US high and heavy imports see rebound as 2021 opens

US high and heavy imports see rebound as 2021 opens

Refurbished locomotives being loaded aboard the Nurnberg in Savannah, Georgia, for shipment to Brisbane, Australia. Photo credit: Wallenius Wilhelmsen.

US high and heavy roll-on/roll-off (ro/ro) volumes slid some 50 percent during 2020 as the COVID-19 pandemic shut down production and stymied equipment and machinery sales. Now, congestion at container ports, tight vessel capacity, and sky-high container rates may change the cargo equation at least temporarily, pushing some containerized cargo back toward breakbulk shipping and ro/ro carriers.

“We are beginning to see some machinery that had shifted from ro/ro to boxes shift back to ro/ro,” Bruce Kuzma, senior director of trade development with the Georgia Ports Authority (GPA), told JOC.com. In January, “we handled some forklift exports out of the US to Europe. These [had] been containerized. A number of companies have shifted back to ro/ro,” Kuzma said.

Kuzma said GPA is fielding calls every week from customers who “haven't necessarily pulled the trigger yet, but they are asking about the ro/ro carriers calling Colonel's Island, and they are reaching out to these carriers.”

Flavio Batista, VP of sales for North America with carrier Wallenius Wilhelmsen Ocean, said he is also seeing customers that were loading cargo in containers come back to ro/ro as the container shipping market becomes more challenging. These customers are moving primarily construction and agricultural equipment, machinery, crated cargo, and breakbulk out of Asia, he said. The cargo must be rolled aboard ships or loaded onto roll trailers, as WW does not move loaded containers or reposition empties. Batista expects this late 2020 spillover from the container side to continue into 2021 for a time, but “at some point the container carriers will bring ships out of cold lay-up,” he said. 

Total high and heavy US imports slid 50 percent to 379,426 mt in 2020, and exports fell 33 percent year over year to 98,585 mt in January–November during the first 11 months of the year, according to PIERS, a sister company of JOC.com within IHS Markit. December export figures were not available at press time. 

For PIERS analysis, ro/ro cargo includes high and heavy machinery, such as tractors, harvesters, mining equipment, bulldozers, trams, other rolling stock, and over-dimensional project or non-containerized breakbulk cargo strapped or lashed to trailers and transported on conventional ro/ro, vehicle, and combined ro/ro and vehicle ships. Passenger vehicles are not included in PIERS’ high and heavy ro/ro cargo data.

‘Normally predictable’

Container carriers adjust capacity and rates as the market fluctuates, whereas ro/ro carriers tend to keep capacity stable for longer and, aside from some pandemic-driven adaptations in 2020, don’t tend to change sailing schedules, Batista said. “We are normally very predictable and reliable. Last year was different, but that's not how the ro/ro operators normally work,” he said. Batista expects high and heavy volumes to be “decent” overall during 2021, as these are considered essential cargoes and are somewhat less affected by pandemic shutdowns.

Baltimore remained the top import gateway for high and heavy imports and exports in 2020, even as overall volumes shrank. Executive director William Doyle said that as of December, high and heavy cargo had rebounded 36 percent from its COVID-19 low point in June; December 2020 was busier for this cargo than December 2019. The port accounted for 126,010 mt in high and heavy imports in 2020, down 36 percent from 197,985 mt in 2019, and 31,812 mt of exports from January through November, down 32 percent from 47,043 mt in the same 2019 period, according to PIERS.

Although high and heavy has been a bit slower to recover than the vehicle side, it also had a V-shaped year in Georgia in 2020, Kuzma said. Rolling stock related to agriculture and construction has been stronger than mining-related volumes, he said. Exports picked up in the fourth quarter, and GPA expects 3 to 5 percent growth for the segment during 2021, he added.

At the Port of Jacksonville in North Florida, high and heavy cargo volumes didn’t change significantly during initial COVID-19 lockdowns that decimated demand for containerized goods, according to Alberto Cabrera, director of automotive accounts for the Jacksonville Port Authority, told JOC.com.  Jacksonville serves a busy trade in used machinery exported to Africa, he said.

“Those volumes — well into the pandemic — didn't drop at all … Compared to everything else, it was still moving,” he said. “That was pretty good for us as a port … You plan for the worst [and] you work to be diversified. That really hit home. That little portion of our market kind of helped us through the slump.” 

Jacksonville is the only Florida port that handles military cargo, Cabrera said. That cargo also did not suffer the pandemic-driven fluctuations seen in vehicle shipments, he said. Military cargo flows according to its own internal schedule. The port handled 1,250 military units during the last three months of 2020, primarily outbound. A “unit” can be a wide range of rolling stock: tanks, a helicopter on a trailer, Humvees, etc. Helicopters are typically flown into the port and shrink-wrapped for transport, he said.

Japan was the dominant country of origin for high and heavy US imports in 2020, accounting for 30 percent of the total, followed by Belgium, Germany, Brazil, and the UK. Australia, an important buyer of mining and agricultural equipment, was the dominant export destination, accounting for 22,543 mt of cargo, or 23 percent of the total 98,585 mt exported through November, according to PIERS.

‘Some degree of recovery’

John Deere, the Moline, Illinois–based global manufacturer of high and heavy rolling stock, said in a Nov. 25 financial statement its total revenues fell 9 percent to $35.5 billion in its fiscal year 2020, which ended Oct. 31. For FY 2021, the company said it expects worldwide sales of agriculture and turf equipment to increase 10 to 15 percent over FY 2020, and construction and forestry equipment sales to increase 5 to 10 percent, reflecting “some degree of recovery from the pandemic in construction equipment, continued strength in compact construction due to residential building activity, and expected growth in the road building sector.” Deere expects global forestry industry sales to come in between flat and an increase of 5 percent.

At Deerfield, Illinois–based Caterpillar, revenues slipped 22 percent to $41.7 billion in 2020, according to the construction machinery and equipment maker’s annual financial statements. Caterpillar, a key global manufacturer of high and heavy cargo, said it would not provide earnings guidance for 2021 due to continuing pandemic-induced economic uncertainty.

The company will be holding larger inventories than usual to mitigate potential pandemic-related supply chain issues, chairman and CEO Jim Umpleby said during a Jan. 29 earnings call. However, there are some signs of end-market improvement, such as increased residential demand and a potential infrastructure bill in the US; higher commodity prices in Africa, the Middle East, and South America; and strengthening mining fundamentals, he said. 

Contact Janet Nodar at janet.nodar@ihsmarkit.com and follow her on Twitter: @janet_nodar.