Project carrier vetting held as vital, but common standard seen elusive

Careful vetting of carrier partners is essential in today’s breakbulk and project cargo environment, but a standard evaluative process is likely to remain elusive, according to industry leaders. The discussion on vetting was among several timely dialogues taking place in conference sessions of Breakbulk Americas, held Oct. 17-19 at the George R. Brown Convention Center in Houston. Ed Bastian, director of global sales at Germany-based worldwide project carrier BBC Chartering, kicked off the panel chat saying he sees recent indications of strong demand and growing trade volumes in a sector that, like containerized cargo shipping, has been impacted for several years by overcapacity, low freight rates, collapse of commodity prices and various econo-political crises. The currently risk-filled industry environment, with some carriers going out of business and banks pulling vessels, makes a meticulous vetting process all the more imperative, according to Jake Swanson, director of global logistics for The Woodlands, Texas-based energy industry technology and infrastructure provider CB&I’s Engineering and Construction Group.

“The way that shippers are protecting themselves is by not shipping much,” Swanson said with a smile, continuing, “No, that was a bad joke. Actually, we are protecting ourselves by keeping our group of carrier partners to a tight list of those with whom we have longstanding trusted relationships and that have gone through rigorous annual vetting processes.” Frank Fischer, managing director for tonnage procurement at Houston-based project, breakbulk and heavylift carrier Intermarine LLC, said he believes a “common vetting agreement” between carriers and engineering, procurement and construction companies, known for short as EPCs, would be beneficial, as the process currently is carried out via myriad disparate procedures.

The head of another global specialized carrier in the sector, Ulrich Ulrichs, chief executive officer of Germany-based Rickmers-Line, said he also would like to see a standard model for the vetting process, as the present variety of methods exacts undue costs. “We are very transparent and welcome vetting,” Ulrichs said. “But it’s different every time, and that’s a bit of a problem.” Ulrichs nonetheless conceded, “I think, honestly, a common standard is not going to happen.” Brent A. Patterson, senior vice president for global projects at Houston-based Blue Water Shipping, concurred that a vetting standard may be ideal but that there is simply too much variation in requirements by region and mode. On a positive note, Patterson said he perceives “an upside to a down market,” in that the abundant supply of available vessels often facilitates favorable spot rates for those booking project transport. And each of the other panelists indicated optimism, at varying levels, that the project cargo shipping business will be in better shape somewhere between two and five years from now. A separate panel, featuring project cargo shippers, opened with Alex Azparrent, global logistics director for Irving, Texas-based worldwide EPC leader Fluor Corp., saying he sees “some modest signs” of business picking up in the project arena, adding, “I don’t think there are any small projects anymore. Everything is a megaproject.” 

Azparrent said he believes technology will play an increasing role as Fluor takes a modular approach to projects and utilizes radio-frequency identification, or RFID, tracking tags on commodities such as pipe, cable and structural steel. Members of the shipper panel agreed on the importance of technology, with Stacia Ellis, manager of overhaul logistics and prep community liaison for the San Diego-based Solar Turbines Inc. subsidiary of Caterpillar Inc., commenting that innovations can be put to greater beneficial use in enhancing visibility throughout the supply chain. John Hark, regional director for North America and chief operating officer for South America for Germany-based Bertling Logistics, said he believes project forwarders are ideally positioned to advance technological innovations and now, during a relatively slow time for business, is a perfect time to work creatively on “meaningful modernization.” Gary Sostack, administrator of the logistics and services division of Aramco Services Co., the Houston-based U.S. link for the state-owned oil company of Saudi Arabia, said RFID scanners are in place at 73 company warehouses in Saudi Arabia and that his firm sees vast possibilities for increasing applications, including on the resupply side. Another energy company logistician, Todd Arnold, Houston-based global category manager for international, inbound and project logistics for Netherlands-headquartered Shell Global Solutions, said he looks to greater use of big data in making project shipping more predictive, but, he added, technology must be implemented by the right personnel. “Technology is an enabler,” Arnold said. “It’s not a solution. It’s got to come with people.” Amy Stepka, senior project manager for Schenectady, New York-based GE Power, was on the same proverbial page, commenting that she sometime feels technology can overtake the human element. “There’s still a need for human contact,” Stepka said. “There needs to be a balance.” A Breakbulk Americas panel session highlighting Mexico’s energy sector focused on what was described as “a booming market” by Brandon Strange, assistant manager of logistics and transportation for Mitsubishi Hitachi Power Systems Americas, who cited Mexican government figures indicating power generation projects bode to boost the country’s electric production capacity from its present 63,000 gigawatts to 100,000 gigawatts by 2030. That capacity is anticipated to further grow to 160,000 gigawatts by 2040, with multibillion-dollar investments not just in traditional sources but also in solar and wind, according to Armando Lee, operations manager for ICI Proyectos and BASE Logistika Jurgen Hess, chief executive officer of IPA Steel Terminal, said his company’s facility at the Port of Altamira has seen moves of 1,700 wind farm component units in the past year, and he looks forward to further increases in project cargo activity of various kinds as Mexican energy reform continues to be implemented. Hess said he also seems more project cargo moving through the Port of Tuxpan following recent completion of an improved highway link between that port and Mexico City. Gabriela Jonasson, senior projects logistics manager for Latin America at Siemens Gamesa Renewable Energy, said she anticipates “a big challenge for the next year” as her company begins moving larger wind energy units, including longer blades and heavier nacelles. Raul Cuevas, commercial manager of Transportes Muciño, said specialized transport companies such as his are prepared to provide customized means for getting heftier project cargos to Mexican destinations.“It is my belief that the game-changer is going to be the tailor-made solution,” Cuevas said. “No matter now tall, wide or heavy, we can always find a solution.” In a solo presentation, Susan Oatway, senior analyst with Drewry Shipping Consultants, said she sees multipurpose vessels with heavylift capability continuing to be increasingly deployed as opposed to simple MPVs without such specific ability to carry project cargo. She said the order book for the project-capable MPVs nevertheless remains “manageable,” with some orders for those ships being delayed by a year or two. And another industry expert observer – Rodger Baker, vice president of strategic analysis for Austin, Texas-based geopolitical intelligence firm Stratfor – offered a chilling thought, opining that, in “an unbalanced world seeking equilibrium,” the threat of nuclear war involving North Korea is “very serious,” with such risk more likely attached to accident than intent. (For Breakbulk Americas reception photos, see page 18.) (Photos by Paul Scott Abbott, AJOT)