Booming transformers market is a fresh challenge for the shipping industry
The growing transformers market has put a strain on the shipping industry on top of the already existing port congestion and capacity demand.
Looking at the market developments, Carsten Wendt, a senior manager for high & heavy and breakbulk at Wallenius Wilhelmsen, based in Bremen, noted that it was difficult to keep up with the latest developments due to the accelerated rhythm in which the transformers market is growing.
One of the major growth drivers is the current shift in power generation, with high investment in power transmission due to increased demand for electricity, which put a lot of strain on the shipping industry.
“Last year, everyone in the shipping industry, including our customers, faced major challenges due to port congestions, labor shortages, and general supply chain disruptions. And in times of hardship, it becomes clear who your real partners are,” said Wendt. “At Wallenius Wilhelmsen, we have to be very selective when our capacity is stretched and prioritise long-term contracts and partners.”
US market on the bounce
The shift in power generation is clearly visible in the United States where production industries are on the move east, from California to Texas, possibly due to inter-state differences in environmental regulations, according to Wendt.
“We have also seen similar dynamics in Germany, where energy is produced in the north and consumed in the south requiring upgrades to the existing grid. This means many transformers are needed elsewhere, thus the need for transportation,” he said.
“According to Market Watch, the forecasted prognosis for the large-capacity power transformer market is “poised for significant growth.” This is also the case for the US market. The average time for obtaining new transformers in the US has increased from two months period in 2021 to 12 months in 2022, according to News Scientist in an article published in March this year,” Wendt adds.
He further noted that another reason why the North American market is particularly hot is the long-time under-investment in the aging grid. It leads to a growing demand for new transformers, another reason for the high demand for shipments of transformers from Europe.
The plan of attack
Going forward, Wendt urged the stakeholders in the power generation industry, especially those looking to move power transformers across the seas, to secure not only short-term but also long-term capacity.
“Timely delivery of the transformers is key, as usually there are penalties for every transformer delivered on-site too late, so the frequency of sailings and transit time matters a lot. However, Wendt emphasises that this isn’t always unavoidable. Wallenius Wilhelmsen themselves have been challenged to keep a reliable schedule in 2022 due to disruptions in the ports.