From Breakbulk Asia: Emerging Markets Key to Growth

From Breakbulk Asia: Emerging Markets Key to Growth

SINGAPORE - Mark-Marian Siegert has a message for breakbulk and project cargo interests looking to grow in the wake of the worst economic downturn in decades: Look to emerging markets.

Speaking at The Journal of Commerce's Second Annual Breakbulk Asia Transportation Conference in Singapore, the managing director for Agility Project Logistics' Asia-Pacific operation said the recession and globalization underscore a new reality: China needs to be recognized as the new superpower, and the key to the future is to develop and invest in emerging markets.

"We are past globalization. We are one economy," Siegert said.

The U.S. and Europe are moving into a phase of economic moderation and a decline of developed markets. The wealthy, powerful Middle Eastern countries have been "brought to their knees" by the global recession, and their growth will be modest compared to pre-2008, Siegert said.

Leading the way, of course, is China, "across all industries including port upgrades and nuclear power," said Siegert, who has lived in China for a decade.

But doing business there isn't simple. "China does not have a bureaucracy," he said. "It just doesn't exist. You must communicate what you want. You must bring them (the Chinese) into the boat. Then you will get results."

Other areas of Asia are also promising. Indonesia is "the flavor of the year," with coal-fired power plants and other infrastructure upgrades under way. Thailand's great potential could be undermined by its political risks, and Vietnam, while promising, has not truly emerged from a socialist political system, Siegert said.

He expects regional projects to trend toward being either very large, 1 million to 1.5 million freight tons, or small "mini" projects of less than 100,000 freight tons. He also believes the shipping window will change from a typical "long curve" time line to a more "box-shaped" peak and de-peak, thanks to changes in procurement patterns and materials management. The supply chain will be "more sophisticated, more consolidated. "There will be a more integrated supply chain for projects," he said.

Challenges for breakbulk carriers include container and ro-ro carriers moving into the breakbulk space. Further, the new multipurpose vessels coming in will not be able to handle all needs, even though ships are improving. Vessels should be smaller, from 5,000 to 10,000 deadweight tons, with shallow drafts and geared up to 500 tons, Siegert said.

"Ninety-nine percent of our calls are outport calls that need this kind of vessel," he said.

Overall, however, Asia's project cargo market is extremely strong. "We are emerging from the crisis," Siegert said. "Every crisis has short-term challenges such as lack of capital for funding projects. I am optimistic. There is plenty of work for all of us."

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