Chronic overcapacity in the multipurpose/heavylift (MPV/HL) sector and fierce competition in a lean market are driving carriers to jockey for position when it comes to carrying breakbulk and project cargo — and not just from MPV/HL brethren, but from roll on/roll-off (ro-ro), container carriers, and bulkers as well.
Not every shipment of breakbulk cargo involves complex mega-projects or thousands of freight tons, and in these cases, it can often shift modes seamlessly. Steel, for example, flows from breakbulk to bulker to, for some forms, ro-ro and container transport, depending on markets, prices, and demand. Competition to carry project and breakbulk heats up when the overall shipping market heads south; when times are good, the sectors are more content in their own cargo “lanes.”
Shippers, on the other hand, are always looking for what best suits their cargo and their budgets. Phillip Brown, global chartering manager with multinational engineering and construction firm Fluor, moves project cargo via all modes of ocean transport, depending on the type of cargo and the circumstances. Steel pipe and spool, for example, fit into oversized 45-foot containers; “spaghetti pieces,” odd-shaped metal pieces that would create a lot of wasted space in an MPV/HL hold, are also a good choice for containerization, he told JOC.com. Several spaghetti pieces can fit into a single box, and boxing avoids multiple handling costs and limits risk. A stick-built capital project might call for both breakbulk and container ships, while modularized projects can require super-heavy-lift or open-stern float-on/float-off (semi-submersible) vessels. “You just look for the best fit and schedules,” said Brown.
Another engineering, procurement, and construction (EPC) executive that works primarily in oil and gas told JOC.com 80 percent of his shipments move in containers. He was quick to point out, however, that does not equate to 80 percent of the total freight tons, which can be many thousands of tons per project. His team will typically charter or part-charter an MPV/HL vessel to move large parcels of breakbulk and project cargo all at once, meanwhile shipping hundreds of containers “two by two.”
Assuming a given piece of cargo is suitable — based on weight and volume — to move on a non-MPV/HL ship, the transport mode is determined by “cost, protection of the cargo, and schedule,” said Dennis Devlin, director, USA and Houston branch, for industrial projects with global forwarder Geodis.
Ro-ro services are tightly scheduled, cargo is always stowed under deck, and there’s rarely lifting involved (ships operated by pure car and truck ro-ro carriers such as Wallenius Wilhelmsen are not geared, but some carriers, such as Bahri, operate geared ro-ro vessels), but it can be costly and port choices are generally limited, he said. Ramp strength and loading door size also restrict the size and weight of cargo that can be loaded on ro-ro ships.
Room for innovation
Because ro-ro and container carriers offer fixed schedules, shippers can elect to ship their cargo sequentially, avoiding having to marshal all or a significant portion of the materials for a given shipment or project at once, as they would for a chartered or part-charter tramp vessel. Depending on the project, this may offer an advantage. In addition, on a ro-ro ship, cargo is always stowed under deck and requires less packaging and handling. “We are the space in between containers and lo-lo [lift-on/lift-off, or geared MPV/HL],” said Stefan Kjellstrom, vice president, Breakbulk and Pricing, Wallenius Wilhelmsen Ocean (WW Ocean). “We see ourselves as competitive, and we believe there is great potential for growth as more and more shippers discover ro-ro.”
WW Ocean might handle a single piece of breakbulk cargo, multiple pieces, or pieces and materials for large, multimillion-dollar projects handled over several voyages, said Kjellstrom. One example could be train sets for a municipal subway or railway system, the kind of project that would move in stages over several years. The ro-ro carrier’s fixed schedule, port rotation, and global network are an asset in such cases, he said. It depends on the project, but “if we go after it, then we feel we are a good option.”
“Costing is the most interesting part when it comes to moving breakbulk cargo,” said Kjellstrom, who works with forwarders, project owners, and manufacturers, depending on the type of cargo under discussion and who controls it. “Other cargoes are more commoditized.”
Pricing depends on many elements: trade lane, weight and volume, cargo type, and any special equipment needed, such as mobile loading platforms (mafis) or jackup trailers. Surcharges for bunkers, port costs, and other assessorial charges must also be factored in. “Normally, container rates look lower on paper, but you have to look at the whole cost, not just the ocean rate,” he said. “It can be complex. Is the cargo outside [on deck] and exposed? Does it have to be dismantled and reassembled? Does it have to be lifted? That adds risk.”
On one of Brown’s recent projects, he moved a shipment of structural steel from the Middle East to the US Gulf via ro-ro. Because the steel was shipped already loaded on mafi trailers, it was possible to discharge 8,000 revenue tons in one day. This is cargo that would typically be packed in smaller bundles on a lo-lo (MPV/HL) ship, he said, which would have taken much longer to discharge.
“Rolling stock lends itself to a ro-ro vessel. If it’s too big for a container, it goes breakbulk,” said Steve Drugan, a longtime project forwarder and Houston-based member of the project cargo industry. When breakbulk cargo moves on a container vessel, “you pay for the number of slots you displace. It takes a lot of coordination. It’s easier to work with ships designed for breakbulk cargo.”
Even so, the more exact scheduling and shorter transit times of liner carriers have made container transport appropriate for several projects he’s worked on, Drugan said. “They accommodated us and made space on the ship. But it’s not easy, because of the cellular structure.” Each type of vessel is designed for a certain cargo, but “there’s room for innovation and creativity.”
Wind turbines, which account for a growing percentage of project transport as offshore and onshore wind energy projects pick up pace globally, also require innovative transport solutions. A rotor blade for a wind turbine can be 200-220 feet long, almost matching the wingspan of a Boeing 747, but weigh only about 9 metric tons. Lengthy, relatively fragile, and not particularly heavy, these blades can endure weathering and, as such, make good deck cargo for multi-purpose carriers with clear deck space.
And how much will that be?
Geographic context also influences costs and mode choice. “Where is the material being fabricated; what ports are nearby; are any container or ro-ro carriers running in and out?” are among the considerations around location, said Jake Swanson, global sector head, EPC projects, DHL. If a piece will fit on a flat rack or can be transported on a ro-ro ship, that’s an option that deserves consideration. "It might be more cost effective than bringing in an MPV," he said.
Another element Swanson considers is how the pieces will be stored after transport. For example, he said, pipe spools are often shipped in containers in racking systems that can be pulled out of the box and stacked in laydown or offsite storage space. “Stacking those racks allows you to save space at the laydown facility; you are adding layers of shelves. It’s more efficient. You might use 25 acres instead of 50. So the way you decide to store and package and protect those pieces can also determine the mode of transport you use.”
On the other hand, “If you are not actually shipping your cargo in a container [on a container ship], you may have to lift and load twice, and lash and unlash,” Geodis’ Devlin said. If a breakbulk piece fits within one flat rack, it takes up one container slot. If it takes up more than one slot, all must be paid for, including slots above the piece that would normally have held containers. Ro-ro and breakbulk costs are more complementary, he said.
Additionally, cargo on a container ship is secured on flat racks or between artificial tween decks to the cellular structure that normally secures containers, Devlin said. If it’s not fragile or weather-sensitive, this may not matter, but in his experience the piece is rarely or never below a hatch. Thus, “on a container ship there is risk due to exposure.”
Joye Runfola, senior logistics specialist, Americas Procurement, Air Liquide USA, said if forwarders had not presented the industrial gases supplier with ro-ro and container as options for moving breakbulk and project cargo, using these transport modes would not have occurred to her and her colleagues. “Their job is to stay hip to the market. ... Honestly, I would never have thought about it.”
These days, it is becoming common for companies like Air Liquide to ask forwarders to price container and ro-ro options, along with part-charter liner services. Runfola said she has seen savings from moving project cargo via ro-ro and container transport, presumably because these carriers offer regular sailings on already-made voyages. Some MPV/HL carriers have monthly schedules, but “you are dealing with lift plans, etc. … It’s not an apples-to-apples comparison, so the costs are different.”
Ninety percent of shipping is about having good relationships with a few freight forwarders and carriers, according to Runfola, especially for companies not moving significant volumes on the level of a retail giant such as Walmart. “We are just a small piece of the puzzle in the shipping world,” she said. “If we don't have relationships with a few carriers and freight forwarders, then we won't do very well, because we won't have any leverage. The thing is keeping the carriers and freight forwarders honest. It’s important to never put your faith in one carrier and one freight forwarder. They [need to] know that we have options.”
When a given shipment’s volume is less than 3,000 freight tons and/or the largest piece doesn’t exceed 50 metric tons, something other than an MPV/HL might make sense, in Runfola’s opinion. But when the shipment is 18,000-20,000 freight tons, or pieces exceed 50 metric tons and/or require tandem (two-crane) lifts, or if the shipment calls for chartering an entire vessel, “then the relationship with the carrier is extremely beneficial and important to the overall success of the shipment. The impact could be catastrophic to a project if it’s not done right,” Runfola said.