Overcapacity still haunts the heavy lift shipping market, but some recovery is expected this year.
Times have been tough for the multipurpose and heavy lift shipping sector in recent years. Oversupply of new tonnage, declining demand for transport, and competition from other ship types have put pressure on charter and freight rates for close to a decade.
The financial and shipping crisis hit this industry particularly hard. Certain cargoes virtually disappeared. For example, low crude oil prices caused a steep drop of orders from the oil and gas industry. Laid-up vessels, bankruptcies, consolidation and the forced sale of tonnage by creditor banks were among the consequences.
Apart from the oil price, key global drivers of multipurpose project (MPP) transport include the drilling rig count, offshore wind energy, steel production, mining, and the demand for heavy industrial plants.
In recent years, the lion’s share of investment in oil exploration and production has been in US shale developments. But these inland plays require little maritime transport to deliver drilling equipment.
The good news is that oil drilling activities may resume in the wake of recovering oil prices, and the downstream sector is in need of modernisation. Refineries need production facilities for new blended marine fuels ahead of IMO 2020. Large offshore wind farms are also being built around the world, which should increase demand for sea transport.
Help on the way
Analysts stated at the turn of the year that the sector was seeing the first signs of recovery, with rates forecast to improve through this year, fuelled by rising volumes of project cargo traffic. However, prospects thereafter are muted by an anticipated slowdown in world trade.
Susan Oatway, senior analyst at Drewry Maritime Advisors, said the project cargo sector of the market is performing reasonably well and is “driving investment levels”.
“Most newbuildings have a project carrying capability, with 900 vessels in the fleet being able to lift weights of 100t and over,” she said. “Premium project cargo carriers have an average age of nine years, and that compares with over 17 years for the multipurpose fleet as a whole.”
She added: “Operators of multipurpose vessels are still seeing good demand growth in the renewables sector and, with the increase in wind-installed capacity, especially in Asia, there are some positive signs for this sector over the next two years.”
Perhaps the key to carrier stability lies in being able to offer flexible solutions for different types of cargo. Specialisation carries risks, added Oatway, pointing to the collapse of Hansa Heavy Lift (HHL).
HHL had a policy of operating super premium carriers offering a maximum lift of over 1,000t and with an average vessel age of just eight years. But Oatway said that this was arguably “just too niche” for the market, given the lack of heavy and oversized project cargoes that actually need such specialist tonnage.
Further mergers and acquisitions could be on the horizon, given the continuing weakness in the market.
Nevertheless, time charter rates through 2018 started to signal a cautious recovery. The monthly Toepfer Transport Multipurpose Index (TMI) rose 12% between January and December last year, but was still well below its long-term average.
German shipping company Toepfer Transport calculates the TMI based on a 12,500 dwt multipurpose F-Type vessel for a six to 12-month charter. Operators with low overheads and without high credit costs will be able to benefit more quickly from a recovery than competitors that have old debts, said Toepfer managing partner Hannes Holländer,
For years, bulk carriers, roro vessels and container ships have been competing with MPP tonnage for general and project cargo. This cannibalisation is likely to recede as the competing vessel types approach full capacity utilisation. Furthermore, loading and unloading general cargo and project cargo in remote ports is becoming too costly and time-consuming for them.
On the other hand, rising oil prices and fuel costs are keeping profits under pressure. Earnings across the MPP sector reached a low point in April 2017 and have only recovered slowly since. Scrapping activity resulting from the oversupply of tonnage peaked from 2014 to 2017, reaching a combined total of roughly 550 ships across all categories by 2017, and 57 in the MPP/heavy lift category, where ships are much younger.
Since older ships will be unable to meet future emission regulations without major retrofits, scrapping is likely to continue at high levels for some time, especially for the smaller multipurpose and coaster fleets. These ships often reach a higher age because they operate in more benign waters and freshwater and are well maintained.
Cargo handling equipment has traditionally formed a steady, if relatively small, part of these carriers’ businesses. Investment in shipto-shore container cranes and RTGs, which are usually transported by sea to their destination ports, often depends on localised factors rather than an underlying global trend.
The picture is similar with bulk handling equipment. However, this is complicated by the fact that big machines, such as stacker-reclaimers, are not universally manufactured at a supplier’s factory and then shipped across oceans to the final destination. In some big markets with heavy engineering capacity, like Australia, the machinery fabrication is often done relatively close to destination. The components are then shipped a short distance overland for on-site assembly.
But as the mining sector and related commodity export terminals are often found in countries without such an industrial base, this can still prove a valuable source of business for MPP carriers.
For example, Netherlands-based BigLift Shipping saw its vessel HappySky start this year with a challenging project that involved transporting a knocked-down bargeloader from Nhava Sheva in India to Kamsar in Guinea, where it was discharged and assembled.
Kamsar is Guinea’s major gateway for the export of bauxite.
Besides six 77t counterweights and various smaller parts, the barge-loader’s main items were its main boom of 61.9m x 10.81m x 6.15m and weighing 350t, and its slew deck of 17m x 17m x 7.32m and weighing 154t.
The major complicating factor for this transport was the small berth in Kamsar where the barge-loader was to be assembled.
However, close cooperation between the client, the crew of Happy Sky and BigLift’s project department resulted in the optimum stowage plan, which enabled the vessel to discharge and erect the barge-loader at the confined berth in Kamsar.
As if the small berth was not enough, tide levels also had to be reckoned with, and various phases of the installation would have to be performed at high tide.
The slew deck was installed first by one of the ship’s cranes. Once the slew deck had been fixed to the berth, the main boom was lifted by the two ship’s cranes and installed on top of the slew deck. As the counterweights had not been installed yet, the boom needed to be supported at the top end, so the boom tip was landed on a temporary support on the berth.
It took six days for the shore crew to install various parts on the barge-loader and they were often assisted by the ship’s cranes. During this process, the boom remained partly protruding over the ship’s deck, with the vessel rising up and down with the tide, though the available space was engineered so that the boom stayed clear of the deck at all times.
The counterweights, which had been transported lying flat on deck, where then placed upright on the deck ready for installation.
Once the barge-loader was ready to receive the counterweights, the boom tip was lifted from its support by the ship’s number 2 crane, and the boom was moved parallel to the berth. Through this manoeuvre, the back end of the main boom moved closer to the ship, and the six counter weights could be installed. This was performed during two high-water cycles. The counterweights were lifted and installed by a special, short rigging that was designed to enable this operation.
Another happy trip
Two years prior to this shipment, BigLift’s Happy Delta had delivered a new 530t shiploader to Kamsar for FLSmidth. The equipment was transported from the port of Qidong in China.
The new shiploader had to be very light, due to the internal strength of the quay at its destination. The light weight made for a more delicate construction, so BigLift engineers were asked during the design phase of the crane to assist in its construction, lifting and sea-fastening possibilities.
At Kamsar, the loader was placed on its rails, and the old machine was loaded onto HappyDelta to be transported to a breakers yard in Belgium. A problem with a job such as the latter one is that details of old equipment often disappear in the mists of time, and so data such as exact weight, and, very importantly, centre of gravity, must be estimated.
For such cases, BigLift designed the Synchoist system, which is a great help when few details are available. Inexact information is buffered by the use of Synchoist. Its plunger is incorporated in the lifting arrangement and helps to tweak carefully the operations to ensure a straight lift. The centre of gravity would usually have to be found by trial and error, adjusting the lifting arrangement every time, until the crane can be lifted in a level position. As it takes hours to dismantle a lifting arrangement and refit it, the Synchoist system saves a huge amount of time.
The old 375t ship-unloader, which measured 27.7m x 18.7m x 41m and was equipped with a 25t tripper car of 24m x 5m x 25m, was loaded aboard Happy Delta and positioned on the same rails in the tween-deck that had carried the new unit.
Another Dutch heavy lift carrier, Jumbo shipping, has completed a number of bulk handling equipment projects in the past 12 months. Two large ship-unloaders were transported from the port of Gdynia in Poland to the port of Djen Djen in Algeria for Fagioli. The first shipment was made in December 2018 and the second in February 2019, with the MV Fairmaster lifting the 1,400t, 60m-high ship-unloaders.
MV Fairpartner lifted and shipped two eco-hoppers weighing 270t each from Vlissingen in the Netherlands to Kwinana in Australia.
Jumbo was also contracted by Geodis Wilson to transport a stacker, a reclaimer and a shiploader for Rio Tinto’s Amrun Bauxite Project in North Queensland, Australia.
The first of two shipments were carried by Jumbo Jubilee from Port Henderson in Perth to Weipa. The total weight shipped was 2,884t, with the reclaimer being the heaviest cargo at 858t. This was discharged onto a barge at Hey River in Weipa. The second shipment was the 872t shiploader for the same project.
On that occasion, Jumbo’s Fairmaster transported the machine plus additional infrastructure modules, again from Port Henderson to Weipa.
At the time of booking, Fairmaster was the only available heavy lift vessel able to meet the outreach and lifting height required to place the shiploader onto the quay.