Agility Project Logistics

Agility Project Logistics

The most significant change in the project logistics sector this year will be the lack of change: the slow recovery will continue.

A year ago, I optimistically noted we anticipated a difficult market with a recovery mode for major projects in 2010, but I also hedged and predicted an upturn in breakbulk cargo volume would be “delayed into 2011, and possibly beyond.” The beyond now looks more realistic.

From all indications, it appears project logistics supply chains won’t recover significantly this year, and major capital freight spending will be delayed into 2012 and beyond. This is arguably the most protracted major capital project downturn we have seen in decades, and although we all live with the cyclical nature of the business, it’s still a sobering reality.

With the clear exception of Australasia, all historically strong project geographies are weak in their commitments to new large capital projects. Smaller projects are proceeding, while the mega jobs we had become accustomed to lag.

Freight rates will be interesting to watch in 2011. Container rates will increase as carriers take advantage of capacity reductions and increasing cargo volumes. But we expect breakbulk ocean freight rates to come under pressure, and shippers can expect to enjoy beneficial rate levels as carriers struggle to find cargo in a competitive market.

That engineering, procurement and construction firms are reporting strong engineering and design work indicates we should be optimistic and maintain our organizational strengths to enable rapid recovery as the market turns.