools and one of the world’s largest inventories of cranes, transporters, and specialty rigging equipment, along with a team of highly skilled professionals, Sarens is well prepared to support your next project.

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China Expands Influence with New Formula for Asian Infrastructure

BANKING ON CHINA

Des

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cover story


East / SE Asia US$5.47 trillionSouth Asia US$2.37 trillionCentral Asia US$374 billionTOTAL US$8.22 TRILLION

Source: Asian Development Bank Institute

Power 49%Transportation 35%Telecommunications 13%Water and sanitation 3%

www.breakbulk.com BREAKBULK MAGAZINE 9

T he Chinese have a well-earned reputation for building impressive skyscrapers and, as recent

events in the South China Sea have shown, even islands in the middle of the ocean at breakneck speed.

China is equally famous for the slow, methodical pace with which it’s been opening up its economy to the rest of the world over the past 40 years. The Beijing government’s ongoing “reform and opening up” campaign began in the 1970s, when then-leader Deng Xiaoping gave domestic manufacturers a green light to partner with foreign companies. China opened wider by launching the Shanghai Stock Exchange in 1990, joining the World Trade Organization in 2001 and hosting the Summer Olympics in 2008.

Now, the campaign has reached another milestone with huge implications for the project cargo industry. The Beijing government is rolling out a new infrastructure and trade initiative balanced on two, mighty pillars: an interna-tional development bank with deep pockets coordinated by China, and a diverse set of trade and develop-ment programs arranged by China through bilateral deals with dozens of countries.

This ambitious initiative is expected to strengthen China’s economic ties with the rest of the world while driving major con-struction projects across Asia for years to come.

Over the next few years alone, contracts worth billions of dollars could be signed for infrastruc-ture projects in underdeveloped regions from Indonesia’s islands to Uzbekistan’s mountains. And that could be just the beginning since, according to one study, the value of all regional infrastructure demand now exceeds US$8 trillion.

In raising the initiative’s first pillar, Beijing has conceived and organized a multinational financ-

By Eric Johnson ing vehicle called the Asian Infrastructure Investment Bank (AIIB). The bank is expected to be ready to process project funding applications by the end of 2015.

As of June, China and nearly 60 founding-member partners from Britain to South Korea had pledged contributions to AIIB’s start-up pool of US$50 billion. Bank officials say the pool even-tually could expand to US$100 billion.

Loans, loan guarantees and direct investments issued by AIIB could begin flowing as early 2016. The money would be used to build highways, rail-roads, port facilities, industrial parks, power plants and much more.

Separately, China has orga-nized an Asian development initiative called One Belt One Road (OBOR) that targets what Beijing officials are calling the “belt” countries of central Asia and “road” countries of Southeast Asia. Through OBOR, China plans to finance con-struction projects and trade programs by tapping Beijing-based policy banks. Chinese engineering, procurement and construction firms; transporta-tion equipment manufacturers; and resource companies are expecting a hefty share of the contracts tied to bilateral deals with participating countries.

According to a recent OBOR analysis by BMI Research, the Chinese government “has traditionally been very willing to provide financial assistance through entities such as the Export-Import Bank of China to regions in need of infra-structure investment” such as Sub-Saharan Africa. These deals “have typically led to Chi-nese state-owned enterprises benefiting from construction or operation contracts.”

As of June, according to China’s official Xinhua news agency, governments in 60

BEIJING COMES OF AGE

WANTED: INFRASTRUCTURE INVESTMENT IN ASIA

China started its reform and opening up campaign in the 1970s

Spending needed to meet basic public demand for infrastructure through 2020

1970 Former leader Deng Xiaoping gives domestic manufacturers a green light to partner with foreign companies

1990 Launch of the Shanghai Stock Exchange

2001 Joins the World Trade Organization

2008 Hosts the Summer Olympics

2015 Roll out of the Asian Infrastructure Investment Bank

By sector, percentage of total spending

Sizing up cross-border trade and investment activity between China and 60, mainly Asian, countries covered by OBOR in the first quarter 2015

Chinese non-financial investments in OBOR countries

Source: China Ministry of Commerce

China exports to OBOR countries

China imports from OBOR countries

Singapore: US$570m

Indonesia: US$300m

Laos: US$260m

global exportsglobal imports

New engineering contracts won by Chinese companies in OBOR countries

Engineering projects completed by Chinese companies in OBOR countries

global investments: US$25.86bn

OBOR investments: US$2.56bn

US$144bnUS$91.5bn

US$15bn US$14bn

up 7.6% from Q1 2014 up 10.3%

from Q1 2014

cover story


countries had “voiced support” for OBOR. Although the report did not identify these countries, other Chinese media reports over the past year have named a variety of supporters including Armenia, Belarus, Cambodia, Russia and Turkmenistan.

Many countries eligible for OBOR deals are already strong trading part-ners with China. Beijing says combined trade with OBOR-zone countries exceeded US$1.1 trillion in 2014, repre-senting about 25 percent of China’s total foreign trade.

Western business leaders have been closely watching AIIB and OBOR take shape. Many see it as a positive development not only for supporting underdeveloped Asia but also as a step toward broadening foreign companies’ access to China’s market. They also hope the initiative gives non-Chinese EPCs, resource companies and other contrac-tors a shot at new business in Asia.

Jörg Wuttke, president of the Euro-pean Chamber of Commerce in China, told reporters at a May press event in Beijing that he hopes OBOR offers

inroads to Asian contracts and markets for companies from around the world. Ideally, he said, the Chinese program should be “done in a way that’s not only beneficial for Chinese companies, but beneficial for others.”

That so many countries have agreed to participate in AIIB and OBOR sug-gests many share Wuttke’s hope that China will welcome a variety of global contractors, and not just the Beijing gov-ernment’s state-owned enterprises.

Multinational support also testifies to the success of China’s methodical approach in launching the initiative. Indeed, the Chinese government spent years building financial and diplomatic ties with other governments before unveiling the plans. Negotiations were handled behind the scenes, in part due to the sensitive nature of China’s interna-tional relations.

Yet controversies over China’s initia-tive have been surfacing ever since the first details of infrastructure financing were made public in late 2014.

For example, the U.S. and Japan responded to China’s AIIB push by refus-

ing to join France, Australia and other western countries as founding members of the bank. That snub highlighted the competition for regional influence that’s pitted AIIB against the U.S.-led World Bank and the Japanese-led Asian Devel-opment Bank (ADB).

Underscoring that rivalry was Japanese Prime Minister Shinzo Abe’s announcement in May that his country would support ADB-funded infrastruc-ture projects with a fresh injection of US$110 billion over the next five years. The announcement coincided with a meeting of AIIB officials in Singapore. Japan’s new funds are expected to boost ADB’s Asia projects pool by 30 percent.

Another controversy surfaced in April when China refused to give an AIIB membership card to Taiwan, which Beijing authorities consider a breakaway Chinese province rather than an inde-pendent nation.

Meanwhile, China’s interest in sup-porting Southeast Asia infrastructure projects has been clouded by its ter-ritorial disputes with area countries, including AIIB founding members

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Vietnam and the Philippines, in the South China Sea. These long-simmering disputes have flared over China’s recent island expansion projects in the sea. And they’ve hurt Sino-U.S. relations, as the disputed area includes busy sea lanes that the U.S. has vowed to defend.

Despite the controversies, China has forged ahead with AIIB and OBOR.

Representatives of AIIB founding-member countries drafted the bank’s charter in May. They also agreed to open the Beijing-headquartered bank by the end of 2015. China will contribute 80 percent of the seed capital, or US$40 billion, while other member-countries will contribute the rest. Funds are to be distributed in the form of loans, equity investments and loan guarantees,

according to the bank’s website.Which countries will be first in line

to receive AIIB funds? And what kinds of projects are likely to be targeted? These and other questions have yet to be answered.

The bank’s website offers only a general explanation: “AIIB will focus on the development of infrastructure and other productive sectors in Asia, which may include energy and power, trans-portation and telecommunications, rural infrastructure, and agriculture develop-ment, urban development and logistics,” it said. Projects that “bring benefits to more than one member in the region will be particularly welcome.”

Much more is known about OBOR thanks to Chinese media coverage of

several visits to “belt” and “road” coun-tries by Chinese leaders over the past two years.

Chinese President Xi Jinping is credited with introducing the idea that, through OBOR, China should revive the spirit of its ancient Silk Road trade link to Europe. He outlined the idea during a September 2013 speech at Nazarbayev University in Kazakhstan. A year later, the program’s related focus on Southeast Asia came to light when Xi unveiled a trade strategy for the region while addressing Indonesia’s parliament in October in Jakarta.

In May, Xi added substance to OBOR’s belt plans while cementing terms for bilateral deals during visits to Russia, Belarus and Kazakhstan.

Delegates from dozens of countries gathered in Beijing on April 27 to hammer out cooperative agreements leading to formation of the Asian Infrastructure Investment Bank. / Credit: AIIB website

cover story


Chinese state media said nearly 90 OBOR-related agreements “covering trade, energy, aerospace, finance, invest-ment, infrastructure and other areas” were signed during the trips. Details have not been released.

Also in May, a Chinese media report said China and dozens of OBOR countries had started building 70 “cooperative” industrial zones across Asia worth a combined US$8 billion. Factories and other facilities in these zones are expected to generate up to 200,000 jobs.

China is also using OBOR as a spring-board for domestic development. An area near the north-central city of Xi’an, for example, has been picked as a trade hub linked to China seacoast ports. Plans call for building an all-new city with a population of 900,000 to support an air transportation logistics center at Xi’an Xianyang International Airport.

The local government has reportedly allocated US$18 billion for the project’s initial construction phase, which is now under way.

Regional transportation projects could also be a boon to Chinese manu-facturers of high-speed trains and heavy equipment such as bulldozers. China’s Business Daily newspaper recently quoted unnamed sources as saying that China plans to use OBOR over time to put Chinese-made high-speed trains to work on more than 26,300 kilometers of new track in countries including Russia, Thailand and Cambodia.

OBOR projects offer a foundation for economic growth and jobs through improved transportation, electricity, energy and telecommunications that foster investment, Zhang Yansheng, an economist with the Chinese gov-ernment’s National Development and Reform Commission, recently told

Xinhua. In turn, he said, better infra-structure will promote regional trade.

In Jakarta, Xi said China through OBOR planned to build stronger trade ties with the 10 member-nations of the Association of Southeast Asian Nations. ASEAN members work under a limited-scope, free trade agreement with China. Moreover, OBOR and AIIB would co-exist with the development-focused ASEAN Infrastructure Fund (AIF), which is backed by ADB.

Non-China-affiliated institu-tions such as ADB and AIF have been supporting big Asian infrastructure projects for years. But their combined funding level is considered far less than what’s needed to meet demand for development in Southeast Asia and the rest of the continent.

ADB’s research division in 2012 said more than US$8.2 trillion would be needed to meet all of the region’s infra-

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structure demands from 2010 to 2020. That huge amount is equal to about 12 percent of the world’s annual gross domestic product.

“Asia’s infrastructure needs are enormous,” said Stephen P. Groff, ADB vice president of operations. “The need is defined by the vast numbers of Asians who still lack access to basic services. Around 1.7 billion people don’t have decent sanitary facilities, more than 600 million still have no electricity, and more 360 million don’t have safe drinking water.”

And Asia’s ongoing urbanization is accelerating this demand. “With 40 million new city dwellers a year in Asia, the urgency to improve infrastructure to meet demand for decent services will become more acute,” Groff said.

Yet Asian development banks should back rural-area projects as well in order to build “connections to devel-

oped areas” and support “the free flow of goods and services,” according to a recent Dezan Shira & Associates report. Without banks and government back-ing, the report said, rural projects might never get off the ground because they’re “generally not very profitable for private enterprises.”

Western leaders are as aware as their Asian counterparts about the need for more financing in developing Asia. And some, such as France’s former premier Dominique de Villepin, have applauded China for stepping up to the task.

“The World Bank and the Interna-tional Monetary Fund are not a good solution to current economic problems,” de Villepin recently told Chinese busi-ness news web portal Sohu. “What we’ve seen today is that the biggest problem facing many developing countries is a lack of necessary funds to build infra-structure.

“We need new tools, powerful new tools such as the Asian Infrastructure Investment Bank” and OBOR, he said.

A road-building project now under way in Cambodia offers a glimpse at what OBOR hopes to accomplish – and how.

The state-run China Road and Bridge Corp. won the US$133 million, three-year contract to build the 182-kilometer road connecting the country’s north-western Pursat Province to the Thailand border. A Chinese government loan to the Cambodian government will finance the project.

At a ribbon-cutting in May, according to Xinhua, Cambodian Prime Minister Hun Sen praised the Chinese initiative to support Asian development.

China is providing “a new source of capital for countries for developing infrastructure and connectivity,” Hun Sen said. “Cambodia and other countries will benefit.” BB

At first pass, the headline figures for the number of piracy attacks reported globally seem encouraging. Through the first quarter of 2015, the number of actual and attempted attacks stood at 54, according to the

International Maritime Bureau, a far cry from the peak of 142 in the first quarter of 2011 when Somalian pirates ruled the waves.

But scratch the surface and it’s clear that the problem has not gone away. While Somali piracy has been largely quashed thanks immeasurably to industry cooperation and the joint naval task force in the region, the number of reported incidents in other regions has shot up. Indonesia is a case in point: actual and attempted attacks here have more than quadrupled over the same period.

With cargo theft, ransom demands, hostage taking and the real threat of crew fatalities worldwide, ship operators remain concerned. The most vulnerable ves-sels, according to Gerry Northwood, chief operating officer of maritime security company MAST, are the slower vessels with a low freeboard of less than eight meters. “Vessels involved in breakbulk, heavy-lift and project cargoes often fall into that category,” he said.

Ship operator BBC Chartering said the constant threat of piracy is one that it takes “very seriously.” To tackle the problem it has invested in defensive security equipment for its vessels, additional crew training, and evasive action, such as rerouting ships to avoid piracy hotspots. The operator relies on regular advice on piracy risks from an external consultant, which can range from implementing recommended measures to complete avoidance of high-risk areas, said Raymond Fisch, senior vice president of public relations.

While breakbulk and project cargoes do not in themselves make attractive targets for theft, the threat of boarding remains real. Earlier in the year, the Chinese navy foiled a pirate attack on a heavy-lift ship in the Red Sea. Suspected pirate speedboats were seen cruising in small groups around the 1983-built Zhen Hua 20 on the evening of Jan. 1, but were repelled by the navy. The Zhen Hua 20 was escorted for a further five days on its journey from the Suez Canal to Dammam.

More recently, robbers boarded an underway heavy-lift ship and stole stores on May 16. Accord-ing to a report from Protection Vessels International (PVI), part of British risk mitigation business Protec-tion Group International, the crew heard the robbers moving around as the vessel sailed about 160 nauti-cal miles southeast of Vung Tau, Vietnam. The crew launched an investigation before sighting the robbers making their escape by boat.

Pirate activity in Vietnam is said to be highly unusual, but attacks in this location are becoming more commonplace. There have been 12 reported incidents of robberies against vessels in Vietnam-ese waters to date in 2015, against just one reported incident between January and September 2014. “The spike may be related to onshore economic motives, improved reporting of incidents and inadequacies in

MOVING

security


TARGETSDon’t Discount the Ongoing Piracy Threat

By Carly Fields

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detecting and punishing perpetrators,” PVI said.

Speaking to Breakbulk, Matthew Parker, managing director of PVI, believes the sea today is a less stable place in which to operate than it was 12 months ago. He cites the ongoing issues dealing with mass migration from North Africa; the expanding ambitions of Islamic State and other extremist groups and their stated desires to con-duct attacks at sea; and the instability in Yemen which is creating a launch pad for attacks.

“These threats require a cooperative and comprehensive solution between the companies with assets at risk, industry bodies, government and the specialists who will supply a number of the solu-tions,” he said.

James Wilkes, managing director of business intelligence consultant Gray Page, noted: “Piracy (and pirates) suc-ceeds because no one ever sees them coming, literally and metaphorically. Just because pirate gangs in the South China Sea region are targeting refined oil cargoes at the moment, it doesn’t mean that they won’t target other types of cargo in the future, or turn to kidnap-ping seafarers from ships and holding them to ransom.

“To protect ships properly against piracy we need to start thinking ahead and placing a greater emphasis on tak-ing a holistic approach to security risk management, rather than just being reactive and applying ‘security patches’ in the hope that the risk, wherever it is right now, will go away eventually. It’s not a new message, but it can’t be said enough,” Page said.

While Somalia has all but dropped off the piracy radar, two other trouble areas now hold the attention of ship operators.

Southeast AsiaThe South China Sea threat is

mainly directed at small to medium-size tankers, carrying refined oil cargoes such as gas/diesel oil or gasoline. Here, ships are being hijacked and part or all of their cargo is stolen. “These are car-goes for which there is a black market into which stolen cargoes can be easily sold,” Wilkes said.

MAST’s Northwood described South

Southeast Asia now accounts for the lion’s share of piracy incidents.

LOCATIONS OF ACTUAL AND ATTEMPTED ATTACKS, JANUARY-MARCH 2010-2015

120

100

80

60

40

20

0

SE Asia Far East India Subcontinent

Americas Africa rest of world

2010 2011 2012 2013 2014 2015

SUBTOTAL FOR FIRST QUARTER

TOTAL AT YEAR END

2 0 10 2 0 11 2 0 12 2 0 13 2 0 14 2 0 15

67

445439

297264 245

142102

66 49 54

Source: International Maritime Bureau

Italian destroyer Andrea Doria escorts a World Food Project vessel. Credit: EU NAVFOR

www.intermarine.com

Empire StateBuilding

= 10 cubic meters

Eiffel TowerParis

Burj KhalifaDubai

Celebrating 25 years of milestones as the global leader in the transport of project,

breakbulk and heavylift cargoes.

70 millioncubic meters of cargo delivered

equivalent to the volume of 70empire state buildings

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more than the cumulativeweight of every volkswagenbeetle ever made

nautical milestraveled at sea, the equivalent distance from

earth to mars

security


East Asia as “an increasingly scary place for seafarers at the moment.

“Operators should protect their crews, cargoes and vessels by thoroughly risk assessing their voyages. This is what the military calls ‘Mission Planning,’ ” he advised. “Considerations should be given to routing and communications security, time spent at anchor, implementation of BMP4 type measures to harden the vessel, additional lookouts, and citadel drills.” BMP4 are Industry Best Manage-ment Practices for Protection against Somalia-based Piracy.

“This is not an exhaustive list and, sadly, most crews are too busy with operating the vessel to give appropriate consideration to basic security proto-cols. Most of these incidents are entirely avoidable with just some application of the mission planning principles listed above,” Northwood said.

ABOVE: Swedish combat boats participating in Operation Atalanta patrol off the Somali coast. BELOW: The officers of the local Marine police patrol unit train with

EU Naval Force FGS Lubeck’s sea boat. / Credit: EU NAVFOR

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security


LIMITATIONS OF A JOINT NAVAL APPROACHThe unwavering presence of the

European Union Naval Force, or EU NAVFOR, has tipped the balance in favor of safe passage for the world’s merchant fleet and seafarers around the Horn of Africa. Operating within the framework of United Nations Security Council Resolutions, Opera-tion Atalanta is the EU’s counter-piracy operation off the coast of Somalia.

EU NAVFOR has warships from EU member states at sea in the piracy high-risk area 24 hours a day, conducting counter-piracy patrols. It also has mari-time patrol and reconnaissance aircraft (MPRA) conducting aerial patrols, on the lookout for “pirate action groups.” Over an area that is one-and-a-half times the size of mainland Europe, EU NAVFOR coordinates piracy patrols and the escorting of vulnerable shipping with the other naval task forces from NATO and Combined Maritime Forces.

It’s a model that has been a success story in the battle against piracy off Somalia, but it’s one that may be “lost in translation” if it were to be emu-lated in other regions suffering from increased piracy attacks.

Both PVI’s Matthew Parker and Gray Page’s James Wilkes believe there are positive lessons to be learned from that

model, but with important caveats.“There is already a framework in

place for international cooperation to deal with criminality at sea. The Regional Cooperation Agreement on Combating Piracy and Armed Robbery (ReCAAP) and its Information Sharing Centre (ISC) were designed to provide this function” in the South China Sea, Parker said.

“Given the geopolitical frictions in the region, the imposition of a Western solution would be foolish; far better for interested parties to invest in a more localized solution, especially as membership is not limited to regional countries. Denmark, Holland, Norway, USA and UK are already signatories,” he said.

In the Indian Ocean public/private partnership will be the key to suc-cess, he said, as governments are ill-equipped to deal with the threat on their own.

Wilkes added the industry shouldn’t forget there was a much broader coali-tion of naval forces operating in the Gulf of Aden/Arabian Sea/Indian Ocean range, as well as a greater level of politi-cal interest in seeing that these waters – primary international trade routes – remained open to shipping and free

from the threat of hijacking for ransom by Somali pirates.

“There was no single point of effort that you can point to and say confi-dently that it made all the difference in the fight against Somalia-based piracy. And there is no one thing, no ‘silver bullet’ if you will, that will make all the difference in combating piracy in the Gulf of Guinea and South China Sea region. Combating piracy of this nature requires a combination of many actors working on different levels, and it always will,” Wilkes said.

MAST COO Gerry Northwood agreed that it was the multiagency approach that gave EU NAVFOR so much credibility and allowed it to play such a pivotal role in setting the condi-tions for the eventual suppression of Somali piracy.

An EU Naval Force spokesperson confirmed that its current mandate runs until December 2016, and there are no plans by member states to extend its operating areas. However, in a small concession, it told Breakbulk that the cooperation model could be emulated, bringing together the maritime industry and a range of counter-piracy forces to deter and disrupt piracy in other regions.

Parker adds that it’s not just the increase in piracy in the South China Sea that should worry operators; it’s the type of attack as well.

“Low-level criminality of the type seen in the region for centuries is migrating to more sophisticated cargo theft. In the case of cargo theft, the pirates have been smart: smaller tank-ers belonging to companies generally not carrying oil majors’ cargo have been the target because the criminals have no desire to upset those with the financial and political clout to stop their activi-ties,” he said.

Having targeted a vessel and boarded, pirates cut communications and other tracking equipment and ren-dezvous with a lighter to pump the fuel

TYPE OF VIOLENCE TO CREW BY LOCATION, JANUARY-MARCH 2015Hostage taking accounts for the majority of reported incidents.

MalaysiaIndonesia

Malacca StraitsGhana

NigeriaPapua New Guinea

VietnamBangladesh

0 10 20 30 40 50

Hostages Threatened Assaulted Injured Killed Kidnapped

Source: International Maritime Bureau

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security


lawless country and out into deep-sea waters that are the subject of the United Nations Convention on the Law of the Sea, rather than territorial claims.

“Security in the Gulf of Guinea is a complex legislative problem beset with constitutional ambiguity and inconsis-tency in enforcing the few clear laws that are in place,” Parker explained. “Endemic corruption and blurred lines between state jurisdictions further complicate the decisions that operators must make in weighing up physical risk against business risk.

“The use of local government security personnel as embarked armed security is prohibited. Aside from the threat of pros-ecution, such practices bring an increased risk of violence, as pirates in the Gulf of Guinea will routinely sustain attacks against vessels. While embarked guards may prevent a hijack, operators increase their exposure. Quality assurance is dif-

West AfricaCargo pilferage is a concern in the

second piracy hot spot off West Africa, but the concurrent threat of hostage taking and violence, sometimes leading to fatalities, makes operations in this region all the more perilous.

Kidnapping seafarers is particularly prevalent in the waters off the Niger Delta, where offshore support vessels, anchor handling tugs and platform support vessels commonly operate and which have been targeted over the years.

In West Africa, BBC Chartering keeps its ships waiting outside and they only proceed to ports when the berth is ready and a pilot is available. “In some instances we are using local escort boats from fairway buoy to berth and vice versa,” Fisch said.

The Somalian model of piracy was, by contrast, simpler to tackle as the attacks took place off the coastline of a

off. The precision of the attacks and repeat targeting suggest the attackers could be colluding with people within the target shipping companies, said Parker.

However, while the statistical threat of piracy in this region has undoubtedly increased, growth remains linked to certain vessel types and follows a par-ticular modus operandi. Pirates in the South China Seas lack the sanctuary of Somalia, making the threat of hijack for ransom less likely.

“Visible hardening, regular reporting and a well-drilled crew will mini-mize the vulnerability of a vessel” in these areas, Parker said. “Voyage Data Recorders and the more routine use of comprehensive CCTV coverage for evi-dence capture would contribute to the successful pursuit of those responsible, leading to an inevitable reduction in attacks.”


ficult to obtain, as is consistency in the professionalism of guards contracted locally. Currently, the only option for robust, legitimate physical protection is the use of naval escort vessels and state-protected anchorage areas.”

MAST’s Northwood believes the employment of armed guards instantly makes those vessels less attractive targets. However, he too questions the quality of the guards permitted by sur-rounding states.

“In our view, it is better to have no armed guards and take the precautioned mission planning listed above, than to have armed guards who have not been trained to high standards and properly vetted,” he said.

Finding an operational model whereby armed guards can be embarked or disembarked in the South China Sea is also problematic. Here, the efficacy and prevalence of regional military and law enforcement means that the use of privately contracted armed guards is unlikely to become commonplace.

BBC Chartering employs armed guards on some routes from selected providers when this is recommended by outside experts. These guards must have the required skills, be registered in a Western European country, be properly trained, have the required gear and all necessary certificates. The use of armed guards has proved to be effective for the operator, although cost recovery is wholly dependent on the terms of the charter party, Fisch said.

In a word of caution, PVI’s Parker said there are few situations where a headlong rush to the carriage of weapons with the potential to apply lethal force is wise. The introduction of guns must be accompanied by the appropriate training and other checks and balances to make sure risks are properly mitigated, prob-lems are solved and not created, he said.

With the armed guard option off the table, ships need to pay close attention to the BMP4 practices in these waters. Operators also need to carefully control the information surrounding a particu-lar ship’s voyage and cargo.

“Hijacking for cargo theft is not a random act of piracy,” Wilkes warned. “These incidents are targeted events. The pirates usually know which ships to go after and what cargoes they will be car-

rying. It is difficult to accomplish because ship movements and cargo information are shared among many parties – agents, charterers, buyers, sellers, shipowners and so on – but, limiting the distribution of information pertaining to ship move-

ments and cargo details is advised.” But for all the measures that can be

taken, sometimes total avoidance of a par-ticular port or region known to be high risk is the only “safe” solution for ship, crews and consequently operators. BB

The thirst for information on the future of world energy is insatiable and all-encompassing; even the Pope now wants to know what the future of world energy will be, as he indicated in his recent passionate

encyclical about climate change.Is the transition toward renewable energy taking

place right now a passing fad or an historic shift, and can those renewables meet rising demand?

A just-released landmark International Energy Agency study says there is only a 50-50 chance of cutting global greenhouse gas emissions, or GHGs, enough by 2040 to keep the earth’s average tempera-ture from rising more than 2 degrees Celsius before 2040. If it rises higher, the IEA reports, the world must be prepared to face the worst impacts of climate change.

But, the IEA also says, the world’s energy produc-ers and consumers can collaborate on a successful transition if they:

• Increase the efficiency of industry, buildings and transportation.

• Progressively shutter the least-efficient coal-

ALL IN THE ENERGY

MIXRace is on Between Demographics,

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By Herman K. Trabish

Credit: Shutterstock

energy forecasts


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burning facilities and stop building new ones.

• Raise investment in renewables from 2014’s US$270 billion to US$400 billion in 2030.

• Gradually phase out fossil fuel sub-sidies by 2030.

• Reduce methane emissions from oil and gas production.

The IEA’s plan, which it calls the “bridge” scenario, specifies some pretty demanding changes.

Although 1.7 billion people would have electricity for the first time by 2030, oil and coal use would stop grow-ing by 2020. Oil demand would peak and plateau at 95 million barrels per day. Despite global energy supply growing by 3,900 gigawatts between 2015 and 2030, coal demand would peak before 2020, as renewables grow to represent 37 percent of global electricity generation capac-ity by 2030. Natural gas would reach more than 20 percent of new generation capacity.

The good news is that the US$26 trillion cost of such shifts falls US$1.6 trillion below the projected necessary global investment. The lower cost pro-jection is due to increased renewables investments that are forecast to be lower than the fossil fuels investments they replace, and falling household energy expenditures as the result of the 33 percent higher average annual energy efficiency investment of US$650 billion.

Bullish Oil OutlookExxonMobil’s View to 2040 starts with

demographics: global population will rise, it projects, from 2010’s 7 billion to 9 billion in 2040. Despite an aging workforce, China’s GDP will grow 400 percent in that period. The working age population of India will increase as its GDP grows 300 percent. In Exxon-Mobil’s other “key growth countries,” expanding working age populations will double or triple GDPs.

These changes will increase the world’s middle class from 2010’s 1.9 bil-lion to 4.7 billion in 2030. That means 60 percent more people with money to spend on electricity and transportation fuels.

Improved efficiency in the 32 lead-ing advanced economies that comprise the Organization of Economic Coopera-

tion and Development, or OECD, will produce a 7 percent reduction in energy demand by 2040 despite an 80 percent increase in GDP.

But developing countries’ energy demand will grow 70 percent by 2040, led by China’s 30 percent increase and India’s 20 percent increase. The net global 35 percent energy demand increase will be only half what it was between 1980 and 2010 – and 75 percent of the 2010 to 2040 growth will come by 2025.

Transportation energy demand from OECD nations will decrease and electric and hybrid light duty vehicles will grow from 1 percent of the fleet in 2010 to one-

third of the fleet in 2040. But overall use of liquid transportation fuels will move toward 140 barrels per day as the rising middle classes in China, India and the key growth nations purchase their first cars. Rapid growth in the use of heavy-duty vehicles in emerging economies will add to the upward pressure on liquid fuel demand.

The fastest growing subsectors, how-ever, will be consumption of liquid fuels for aviation, marine and rail transport. Together, they will grow from their pres-ent 20 percent share of all transportation fuel to 30 percent in 2040, ExxonMobil predicts.

In 2010, the combined demand for liquid fuel by the aviation, marine and rail subsectors was about half of that demanded by the world’s light-duty vehi-cle fleet. In 2040, it is expected to be 90 percent of the light-duty vehicle fleet’s demand. Most of that demand will be met by oil, creating a combined 7 million barrels per day (equivalent) increased use. About 20 percent of demand growth in the marine and rail subsectors will likely shift to natural gas, so that by 2040 it will be about 10 percent of the fuel con-sumed in those markets.

The overall result is an increase in oil demand in 2040 of “almost 30 percent due to growth of commercial transporta-tion and the chemical industry’s need for feedstock.”

It is natural for the world’s biggest independent oil company to be bullish in its outlook, but the forecast is a far cry from what the IEA says is needed to prevent the worst impacts of climate change. This is unlikely to please the Pope.

Global electricity demand is pro-jected by ExxonMobil to grow 85 percent. But coal’s share will fall from 2010’s 40 percent to below 25 percent in 2040, as China and the OECD countries shift to lower emission resources for electricity generation. Natural gas will take a big share of what coal loses; its use in the electricity sector will increase 135 percent. Demand for nuclear power is forecast to increase 2.3 percent per year through 2040 and use will increase 90 percent overall.

Solar capacity in the electricity sec-tor will grow 2,000 percent and wind capacity will grow 500 percent. Demand

In the IEA’s ‘bridge’ scenario, solar and wind power gains will offset coal capacity losses.

WORLD POWER GENERATION CAPACITY MIX AND CAPACITY ADDITIONS

100%

80%

60%

40%

20%

0%

2014 2030

6,178GW 8,809GW

installed capacity

additions 2015-20303,905GW

others

solar PV

wind

hydro

nuclear

oil

gas

coal

Source: IEA Energy and Climate Report

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21%

14%

23%

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for solar, wind, biofuels, and geother-mal will grow by at least 5.8 percent per year. Yet ExxonMobil’s conclusion about renewables’ role in power generation is quite conservative. They will be only 4 percent of global energy demand in 2040, it says, because of the “cost and intermittency” of solar and wind.

GHGs from energy use will grow 25 percent, peak in 2030, and then dimin-ish about 5 percent by 2040. This would likely leave the Pope grumbling. Or praying.

The BP Energy Outlook 2035 projects similar conclusions to those by its sister oil giant, but the five-year time horizon difference limits comparisons.

Like ExxonMobil, BP sees GHGs ris-ing 25 percent by 2035.

Another unmistakably similar if unsurprising conclusion is that non-OECD countries are where the action is. They will provide 96 percent of the 37 percent growth in energy consumption and more than half of that will come from China and India. Demand will also grow 37 percent and those two coun-tries will make up half of that growth as well.

Liquid fuel consumption, including oil, biofuels, and alternative fuels, will be 111 million barrels per day by 2035, BP predicts. The biggest impacts will come from non-OECD transportation and industrial consumption.

Almost 60 percent of capacity growth will be for electricity generation. Renew-ables (including biofuels) will grow 6.3

percent per year to be twice as big as in ExxonMobil’s future, providing 8 percent of total energy consumption in 2035. Nuclear will grow 1.8 percent per year, about the same as hydroelectric power’s 1.7 percent per year.

Natural gas will be the fastest-growing source of fossil fuel generation, growing at 1.9 percent per year, more than twice as fast as coal’s 0.8 percent per year growth. Coal loses market share everywhere in the world, including in China. Even generation with oil will grow a tiny bit faster than coal’s use.

Natural gas will have an almost 500 billion cubic feet per day capacity

by 2035 and 80 percent of that will be used for power generation or industrial heating. The U.S. will provide almost a quarter of all gas supplied.

BP expects shale gas to be increas-ingly important to supply. North America now provides almost all shale gas, and will still provide 75 percent in 2035, but by the 2030s growth of the rest of the world’s share will be bigger. China will account for 13 percent of global shale gas supply growth. By 2035, China and North America will provide 85 percent of global shale gas output.

Liquefied natural gas, or LNG, will be the biggest source of natural gas import-export activity by 2035. While natural gas trade will grow about 2 percent per year, LNG trade will grow at a 4.3 per-cent-per-year pace.

Renewables will become affordable, BP’s evaluation predicts, due to techno-logical advances, learning-by-doing, and economies of scale.

“Both solar PV and wind appear to be following well-established learning curves, with costs falling rapidly as pro-duction increases,” BP reports. “Onshore wind power in the best locations is increasingly able to compete with new conventional fossil power plants, even without subsidy and allowing for grid integration costs.”

Solar PV is becoming competitive in some markets, but only a price on carbon will give it the edge against efficient

Europe will continue to play second fiddle to Asia Pacific’s PV needs.ANNUAL PHOTOVOLTAICS DEMAND BY REGION 2015-2020

150*

120

90

60

30

0

2014E 2015E 2016E 2017E 2018E 2019E 2020E

Africa

*in gigawattsSource: GTM Research Global PV Demand Outlook 2015-2020

Europe Asia Pacific North America Latin America Middle East

Global energy demand will increase 35 percent from 2010 to 2040.2040 GLOBAL DEMAND BY FUEL

250*

200

150

100

50

0

oil

0.8% – average annual growth rate

1.6%

0.1%

0.5% 2.3%

5.8% 1.8%

gas coal biomass nuclear solar/ wind/

biofuels

hydro/ geo

*in quadrillion British thermal units, or BTUsSource: The Outlook for Energy: A View to 2040, ExxonMobil

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natural gas generation by 2035.The EU will remain the world’s

renewables leader, thanks to falling costs that relieve its subsidy burden. China and the U.S. will be neck and neck by 2035.

Emissions can be reduced faster, BP reports, but any choice entails challenges that present risks of higher costs, limits to technology, stranded capital stock, global policy implementation obstacles, or resistance to behavioral change.

Clearly the Pope would not be pleased with the oil companies, though he might give BP credit for at least offer-ing, though tentatively, some options.

Alternative AnalysisThe Global Futures Report from the

Renewable Energy Policy Network for the 21st Century, or REN 21, offers a range of possible futures drawn from 50 recent scenarios and evaluated by 170 surveyed experts.

Unlike oil company forecasts, which take oil’s dominance of new technolo-gies as a given, the REN 21 analysis sees the energy future through 2050 as “fundamentally a choice, not a foregone conclusion.” Various future scenarios are built on projections for investment that range from US$300 billion to US$1

trillion by 2020, it explains.The report recognizes there are

“conservative” projections by energy companies that, perhaps swayed by vested interests, do not expect the share of renew-ables in future energy markets to grow.

It also recognizes “moderate” projec-tions that foresee renewables providing 30 percent to 45 percent of the electricity, heating and cooling, and transport fuel markets by midcentury. Such projections, it explains, allow for higher renewables penetrations into the world’s grids and the entry of biofuels and plug-in vehicles into the transport marketplace.

...THE REN 21 ANALYSIS SEES THE ENERGY FUTURE THROUGH 2050 AS “FUNDAMENTALLY A CHOICE, NOT A FOREGONE CONCLUSION.”

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Finally, it recognizes “high renewables” projections by advocacy organizations like Greenpeace Interna-tional as well as those from the IEA that offer roadmaps to possible 100 percent renewables futures by midcentury.

Such future scenarios are supported by aggressive, if hypothetical, policies that drive unprecedented investment in grid strengthening, new markets, afford-able energy storage, smart technologies, and a completely transformed transpor-tation sector.

“In transport, large shares of biofuels and electric vehicles are projected, even for freight transport, such as biodiesel and electric trucks and electric rail,” REN 21 explains. “The use of electric vehicles for grid balancing purposes is enhanced through smart-grid interac-tions and ‘vehicle-to-grid’ (V2G) and ‘vehicle-to-home’ (V2H) concepts.” Smart technologies and breakthrough

architectural and materials science thinking creates a “different paradigm” in building energy management.

What most “high renewables” sce-narios have in common is a constraint on GHG emissions, often in the form of an emissions price or emissions trading market, REN 21 finds.

Not left to choice is that “at least 30 countries around the world already have shares of renewable energy above 20 percent,” REN 21 reports. An estimated 120 countries also have long-term poli-cies to grow renewables by 10 percent to 50 percent in the 2020-to-2030 time-frame. They include Algeria, China, Indonesia, Jamaica, Jordan, Madagas-car, Mali, Mauritius, Samoa, Senegal, South Africa, Thailand, Turkey, Ukraine, and Vietnam.

The historic China-U.S. agree-ment on emissions reductions and the Obama administration’s Clean Power

Plan are expected to add to momentum for expanded renewables targets. Led by at least some of the BRIC countries, more demanding policies are expected from Argentina, Chile, Colombia, Egypt, Ghana, Indonesia, Jordan, Kenya, Mexico, Nigeria, the Philippines, South Africa, and Thailand, according to the REN 21 report.

In transportation, next-generation technologies will take biofuels well beyond their current 3 percent share of the transportation fuels market. Some will still be blended into petroleum-based fuels but some will be standalone products by the 2020s.

Wind ProjectionsThe most recent Global Wind Energy

Council forecast predicts Europe will stay on course to achieve its 20 percent renewables target by 2020, with about 70 GW of new wind capacity yearly through


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2019. Sweden, France, Turkey, and Poland are expected to lead.

U.S. growth, GWEC adds, will remain unpredictable because of uncer-tainty about its key production tax credit. Canada’s lack of specific binding policy makes it equally unpredictable. Mexico’s legislation targets a 2 gigawatt-per-year wind growth that, GWEC predicts, will not likely be met before 2019. Overall, North America will add about 44 GW of wind capacity by 2020.

China, GWEC predicts, will add 100 GW of wind by the end of 2019, beating its 200 GW cumulative installed capac-ity 2020 target “by a healthy margin, and a year ahead of time.” India will not achieve its 5 GW-per-year target in 2015, but will continue growing and be close to that annual installed capacity by 2020, GWEC expects.

The rest of Asia will add 140 GW of wind capacity by the end of 2019, with

notable growth in Pakistan, the Philip-pines, Taiwan, and Thailand, but not in Japan or South Korea.

Brazil will lead Latin America, with an estimated 12 GW to 13 GW by 2020. Chile, Uruguay, Peru, and Panama are expected to grow wind but Argentina has Latin America’s most untapped potential. The region is expected to account for about 25 GW of new capacity by 2020.

Africa and the Middle East will likely add about 13 GW by 2020, according to GWEC, with South Africa and Egypt leading and Morocco, Ethiopia, Kenya, Tanzania, Ghana, and Jordan contribut-ing. The Pacific region will contribute perhaps 4 GW, led by Australia.

After growing only 2 percent in 2014, the global photovoltaics market will grow 36 percent in 2015, GTM Research’s Global PV Demand Outlook, 2015-2020 reports. This unprecedented

growth from a small base may not get much attention from ExxonMobil and BP but it will likely please the Pope.

Asia will own half the 2015 market, Western Europe will remain strong and Turkey will emerge. In 2017, global growth will slow due to uncertainty created by the Dec. 31, 2016, expiration of the U.S. investment tax credit, but 23 percent yearly growth will return from 2018 to 2020, GTM Research predicts, led by China, the U.S., and Europe. Latin America, the Middle East and Africa will emerge to capture 18 percent of the global market by 2020.

Global installed capacity is forecast to reach an estimated 696 GW by 2020, according to GTM Research.

An energy transition is clearly under-way, but scenarios significantly differ and it is hard to know which is most accurate. In the end it may all come down to what you are praying for. BB

The busy sea lanes tra-versed daily by the world’s project cargo shippers might be com-pared to squares on a Rubik’s Cube puzzle

with multiple configurations but only one solution.

Now, two of the world’s most expe-rienced and extensive operators of multipurpose vessels have solved part of the global puzzle by agreeing to pool hardware, international resources and collective experience while combining their project cargo services.

Singapore-based AAL and Hamburg-based Peter Döhle Schiffahrts-KG have agreed to cooperate closely but maintain corporate independence while shar-ing tonnage across major trade routes, offering customers a new dimension in worldwide tramp and project services.

Under the deal announced in May, AAL will handle all project cargo opera-tions, while Peter Döhle will oversee time charter and bulk cargo operations for the combined fleet. In this way, the companies plan to share operational responsibilities for global coverage with a combined fleet of more than two-dozen multipurpose, heavy-lift-capable cargo vessels in seven classes, ranging from 12,000 to 31,000 deadweight tons.

Each company brings to the table “functional and geo-graphical strengths” that, when combined, provide “economies of scale (and) far greater reach within the mar-ketplace,” said Namir Khanbabi, manag-ing director of AAL’s Tramp & Projects Division.

AAL is the younger of the two partners with 20 years of liner service under its belt, compared with Peter Döhle’s nearly six decades in the business.

AAL is based in the backyard of young, fast-growing Asian economies. This year, the company has grown its fleet’s combined tonnage to more than 500,000 dwt to maintain brag-ging rights as “the youngest and most advanced” fleet in the breakbulk sector. Moreover, AAL has a solid track record

SOLVING

Namir Khanbabi

A GLOBAL

PUZZLE

carrier profile


AAL, Peter Döhle Partnership Makes Logical SenseBy Eric Johnson

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for reliable services and quality cargo moving throughout Southeast Asia, China, Australia and the Americas.

For these and other reasons, a close look at AAL’s past and present can open a window to its future as Peter Döhle’s partner. And AAL’s current business points to where the Asia project cargo market is heading.

AAL’s current position as a lead-ing global ocean transport operator is based on its ability to serve the breakbulk, heavy-lift and project cargo industry with 19 special multipurpose, heavy-lift vessels under distinct busi-ness units, namely the Liner Division and the Tramp & Projects Division. The com-pany is a subsidiary of the privately held ship-ping group, Schoeller Holdings.

AAL recorded significant growth last year, underscored by Schoeller’s decision to strengthen management by trans-ferring company board member and appointed Managing Director Kyriacos Panayides to Singapore from the group’s home base in Limassol, Cyprus.

Breakbulk caught up with Panayides at the annual Breakbulk China exhi-

bition in March and again in May at Breakbulk Europe, where the AAL team was busy promoting its agreement with Peter Döhle. Panayides, with nearly 25 years of maritime industry experience, has been serving AAL since its inception in 1995, holding a managerial position in the early days and later via a seat on the board of directors.

AAL got its start 20 years ago as a Dutch-incorporated company called Austral Asia Line BV. Management offices were opened in Brisbane, Aus-tralia, and Singapore, and a liner service launched with routes connecting South-east Asia ports, Papua New Guinea and Queensland, Australia.

Three years later, Schoeller incorpo-rated a sister firm to complement Austral Asia Line, giving the new company the same structure and management. The sister, called Project Asia Service BV, launched a service linking northern Asia and Australia’s east coast. It also opened offices at major ports in China, and arranged an owner’s representative in South Korea.

The sisters merged in 2006, main-taining the name Austral Asia Line. The company in early 2015 was officially rebranded to AAL to reflect its global growth and operations.

Now that he’s moved to Singa-pore, Panayides’ chief assignment is to

“oversee AAL’s next stage of business development,” according to a recent company press release.

“My focus will be on the corporate side of the business” to make sure “our management systems and infrastructure are in line with our growth plans,” he said. “We will continue to embrace the dynamic and entrepreneurial approach to business that defines us.”

Panayides’ transfer to the Ori-ent coincides with dynamic changes under way in Southeast Asia, where accelerating development has attracted companies with a vast array of spe-cial cargo needs. Manufacturers, for example, are shifting production from China to less expensive Malaysia and Indonesia. Chinese engineering, pro-curement and construction companies are winning bids for infrastructure proj-ects from railroads to pipelines. And the renewable energy business, encompass-ing initiatives from wind power farms to hydroelectric dams, has sparked strong demand for special cargo hauling between Asia and North America, and Asia and Europe.

These days, there’s a lot of talk about slowing economic growth in China, but Panayides said AAL’s service-oriented business model has helped the company maintain healthy relations with Chinese companies and their clients. Despite the decline in China’s gross domestic prod-uct growth, “we don’t see the situation as serious, as the country still records a significant growth rate of 6 percent to 7 percent” every year, he said.

Neither does Panayides see the ongo-ing slump in global oil prices, which started in mid-2014, as a reason to worry about AAL’s growth. Because the com-pany manages a sizable fleet, he said, it’s flexible enough to manage risk and rapidly diversify. AAL can, if necessary, quickly veer away from the oil and gas sector and give attention to other sec-tors, such as renewable energy, with its growing wind farm sector, or the infra-structure construction sector.

AAL has positioned itself in these trades at the right time for doing busi-ness with China, where the government has for several years been encouraging its state-run companies to expand into other countries, particularly developing nations.

“The Chinese government is pushing

Kyriacos Panayides

AAL handles a variety of project cargoes. / Credit: AAL

carrier profile


into more overseas investments, so Chi-nese EPCs are following this path and developing more and more overseas sites,” said Panayides. “With a long estab-lished presence and strong relationship with Chinese stakeholders, we are glad to participate in this business trend.”

Thus, in Asia AAL has a major focus on infrastructure project cargo. What kind of cargo? “You name it,” Panay-ides said. “There are so many nations with still-poor infrastructure that have already approved huge budgets to embark on new development projects, including but not limited to ports, rail-ways, power stations and other general construction.”

In terms of ports of call served, AAL is adaptable and never wants to get stuck in a rut. Owing to this flexibility, the ports and regions on its service list can vary from year to year or even month to month, according to market demand.

“We position our fleet from one area to another wherever we see sustainable business and where our customers need us to be,” Panayides said.

AAL maintains a tramp unit separate from its liner division because tramp vessels can handle “specific volume

needs,” he said. This business is well-supported by shippers of the itinerate cargo moving between China’s ports and points across Southeast Asia.

Southeast Asia is an area with “extreme competition” for short voyage shipping, Panayides said. “We have a number of ships dedicated to intra-Asia markets.”

The liner service, on the other hand, is the choice for customers who demand fixed frequency and set-in-stone sched-ules. The regularity of the company’s liner services “ensures that we are the preferred carrier for specific project needs,” Panayides said.

That’s not to say AAL is sailing through today’s changing business envi-ronment in China, Asia and the world without challenges. For example, Panay-ides said, tight profit margins have tested the company’s commitment to its “zero harm-zero damage” pledge. But for AAL, he said, that pledge remains “engraved in stone.”

“Because of falling freight rates, it’s hard for carriers to maintain quality of service and high level safety factor practice,” he said. But for AAL “it’s a non-compromise situation. We will not

change our tradition or our long history and reputation, regardless of the trend in the index of freight rates.”

No wonder AAL has won prestigious industry awards from trade groups in Canada and Hong Kong. “These are rewards for our efforts and strategy,” Panayides said. “In principle, if your main motivation is to find services that are cheap, it inevitably means a compro-mise to the level of quality and safety.”

Still, looking at the breakbulk cargo hauling industry worldwide and espe-cially in the super-competitive Southeast Asia region, AAL is working in a busi-ness environment where it may seem there’s a race to the bottom, marked by carriers offering services at ever-cheaper prices. This climate has presented “new constraints” for AAL, Panayides said. So a freight owner who is shopping for a carrier may have to choose between a low-cost service and another company with a solid reputation but higher price.

“One has to judge,” Panayides said with a smile.

His smile highlights the fact that smart shoppers are well aware of the risks associated with port-to-port breakbulk hauling. Any damage or delay in deliver-

Prince Rupert is a new destination for AAL’s Pacific Service. / Credit: AAL

carrier profile


ing cargo destined for a new oil refinery, power plant or wind farm can result in major and costly setbacks for investors with billions of dollars on the line. That’s just one reason why, as Panayides sees it, cheaper is almost never better.

Through AAL’s agreement with Peter Döhle, the companies will share 80 years of experience, resources and hardware worldwide. Their plan calls for offering services and solutions to the global market, with the goal of delivering efficiency, personal care and competitive advantages.

The two carriers remain indepen-dent, with separate owners, operations and identities. However, across a number of key trade routes linking Asia, Europe and the Americas, their partnership will deploy and jointly represent the mar-ket’s youngest fleet of 26 multipurpose, heavy-lift vessels. And they’ll provide tailor-made tramp and project solutions to major industry sectors.

“With Peter Döhle, we share those synergies that are crucial ingredients in building a long and mutually beneficial

relationship,” Panayides said. “These include our shared multipurpose sector expertise, our aligned ethics and culture, our service philosophy, and our ambition for the sustainable growth and success of our respective organizations.”

Khanbabi explained, “This coop-eration builds upon the functional and geographical strengths of each party. We find ourselves with the enviable prospect that the whole is now greater than the sum of the parts.”

Even beyond the global cooperation agreement, though, AAL is continuing to expand operations by, for example, seeking new market opportunities in the Americas and Europe. That search recently led the company to northwest Canada’s Port of Prince Rupert, British Columbia, as a new destination for AAL’s Pacific Service.

The service’s three A-Class, 31,000 dwt vessels will be put to work to sup-ply the oil and minerals industries in northern Alberta Province. With the inaugural voyage into the Port of Prince Rupert on May 10, the AAL Brisbane

delivered a cargo of processing units for an oil sands project in Alberta.

Less than two months earlier, the com-pany announced the addition of the 25,800 dwt, Super A Class ship AAL Galveston. Through a long-term charter, the vessel is expected to enhance the company’s Tramp & Projects division while focusing on ser-vice to Europe and the U.S.

Khanbabi said the AAL Galveston is well suited to growing sectors, “par-ticularly renewables, where logistics challenges have become greater as com-ponents get larger and more complex to transport, and ports of loading and dis-charge are more globally widespread.

“These factors demand solutions that can ensure cargo safety and proj-ect efficiency – expertise that AAL has a 20-year reputation providing,” said Khanbabi.

Now, AAL and new partner Peter Döhle are putting that expertise to work for breakbulk customers around the world. Through their cooperative strat-egy, they’re offering a satisfying solution to a Rubik’s cube puzzle. BB

AAL’s heavy-lift ships take the strain. / Credit: AAL

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ABP takes weekly deliveries of paper in breakbulk vessels from Sweden and Finland.Credit: ABP

market spotlight



A fundamental trade shift is set to challenge Euro-pean dominance of the timber and associated

forestry products industry. Up-and-coming South American exports mean that ship operators and ports need to step up to the plate to accommodate the larger ships with deeper drafts making their pres-ence felt in these trades.

Trade in timber and forestry products, while traditionally a largely regional business, has recently developed into a much more global affair, with the greater dis-tances between producing countries and end user markets resulting in more complex and geographically wider supply chains.

Founded in 1958, Verbrugge International B.V. is a second-generation family-owned business headquartered in the port of Ter-neuzen, on the Dutch North Sea coast.

According to Dolf van Dijk, commercial manager at Verbrugge, forestry products represent about one-third of the breakbulk cargo that the firm handles. While Ver-brugge also handles timber and paper reels, woodpulp is the most significant forestry product and the largest single commodity handled by the firm. Dealing with about 4.5 million tons of cargo per year, Verbrugge has become the largest European handler of woodpulp.

“We have been handling this product since the late 1960s. At that time woodpulp was mainly produced in the Nordic countries, and our terminal in Terneuzen was acting as an import hub into continental Europe, with the end market mainly in the Benelux countries, France and Germany. The company developed particularly strong links with pro-ducers in Finland,” Van Dijk said.

“In the late 1990s we saw devel-opments coming that the production of woodpulp was switching from the Northern to Southern hemisphere,

CARVING A GLOBAL

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in Neat European Packages

By Mark Willis

market spotlight


and would increasingly be located in South American countries such as Uru-guay, Brazil and Chile,” he added.

While the firm still handles pulp from the main European producing countries of Sweden and Finland, there has been a reduction in quantities com-ing from the Nordic countries over the last decade, with the largest volumes now arriving from South America.

Wider statistical data also confirms this sizable rise in South American timber and forestry product exports during the last 20 years. According to the United Nations Conference on Trade and Development, or UNCTAD, the U.S. dollar value of forestry-related South American exports expanded from US$7.3 billion in 1996 to US$17.8 billion by 2013. While still a long way behind the com-bined 2013 export value of about US$33 billion from the largest two European timber producers, Sweden and Finland, South America exports grew an impres-sive 143 percent during the same period compared with the 23 percent gain for the Nordic countries. On the current trend growth rate, South American exports will overtake those in Scandina-via within the next decade.

Lars Traaseth, CEO of Saga Welco, a Norwegian firm with 52 open-hatch bulk

carriers, explained how the rise in South American woodpulp exports – at the expense of some of the large European economies – has been primarily driven by greater cost competitiveness and investment in countries like Brazil.

“South America in general is more competitive on a cash cost basis for producing woodpulp. The reason is that they have more modern and larger mills. They also have larger plantation-based production of trees, so in a sense they are more competitive than the Northern Hemisphere,” said Traaseth, whose firm carries South American woodpulp to the Far East and Europe, and smaller volumes from Scandinavia to Asia.

This changing pattern in the sup-ply and demand of woodpulp, and other forestry products, has presented new challenges to firms operating within global supply chains. In particular, the greater distances and different orienta-tion between producer countries and the final destination has resulted in larger cargo vessels, as well as ports more strategically suited to the new South American trade.

According to Van Dijk, Verbrugge in the past handled most woodpulp imports through its terminal in Ter-

neuzen. Having anticipated the rise of South American exports, in the early 2000s the firm moved to develop a new terminal, Scaldia, with an open connec-tion to the North Sea, more suited to the larger vessels with deeper draft servic-ing the burgeoning transatlantic wood-pulp trade.

“Located closer to the North Sea in Vlissingen, the Scal-dia terminal is more suited to South Amer-ican imports, and with no sea locks and less congestion allows ves-sels to unload faster and around the clock,” Van Dijk added.

Gareth Russell, business develop-ment manager, Humber, at Associated British Ports (ABP), pointed to largely stagnant growth of forestry product imports at 15 of the firm’s 21 UK port facilities that have handled forestry products during the last five years. Annual breakbulk volumes have remained at about 100 million to 110 mil-lion tons since 2010, Russell said.

Regarding the breakdown of specific products, timber and sawn timber – which accounts for about half of ABP’s total forestry imports – have declined modestly, alongside a slight increase in both paper and woodpulp.

While the lack of growth is surpris-ing given the UK’s status as the fastest growing “major economy” in 2014, it’s possible that inventories built up during 2010-13 led to the tepid demand of the past 18 months.

With consensus forecasts suggest-ing the UK economy will continue to outstrip the rest of Europe over the next few years, there are reasonable grounds for a projected acceleration in forestry product imports – notably timber for the construction sector – over the short- and medium-term horizon.

According to Russell, ABP has not witnessed a marked increase in South American imports, with Sweden and Finland still the dominant provider of UK forestry products at its facilities. However, he acknowledged that earlier transshipment at continental European ports, including Antwerp, might cloud the wider trade trends, and the growing

Verbrugge’s Scaldia terminal is suited to larger vessels servicing the transatlantic woodpulp trade. / Credit: Verbrugge International B.V.

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Verbrugge, which operates out of the ports of Terneuzen and Flush-ing (Vlissingen) in the Netherlands and nearby Zeebrugge in Belgium, offers its clients a range of logistics services, including stevedoring, distribution and warehousing for breakbulk and bulk cargoes.

Starting in the 1960s as a handler of Nordic forestry products, the operator initially dealt with transporting these cargoes to clients in the Benelux coun-tries, France and Germany. However, in line with the stellar rise of South American production and exports during the last 15 years, Verbrugge’s European demand has since expanded to include the UK, Poland and Austria, as well as its former core markets.

Verbrugge has since grown to become the largest European handler of woodpulp, dealing with imports of both Nordic and South American

forestry products. Verbrugge, which initially established in 2000 with just a single warehouse to handle the increasing transatlantic woodpulp trade, has since expanded its Scaldia terminal to 22 warehouses.

Dolf van Dijk, the firm’s commer-cial manager, highlighted a number of value-added services provided by Verbrugge.

“We have enormous storage capacity. If the market is slowing down, we can increase our storage. We have the largest storage facilities in Europe, with total capacity of 1 million square meters of good qual-ity space in predominantly modern warehouses,” said Van Dijk.

“With our depth of experience, we know the market very well, and can adjust to the demands of our customers,” he said.

Along with its modern handling

equipment and warehouses, Ver-brugge is strategically located for shippers and end-user clients, Van Dijk said. Situated at the port of Vlissingen, on the north bank of the Scheldt estuary, the Scaldia terminal was developed specifically to handle the South American trade. With the deep port allowing easy entry for the larger vessels servicing this trade, the absence of sea locks and congestion facilitates swifter unloading of cargo than at nearby Antwerp, according to Verbrugge.

Situated close to the North Sea and to the major river and canal networks of Northern Europe, Ver-brugge can transport woodpulp via barge throughout the continent within a relatively short space of time, switching to coasters to trans-port goods to the Baltic Sea, Poland and parts of northern Germany.

relative worldwide importance of trans-atlantic imports.

Of the 15 ABP facilities handling for-estry products, the port of Hull in North West England remains the dominant shipping cargo entry point, accounting for about half of total imports. Alongside the location of manufacturing plants and the development of surrounding infra-structure, Hull’s status as the principle recipient of foreign timber products also reflects the ability of shippers to gain a profitable cargo for the return journey leg, according to Russell.

“Once a vessel arrives in the UK, among the biggest proportion of its costs will be the onward haulage from the port … which will have a large influence on selection of port of entry,” he said.

The typical weekly delivery of paper in breakbulk vessels from Sweden and Finland will carry backloads of machin-ery and containers, Russell added.

Given the levels of investment that have taken place during the last sev-eral years and further spending plans in the pipeline, many analysts expect

CATERING TO WOODPULP DEMAND

that supply of South American timber and forestry products will continue to expand, with a corresponding increase in sea bound exports traveling to Euro-pean and in particular Asian end users.

While consumption of paper for newspapers, magazines and books has diminished in line with the decline of the global print media sector, demand for woodpulp for packaging, replacing less environmentally friendly and non-biode-gradable plastics, has increased.

There is an expectation, therefore, that woodpulp will continue to prove its worth in future years, with demand broadly expected to keep up with the growth in supply.

“In general, the pulp industry is doing very well. Both supply and demand are generally on an upward trend and remain well balanced. You still see big investments in the building of woodpulp mills in South America, and we expect further new investment to take place,” said Verbrugge’s Van Dijk.

Saga Welco’s Traaseth is slightly less optimistic about the outlook for global

woodpulp demand, but nevertheless expects positive growth on the back of robust emerging market expansion.

“The international demand for paper products or products based on food fiber is not spectacular, but expanding by about 2 percent per year. What you see is that there is negative growth in North America and relatively flat growth in Europe. But Latin America and the Far East are having healthy growth. So [aggregate world] demand for woodpulp is positive,” he said.

The largest European suppliers in Finland and Sweden will continue to see their global export share diminished by more cost competitive developing coun-tries, where larger investments have taken place.

However, with end users and manu-facturers still requiring a mixture of hard and soft woodpulp and fiber qualities, analysts expect Scandinavia to remain a significant exporter of forestry products. To this end, recent investments in Fin-land are considered a promising sign for the European pulp industry. BB

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The Port of New Orleans is a deep-draft multipurpose port at the center of the world’s busiest port system, Louisiana’s Lower Mississippi River. Connected to major inland markets and Canada via 14,500 miles (23,335 kilometers) of navigable waterways, six Class I railroads and the Interstate Highway System, the Port of New Orleans is the ideal gateway for con-tainers, chemicals, coffee, steel, project cargo, natural rubber, forest products, manufactured goods and more.

“Shippers of such goods as steel, nonferrous metals, for-est products and rubber, as well as heavy-lift project cargo, choose the Port of New Orleans because we offer logistical advantages unlike any other port in the world,” said Gary LaGrange, President and CEO of the Port of New Orleans.

Due to the historic industrial expansions and new con-struction both on the Lower Mississippi River and along the Gulf Coast, Port of New Orleans stevedores are experienc-ing a real boost in project cargo.

RECORD CARGO GROWTHIn 2014, cargo worked at the port totaled 8.37 million tons,

the highest total since 2000. Leading the growth, imported steel rose 101.6 percent over the year-earlier period to 3.54 million tons. Overall breakbulk tons totaled 3.76 million tons, up 51.7 percent, while container volume topped 4.61 million tons, up 13.5 percent compared to the prior year.

“At the Port of New Orleans, we are built for breakbulk, and our continued drive to provide value-added services will ensure our exceptional abilities to handle breakbulk and project cargo for generations to come,” LaGrange said.

Terminal operators Coastal Cargo, Empire Stevedoring, New Orleans Cold Stage, Ports America and Seaonus Steve-doring-New Orleans offer a wealth of experience and decades of commitment to the Port of New Orleans shippers.

Gaining recognition for its premium connectivity, world-class customer service and strategic location, the Port of New Orleans was named Business Facilities’ top Logistics Leader in 2013 and Port Operator of the Year by Lloyd’s List in its 2014 top North American Maritime Companies.

MEGA PROJECTS ABOUNDLouisiana, the nation’s No. 1 producer of crude oil and

the second-highest producer of natural gas, is attracting mega projects. In the past several years, US$80 billion in capital infrastructure investments have been announced in Louisiana, including an estimated US$21 billion investment by South Africa-based Sasol to build an ethane cracker as

BUILDING UPON SUCCESSPort of New Orleans Builds Upon Record Breakbulk Business

well as an integrated gas-to-liquid (GTL) facility.Several other projects coming to Louisiana boast a capi-

tal investment of more than US$1 billion each, including a US$2.1 billion expansion of CF Industries’ Louisiana nitro-gen complex in Donaldsonville and a $1.2 billion methanol manufacturing plant in Plaquemines Parish by Castleton Commodities International.

The Port of New Orleans recently completed two of the heaviest project cargo lifts in its history successfully discharging a 718-ton, absorption tower and a 790-ton ammonia converter from ship to barge.

On Jan. 20 the Port of New Orleans handled its larg-est project cargo piece to date at the Louisiana Terminal, operated by Coastal Cargo. Dan-Gulf Shipping was the appointed agent for the record-breaking 790-ton, 128-foot-long project piece that journeyed to New Orleans from Jebel Ali, Dubai, aboard the Palabora. Operated J. Poulsen Ship-ping, the Palabora became the second vessel in one week to discharge project cargo that weighed more than 700 tons at the Port of New Orleans.

Dan-Gulf officials were pleased with the success and effi-ciency of the operations at the port.

“As agents, it was our pleasure to coordinate the dis-charge operation between the vessel operators in Denmark and local entities such as the Port of New Orleans, Coastal Cargo of Louisiana and the receivers,” said John-Paul Geh-rkin, Operations Manager for Dan-Gulf Shipping. “We are honored to be a part of such a historic event and hope to continue that tradition as more large-project cargos come to the Port of New Orleans.”

Just eight days prior to the record move, Fracht USA/Germany, a global freight forwarder, successfully handled the 718-ton, 164-foot-long absorption tower, which was destined for the CF Industries plant project in Donaldsonville, La.

The SAL Amoenitas arrived at the port’s Louisiana Avenue Terminal Jan. 10 after a 45-day trip from Shanghai, China. The lift from ship to barge was completed Jan. 12 by SAL Heavy Lift, Fracht, Roll-Lift, McDonough Marine and terminal stevedore Coastal Cargo Co.

“This is great business for Coastal as well as for the Port of New Orleans,” said Dan Haeuser, President and CEO of Coastal Cargo Co. “Project cargo of this type and magnitude has not been traditional in the Port of New Orleans. It’s wonder-ful to have this type of diversity added to the Port’s cargo mix.”

Fracht officials said the successful move took more than a year of careful planning.


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Stevedore Coastal Cargo Co. recently worked steel wire rod coil at the Louisiana Avenue Ter-minal at the Port of New Orleans. Steel imports rose more doubled in 2014 leading to a 14-year high for general cargo at the port’s public docks.Photo by: Tracie Morris Schaefer, courtesy of Port of New Orleans

“When you look at this move, project forwarding isn’t just calling the vessel lines and calling the stevedore,” said Reiner Wiederkehr, Fracht’s Chief Operating Officer. “There are so many things involved with such a huge task. The Port and Coastal Cargo have been very accommodating and helpful, but we picked the Port for a reason – they have the best people to handle this type of cargo.”

Reflecting on the Port of New Orleans’ busy year, LaGrange said its successes were realized from the com-bined efforts of the entire port community, and has created momentum for its terminal operators and customers.

“The challenge now is to build upon these successes and continue to grow,” he said.

Dan-Gulf Shipping was the appointed agent for the record-breaking 790-ton, 128-foot-long ammonia converter at the Port of New Orleans’ the Louisiana Terminal, oper-ated by Coastal Cargo. The piece journeyed to New Orleans from Jebel Ali, Dubai, aboard the Palabora, operated by J. Poulsen Shipping.Photo by: Tracie Morris Schaefer, courtesy of Port of New Orleans




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Ranked 9th nationally in total tonnage, there’s a lot of “new” these days at the deepwater Port of Greater Baton Rouge. For example, say port officials, NEW COMPANIES locating at the port, NEW INVESTMENT in infrastructure, and NEW LAND AVAILABLE for development.

Highlights of these new developments include:

• Genesis Energy, L.P. is constructing a $150 million crude oil, intermediates and refined products import/export terminal, expanding that company’s commitment to pro-viding efficient mainstream supply and logistics services to the region.

• Drax Biomass, one of Europe’s biggest renewable elec-tricity generators, has launched its $30 million wood pellet storage and transfer operation. The storage facilities have the capacity to store approximately 80,000 metric tons of wood pellets. Each storage dome is approximately 200 feet in diameter by 145 feet tall including the mechanical housing unit atop the structure.

• Stupp Coatings, LLC has constructed a facility on 24 acres at the Baton Rouge port’s Inland Rivers Marine Ter-minal to operate concrete weight pipeline coating services for the oil and gas industry. The site is service by rail, truck and barge with access to the Gulf Intracoastal Waterway.

THE LATEST “NEW” FROM THE PORT OF GREATER BATON ROUGE

• Louis Dreyfus Commodities is successfully operating its new, state-of-the-art grain dock and export grain elevator.

• Westway Terminals, LLC has completed its $3.5 million expansion at the port’s liquid bulk terminal.

• Over $10 million in improvements have been made to the port’s rail lines and infrastructure.

• Acreage at the port’s Inland Rivers Marine Terminal is avail-able for development, with access to the Gulf Intracoastal Waterway.

Recent reports show that cargo worked at the Port of Greater Baton Rouge’s public docks in 2014 more than doubled the amount handled in 2013, according to year-end statistics from the port. In 2014, the Port of Greater Baton Rouge handled more than 9.2 million tons of cargo, an increase of more than 100% over the 4.2 million tons that passed through in 2013.

For the more information, officials at Louisiana’s capital city port suggest

giving them a call to ask, “What’s new?” Contact Greg Johnson, Director of Business

Development, at 225.342.1660.




The Port of Lake Charles in South-west Louisiana is no stranger to widespread industrial growth. Even with an economic boom reaching upwards of $80 billion in announced

PORT OF LAKE CHARLES KEEPS PACE WITH UNPRECEDENTED ECONOMIC GROWTH

capital investment in the region, the Port has kept pace with rapidly evolv-ing cargo demands as new industrial facilities break ground and new global customers gravitate to the region.

The Port acts on behalf of the State of Louisiana as the local sponsor for the maintenance of the Calcasieu River Ship Channel—the major economic artery to the region. The region’s role in national and global economies can be measured by the Channel. According to Lake Area Industry Association—an organization comprised of area oil and petrochemical plants—cargo transported on the Chan-nel supplies 7.5 percent of the nation’s daily petroleum products consumption.

Consistently ranked by the U.S. Army Corps of Engineers as the 13th-busiest Port District in the U.S., the Port’s 13 berths and large lay-down facilities are being upgraded to meet future maritime trends.

Deep-draft ship traffic is projected to double on the Channel over the next 10 years, and the Port is already pre-paring for this increase by dedicating $46 million in capital investments this year. These improvements will mod-ernize warehouses, add new docks, improve traffic patterns and reinforce services on which Channel users and Port tenants rely.

Other major developments include the IFG export bulk grain elevator, which is already drawing international customers and will move 1 million tons of grain annually. The elevator works congruently with the Port’s train track infrastructure, which has been upgraded to include two loop sys-tems, and together they substantially increase the Port’s cargo capacity, handling speed, and overall efficiency.

The Port recently established a short-line rail corporation that now oversees train movements to and from City Docks, and this endeavor fits with the Port’s aim to enable smart growth during the next decade of rapid indus-trial expansion.

The Port of Lake Charles is gov-erned by a seven-member board of commissioners and comprises two marine terminals and over 5,000 acres of property zoned for industrial use, including an industrial park. For more information, call 337-439-3661 or visit www.portlc.com.

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Gulf Stream Marine is a leader in cargo handling, stevedoring and terminal operations in the Gulf Coast region. Founded in 1990, Gulf Stream Marine has grown to become one of the largest privately-owned stevedoring companies on the Gulf Coast. This year, we have launched the expansion of our operations from the seven terminals in Texas, to offer our services across the Gulf Coast in Louisiana, Mississippi, and Alabama. With this geographic presence and the depth of our skilled supervision and labor, we can deliver unparalleled management flexibility with safe and efficient operations for our customers.

We believe we currently possess an industry leading position in our safety performance as measured by the Total Recordable Incident Rate metric. Safety and qual-ity are among the highest priorities in all of our terminal operations. Our long term success rests with our ability to engage our employees in continually improving the quality of our services while ensuring everyone goes home to their family injury free.

Cargo shipments are like stevedoring companies: no two are exactly the same. We believe that a stevedoring com-pany should be driven by the demands of its clients and Gulf Stream Marine has established a reputation as an industry leader. We manage cargo from all over the world. From industrialized Northern Mexico, to the Far East and Europe.

We own and maintain one of the largest equipment fleets in our sector, employ a rigorous equipment renewal program and procure advanced equipment to drive pro-ductivity. We actively pursue improvement opportunities company-wide, and employ Lean Six Sigma methodology and practices to scope, execute and measure improve-ment projects.

Accurate and timely transfer of information is as impor-tant as moving the cargo itself. At Gulf Stream Marine, we

view technology and systems development as a core busi-ness strategy and strength. STMS (Stevedore and Terminal Management System), our proprietary system, manages and tracks your cargo through the planning, receiving, moving and loading process. Our industry leading cargo receiving process utilizes hand held tablets in the yard so real time information for cargo is available. Our customer portal enables our customers to conveniently access vis-ibility to the status of their cargo. We are committed to identifying and developing advanced technological solutions, such as STMS, that will enable us to better serve our customers. Gulf Stream Marine’s desire is to integrate our customer’s data into our process to opti-mize efficiency.

In 2014, Gulf Stream Marine acquired Big John Marine Services. As a result, Gulf Stream Marine has increased our service offerings to include heavy lift capabilities at all of our terminals and throughout the Port of Houston. Big John Marine Services is a marine service company based in Houston, Texas. At the center of the company’s port-folio, is a harbor service derrick barge “Big John”. The Big John has served the Port of Houston and surround-ing areas on the Gulf Coast since 1967 and serves a very important role in facilitating the transfer and movement of cargo within the Port. With its 500-ton lift capacity, Big John has executed more than 4,000 lifts without a single incident of cargo damage.

Since Gulf Stream Marine began, we have been devel-oping transport solutions and providing a vital link between shippers and receivers of unique goods. Daily safety meetings, customer rigging, heavy lift expertise, on-site engineers and highly-trained staff are what makes Gulf Stream Marine the most dependable stevedoring company on the Gulf Coast.

GULF STREAM MARINESee What Makes Us the Most Dependable Stevedoring Company on the Gulf Coast




goes. Everyone in the team has long experience in this cargo segment and we are spread across the key breakbulk mar-kets, ensuring personal and local service to customers.”

NEW EQUIPMENTHöegh Autoliners did last year complete the implementa-

tion of a program to introduce two new sizes of mafis or roll trailers to add to the traditional 20’, 40’ and 62’ sizes. The newest roll trailers are now 72’ and 80’ in length and custom made to accommodate longer cargo. They also have rails in the bed of the trailers making them even suitable for rail cars and locomotives. Oskar Orstadius continues: “The rails offer safe and smooth transportation of trains and trams as it enables cargo operation without lifting the unit. It also offers a more cost efficient solution as there is no need to hire cranes for the operation.” Höegh Autoliners continues to invest in specialised equipment to accommodate for even bigger and heavier cargo suitable for the New Horizon vessels.

LOOKING FORWARDHöegh Autoliners are very excited about what the future

holds as the company expands and provides new levels of service to its customers. New markets are likely to evolve and put new requirements to the trade networks. Höegh Autoliners already has presence on all continents and offers a global trade network. Now with a dedicated project cargo team, investments in equipment and the world’s largest PCTCs soon in its fleet, Höegh Autoliners is ready to wel-come new customers with even bigger and heavier cargo.

Höegh Autoliners is a leading global provider of Ro/Ro transportation services. This year, the company takes a new step in its investments in the breakbulk market, introducing a new generation of vessels with improved capabilities for carrying high and heavy cargo. This is only one of the activi-ties Höegh Autoliners is taking to improve its services to the break bulk market where new equipment and a dedicated organizational set-up are other significant investments.

By 2016, Höegh Autoliners will have six of the New Horizon vessels in its fleet, operating within the company’s global trade network. The vessels will be of the Post Panamax size and offer ramp capac-ity up to 375 tonnes and 6.5 meter door opening height. With five out of 14 decks being liftable, the vessels will enable load-ing of a wide variety of cargo and offer high flexibility in trade.

Besides offering excellent cargo operation opportunities the New Horizon vessels can also pride themselves with a better environmental footprint compared to standard car carriers and the vessel model is given DNVGL’s class notifi-cation “CLEAN” for cleaner design.

DEDICATED RESOURCESTo further enhance the company’s capabilities in the

breakbulk segment, Höegh Autoliners last year launched a new global breakbulk and project cargo group. Oskar Orsta-dius, Head of Breakbulk segment says: “Our team exclusively service those accounts that move breakbulk and project car-

BIG JUST GOT BIGGER

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25-28 October 2015Abu Dhabi National Exhibition Centre (ADNEC)Abu Dhabi, UAE

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Superior Education, Unmatched NetworkingJoin top project cargo logisticians from around the world for the inaugural Breakbulk Middle East Conference and Exhibition.

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DRIVING REGIONAL

DEVELOPMENTAbu Dhabi’s Industrial Growth

Mirrors Cargo Volumes

By Carly Fields

Middle East infrastructure investments in excess of US$1.3 trillion over the next 10 years promise a

complementary growth in the cargo and transportation market. Industrial growth and cargo volumes go hand-in-hand; increased trade flows through a port are a good indication of a healthy economy. The capabilities of a port also directly affect the industrial centres it supports.

Abu Dhabi Ports contributed 2.9 percent to the non-oil gross domestic product of the Emirate in 2014, and as such has a crucial role to play in Abu Dhabi’s economic development. As the capital of the United Arab Emirates and the source of more than 90 percent of the country’s oil revenues, many consider Abu Dhabi as the primary growth engine for the success the nation enjoys today.

The Emirate’s forward-thinking leaders are, however, shifting their focus towards the strategic diversification of the local and national economy in order to secure the long-term prosperity for the U.A.E. Abu Dhabi Ports has been a catalyst for economic development that is not entirely dependent on hydro-carbons, and if the company’s recent

performance is anything to go by, the future is bright for Abu Dhabi.

Since its creation in 2006, Abu Dhabi Ports, the developer, operator and man-ager of commercial logistics, community and leisure ports and industrial zones in Abu Dhabi, has been constantly evolving, driven by a commitment to innovation and facilitated by its ability to handle growing volumes of cargo.

Last year, Abu Dhabi Ports handled more general cargo than ever before. With a 37 percent year-on-year increase in the total number of tonnes, Abu Dhabi Ports broke the Emirate’s record by handling 12.8 million tonnes in 2014. Dry bulk made up the majority of total volume at 81 percent, with the remain-der representing breakbulk (19 percent), including steel and project cargo.

The ability to handle record loads has been facilitated by the recent completion of the transfer of its entire roll-on, roll-off operations to Khalifa Port from Zayed Port, in line with its mission to expand the Emirate’s port infrastructure. Han-dling a record 106,071 ro-ro units, Khalifa Port opened the door for Zayed Port to focus on and thrive as the Emirate’s breakbulk specialist. With more than 2.2 million tonnes of raw steel handled by Zayed Port, 2014 also saw Abu Dhabi Ports receive the largest ever shipment in the free port, with five heavy-lift pieces

VESSEL CALLS IN 2014More than 20,000 ships called at Abu Dhabi Ports’ facilities last year.

U N I T E D A R A B E M I R A T E S

Khal i fa Port – 1,040

Zayed Port – 1,062

Musaffah Port – 15,525

Free Port/New Free Port – 6,467

*million tonnes / Source: Abu Dhabi Ports

Abu Dhabi Ports experienced record growth last year.

GENERAL CARGO PERFORMANCE IN 2014

15*

12

9

6

2010 2011 2012 2013 2014

middle east


middle east


for the Abu Dhabi Oil Refining Co.’s (TAKREER) Carbon Black Project weigh-ing in at a total of 29,492 tonnes.

Abu Dhabi Ports continues to build on these successes, with general and bulk cargo experiencing a 32 percent increase in the first quarter of 2015 over the same period in 2014.

Abu Dhabi Ports operates the port facilities of the Emirate’s nine commer-cial logistics, community and leisure ports, including its flagship Khalifa Port – one of the world’s most advanced deep-sea ports and the region’s first semi-automated port – and its industrial trade and logistics hub, Khalifa Indus-trial Zone (Kizad). Abu Dhabi Ports’ facilities and zone offerings, as well as the company’s subsidiaries, are prime examples of its strategy to be an enabler for trade and development contributing to the economic vision of developing and diversifying the Emirate’s economy.

In 2015, Zayed Port took delivery of two new mobile harbor cranes, which will be used to more quickly and effi-ciently handle the increasing general cargo volumes. The new cranes were supplied by Liebherr and can lift 65 tonnes, thereby complementing Abu Dhabi Ports’ existing cranes, which are capable of lifting loads of up to 100 tonnes. The new cranes, as well as other equipment, such as hoppers and forklifts, are part of an ongoing upgrade to all of the general cargo handling equipment across Abu Dhabi Ports. It also car-ried out essential maintenance work at Zayed Port and its neighboring Freeport, repairing the quayside wall in order to enhance port facilities and services.

Such investments and upgrades, together with Abu Dhabi Ports’ abil-ity to complement activities across its ports, allow the company to boast a value proposition for the global industrial and trade community. As a result, Abu Dhabi Ports, which prides itself on offer-ing competitive services at high levels of productivity and quality, has seen numerous small and medium Emirati enterprises transition back from other, regional ports. More companies are expected to return once all infrastruc-ture extensions, including road and rail networks, to and from its ports have been completed.

“The customer lies at the heart of

the success experienced by Abu Dhabi Ports and the Emirate itself,” Gary Lemke, executive vice president of ports at Abu Dhabi Ports, told Breakbulk. “We decided to recognise the impact of Abu Dhabi Ports and its customers on the U.A.E. economy, and therefore last month hosted our inaugural customer awards ceremony. The event celebrated the achievements of the past year, with winning customers applauded for their business growth, their professional best-practices and their overall contribution to the Emirates’ growing regional and global trade volumes as well as non-oil GDP and economic diversification.”

At the ceremony, Abu Dhabi Ports honored companies including Al Ghurair Iron & Steel, for breakbulk, and Emirates Steel, for dry bulk, as Importers of the Year for their contributions as market leaders to importing and manufactur-ing finished products, as well as their contribution to Abu Dhabi’s economic transition.

Before kicking off celebrations, however, Abu Dhabi Ports and their customers have had to work hard to overcome labor and infrastructure chal-lenges, among others. To this end, the implementation of employee-training programs has been crucial in developing well-versed staff able to handle specialist projects. Set up in 2013, the Abu Dhabi Ports’ Maritime Training Centre has developed into a leading training facil-ity in the region, with the number of trainees studying at the center increas-ing by 15 percent in 2014. The center, which recently signed a memorandum of understanding with the Higher Col-leges for Technology (HCT) Abu Dhabi to develop an academic partnership, saw its efforts awarded with international recognition, passing a Lloyd’s Register audit and being officially accredited as an approved training provider – the first of any maritime training insti-tute in the Gulf Cooperation Council region – thereby driving overall career development and the national goal of empowering Emirati talents.

Abu Dhabi Ports has also committed significant investments across all ports to bring in world-class infrastructure that can facilitate quicker and better services, be more cost-effective, and environmen-tally sustainable. At Kizad, Abu Dhabi

Ports invested in the Modular Path, which is designed to enable large plant and equip-ment to be transported directly between Khalifa Port and investor facilities.

In addition to hardware, Abu Dhabi Ports is also upgrading its terminal operational software. As of July 1, Jade Master Terminal Operating System (TOS) will be gradually implemented across all of Abu Dhabi Ports, with Khalifa Port and Zayed Port marked as the first adopters. The initial round of employee training workshops have already been completed.

Abu Dhabi Ports also has to deal with the challenges of temperature extremes. With an average summer temperature of nearly 43 Celsius/110 Fahrenheit, Abu Dhabi Ports has invested in and implemented best practices and gen-eral safety standards in line with the International Maritime Organization to protect not only cargo shipments but also its employees. Providing cold and cool storage for the former, Abu Dhabi Ports, as part of a wider educational program, recently launched its annual summer health and safety program – aiming to reach more than 2,000 Abu Dhabi Ports users – to raise awareness about and help prevent heat-related illnesses during the summer months. “Health and safety is a top priority at all times. At Abu Dhabi Ports, we strive to educate our staff and other port users, and empower them to identify when a colleague is in need,” said Lemke.

The central business strategy of Abu Dhabi Ports is to facilitate development and trade to support the diversification of the Emirate’s economy, which is a main pillar of the Abu Dhabi Economic Vision. The introduction of the latest technolo-gies that respond to the needs of the 21st century and further optimize all its operations, including breakbulk, and the wide range of customer service offerings is necessary to position the authority at the forefront of progress to also enable it to face tomorrow’s challenges.

Abu Dhabi Ports offers a wide inter-modal transportation network via sea, road and air, and provides market access to 4.5 billion people within four time zones. With Abu Dhabi Ports set to link into the Emirate’s wider road and rail network, it will further contribute to the overall prosperity of the Emirate. BB

FLYINGHIGH

Airbus, DHL Showcase Multimodal Approach to A320 Assembly

By Mary Shacklett

Manufacturing aircraft for the Airbus A320 family is an enterprise that engages multiple parties and con-

tinents. This multiplicity is one of the driving factors that prompted Airbus to engage the DHL Industrial Projects group in a multimodal logistics plan that was capable of delivering sensitive breakbulk goods with unit weights of 30 tons each from Europe to the U.S.

“Transport management for highly sensitive heavy goods calls for highly specialized expertise in project logistics as well as a strong grasp of technical and security issues,” said Nikola Hagleitner, CEO Industrial Projects, DHL Global Forwarding. “Together with Airbus,

Among the A320 family production components being shipped from Hamburg, Germany, to Mobile, Alabama, is the forward fuselage section for a JetBlue A321ceo aircraft to be delivered in 2016. / Credit: Airbus

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BEST PRACTICES FOR COMPLEX PROJECT MOVESWhile the DHL Airbus shipment

process had only just started at the time of writing, both companies had already reported several best practices that they would recommend to others facing similar types of movements:

Define the shipment in great detail: “Every party, including the transport provider and the ship-ping company, has to have the same understanding of the shipping objec-tive,” said Klaus Fischer, workstream leader transport and logistics, Airbus FAL U.S. “Both parties need a thor-ough explanation and understanding of the parts they are going to ship. They must also understand how han-dling and shipping aircraft parts is unique from handling and shipping other breakbulk goods.”

Create a detailed description of the transport process: “Going into great detail on the transport process ensures the right understanding of the process’ sequence of events, and its relationships with all other actions,” Fischer said. “The develop-ment of this process takes time, but it is a mandatory baseline.”

Establish clear and open communi-cations between the shipper and the transport service provider: “[This is] especially when the transport service provider is coordinating with other service providers such as a shipping or a trucking company; the main objec-tive is to have transparency of the operations in a short time,” Fischer said. “Often, you will face the situa-tion of short time decisions, and this

requires clear transparency of the situ-ation and its related consequences, if you are to make the right decision. Throughout the entire project, you have to create an environment of trust between both parties.”

Enact a quality program that aims at zero harm and incidents: “Trans-portation of aircraft pieces has its own unique requirements,” said Peer Wulf Herrmann, head of DHL Global Forwarding Industrial Projects in Germany. “It cannot be compared to other heavy-lift cargo.”

Employ seasoned experts when doing a project this complex: “A proj-ect as detailed as this requires high technical knowledge at all times,” Hermann said.

our Industrial Projects team designed a sophisticated multimodal transport concept.”

The Airbus A320 logistics project involved shipping 80,000 tons of freight that included aircraft components like rear and forward fuselage, wings, and vertical and horizontal tail plane. These components needed to be shipped from Hamburg, Germany, to Airbus’ newly constructed aircraft assembly plant in Mobile, Alabama, with the first group of shipments beginning in June.

The large A320 components, along with 1,000 sea freight containers of addi-tional parts, crossed the Atlantic by ship. These were augmented with air freight shipments of hazardous materials and other goods. Configuration and control of the final assembly processes at Airbus’ manufacturing facility required all cargo delivered from Germany to Alabama within a 29-day delivery schedule.

In developing the multimodal logistics plan, DHL was responsible for designing and manufacturing the special trailers and lifting devices that were needed to execute Airbus’ transportation requirements.

“DHL designed and provided lift-

Heavy-lift cranes take the strain of loading components. / Credit: DHL Global Forwarding

ing devices and roll trailers in Germany, and also the road trailers in the U.S.,” said Peer Wulf Herrmann, head of DHL Global Forwarding Industrial Projects in Germany. “These devices and trailers are

customized to fit the specific dimensions of the unique cargo and transport jigs.” Oversized cargo was shipped by charter vessel, and other cargo went on standard routes, vessels and planes, he said.

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case study


Putting this plan into action is no small task: special sea transport frames secured on roll trailers with twistlocks were needed to facilitate trans-ocean shipments of five aircraft components up to 30 tons each. Transport frames were used to move this heavy cargo over land from Hamburg to the Finkenwerder Airbus plant’s wharf. Once the cargo arrived at the wharf, the transport plan called for two 200-ton cranes to transfer the components to a chartered, heavy-cargo vessel for voyage to the U.S. Timing was critical as all load-ing had to be completed within six hours of the cargo’s arrival at the wharf.

Special handling was a factor because major sections of the A320 aircraft are much too large to fit into a normal sea container. Consequently, these sections had to be loaded onto special transport jigs, which were then locked into posi-tion under the weather deck of the ship to protect them from the elements.

“The heavy components, each with a single maximum weight of 30 tons that is inclusive of the weight of the sea transport jig, are not really heavy for breakbulk operations, but the sensitivity regarding movement during the ship-ment is the main challenge,” said Klaus Fischer, workstream leader transport and logistics, Airbus FAL U.S. “There-

fore, safety aspects and a secure loading and unloading of the components are mandatory. Specialized handling equip-ment is also needed at the ports and for the road shipments.”

Once the cargo arrived in the U.S. and cleared customs in Mobile, special cranes loaded the aircraft components onto heavy-duty trailers, which then transported the cargo to the Airbus assembly plant a few miles away.

After unloading these aircraft com-ponents, the sea transport frames were disassembled and transported on fla-tracks by ship back to Bremerhaven then trucked to Finkenwerder, where they were reassembled.

While this heavy cargo was being transported, an additional 4,000 parts of general cargo were loaded into sea con-tainers at DHL’s Hamburg hub, and then transported by truck to Bremerhaven and on to Mobile by container ship.

Special Handling“In the shipment process, there is

another element that we had to consider in the planning,” said DHL’s Herrmann. “The cargo is very sensitive in that there can be no touching and no welding. Strict requirements are in place with regards to acceleration forces, flatness of

ground and clearance around the pieces. We also have a set of strict lead times that we have to meet.”

To help address these issues, Her-rmann said Airbus asked to have large safety clearances maintained around the cargo handling operation. Airbus also insisted that hatch covers were kept clean at all times of any falling debris that could land on aircraft parts. As part of the security measures, secured areas were also set up for these major aircraft components, prohibiting entry of any unauthorized or untrained personnel.

As part of the A320 shipping effort, the Airbus-DHL team utilized air trans-port as a complementary strategy to ocean shipping, and Airbus insisted that DHL pass the European Aviation Safety Agency audit in order for it to be an approved by-air Airbus supplier.

DHL used air transport primarily to ship hazardous goods, but consolidated shipments were also air freighted. Both types of cargo required special procedures that are legally required for securing and transporting the cargo. The overall logistics plan called for air shipments to arrive in the U.S. and to clear customs just as the ocean-carried shipments must. After customs clearance, the freight was transported by truck to the Airbus assem-bly plant in Mobile. Containers, once unpacked, were shipped back to Finkenw-erder to be used for other projects.

A project of this magnitude required close collaboration between Airbus and DHL. Initially, this included working together on all document preparation and logistics alignment meetings that were arranged with customs authorities in Germany.

Maintaining the quality of shipments throughout the logistics process is also critical. “For the handling of hazardous cargo, DHL has strict internal require-ments and regulations, which allow for a smooth and uneventful handling,” Her-rmann said. “DHL has also implemented a strict handover process at each change of the transport mode and will supervise the entire transportation supply chain.

Components were visually inspected for damage at various check points through the shipping process. Dedicated DHL Industrial Projects Health, Safety, Security and Environment (HSSE) staff supervised load-out and load-off and

Members of DHL Global Forwarding, Airbus, the International Longshoremen’s Association (Local 14010) and APM Terminals employees pose in front of the fuselage of the first Airbus A320 aircraft to be assembled at the Airbus U.S. Manufacturing Facility in Mobile, Alabama. / Credit: Airbus

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case study


performed regular risk assessments and analyses during the entire shipping operation, he said.

“QAP (quality assurance procedures), safety meetings, and toolbox talks are just some of the many measures we have in place to ensure that the entire chain of sea and air shipments for the aircraft goes smoothly,” Herrmann said.

Airbus’ Fischer added: “Airbus also has stringent Quality Gates at the end of each manufacturing stage to ensure the quality of a component or assembly before it is moved or shipped to the next stage. Although we do not check quality during shipping, the quality of an air-craft component is checked before and after shipping.”

Given the stringent 29-day delivery timeframe for 80,000 tons of parts to be shipped between Germany and the U.S., together with the special handling and sensitivity requirements for several key aircraft components, the Airbus-DHL team focused on several important project cornerstones as it developed a comprehensive logistics plan covering costs, equipment suitability, system

visibility, and contingency planning, among other issues.

Firstly, time was of the essence, but controlling shipping costs was also important. This was one reason a multi-modal shipping approach was adopted, placing as much cargo as possible on standard, lower-cost shipping routes. Meanwhile, the decision was made to ship oversized pieces of cargo requiring special handling or hazardous compo-nents by charter vessel or air.

Secondly, oversized aircraft sec-tions could not be transported, loaded or unloaded using standard equipment requiring DHL to design and manufac-ture special trailers and lifting devices.

Thirdly, with the intercontinental ship-ment of so many aircraft components in such a tight timeframe, having end-to-end system visibility of all goods in transport was an absolute necessity. “Airbus used its own internal planning tools to synchro-nize deliveries of components to ensure they arrived at the Airbus U.S. manufac-turing facility on time, Fischer said. “This tool incorporates the necessary manufac-turing and transport lead times.

“DHL also has to work to very tough timelines to manage cargo availability on time and without damage,” added Her-rmann. “High-level project and supply chain management is required on DHL’s side with joint cooperation between Industrial Projects, Germany, who is in the lead, and working with the Indus-trial Projects team in the U.S.”

Fourthly, contingency planning is a mainstay in the aerospace business. To assure contingencies for unexpected glitches that could arise in the Airbus A320 logistics plan, DHL used its own internal logistics contingency methods and also identified in advance the backup solutions it would use in the event that a contin-gency cutover to other systems or logistics avenues became necessary. “We also worked closely with the ports, carriers, etc., on these plans,” Herrmann said.

DHL Industrial Projects is backing its logistics effort for Airbus with its own fully customized and proprietary devel-oped Material Management System. “The usage of this system has great advantages due to its tailor-made design, data and high visibility,” Herrmann said. BB

A rear fuselage section for the first A320 Family aircraft to be produced at the Airbus U.S. Manufacturing Facility in Mobile is loaded onto the BBC Fuji cargo ship ahead of its transatlantic voyage. / Credit: Airbus

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STARTING FROM SCRATCH

The site of the new airport on the island of St Helena. / Credit: Basil Read

infrastructure



P alma in Mozambique is a small unassuming fishing village in the north of the country. Situ-ated in dense jungle there are

few roads, the locals live in scattered mud huts and hardly, if at all, speak Eng-lish.

Those locals vary from friendly fishermen to gun-toting rebels. There are snakes – the poisonous kind – and hordes of mosquitoes, the malaria kind. The current port is nothing but a stretch of beach and the airport a dirt strip. Drinking water and electricity is as hard to find as the shops.

This unassuming place is where Anardarko Petroleum Corp. plans to build a gas-export project, one of the biggest of its kind, to recover gas reserves of 250 trillion cubic feet in the region. It’s a project of enormous pro-portions, not least because of the lack of even basic infrastructure to support the development.

But ask any project manager in Africa what the minimum infrastruc-ture requirements are for a project of this nature and you get the same answer every time: nothing. At most they will say some kind of access is nec-essary, but even that is desirable, rather than essential.

“Our organi-zation has never walked away from a project due to the lack of infrastruc-ture,” said Ferose Majam, commercial, international and tenders manager for Basil Read. “No infrastructure is the norm on most projects in Africa. Our approach is simply to find solutions and create that which is not there. We have developed a skill set that puts us in a position where we can tackle and find means to complete any project.”

African Projects Test Limits of Infrastructure

Ernst Kunfermann, a projects spe-cialist who has worked across Africa, agrees, saying that he has yet to find a project that is not doable.

“The bigger question is more about whether there is budget to create the infrastructure for the infrastructure. It can be extremely costly and run into huge figures before you have even started construction of the actual proj-ect,” he said.

In Mozambique it is estimated that the exploration company’s costs are already around the billion-dollar mark and there is little to show for it all in terms of minimum infrastructure input thus far. In fact, Anardarko is still at the pre-project planning stage and feasibility studies have not yet been completed.

The magnitude of what the company has to establish is difficult to compre-hend. Before any gas plant goes up, the company is going to have to find a way of housing and feeding more than a thou-sand project workers. Anardarko has already had to truck in tons of soil to cre-ate a temporary campsite for the small handful of people on site.

Lars Greiner, managing director for materials management and logistics of consultancy Greiner, Mendi & Associ-ates, said the viability of projects is not measured in terms of what is already on the ground.

“Mozambique is a prime example of our willingness to take on just about anything regardless of what it costs or how difficult it is,” he said. “Innovative logistics that speak to the delivery of cost-effective projects is being required more and more. Logistics experts have to just perform the extraordinary, and one then begins to question if there should not be a minimum requirement of infrastructure in Africa.”

Francois du Toit, global discipline director: logistics for Hatch, said there is no standard in Africa, as it varies for

Ferose Majam

infrastructure


every project and for every company operating on the continent.

“Some people will say roads, ports, railways must be in place before they undertake a big project, while others will say understanding of the customs regulations and compliance to it is just as important. After all if you don’t have the necessary understanding and ability to manage the import and export of your materials and equipment in and out of a country you might as well not even be in it, and you will not be constructing your project, let alone achieve schedule and cost,” he said.

In fact, it’s far more complex than that. “Electricity, water, sewage, accom-modation for employees, food, security, storage – all of these would be consid-ered minimum requirements in most countries before a project could kick off. In Africa none of these things have to be in place for a project. Remote logistics addresses it all.”

It all starts with pre-feasibility – in African terms that means establishing how much of those essentials need to be taken to the site for the project to begin.

Taking this into account, risk then plays a major role in the African project

landscape. “The importance of knowing what you are going up against cannot be underestimated,” Majam said. “You have to plan, plan and then plan some more. In Africa there are no shortcuts and you have to as far as possible eliminate all elements of surprise.”

A near impossible task as there are virtually always surprises; expecting the unexpected is part and parcel of project planning in the continent.

“The trick,” said Majam, “is to plan for those unexpected elements and to understand the landscape you are oper-ating in – an environment with very little or no infrastructure.” Once you know what you are dealing with, it is simply a matter of constructing an access point. “We start with the road. All we need is a starting point and from there one can just about do anything,” he said.

The St Helena island airport con-struction is a prime example. Situated 2,000 kilometers from the nearest point of land on the African continent, initial infrastructure was limited.

“There was no harbor, no construc-tion plant and no material available for construction apart from rock and water,” Majam said. “In order to get our equipment and material to the island we sourced a ship which is a landing craft type vessel to which we had to make modifications to allow it to carry fuel and cargo. A crane was also installed to allow us to offload.”

A forwarding facility was created in a bonded yard in Walvis Bay in Namibia to consolidate all cargo before shipment to St Helena. On the island itself Basil Read constructed offices, storages and workshops. “We constructed an accom-modation camp that could accommodate about 100 people. The vessel that we sourced – the NP Glory 4 – was the first vessel to voluntarily touch ground on the island. We built a temporary jetty to allow for this.” The company also built a haul road that climbed about 350 meters in the first few kilometers to get to the site.

To date, the company has shipped in excess of 22 million tons of fuels, 5,000 tons of explosives, 27,000 tons of cement, more than 200 pieces of heavy construc-tion equipment, brick-making machinery, crushing equipment, batching plants for concrete, and tons of sand. The list goes on: “Then there are the hundreds and

The wharf on the island of St Helena – one of the most remote places in the world with minimum to zero infrastructure. / Credit: Basil Read

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hundreds of kilograms of fresh meat and food produce that had to go,” Greiner said.

In Nacala, Mozambique, where a rail-way line was constructed a few years ago, people lived in tents on site for at least six months while living accommodations were constructed. Camping in the middle of nowhere means trucking or flying in fresh food, fuel to generate power and water for drinking and washing.

“Once there is access anything and everything is brought to the site, water and food being the most obvious. Elec-tricity is created with generators and containers are turned into storage facili-ties,” Greiner said.

In Palma these necessities will have to be trucked in over hundreds of kilo-meters, as was the case for the Ascaf iron ore project in Mauritania. “Literally a desert site in the middle of nowhere, one of the biggest questions initially was how do we get the first containers off a truck.

Once that was solved everything was delivered to the site,” Greiner said.

Kunfermann added that in the case of Mozambique the first priority – once the road to the site is completed – will be to create a settlement of sorts.

“These camps are quite primitive and provide only for the bare necessi-ties. Even so it is expensive. Putting this minimum infrastructure in place plays a big role in why logistics in Africa is so expensive,” he said.

Paul Runge, an African projects expert and managing director of the Johannesburg headquartered Africa Project Access, noted that the high cost of logistics has not deterred project flow in Africa, which is riding the crest of a wave.

Monitoring projects across a broad range of sectors in Sub-Saharan Africa, excluding South Africa, Runge said he is not surprised to see the private sector paying close attention.

“The continent has an abundance of natural resources and minerals, oil and gas and it is politically stable in many regions,” he said. However, he noted that funding is a problem and it is affecting projects as logistics costs are “sky rock-eting.”

In its latest Africa infrastructure report, Capital Projects & Infrastructure in East Africa, Southern Africa and West Africa, PricewaterhouseCoopers (PwC) found that the top three challenges in deliver-ing capital projects across Sub-Saharan Africa were:

• The availability of skills.• A lack of internal capacity among

state organizations to plan, procure, manage and implement capital infra-structure projects.

• The impact of political risk and government interference during project lifecycles.

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said Du Toit. “In Madagascar we built a mine with hardly any infrastructure available, not even a port. At least 160,000 tons of cargo was moved on to the island via barge onto a temporarily established quayside. A port was constructed at the same time as the mine was going up. Accommodation, water, food, power, sup-plies … everything else was imported for the duration of the project and the perma-nent infrastructure requirements were constructed as we went along.”

According to Runge, developers also need to consider emergency prepared-ness. “Not only planning and creating of living facilities and getting food, water and electricity to people, but you also have to have a plan in place as to what you are going to do if someone becomes ill or if an accident happens. How are you going to evacuate them and how quickly you can do it?”

Community involvement is another

minimal requirement – albeit not infra-structure related, Runge said. “Without the buy-in of the local community you are not going to go very far. It is essential for a project to have the village chiefs and tribal leaders on board.” In the case of Anardarko in Mozambique some 3,000 locals from a handful of villages will have to be relocated.

However, successful projects are able to mitigate risks, Runge said. “The problem is that these large international companies just don’t understand the risks. Yes, there are those that have paid their dues and have come to appreciate what it means to do a project in Africa, but many have learned the hard way.

“You might run a big multinational in a very developed country, be very good at projects and have a string of successful projects that attests to that, but a proj-ect in Africa is a different kettle of fish. Understanding the risk and then mitigat-

ing it is what makes the difference.”In Tete, Mozambique mining com-

panies faced very real problems in the relocation of local communities out of the coalfields. “That is but one of many examples,” Runge said. “Another mini-mum requirement for any African project is that there has to be an off taker for the product. Unless someone really wants that mineral the money being put in to make it happen is going to be wasted.”

Explained Greiner: “It’s not about what can be delivered but rather at what cost. It has to be cost effective for it to make sense in the long run.”

Du Toit agreed saying the develop-ment of a project has to be sustainable especially in remote areas. “It’s about implementing durable solutions over a long period of time which ensures sustainability and that remain cost effec-tive. If the solution is just too expensive it’s not durable or sustainable.” BB

opinion


include research on local laws and regulations with respect to legitimate payments that may be demanded, who is authorized to demand them, and acceptable methods of payment. It is often helpful to have local counsel on call to answer nuanced questions related to local regulations and practices, when such questions arise.

At a minimum, company policies and internal controls should ensure that their local employees in high-risk jurisdictions do not approve question-able payments or services, regardless of business or operational pressure, and instead let the compliance and legal departments of the parent company handle such decisions. Given the time-sensitive nature of these issues, advance planning is rewarded with reduced business disruption.

Any payments that are ultimately approved should be accurately recorded and supported with the proper documentation, including receipts, in order to comply with books and records provisions of anti-bribery laws. If receipts are not available, companies should consider creating their own templates that gov-ernment officials can complete, sign and stamp in return for payments. Frequently the act of insisting on documentation will alert the person

B reakbulk and project cargo operations present challenges for shipping compa-nies, as well as cargo and shipowners, in their efforts to comply with local anti-

bribery laws and international standards.These challenges arise from several factors.

Unlike liner shipping, breakbulk and project cargo ships frequently have to call at ports in high-risk jurisdictions. They may be unfamiliar with these ports and typically have little discretion to change ports of destination.

The complex and often high value nature of project cargo may flag its handling in ports as an opportunity for “entrepreneurial” government officials to extort bribes. They may do this, for example, by threatening to conduct additional, unnecessary checks and other procedures that would lead to significant delays. Finally, compa-nies often have to hire local agents to perform customs, forwarding and logistics services, and these agents may not subscribe to international standards of compliance.

What can be done to reduce risk in the industry? Shipping companies should perform a rigorous risk assessment of the ports at which they’re scheduled to call. Risk assessments should

WHEELS OF COMMERCE

By Alexandra Wrage

Robust Procedures Can Help to Mitigate Compliance Challenges

U.S. enforcement actions peaked in 2010, coinciding with a rise in non-U.S. enforcement actions in 2008-2010. Actions appeared on the rebound in 2014.

ENFORCEMENT ACTIONS – BRIBERY OF FOREIGN OFFICIALS

35

30

25

20

15

10

5

0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

U.S. enforcement actions

non-U.S. enforcement actions

Few third party respondents make yearly due diligence a priority.

PERCENTAGE OF THIRD PARTIES WHO PUT THROUGH DUE DILIGENCE ANNUALLY

20

15

10

5

0

0%-10% 11%-20% 21%-30% 31%-50% 51%-70% 71%-100%

Source: TRACE International Inc., 2015

33% (17)

13% (7) 13% (7)

6% (3)8% (4)

27% (14)


demanding payment that your com-pany will not sanction inappropriate payments. When this is coupled with delay – “I’ll have to check with head-quarters” – companies can become such a burden for bribe-takers that they are permitted to pass while easier targets are identified.

With respect to facilitation pay-ments – “grease” or “expediting” payments – companies are advised to unequivocally prohibit them. These payments may seem innocuous initially, but they may prompt additional and higher value demands and undermine compliance efforts. As a side note, pay-ments made in response to a reasonable expectation of physical harm or ille-gal detention are not bribes; they are criminally extortionate demands and employees shouldn’t be expected to risk personal safety, health or liberty for their employer. Shipping companies

should clearly make the distinction for these types of payments and should circulate a policy stating which are acceptable.

Third-party providers are a peren-nial area of risk. The best way to address this is for shipping companies to perform thorough due diligence. This accom-plishes three goals:

• It elicits information that can help companies make prudent choices among providers.

• It creates a record that the company can point to should misconduct by the third party be uncovered at a later date.

• The due diligence process itself sends a message to third parties that the company values and prioritizes compli-ance amongst its business partners. This should not be underestimated.

Wherever possible, companies should also endeavor to train their agents using actual scenarios for the same reasons. It

is prudent for companies to avoid third parties, whether small and local or large and multinational, if they are unable to demonstrate a prior commitment to compliance or a willingness to promote the standards propagated by the ship-ping company.

While the challenges to this industry are considerable, companies can demand appropriate business practices and remain profitable if they demonstrate the internal will, undertake as much advanced planning as practicable and convey their willingness to walk away from business opportunities presenting insurmountable bribery risks. BB

Alexandra Wrage is president of TRACE, an anti-bribery business asso-ciation offering tools and services to multinational companies and their part-ners. For more information go to www.TRACEinternational.org.

http://www.TRACEinternational.org

http://www.TRACEinternational.org

Breakbulk and project cargoes that shift in tran-sit or in handling are not only a major safety concern; the costs for repair, replacement and repair to property can be eye-wateringly high.

Unsurprisingly, it’s something that shippers actively strive to avoid.

For decades, lashing solutions to secure these car-goes have been dominated by unwieldy chains, with little in the way of innovation to overcome the problems of weight, risk of sheering, and threat of damage to some sensitive cargoes.

Times are changing and synthetic straps and webs are starting to gain a foothold in the cargo-lashing sector. But before there can be widespread adoption, manufac-turers need to win the battle for hearts and minds.

“A lot of people in the shipping industry have the

SYNTHETICS VS. STEELBattle for Strapping Supremacy Takes no Prisoners

By Alan M. Field image in their head that synthetic strapping and web-bing material is only good for [securing] small cargo and light cargo,” said Mark Openshaw, senior application specialist at Cordstrap, the world’s largest manufacturer of synthetic, woven strapping. “In actual fact, the web-bing that we make will actually compete in [terms of] strength with chains for a fraction of the weight.”

But, he noted that the “tide has been turning” in the industry, as more traditional breakbulk firms – long users of steel strapping – are beginning to understand the virtues of synthetic materials. Recently, Openshaw said: “When someone shipped some 100-ton hop-pers from Ireland to a port in the U.K., they used our product because it was quicker to apply, and quicker to remove. The less time your ship is in the port or dock, the less it is costing you.”

Traditional wire systems have been used for hun-dreds of years, and people are generally more familiar with them. Cordstrap has been making strapping for

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about 50 years, using lines of fiber that were originally held in place by glue. As an alternative to steel banding, that product was made out of rayon; a natural fiber.

“It had some good applications, but any kind of water or weather, over time, could make the product go weak, and then fail,” Openshaw recalled.

With the emergence of innovative plastics during the 1970s, Cordstrap moved into using polyester to make strapping; polyester fibers running in parallel, held in place by a new glue coat-ing. This made it more weather resistant and a longer-lasting strap. From the 1980s the company switched from a glue to an extruded plastic coating. The manufacturer’s original market was the timber industry, moving into the chemi-cal industry and then into unitizing or palletizing and securing cargo in con-tainers.

“As our experience with customers evolved, we realized that we needed stronger products, so we moved into our own woven strapping, which we call ‘webbing,’ which also came in various size strengths,” Openshaw said. “It is important to provide a product that is very high tension so that when you put it on, you get high tension applied to the strap, and it retains that tension. The

tension gives you a pulling force.”Today, Cordstrap’s woven strap is

made and treated in such a way that it can control the amount of elongation in the product, he added. “Our product range goes from a couple of tons right into 20 tons. So for heavy cargo – break-bulk cargo – it is our heavy-duty woven lashing that we use.”

A typical Cordstrap product involves lines of fiber running in parallel, which provide strapping strength from 300 kilograms up to 2,600 kilograms, depending on the needs of the shipper.

Gwin Hilton, technical sales manager of North Carolina-based Carolina Strap-ping & Buckles, a U.S. manufacturer of woven, composite and bonded polyester strapping and lashing products, noted that the market for these products is growing largely because of widespread concern for safety issues.

“Every shipper has a story about a cut or a near miss or accident in which a cut occurred with the use of steel strap-ping,” Hilton said. He noted that the insurance rates paid by companies who use steel strapping are affected by the frequency of accidents and near-misses. Whereas steel strapping can “impale or cut people,” Carolina’s product “will not do that. It has tension on it, of course, but it won’t cut you. That makes it the

most attractive product for senior level management,” who pay close attention to insurance costs.

Hilton added that railroads have tried over many decades to solve some of their load shift problems by using this kind of product. “You can imagine a load of pipe being close to a tank car – and if that pipe was to impale that tank car, especially chlorine, then you would have evacuation on your hands of the adjacent population.”

Although steel strapping takes an impact, steel does not have the elonga-tion properties to hang on to the load, he said. “Our material will stay with the load; on impact, it will take the impact and keep the load secure.” When steel strapping breaks, “you have a series of broken steel banding, hanging down from the railroad car going down at 30 to 50 miles per an hour. You can only imagine what would happen if you have a pedestrian at a rail crossing with that [steel banding] hanging off that car.”

Openshaw noted: “Customers who were using chain to secure steel slabs onto flat racks have moved to our prod-ucts because the chain was breaking. Chain may be a steel product, but when you put it over a sharp edge – like a steel product; such as the chain on the edge of a piece of plate steel – if a load is [then] applied, the chain can snap.”

It’s important that high tension is applied to the strap. / Credit: Cordstrap


BELTS, BRACES AND BUCKLESAdequate and appropriate

webbing to secure breakbulk and out-of-gauge cargoes is only one piece of the strapping puzzle. Con-nectors and ties are also critical components and are consequently the subject of ongoing research and development.

Cordstrap’s offering is its pat-ented Dynamic Load Buckle, known as the Dynablock Buckle, designed for those cargoes most affected by vibrations. The company’s Mark Openshaw explained that when it comes to securing shipments with lashing and strapping, there are three different categories of cargo to consider:

Cargo that is fixed and solid and won’t move at all, for example a steel box.

Cargo that can move, such as a truck with wheels and suspension. In such a case, “the whole thing can move and bounce, independent of what it is sitting on,” Openshaw said.

Dynamic cargo – “the kind of cargo that can’t move, but as a result of the way that it is transported, you can have vibrations. Truck or big machinery can move, relative to whatever it is sitting on, through vibrations.” These kinds of vibrations mean that the lashing system is the subject of forces that are applied and removed very quickly. This third kind of cargo is known as ‘dynamic cargo’ because a dynamic action is happen-ing on the cargo at all times.

“For traditional webbing systems, this dynamic action can cause the [strapping] to go loose and to fail,” Openshaw said. “With our original [earlier] system, you couldn’t use [our strapping] in this [dynamic] environ-ment because it could go loose.”

Cordstrap developed its Dynamic Load Buckle to prevent against such failure in the securing of this third type of cargo.

The patented buckle system is used for joining the straps together, he explained. When the cargo is placed on the ship, it must be secured to the lashing point on the ship. Using a loop-and-strap system, the Dynamic Buckle goes through one lashing point and back down again. While the Dynamic Buckle looks the same as a normal buckle from a distance, special ridges have been cut into it so that it can’t slip. The system works on dynamic cargo and static cargo that is behaving dynamically.

Openshaw added: “Once it is applied – and we have developed tooling to apply it – you can actu-ally secure dynamic cargo with this system and it will not go loose. This works on things like trucks, but also on things like wind turbines – which is a common breakbulk cargo around the world at the moment.” Indeed, Cordstrap’s Dynamic Buckle is attracting more and more users for securing wind turbines.

“Traditionally, people use chains to secure wind turbines,” Open-shaw said. “But chains are heavy, so moving them from the deck of the ship, five or six meters into the air, involves a lot of weight [being moved]. If you use a [synthetic] webbing system, there is a lot less weight, but people are concerned that the webbing system could go loose. So it’s that kind of market where we can work with our system, so it won’t go loose.”

Openshaw admitted that the Dynamic Buckle was not an immedi-ate success, despite its benefits. Although the product has been on the market for a couple of years, many people “haven’t noticed that it can make a difference,” he said.

The dynamic buckle system has been used on railroad systems for a few years and it is available for other kinds of users, but it has not been heavily promoted in the marine industry. “Cordstrap wants to make sure that it has good test cases that are being used – and make sure that there are no issues with it before [we] start pushing it big time,” Openshaw said.

Strapping is used to secure an outsized cargo. / Credit: Cordstrap

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W W W .S C M L IN E S .C O M

In addition to the safety and the strength issues with chain, Hilton noted that steel strapping can also lead to rusting and abrasion of some breakbulk cargo. “Our product, being a textile product made here in the U.S., is not an abrasive product on sensitive commodi-ties that will be shipped over rail. If you have a pipe that already has a finish on it, then you do not want that product being secured by something that is going to be abrasive. Our product will secure the product in place without compromis-ing the finish of the product. This is not something that is going to have to be touched up later on. This is safer for the individual and for the product itself.”

Allen Creech, director of technical services, at Southern Bracing Systems, based in Rome, Georgia (U.S.), added, moreover, that “traditional steel banding can be very difficult to handle and use. Handling, installation and removal can

require safety gear to ensure the user is not hurt. During installation, heavy tools are also needed to tension and secure the bands. The sheer weight of the individ-ual coils, which can be in excess of 100 pounds, requires additional machinery to transport and handle.”

In contrast: “A typical woven or bonded strap coil or spool is designed to be transported by a single person. Our standard coils are kept below 15 pounds [in weight], and the tensioning device is a single tool – in most cases, lightweight – making the application very easy for the installer,” he said.

On the other hand, added Creech: “On the customer side, the material can be cut with a pair of scissors rather than the need for a heavy tool designed to cut steel band-ing.” Moreover, “Steel banding can become extremely sharp when cut and can result in injury to not only the installer but also the customer. Steel banding can also be

difficult to tension correctly as the steel doesn’t always conform to the product and must be manually manipulated to help ensure a proper tension is achieved.”

Given all these selling points, why then is there still significant resistance to synthetic replacements for steel among veterans in the industry? Openshaw explained: “The maritime breakbulk industry is pretty well regulated and has a pretty good safety record. Because they’ve been doing a certain thing a certain way for a long time, people just don’t like to change. Even though you have a product that does everything you need it to do, there is just a feeling in the industry that ‘chain is big and heavy; how could something synthetic be just as strong as a chain?’ ”

While Cordstrap’s woven product offers as much strength as steel for those who require it, “there is a perception in the industry that chain has to be better.


Whereas, in actual fact, if you go down to a technical level, with regard to what abuse they can take with use, the synthetic sys-tem is actually far more forgiving because it can give and stretch, whereas a chain will either hold or break.”

Manufacturers remain hopeful that their products will become more popular among users, although they are unable to provide sales figures. Hilton noted that his firm’s market share is increasing “because of the safety issues.

“There is resistance to change in any organization,” he said. “When you talk to steel manufacturers in the U.S., they are the first ones to tell you that they are not going to be changing away from steel strapping; ‘we are a steel company,’ they say. But once they start using it, they have, one by one, seen the advan-tages of it – not only pricewise, but also in efficiencies. As different load designs are developed by railroads, you see them

more and more leaning toward non-metallic strapping.”

For his part, Creech said: “As with any new product or process, there is always resistance to change. Steel banding is still an accepted standard and one that will continue to play a role in load secure-ment for a long time to come. However, some applications have been shown to no longer work with steel banding, largely due to the fact that the bands can pose a danger to others if they fail during transit. While the start of this change occurred in the rail industry, we continue to see it affecting other modes of transit every day, as people see the benefits of woven and bonded strapping. These same veterans are the main people that end up helping to push the popularity of the product, as they see the benefits after some initial resistance and are happy to tell others.”

More education of the market is required, the executives agree, as many

potential users still do not understand the benefits of using these products.

“Many people do not initially see the benefits to upgrading,” Creech said. “It is our job to explain that typical strapping is made with between 15 percent and 30 percent elongation, and this additional stretch can allow the freight to move. As a simple example: a 10-foot length of strap with a 30 percent elongation could elon-gate as much as three feet when under tension. That much movement in a ship-ment could be the cause of very expensive damages and these can be prevented with a true load securement strap.

“Another challenge is the flood of very similar products.” Creech concludes that potential users must also under-stand that “to get the most out of a strap, it must be used with the correct buckle or the entire system will underperform, resulting in excessive movement and potentially damage.” BB

EVENT COVERAGE

Roll-on, roll-off and multipur-pose vessel owners’ share of steady general cargo volumes will increasingly erode going

forward, a leading consultant has warned.

Instead, container lines will take a larger share of global general cargo trade as carriers repurpose 4,000- to 8,000-TEU containerships to accept non-containerized cargo.

Niklas Bengtsson, director of Sweden-based maritime-insight, told delegates at the Breakbulk Europe event in Antwerp that the problem is “not with the cargo itself.”

“The problem is that the growth will be handled by the container carriers. They will steal the cargo and not neces-sarily earn money – that is a problem,” Bengtsson said.

Container carriers’ bulging order-book will “change the foreseeable future” for general cargo ships, over-shadowing forecast flat growth in the general cargo ship fleet through 2019.

“Container carrier capacity has out-grown general cargo capacity massively in the last 20 years. The trouble is that the current ro-ro cargoship orderbook will not come close to replacing ships, so the fleet will decrease by almost 16 percent by number of ships over the next few years,” Bengtsson said.

The “general cargo fleet will get older and ro-ro cargo ships will struggle; I’m not saying that the concept is dead as it is not, but it will be even more niche in the future,” he said.

Instead, Bengtsson expects compara-tively inefficient mid-range container

CONTAINER SHIPS CONUNDRUMMidsized Boxships Dent Demand for Oversized Cargoes

By Carly Fields

ships to be taken out of the regular sail-ings to accept more awkward cargoes in the medium term.

As a result, general cargo and ro-ro ship operators face tough times ahead, as their ships “are expensive to build and run and relatively high consumers of fuel. To survive, there must be more efficiency, and shipbuilding in Asia to bring costs down. Ro-ro operators must also work a lot more with complete logistics solutions to remain competi-tive,” he said.

In a breakdown of the vehicle sector, Bengtsson noted the fleet is forecast to grow slower than trade. Normally, this situation would have prompted new orders, but strained finances for many of the lines active in this trade have reduced newbuild opportunities.

The upside of this, said Bengtsson,

is that vehicle carrier operators will not overbuild their market and will conse-quently benefit from improved earnings for the next five years.

That said, container ships also pose a significant threat to traditional car carri-ers: “All expensive cars and cars that are not going in the big trunk lines will be containerized first. Cheaper cars directly on the trunk lines will be in car carriers for a few more years.

“The trouble is that as container-ships have tremendously increased in size, others have not, so where container carriers have lower costs, car carriers do not.”

Bengtsson predicted that car carriers would need to increase in size to 10,000-12,000 car equivalent units in the near future to capitalize on the same econo-mies of scale. BB

Niklas Bengtsson, director of Sweden-based maritime-insight, speaks at Breakbulk Europe 2015.

breakbulk europe 2015


Avda. del Partenón, 10

28042 Madrid - España

T +34 915245500

F +34 915245501

www.puertos.es

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Too big? Too heavy? Too complicated?Not for Spanish Ports

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EVENT COVERAGE

A ntwerp has finally brought breakbulk into its port com-munity system through an innovative 22-month part-

nership with the port of Bremen and dbh Logistics IT.

A new breakbulk application, launched at the Breakbulk Europe exhibi-tion in Antwerp, will automate much of

ANTWERP ADDS BREAKBULK TO ITS PCS

Port Overcomes Challenges of Digitalizing Paper-heavy Business

By Carly Fields the port’s existing breakbulk process.“We have been searching for a digital

application for breakbulk cargoes for a long time,” John Kerkhof, director of Antwerp Port Community System, said on the sidelines of the Breakbulk event. “It’s much easier to digitalize containers than breakbulk.”

Annick Dekeyser, marketing com-munication coordinator, added: “This application will help the digitalization of breakbulk cargo at Antwerp. Today, it’s

a very paper-heavy business and at the moment, not all people in the breakbulk supply chain are informed enough, so it is important to make this cargo more transparent.”

In the new breakbulk process, the forwarder who initiates the transport makes a single declaration concerning the consignment through the breakbulk application.

The application then assigns a unique reference to the consignment that is then used by all subsequent parties in the chain. This allows the forwarder to view the status of the consignment in the sys-tem at all times.

All users of the application will be expected to share in the cost, with the port working on the basis of €0.10 per tonne to be shared between the forwarder, ship’s agent and terminal operator. Kerkhof explained that it is not the intention of the port to “get rich” from the application, as the proceeds will be returned to the community.

Currently in a pilot phase with Arce-lorMittal Logistics, Fednav and NHS, the port is aiming for the application to achieve “fairly full coverage” by the end of the year.

The port is also planning further breakbulk developments in its com-munity system, focusing next on the integration of Customs applications and hinterland connections.

“Cubix is another example of the innovative approach in breakbulk in Antwerp,” said Luc Arnouts, chief com-mercial officer of the Port of Antwerp. “Antwerp remains positive and confi-dent to the future as a leading breakbulk port. We need to remain vigilant and innovative and act and react quickly. Transparency and avoiding redundancy are key words.”

Antwerp’s Port Community Sys-tem was initially developed by the port authority in conjunction with Customs and private companies. It’s a combina-tion of an electronic messaging system with information exchange, supporting all goods and transport modes that uti-lize the port.

Antwerp’s vision for its PCS is to allow its users to “achieve a competitive position in cargo logistics” through the efficient exchange of information with other links. BB

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F I R S T C L A S S S H I P P I N G S E R V I C E S W O R L D W I D E

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To the date this impressive project is the heaviest piece of cargo ever moved by Martin Bencher. To see and learn more about impressive projects by Martin Bencher, please visit our website or call one of our 15 offices located in 20 different countries world wide.

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EVENT COVERAGE

P lanned Middle East infrastruc-ture investment in excess of US$1.3 trillion over the next 10 years validates its importance

as a key project cargo destination.With almost 30 percent of that

MIDDLE EAST MONEY-MAKERSUS$1.3 Trillion Investment Proves MENA Project Worth

By Carly Fields spend already committed, the area will continue to be a powerhouse in infra-structure spending despite lower oil prices.

“The scale of change is so big; we are talking about regional transformation at a scale that has never happened before and will probably never happen again,” said Teresa Lehovd, head of market intel-

ligence, Höegh Autoliners, speaking at Breakbulk Europe.

Some projects have been postponed or cut in the region as a result of lower oil prices, but the sub-US$50-per-barrel rates have also prompted a “paradigm shift” in the Middle East, said Lehovd. “The current prices expose the risks of overdependence on one single commod-ity and emphasize the need to diversify. This has created a very large and fast-growing project cargo market.”

Population in the Middle East-North Africa region is expected to grow by 100 million from 2014 to 2050, placing intense demographic pressure on the region. Added to which, countries in the Middle East have lost an estimated US$38 billion in revenue over the past year on the back of lower oil prices, compounding the pressure to finance

Signature infrastructure projects include the US$93 billion King Abdullah Economic City project in Saudi Arabia.





projects. Saudi Arabia alone needs to cre-ate 4 million jobs in the next five years to accommodate its young population.

“In order to develop areas of com-parative advantage, these countries need infrastructure, that’s why infrastructure is becoming the critical catalyst for the diversification process in certain coun-tries,” Lehovd said.

Signature infrastructure projects include the US$93 billion King Abdullah Economic City project in Saudi Arabia, the US$147 billion Dubailand project in Dubai, the US$45 billion Lusail develop-ment in Qatar and Oman’s US$20 billion Duqm New Town project.

In a comment on the effect lower oil prices will have on planned infrastruc-ture projects, Lehovd said: “I believe that projects that are tied to international major events are safe, as are mega proj-ects related to economic diversification and social infrastructure projects. The

projects at risk are the refining and pet-rochemical projects, as well as projects that are not strategically important, commercial/retail construction, and high-end real estate projects.”

When it comes to delivering on planned projects at current oil price levels, she placed Qatar, U.A.E., Egypt, Morocco and Saudi Arabia at moderate risk, while Bahrain, Oman, Abu Dhabi, Kuwait and Algeria were high risk.

“Short term these countries are well prepared for currency declines,” Lehovd said. “Longer term they will have to turn to debt and borrow from private banks and/or sell strategic assets.”

In summary, Lehovd said prospects for project cargo “remain good for now,” but cautioned that a deepening oil price crisis could mean there will be further cuts to come. “They have perhaps done too little, too late,” she said. BB

Teresa Lehovd, head of market intelligence, Höegh Autoliners,

at Breakbulk Europe 2015.

EVENT COVERAGE

Breakbulk Europe, the largest exhibition and educational forum in the world addressing the needs of traditional breakbulk and project cargo logistics professionals, celebrated its 10-year anniversary in record-setting fashion with nearly 7,200 qualified attendees from 113 countries gathered in May at the Antwerp Expo in Antwerp, Belgium. In addition, more than 350 exhibitors and sponsors filled more than 13,000 square meter exhibition area.

In addition to a series of executive presentations in the exhibition hall, Breakbulk Europe provided a range of networking activities, including the welcome reception, a VIP Leadership Summer, Ports America’s Happy Hour, Breakbulk Business Run and numerous hosted parties and receptions.



18-21 May 2015 | Antwerp Expo | Antwerp, Belgium

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The 10th anniversary celebration included recognition of the Breakbulk Europe’s “founding fathers” – Edouard F. Dekkers, president, Dekkers International Inc.; Albert Pegg senior advisor-marketing, promotion and commercial relations, Antwerp Port Authority; and Jean-Jacques Westerlund, director, Taste-Westerlund. Ann DeSmet, business development manager of Port of Antwerp, was also recognized for her tireless efforts on behalf of Breakbulk Europe.

The 11th Annual Breakbulk Europe Exhibition will be held May 23-36, 2016 again at the Antwerp Expo. Additional information will be available at www.breakbulk.com.

EVENT COVERAGE

BEST IN CLASS BBC Chartering GmbH

CREATIVE BOOTH DESIGN Martin Bencher Group

INFORMATIONAL/EDUCATIONAL Holmatro

STRIKING INTERNATIONAL THEME Ports of Spain

TOP ENTERTAINMENTNirint Shipping

MOST WELCOMING STAFF Port of Blyth South Harbour

MOST “FUN ON THE FLOOR”Broekman Logistics

2015 BOOTH WINNERSVIP Shipper judges from Alstom Power, Wartsila OY, and FLSmidth reviewed the 350-plus exhibitor booths and awarded the following:




INDEXB reakbulk 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 heavy-lift 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.

V eteran maritime editor Carly Fields has joined Breakbulk Events & Media’s international

editorial team as news editor.Fields has more than 20 years of

shipping industry experience, including writing and editing maritime publica-tions since 2000. After six years as special reports editor at daily shipping newspaper Lloyd’s List, she has worked as a freelancer journalist, serving as editor of Port Strategy magazine, the Institute of Chartered Shipbrokers’ Shipping Network magazine, The Mission to Seafarers’ The Sea newspaper and the Baltic Exchange’s online news source.

Fields has also served as a lec-turer for the Institute of Chartered Shipbrokers and was named Seahorse International Editor of the Year in 2012.

“I’m truly excited at this opportunity to immerse myself in the breakbulk and heavy-lift sectors in my role of news edi-tor of Breakbulk magazine,” Fields said. “I’m keen to further develop this hugely successful magazine, sourcing fresh content and tailored features in support of our international stable of events.”

INDUSTRY VETERAN FIELDS JOINS BREAKBULK


Source: Danske Market Equities, www.danskebank.dk

EUROPEAN FREIGHT FORWARDING INDEXThe index, based on European forwarders’ actual and expected freight volumes, remains below 50 although August marked an increase. Values below 50 on the zero-to-100 scale indicate a decline.

FORWARDING INDEX

MJJASONDJF

MAMJJASONDJF

MAMJJASONDJF

MAMJJ ASONDJF

MAMJJASONDJF

MAMJJ

2015

2011

2010

2012

2013

Actual Forecast

80706050403020100

2014

PIRACY

WEST AFRICA MARITIME SECURITY INCIDENTSThere have been 47 incidents from Senegal to Gangola during the first half of 2015, with 14 kidnappings, nine robberies, three thefts, two hijackings and 19 failed attempts. Efforts to combat piracy off the Horn of Africa have been largely successful, although there was a single hijacking in March.

Total Failed Attacks Hijackings Attempts Theft Robbery

October ‘13 9 4 5 0 0November 5 2 1 0 0December 3 1 2 0 0 January ‘14 5 3 2 0 0February 7 3 3 0 1March 10 5 4 0 1April 4 0 3 0 1May 5 1 1 0 2June 6 5 1 0 0July 3 1 2 0 0August 7 3 3 0 1September 5 1 1 0 3October 9 6 3 0 0November 13 5 7 1 0December 9 2 5 1 1January ‘15 7 1 2 1 2February 6 1 1 0 1March 10 0 4 2 1April 7 0 4 0 0May 12 0 5 0 4June 5 0 3 0 1

Note: “Failed” includes attempted robberies/thefts as well as hijackings. “Hijackings” include kidnappings from vessels.

SOUTHEAST ASIA MARITIME SECURITY INCIDENTSThrough the first half of 2015 there have been 100 maritime security incidents. Sixty-five were successful, led by theft (29) robbery (23) and hijacking (12).

Total Failed Attacks Attempts Hijackings Theft Robbery

October ‘13 19 9 1 4 5November 13 4 0 6 3December 13 3 0 9 1 January ‘14 1 0 0 0 1February 7 1 0 0 6March 9 2 2 1 4April 12 1 4 5 2May 18 11 1 2 4June 15 2 3 4 6July 14 5 2 1 6August 14 6 1 4 3September 8 2 3 2 1October 26 7 4 8 7November 20 9 0 5 6December 16 7 1 3 5January ‘15 18 6 2 4 6February 11 3 2 3 3March 15 6 2 2 5April 16 9 1 4 2May 22 7 2 11 1June 18 4 3 5 6Note: “Failed” category is for attempted robberies/thefts, not hijackings.

Source: Risk Intelligence, www.riskintelligence.eu


bb index

FOREST PRODUCTS: PULP INDEX

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J



125

100

75

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.

EUROPE

2010

2010

2010

2011

2011

2011

2013

2013

2013

2012

2012

2012

2014

2014

2014

2015

2015

2015

175

150

125

100

75

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.

NORTH AMERICA

225

200

175

150

125

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.

ASIA

Source: RISI, www.risi.com

2015-2016 EVENT DATES

`

TO REGISTER OR RESERVE A BOOTH, VISIT

www.breakbulk.com »

NETWORK WITH BREAKBULK & PROJECT CARGO LOGISTICIANS FROM AROUND THE WORLD.

A division of

14-17 March 2016Shanghai, China

October 5-8, 2015Port of Houston, TX, USA

23-26 May 2016Antwerp, Belgium

February 2016Istanbul, Turkey

1-2 December 2015São Paulo, Brasil

4-7 April 2016Johannesburg, South Africa

25-28 October 2015Abu Dhabi, UAE

BBEvents_alleeventsSummer2015.indd 1 7/21/2015 9:18:31 AM

This will be tough on the project cargo transport industry, which thrives on the kind of remotely located, complex energy projects triggered when energy prices hover at US$80 a barrel and above. On the other hand, Iran will soon be a rapidly rebuilding/developing market on Turkey’s doorstep, as well as a busy transit corridor for central Asia, factors we will be discussing at Breakbulk Turkey Congress in Istanbul.

Low natural gas prices will also be a boon for the U.S. Gulf Coast, where billion-dollar investments in petrochemical manufactur-ing facilities and LNG export projects will come into play over the next 12 to 24 months.

Louisiana’s Port of Lake Charles is just about out of real estate, according to Dan Loughney, the port’s director of marketing and trade development. “A few years ago we couldn’t give space away,” he said. Now project owners, EPCs, service suppliers and regional planners are bracing for a boom that will shape the region for years to come. This, too, will be a Breakbulk panel discus-sion topic, this one at Breakbulk Americas in Houston in October.

Another Breakbulk Americas discussion we are excited about, “Managing the Trans-port Envelope,” will focus on the EPC/OEM perspective on the transport supply chain. The idea actually rose out of a great panel on managing risk presented at Breakbulk Africa last February, and we’ll be adapting it for other Breakbulk events.

Enjoy the rest of the summer – and I hope to see you at one of our Breakbulk events over the 2015-2016 season. If you have a great idea for a panel, give us a call.

It’s Breakbulk Events’ slow season, as we prepare for the 2015-2016 event cycle, plan our program content and watch the news – and boy, is there a lot to watch,

much of it triggering ripple effects that will surely impact the breakbulk sector.

Joao Augusto de Castro Neves, an econo-mist with consultancy eurasia group, and a keynote at Breakbulk South America last December in Sao Paulo, told us recently that he sees distinct signs of brighter times ahead for Brazil’s shipping sector.

Petrobras, Brazil’s state oil company, has been the sole operator of Brazil’s vast “pre-salt” offshore oil fields since President Dilma Rousseff’s leftist government changed the laws. However, in the face of recession, crippling scandals at Petrobras and intense financial pressure, Brazil’s congress appears poised to pass legislation that will again allow foreign and private oil and gas compa-nies to invest in and operate these fields.

Since Brazil’s assets will be selling very cheaply, de Neves expects an inflow of des-perately needed foreign investment. New policies will also encourage foreign invest-ment in logistics and other sectors, he said.

However, the pre-salt oil is challeng-ing, and therefore very expensive, to reach. Low global oil prices greatly increase the risks. News from Iran, where an historic agreement means yet another set of legal barricades is falling, will only add downward pressure on oil prices.

Once Iran has met certain required nuclear program-reduction steps, and assuming no roadblocks arise, international sanctions should begin lifting from Iran’s US$400 billion economy. At press time, oil prices were sliding; an unlocked Iran means the world’s third-largest oil and gas reserves will gradually begin supplementing the pool despite a massive global oversupply.

THE SLOW SEASON

An unlocked Iran means the world’s

third-largest oil and gas reserves

will gradually begin supplementing

the pool despite a massive global

oversupply.

By Janet Nodar

Credit: Keith Necaise Photography

opinion


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