TRENDS AND OPTIMISM IN THE PROJECT CARGO MARKET

Air Products and Chemicals Inc. serves more than 30 industries in 50-plus countries, supplying “industrial gases, performance materials, equipment and technology.” When the world’s largest supplier of hydrogen and helium needed a site to manufacture its liquefied natural gas heat exchangers, it located its facility just outside the gate of Port Manatee, Florida.

Headquartered in Allentown, Pennsylvania, the company exemplifies a trend gaining steam in the project cargo industry: locating facilities that produce overweight, over-dimensional units in closer proximity to the docks from which they may be exported.

Dedicated in January, the Air Products facility is gearing up to make units weighing 500 tons or more apiece that can be put on special trucks, taken a mile or so to port berths for loading on ships, then transported to customers throughout the world.

John McGlade, Air Products’ chief executive officer, is quick to note that the near-dock location of the company’s second major heat exchanger plant averts inland transport concerns and expenses related to moving the mammoth units from its factory in Wilkes-Barre, Pa., to the closest export terminal.

Demand for ocean transport of project cargos is anticipated to be on the upswing, with carriers serving the heavy-lift market optimizing lifting capabilities while increasing flexibility through deployment of multipurpose vessels.

Executives of most major project carriers seem to be in agreement that improving global economic conditions are spurring an eagerly awaited rise in the call for moving over-dimensional cargo, but enthusiasm nonetheless remains somewhat tempered.

“While we still see challenging market conditions in the break-bulk and heavy-lift market, in the past months optimism has started to grow,” says Ulrich Ulrichs, chief operating officer of Hamburg, Germany-based Rickmers-Linie, which has 18 specialized multipurpose heavy-lift vessels in permanent operation.

Activity increases are particularly noticeable in trades from Asia to South America and from the United States and Europe to the Middle East, according to Ulrichs, who notes that Rickmers’ westbound ’round-the-world service, initiated in March 2013, is now running on nearly a monthly frequency, and its eastbound Pearl String is operating with 10 vessels, up from nine, allowing maintenance of fortnightly frequency even with the company’s slow-steaming policy.

Hopeful that a project backlog caused by the worldwide financial crisis will experience some alleviation in 2014 and 2015, Ulrichs says Rickmers looks forward to delivery by early 2015 of two new vessels for its service from Europe to the Middle East and India. Consistent with industry trends, these new ships will feature enhanced fuel efficiency plus powerful shipboard cranes capable of combining to lift cargo units of as many as 900 metric tons.

For his optimism, Ulrichs cites a recent Drewry Shipping Consultants Ltd. forecast, which indicates an average annual growth rate of 3 percent for multipurpose vessel volumes through 2017. That forecast comes after a series of comparatively dreary prognostications.

Leer, Germany-based BBC Chartering, which operates 150 vessels serving the multipurpose and heavy-lift market, is well into multiple new building programs for delivery of “ecoships” that facilitate both optimum speed and fuel utilization.

“New developments in project cargo vessels aim at optimizing cargo-handling productivity and voyage efficiency,” says Raymond Fisch, BBC Chartering’s senior vice president for Public Relations, Corporate Communications and Group Marketing.

The company has completed its BBC Congo series, with seven vessels good for 17,000 deadweight tons—a measure of how much weight the ship can safely carry—each with two cranes combining for 500-metric-ton lifting capacity. Also completed were its BBC Everest series of eight 9,300-deadweight-ton ships, each with combined lifting capacity of 700 metric tons; and, by the end of 2013, nine of 14 vessels in the BBC Amber series of 14,800-deadweight-ton ships, each offering combined lifting capability of 800 metric tons.

According to Fisch, Asia remains the hotbed of project cargo activity, plus North America and Europe are busy exporting heavy lifts to developing markets such as South America and Africa, and he describes the trade within Europe as “lively” as well.

Fisch observes that clients are tending more and more these days to rely upon a single source for shipping solutions—which may combine regional cargo consolidation with overseas transport, dedicated shuttles or offshore floating storage and feedering—and this is requiring that carriers bolster their project management capabilities.

Another trend cited by Fisch is greater risk awareness on the part of clients, with an increased focus upon occupational health, safety, environmental and quality-management issues throughout the execution of a shipping project.

Torin Swartout, vice president of the Spliethoff USA unit of Amsterdam-based Spliethoff Group, which operates more than 100 multipurpose, heavy-lift and roll-on/roll-off vessels, notes that safety, transit time, energy reduction and cost-cutting benefits are all being achieved with moves toward vessels that can run on liquefied natural gas and with direct services such as one being initiated this spring by Spliethoff between the Great Lakes and Europe. That scheduled service, operating from the Port of Cleveland and using the St. Lawrence Seaway, is to handle heavy-lifts as well as containers.

“We see the big pieces getting even bigger and heavier, and everything that can be containerized being shipped on liner services,” Swartout says, relating these trends to the startup of the Great Lakes-Europe service and to the recent building by Spliethoff Group member BigLift Shipping of the Happy Sky, with a combined lifting capacity of a whopping 1,800 metric tons. “We see increased demand for larger and heavier cargos, as well as more requests for scheduled services for smaller projects that have containerized cargo included.”

Energy-related projects represent a significant sector of Spliethoff’s business, from oil and gas industry components heading from Asia to the Americas to wind-power units going from Europe to the Great Lakes, according to Swartout.

“Concerns for the environment and new regulations for energy production have been a driving force in updating power production facilities,” he says, “and at the same time, the growing demand for power means more oil and gas projects.”

Brent Berg, Houston-based managing director of Thorco Shipping A/S, says that while wind, solar and wave technologies are “great ideas,” projects related to oil and gas will continue to be primary in providing project cargo opportunities—including equipment for new refineries and for extracting natural gas from recent finds, as well as green-lighted undertakings that had been put on hold while global economic uncertainty lingered.

In July 2013, Thorco Shipping merged with Clipper Projects, continuing under the Thorco name, with headquarters in Copenhagen and a 90-vessel fleet. For Berg, it’s great timing. “I think 2014 is going to be a really refreshing, fun year,” he says, opining that the upturn is beginning in the traditional seven-year cycle for project cargo activity.

Berg believes the days of big investments by carriers in heavy-lift-specific vessels are likely over, with the emphasis now on combination ships that are able to handle a variety of cargo types, including containers. And ship designs are continuing to move away from traditional bows to those that help to reduce fuel consumption.

Charles Atkinson, Baltimore-based national sales manager for Bahri General Cargo, notes that his company, formerly known as National Shipping Co. of Saudi Arabia, anticipates spring delivery of its sixth new “RoCon” roll-on/roll-off container vessel. He says this should be propitiously timed with demand growth in the Middle East, in particular in Saudi Arabia, where some $77 billion in infrastructure investments are under way.

“For the Middle East area,” Atkinson says, “there is an ever-growing demand for project-savvy carriers offering various alternatives.”