No respect for breakbulk

No respect for breakbulk

One inescapable conclusion from last week's Breakbulk Europe conference in Antwerp was that breakbulk cargoes - project cargo, noncontainerized general cargo and ro-ro - get a lot less credit than they deserve.

Here is a maritime cargo sector that is thriving; there's no other way to put it. A number of carrier executives I interviewed said they see the current good times lasting three or four years. Beyond that, it's not a downturn or even dark cloud that they foresee but rather a point too far in the future to predict. Think about that: three or four years of anticipated prosperity - it's not every industry whose leaders are uniformly so optimistic. Compare that to containers, where the headlines over the last few months have been consistently dour, with slumping freight rates and declining or disappearing profits at nearly all of the major container lines.

We at the JoC have seen for ourselves the evidence of the surge in breakbulk. Last year's inaugural Breakbulk Europe conference had 35 exhibit booths in a cramped hotel space that the show had essentially outgrown even before it began. This year, the event moved to the Antwerp Expo and had 140 booths and more than 1,300 people from 54 countries, compared with what was a surprisingly large number of 800 last year. On the show floor, there was a distinctive buzz of economic activity among professionals who ship, carry, handle or arrange the logistics for the world's breakbulk cargoes - power generation equipment, steel, forest products, oil field-related products, etc.

"Strong markets, a lot of cargo, a pretty good outlook," said Gerhard Janssen, general manager of marketing and sales for Rickmers-Linie GmbH, based in Hamburg.

But although the sector is vigorous, it's a bit like Rodney Dangerfield: It gets no respect. The snub comes principally from ports and shipyards - in a general sense, of course; I am not referring to specific examples. A common theme in Antwerp was that ports around the world - not all, but many - are intoxicated by containers and their high growth rates, and as they devote more of their limited land to satisfying containers' huge appetite for terminal acreage, breakbulk is getting short shrift.

Delays are increasing, berth space is becoming more difficult to find, ships experience idle time at anchorage, and, as a result, costs are going up, and projects are taking longer to complete. Stories are increasingly heard of carriers diverting cargoes to alternative and usually less desirable ports to avoid congestion at the intended port of discharge. "Very clearly, massive investment in breakbulk facilities is required," Janssen said.

Part of the problem is that breakbulk is under the radar screen for many ports, and for the transportation industry in general. At Hamburg, one of a select group of ports that understands breakbulk and takes it seriously, this cargo makes up only 3 percent of oceangoing cargoes by tonnage, according to Rickmers.

The other problem is shipyards. Many shipyards aren't interested in building multipurpose ships, the heart of the breakbulk fleet, when their order books are filled with other types of vessels. Multipurpose ships are not uniform in design, and they are typically built in smaller batches. Therefore, unlike tankers or container ships, they can't be mass-produced in a way that offers the shipyard meaningful economies of scale.

Container ships, tankers and dry-bulk carriers are typically in the dry dock stage of construction for four months, while multipurpose ships take longer, bottling up production. Breakbulk carriers complain that getting into shipyards' schedules and obtaining prices that aren't exorbitant poses significant challenges. Delivery dates for ships ordered today would be in the 2009-2011 range.

The problem when ships aren't being produced for a robust sector such as breakbulk is that the existing vessels stay in service longer, and that's exactly what is happening. According to statistics presented at the conference, 37 percent of the current multipurpose fleet is more than 25 years old, and the older ships are having no problem finding cargoes.

A situation like this worries shippers because the advanced schedules for projects means they are looking months or years into the future searching for vessel space. "We are concerned about what will be the breakbulk capacity in the coming year," Thierry Dantec, Europe logistics leader for GE Energy Power Generation Group, said in a presentation.

I am sure he's not the only one concerned.