While many cargo sectors are only seeing moderate growth, logistics providers are doing their utmost to get into fast- expanding project markets by offering a range of services and solutions in a bid to entice big-spending customers.
Positivity abounds for those with a stake in the global project cargo business. With energy projects continuing to be pursued globally and all manner of other mining and raw material sourcing projects underway, many in the logistics business view the provision of specialist solutions to major construction and development projects as a key earner while consumer markets in Europe and the US remain subdued and commodity prices relatively bearish.
This point was driven home in the 2013 annual results of many of the world’s largest 3PLs as they were released in the first quarter. Typical was Panalpina which views project logistics as a core product, alongside its oil and gas portfolio. Group gross profit in 2013 increased 7% to CHF 1,561.0 million driven by strong growth in the company’s Logistics and Ocean Freight divisions, but also by an oil & gas and projects business which saw double digit gross profit growth and was described as “thriving” by executives.
Further progress is planned in 2014 when the Switzerland- based logistics giant plans to expand its footprint. Chris Kent, Global Head of Panprojects, said that with its existing global presence, Panalpina was uniquely positioned to offer true door- to-door services under one roof. “This allows consistent and proven compliance controls and service levels throughout the supply chain,” he explained. Panalpina has been investing in the expansion of its
Panprojects Transport Engineering Team to support the verification and planning of special moves across all regions and this is due to continue during 2014. “We have also centralized vessel chartering/part chartering within the Group under the Panprojects team to ensure overall quality of out-of-gauge and heavy cargoes within the Transport Engineering Team on a door- to-door basis,” said Kent.
US-headquartered Seko Logistics is another 3PL expanding its project reach as part of its strategy of differentiating its service portfolio from global rivals able to offer commoditized products at low cost. Seko plans to leverage its existing global forwarding network to draw in more project contracts after its Energy division recorded strong growth during 2013, not least in Africa where the company has handled major military contracts as well as recently managing the movement of transformer equipment from Italy to Libya.
New offices are planned this year in Tanzania and Algeria, adding to the company’s already long reach in North and East Africa where the company expects further demand growth. Joe Bento, chief sales officer, said Seko had been in the project business for 20 years but was now pushing its offerings more aggressively on a global basis.
“We don’t want to be a typical forwarder,” he said. “Customers want to know what else we can do. Very few companies are offering project cargo shipments globally but we can. It’s a very high-end customer service business, very time-sensitive and skilled. But we have a good base for this in Houston and we’re pushing this out.”
He said the project market remained fragmented, leaving opportunities for those companies with the scale, agility and personnel to seek out new customers. “You need very experienced people,” he said. “These are big budget projects, but they need to be managed cost effectively. If money were no object then anyone could do it.”
Although it outsources Out Of Gauge (OOG) and heavy transport services to approved service providers, unlike many 3PLs, Panalpina has also invested in its own project cargo assets which includes barges and heavy haul equipment in the Caspian area.
Where multiple vendors and their equipment are used, management remains in-house. “With its own transport engineers Panalpina is then able to review and plan jobs with these service providers to ensure that our standards are fully met,” said Kent.
Major contracts nearing completion include a power project in Ghana and a mining project in Mongolia where the distance from entry port to site is over 1,000km. “In the last quarter of 2013 we also moved the heaviest piece — 600 tonnes — yet to move on Turkish roads,” said Kent. “For this move we arranged shipment from China to entry port and final delivery to a mountainous site over 100km from the port.”
Agility Logistics has long been a specialist in project logistics, in part due to the company’s long history of supplying niche services to energy developments in the Middle East, and its willingness to charter new logistics territories in emerging markets. Although offering its own fleet of trailers and heavy haul equipment in the Middle East, Agility primarily takes a non- asset-based approach to project logistics, drawing on a wide list of vetted support vendors to offer clients tailor made solutions.
Asked to explain what Agility offers clients, Grant Wattman, President and CEO, Agility Project Logistics, explained: “Without giving too much away, whether it is a grass roots construction or an existing plant expansion, our ability to offer turnkey project management solutions from factory to foundation even in the most remote corners of the world through our ever growing network of offices is what makes the Agility difference.
“To begin with we have computer-aided design software that allows us to determine the optimum solution not just for ocean and barge stowage but also for heavy haul and where necessary crane offloading.
“Our in house tracking system ensures that not just the large items but all the way down to a box of nuts and bolts are delivered on time. Our execution plan gives our client a working model and matrix as to how their project will be executed and the plan it will follow which assimilates their own schedule. This is a live fluid program that evolves as the project moves through its different phases towards completion.”
One recent contract completed by Agility involved delivering transformers from factory to foundation pad for a major client.
“We collected the transformer main tanks and accessories from the factory in Sweden, transported them to Rotterdam port where we loaded them onto an ocean vessel,” he said. “Upon arrival in Milwaukee they were transhipped to a barge, sailed around the coast, then rolled them off using 12 axle self- propelled modular transport. They were then transported to site using a 6-deck-6 SPMT due to height restrictions. A jack and slide system was then used to rough set the transformer main tanks onto their respective foundation pads.
“Our success on this project was recognized by the customer who whilst auditing us during the whole process of the project gave Agility 97% overall with 99.3% on delivery and 100% on quality.”
Wattman believes there is currently more than enough ocean-going heavylift capacity available to the market, given continued weak demand particularly from Europe and the number of newbuild multi-purpose vessels entering service. “Newbuild investment activity in recent years has been concentrated on the Project & Heavy Lift market segments, whilst the basic multi-purpose vessel newbuild programme has remained stagnant, suggesting that the cargo demands from shippers continues to be focused on the modularization and heavy lift capabilities resultant of the various ‘fab yards’ being developed especially in the Far East region,” he said.
There has also been limited scrapping of older tonnage and this has seen the average age of multi-purpose vessels climb above 15 years. “Certain trade lanes are experiencing some capacity constraints, attributable to infrastructural development and/or emerging market growth, for example the South American region,” he said. “Despite these regional spikes in demand, we believe that the global vessel capacity remains adequate to forecast market demand.”
He also said some ports were losing their project handling expertise and/or handling facilities as they expanded in new directions, for example in Australia where Sydney and Melbourne have aligned their focus more on the container trades. “That said,” he continued,“key project/breakbulk ports such as Antwerp, Houston and Singapore remain well-equipped to handle these cargoes in a professional, safe and efficient manner.”