The project cargo transport industry has faced a number of obstacles in 2022, with project forwarders, shippers and cargo owners having to find solutions to work through the challenging market conditions. Despite this, and some ongoing issues, there are positive signs for 2023. 
Speaking during the Project Cargo Journal Live show, Stefan Welch, head of specialized transport at deugro, based in Houston, said the company has had a year of mixed opportunities but with an uptick in inquiries. Should all these materialise, there is enough space for optimism.

Likewise, Marc Willim, global general manager chartering at AAL Shipping, said that while the rates have been quite volatile in the past couple of years, the company’s vessels are full and there is plenty of project cargo to be transported on the company’s regular trade lanes.

Navigating 2022

The year 2022 did not go without a glitch, especially in the North American market with West Coast ports congestion affecting the project logistics sector. “It is a well known fact that the West Coast was very much congested even before 2022,” said Welch, adding that the cargo then shifted to other Gulf and East coast ports as an attempt to save time and money. Even today, the cargo continues to move through these ports. This then subsequently puts additional stress on the ports resulting in docking delays, terminal congestion as well as labour shortage, some of it still Covid related.

Adding to that, Willim noted that North American congestion was a result of the increased volumes of containers that could not get out of the regular container terminals. “Carriers tried to find an alternative solution which is then of course an MPP terminal, which was not at all equipped to handle such kind of volume, and respectively containers by itself,” he said.

On the other side of the globe, in China, AAL Shipping has also faced similar issues, where, when carrying containers onboard its vessels it was faced with having to call two terminals due to a regulatory requirement imposed by the government, which meant that MPP terminals were not allowed to export containers.

“This caused another set of problems, because if you have project cargo then you also have a few containers with accessories, with spare parts, with tools, then all of a sudden we were in a situation of having to call two terminals, because the MPP terminal was not even allowed to accept these kind of spare part containers anymore which also added to congestion,” said Willim.

The company, being a regular carrier in China, and having a regular liner status in the port of Taicang where the terminal is registered as both MPP and container terminal was able to find the solution for the issue.

“We had very flexible clients both on the shipper and on the receiver side, which helped us tremendously to then instead exporting via Shanghai, to export via Taicang,” Willim said. He further stressed that this enabled the company to call a nearby terminal or a nearby port in order to avoid up to 25 days of waiting in some instances, which would significantly impact the costs, having in mind that the day rates for MPPs were in the high five-digit figures.

Good signs for deugro

Noting that the year 2022 has been one of mixed opportunities, Stefan Welch stated that the deugro had a significant uptick in trade inquiries. “In fact, if that all materialises, when it should in 2023 and 24, we are off to a good start. Also talking to vendors of ours, their orderbooks are full, at least until March. Also the industry’s large clients, especially in the power generating industry, their orderbooks are full as well,” he said.

deugro has been active throughout the year with EPCs and oil and gas, power generation, heavy industry being the major contributors to the activity. Going into 2023 the company is focused on navigating the market conditions that will remain.

Welch reflected on Biden administration’s infrastructure plan that will bring an increase in the number of projects, especially from the power generation sector. “We have not seen it yet in 2022, other than a strong increase of inquiries,” says Welch, adding that based on the inquiries, deugro expects a positive 2022, posibbly even better than 2022.

We are still limited with the general geopolitical situation, also from the economy point of view whereby central banks are increasing interest rates, reducing money for investment, but in general we are seeing a better outlook for 2023.

AAL’s activity

As shippers across the sectors, AAL has been able to reap the benefits of its operations in 2022. Speaking of the year 2023, Willim noted that AAL is confident in all the markets, from North America, Central America, Mexico, with some ongoing projects as well as new projects coming which are currently in the start phase.

“For the oil and gas, LNG, power generation, we are very confident for North America and Europe. The orderbooks are full for more wind parks to be installed, so we are also very confident for Europe even though we unfortunately have to see how this situation in Eastern Europe, the war will proceed,” Willim said.

There are still plenty of imports coming from Asia according to Willim, who added that a strong push for green energy is coming from Australia where a lot of wind parks are under construction, with many more expected. He also mentioned that in the Persian Gulf, the North Field expansion project that is set to increase Qatar’s LNG export capacity, is a good sign for the MPP market’s medium future.

Testing the waters

Another major aspect, discussed during the Live show was the lack of MPP vessels in relation to the demands of the market, and the need for investments in newbuilds. AAL has six newbuilds on order with deliveries scheduled for 2024 and 2025.

The investment in the new fleet of Super B class vessels with 33,000 dwt featuring three 350-ton cranes and a long deck of 150 metres with two cargo holds of 80 and 50 metres, comes as an intermediate step towards greener fleet.

Willim noted that AAL’s fleet, although the youngest in the sector is now already 10 years old, and the Super B class is that intermediate step before 2030, and a step to test the waters as it is the first time the company will have built an MPP vessel with the bridge forward, an entirely new field for the company.

AAL has also left itself space to decide on the fuel of the future as the engines are dual fuel ready, but no additional tanks have been built in order to make that move away from the traditional fuel to an alternative.

Responding to a question from studio guest, Cor Hoogendoorn, CEO, director and founder of the Holland Shipyards Group, about the market volatility, Willim added that in fact the market rates are volatile, but there is enough cargo, the vessels are full, although the rates are not as high as they were some three, six or eight months ago.

Despite the rates volatility, Willim still stressed that there is enough project cargo for the fleet, which is a positive sign for the coming year.