The document provides an outlook on the breakbulk transportation industry for 2013 from various industry experts. It discusses that: - Developing regions like China, India, Africa and Latin America will continue to drive breakbulk momentum in 2013, fueled by ongoing energy projects. - However, infrastructure bottlenecks and a lack of skilled labor in many developing countries may challenge project cargo movement and economic development. - Piracy remains a security issue off Africa's coasts, while the multifaceted threat environment in the Gulf of Guinea is expected to see further hijackings. - Overall, while aware of economic uncertainties, the sector remains warily optimistic given the large number of projects underway globally that will support break

1. JANUARY-
FEBRUARY 2013
JANUARY-
FEBRUARY 2013
Going West ■ Ghana’s Bright Future ■ NE India Roadblocks ■ Wind Credit Reprieve
Developing regions
drive breakbulk momentum
WARILY
MOVING
AHEAD
outlook
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2. CONTENTS
4 BREAKBULK MAGAZINE www.breakbulk.com
6 Editorial ■ 40 Insurance: Force Majeure ■ 42 Special Report: Facilitating Payments ■
62 Breakbulk Index ■ 73 Port News: Stevedore Stalemate ■
COVER STORY
JANUARY-FEBRUARY 2013
18 SHIPPING TRENDS
ROADBLOCKS
TO NE INDIA
Lack of access hurts
economic development.
26 MARKET SPOTLIGHT
GOING WEST IN CHINA
Development program
tackles interior logistics.
32 REGIONAL REVIEW
GHANA’S BRIGHT FUTURE
Stable government bolsters economy.
50 CARRIER PROFILE
STARTING FRESH
Hansa builds new heavy-lift competitor.
56 TRADE NOTES
NAFTA’S UNINVITED GUEST
The conundrum of international
anti-bribery enforcement.
70 EXECUTIVE PROFILE
OUT OF THE BOX
New Rickmers-Americas chief
jumps into breakbulk.
75 ENERGY UPDATE
REPRIEVE FOR
US WIND INDUSTRY
Tax credits may be short-lived.
77 INFRASTRUCTURE
BUILDING UP BRAZIL
Government initiative to modernize ports.
8 BREAKBULK
OUTLOOK 2013
Developing regions drive
breakbulk momentum.
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3. JANUARY-FEBRUARY 20138 BREAKBULK MAGAZINE www.breakbulk.com
breakbulkoutlook2013
breakbulk
outlook
WARILY
MOVING
AHEAD
Developing regions
drive breakbulk momentum
B
reakbulk magazine has
again prevailed upon a
disparate group of industry
executives to break out
their crystal balls and predict the
breakbulk transportation industry’s
direction in 2013.
We’ve focused on the developing
regions whose momentum drives the
industry. Energy projects in these
regions will “rule the breakbulk
waves,” as Ahler’s Luc Maton puts
it. However, this reality will also
exacerbate the conundrum of growth
outstripping infrastructure that will
have profound effects on project
cargo movement for years to come.
Evolving piracy and security
challenges, and an escalating scarcity
of skilled labor, are discussed by
Africa-based commentators.
The multipurpose fleet, although
it has avoided the overbuilding
that continues to haunt the bulk
and container segments, remains
vulnerable to competition, soft rates
and volatile bunkers.
Overall, although aware that
economic tremors
could still derail a fragile recovery, the
sector remains warily optimistic.
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4. www.breakbulk.com BREAKBULK MAGAZINE 9
CONTROL RISKS
SOUTHERN AFRICA
DAVID BUTLER
Managing Director
Piracy continued to domi-
nate maritime security issues
across Africa in 2012, with
activity off the east and west
coasts the two main hot spots.
What piracy issues can the
maritime industry expect
this year?
OntheEastAfricancoast,
Somalipiracydroppeddramati-
callyin2012,witha56percent
reductioninattacks,a33per-
centreductioninhijackings
anda72percentreductionin
ransompayments.Thecombi-
nationofamoreaggressiveand
coordinatednavalstrategy,the
increaseduseofonboardarmed
teamsandimplementationof
bestmanagementpractices
madeSomalipirategroupsless
successful.
Before declaring victory,
remember that conditions
onshore still enable piracy
despite small improvements in
local governance. Vessels and
hostages continue to be held
offshore, and pirate attacks
will continue.
Somali pirate groups will
focus on assessing the vul-
nerability of vessels before
committing to an attack.
The recent boarding of a
vessel in the Gulf of Oman
was preceded and followed
by a number of suspicious
approaches in that area.
In the Gulf of Guinea,
threats are more varied.
Criminal activity extends from
low-level anchorage crime to
hijacking vessels for cargo theft
and kidnapping personnel.
This year is likely to see
further hijack-for-cargo inci-
dents, in which tankers are
hijacked by Nigerian groups
and held while the vessel is
moved and part of the cargo is
siphoned off to another vessel.
In 2012, these attacks
extended farther west to Abi-
djan anchorage, Cote d’Ivoire.
Expect to see commercial ves-
sels targeted farther offshore
the Niger Delta, with violent
armed robbery and persistent
kidnapping threats.
In addition to the high-
profile hijackings, shipping
has become increasingly
aware of the problem of
opportunistic anchorage
crime. While trends in East
and West Africa constantly
change, 2013 will see anchor-
age crime across the continent
targeting cash, valuables,
equipment or ship’s stores.
As threat areas change and
new trends develop, informa-
tion and awareness become
essential tools for the mari-
time sector. With security
threats ever-changing, a thor-
ough risk assessment should
be the first step before any
new project or voyage.
ITATRANS AGILITY BRAZIL
BERNARDO CURI
Project Development Manager
One of the biggest
bottlenecks in Brazil is poor
infrastructure. This affects
ports, airports, roads, railways
and energy.
In past years, Brazil has
invested only 2 percent annu-
ally of gross domestic product
on infrastructure. Other
countries such as China, India,
Chile and Colombia have
invested more than 5 percent
of their respective GDPs.
The World Economic
Forum ranked Brazil’s infra-
structure at 104th among 142
countries.
As the fifth-largest country
in the world in land mass, 58
percent of all domestic cargo
moves by trucks on bad roads.
Only 6 percent of Brazil’s roads
are paved.
The remainder of domes-
tic transportation is by rail,
28 percent, and water,
13 percent. In countries such
as Germany, U.S. and Canada,
railways account for more
than 60 percent of domestic
transportation. Rail reduces
costs and time, making those
countries more competitive in
the global market.
Brazil is trying to improve
the situation. In 2007, the
government started up its
Growth Acceleration Pro-
gram, known as PAC, with
estimated investments
around BRL955 billion. The
second stage, known as PAC
2, began in 2011 and is sched-
uled to be complete in 2014.
Officials say 40 percent
of PAC 2 is complete, but this
is not what we see on a daily
basis. Our infrastructure is
still chaotic.
The government has been
trying to stimulate the private
sector to invest in infrastruc-
ture, but Brazil remains one
of the most expensive and
bureaucratic countries in
the world.
KITA LOGISTICS
EMRE ELDENER
General Manager,
Kita Logistics Istanbul
and President, Heavy Lift Group
Turkeyhasbeengrowingat
anaverageof5percentto
6percentinrecentyears.Itlooks
ifasthegrowthratewilldrop
slightlyto4percentin2013.
Projects under construc-
tion or starting up in Turkey
this year include: the third
Bosphorus bridge, the Istan-
bul-Izmir expressway, two
nuclear power plants, two
large oil refineries, power
plant installations totaling
about 4,000 megawatts (com-
bination of wind, hydro, coal
and gas), about 10 subway sys-
tems in different cities,
the Ankara-Istanbul high-
speed train, and the Izmit
BEFORE
DECLARING
VICTORY,
REMEMBER THAT
CONDITIONS
ONSHORE STILL
ENABLE PIRACY...
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breakbulkoutlook2013
Bay suspension bridge.
Istanbul needs a new air-
port. The tender will be out
early this year for the new
150 million passenger-capacity
airport project, which will be
the largest airport in the world.
Considering a global slowdown
of investment activities, these
projects are appetizing for
contractors, logistics service
providers and fabricators.
Additionally, the recon-
struction of northern Iraq
will continue at a high speed,
including new refineries, oil
exploration projects combined
with new gas-fired power
plants, and housing projects.
Itisbecomingmoredifficult
foranycargotopassthrough
Iranintransit.Tradersare
forcedtousethelandroutevia
Turkeytoreachcountriesin
CIScountries,ofwhichAzer-
baijanlookstobeespecially
activewithnaturalgas-related
projects.IntheBalkancoun-
triesofGreece,Bulgariaand
Romania,theoutlookdoesnot
lookasbrightasthatofsouth-
ernEuropein2013.
TWP PROJECTS (PTY) LTD.
SOUTH AFRICA
LARS M. GREINER
Head of Materials Management
It may be a worldwide phe-
nomenon, often talked about
in hushed tones. However, in
Africa, the lack of any type of
formal training and the dimin-
ishing number of educated
people entering the logistics
sector are now leading to a cri-
sis within transport as a whole
and in the breakbulk and proj-
ect sectors specifically.
While the seamen’s certi-
fication is clearly documented
and internationally recog-
nized, the same cannot be said
of landside staff. With few
national fleets left in Africa,
there is a distinct lack of sea-
experienced staff moving to
work on the quayside.
Add to this the lack of
any formal qualifications or
requirements to open a ship’s
agency or forwarding com-
pany. The result is that anyone
with an interest in the industry
and a bit of cash or political
clout can open one of these
companies.
Shipping lines and shippers
alike are left at their mercy,
trying to pick from a plethora
of potential agents, or worse,
required by their local contract
partner to choose a company
based on politics.
It remains amazing that
while years of training are
required for engineers and cap-
tains in the project-shipping
realm, agents who are between
the two often have little more
than a school-leaving cer-
tificate and a couple years of
experience.
The time has come to set
international standards again
for agencies and forwarders
alike, with a rating scale. Such
standards should be linked
with some form of interna-
tional minimum training
requirements.
Shipping and transport
remain attractive industries
to enter. They are considered
“sexy” industries by young
people because of their global
nature and the possibility of
working internationally.
There is an opportunity to
tap into this willing resource,
and begin to nurture a well-
trained group to drive the
development of Africa. It’s time
to take the skills gap seriously.
MARTIN BENCHER
(SCANDINAVIA) A/S
PETER JENSEN
CEO
The last couple of years
have been very good for Martin
Bencher. We have opened new
offices and increased turnover
and profit. However, we are
not really sure what to expect
from 2013.
We hear mixed signals
from both customers and
suppliers. Some business
areas expect growth. Others
are more cautious, and some
expect a tough year with
few projects.
We believe our custom-
ers in the energy sector will
provide most of the growth
through equipment for the oil
and gas industry, power plant
projects and wind. Port expan-
sions and upgrades of port
facilities will also be an impor-
tant area for us in 2013.
Most activity will be in
China, Southeast Asia and
Latin America. Africa, Central
Asia and Australia are areas
with great potential.
Our main suppliers,
the shipping lines, seem to be
on a roller-coaster ride. Rates
go up and down; it is very
challenging to do anything
long-term. Imbalance and
overcapacity seem to be the key
words. We do not anticipate
much change to this situation
in 2013.
Despite these mixed sig-
nals, we allow ourselves to be
optimistic. The project market
is still very big if we look at
it from a global perspective,
and we find plenty of room for
expansion for a company of
our size.
UNIQUE GLOBAL
LOGISTICS PVT.
PAVITHRAN M.
KALLADA
Managing Director
India will surely wit-
ness growth in project and
breakbulk cargo shipping, con-
sidering the increased need for
power to supply the country’s
growing industries as well as
consumers.
Increased investment in oil
and gas fields is expected, both
to upgrade old producing fields
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breakbulkoutlook2013
and to pay for new exploration.
Increased demand for fossil
fuels in this part of the world
will require more refining
capacity, which will fuel proj-
ect investment and breakbulk
cargo shipping. Overall, the
growth outlook for breakbulk
cargo is reasonable.
India’s pool of engineering
graduates will fuel growth in
the EPC sector, since global
EPCs are increasingly consid-
ering India for engineering and
fabrication facilities.
EPC and engineering com-
panies have been increasingly
active in the global market,
exporting to the Middle East,
Africa and Southeast Asia.
These increasing exports have
significant impact on India’s
export of breakbulk cargo and
represent a shift from the tra-
ditional import market.
The breakbulk cargo
movement in India faces
these challenges:
—Infrastructureproblems
inportsandexitroutesfrom
portstointeriorplantlocations.
— Lack of quality roll-on,
roll-off facilities, limited use
of waterways and heavily con-
gested highways.
— India’s major ports lie
within centers of growing
cities, which leads to port
congestion.
— Compromises in safety to
reduce costs.
What India needs is a Min-
istry of Logistics to oversee
and formalize logistics policies
that will prevent bottlenecks in
supply chains.
JUMBO SHIPPING
AUSTRALIA
JEROEN KOCK
Business Development Manager
Australia is a unique mar-
ket, with oil and gas, mining
and port developments going
on at the same time.
This means that for 2013
there are many planned
shipments of equipment,
including ship loaders, port
infrastructure equipment
and subsea equipment, such
as reels.
Investments in mining
and port development sectors
have slowed; however, there
are still many shipments to be
executed in 2013. We feel these
investments will not continue
at the same speed, which might
reduce the number of ship-
ments in 2014.
Australian port develop-
ment seeks to become more
efficient at handling com-
modities such as iron ore and
coal, or focuses on tasks such
as building jetties at LNG
terminals.
But handling project cargo
and breakbulk at these ports
is often a challenge. None of
these projects are expected to
ease congestion or turnaround
time for breakbulk and project
cargo ships.
There is a lot happening
in Australia for heavy-lift car-
rier Jumbo, which will, for
example, support the handover
of reels to offshore installation
vessel Normand Clough in
February.
We expect a busy 2013,
but this might change during
2014. Developers are tapping
the brakes a bit, thinking about
how to make existing assets
more efficient rather than
investing in new facilities.
Some major projects are
over budget. Australian labor
costs are high. Other regions
are beginning to look very
interesting. And if the U.S.
and Canada start export-
ing shale gas, that will also
change the game.
Interesting times are ahead
of us. We are positive, but will
proceed with caution.
MAERSK LINE LTD. INDIA
SUDHIR KUMAR
Manager, Ship Management &
Chartering, Breakbulk &
Project Cargoes
The shipping industry
faced price-driven competi-
tion across the globe recently
because of excess capacity
and a slowdown in demand.
But Indian project cargo play-
ers view 2013 with optimism
because end-users and ship-
pers in India have always been
price-conscious.
India is among the few
regions that imports and
exports similar breakbulk
cargoes. Steel is imported
from the U.S. and Europe
while India exports it to the
Persian Gulf, Africa, Europe,
the U.S. and elsewhere. The
same goes for power trans-
formers, fabricated units and
other project cargoes.
Volumes will grow and
rates will firm but fall short of
touching their former dizzy-
ing heights.
In capital investment,
the Indian Reserve Bank has
hinted at rate cuts to free capi-
tal for infrastructure projects
and ease debt on existing ones.
Industry giants Reliance,
Tata and other infrastructure
majors have been tapping U.S.,
Indian, Chinese and European
Exim banks for funds. The
U.S. Exim Bank in November
approved US$2.1 billion in
funding for a new Reliance pet-
rochemical complex on India’s
west coast.
Cargoes for this project
will begin moving in the third
quarter of 2013, while the
Indian east coast is abuzz with,
power plant and gas explora-
tion activity.
In the natural gas sec-
tor, the year began with
Petronet advancing on plans
for a proposed third gas-based
OVERALL,
THE GROWTH
OUTLOOK FOR
BREAKBULK
CARGO IS
REASONABLE
INDIAN PROJECT
CARGO PLAYERS
VIEW 2013 WITH
OPTIMISM...
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breakbulkoutlook2013
power plant in Gangavaram.
Petronet’s first plant in Kochi
on the southwest coast begins
operating in March.
The gas sector augurs well
for equipment manufacturers,
drilling service providers and
freight forwarders.
Traditionally, Indian rail-
ways have been considered
passenger lines or commodity
and container transportation.
To cater to the needs of an
emergent India, the concept
of dedicated freight corridors
has gained momentum. These
are aimed at easing highway
congestion as well as bring-
ing down transportation unit
costs for project as well as
containerized cargoes.
BBC CHARTERING
SHANGHAI
JUERGEN KUNTZ
Managing Director
With high growth both in
exports and imports, China
has taken over center stage in
recent years in the global spot-
light for breakbulk and project
cargo shipments.
We currently see exports
and sourcing out of China
slowing down as local produc-
ers deliver relatively “on time.”
During the boom days, produc-
ers often fell behind schedule.
Today, many fabrication
plants and shipyards have
increased spare capacity and
lowered orderbooks.
As a consequence of the
ASEAN-China Free Trade
Agreement signed in 2010, we
may see more Chinese state-
owned companies investing
and exporting in Southeast
Asia. This in turn may increase
demand for shipping.
But we will continue to
experience an oversupply of
shipping capacity in China
because of multipurpose ton-
nage coming on the market.
Although some older ships
go for scrap, we see operators
snapping up relatively cheap
tonnage. That fuels pressure
on rates, especially on intra-
Asian business in both the
multipurpose and heavy-lift
business.
As a consequence, we
expect the market to continue
to be competitive on most trade
lanes in 2013, with a focus on
price rather than quality. At the
same time, we see a lot of cargo
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being re-circulated because
of fast-paced changes in the
Chinese market. Operators and
carriers enter and leave the
stage quickly, and they often
fail to perform.
We might see some inter-
mediate short-term recoveries
despite the challenges. But
China continues to be a buyer’s
market in 2013.
The International Mon-
etary Fund projects 8.2 percent
gross domestic product growth
for China in its World Eco-
nomic Forecast for 2013 under
the assumption of “adequate”
policymaking in the Euro-
pean Union and the U.S. Such
growth would be more-or-less
in line with the previous year.
But policy failures may
turn into a potential threat for
all market participants.
China represents a key
market for BBC Chartering.
On a year-to-date basis, we
had about 25 percent more
vessel traffic in 2012 com-
pared to 2011. We continue
to see much opportunity
here and in the Asian region
as a whole, and continue to
increase BBC Chartering’s
commercial footprint.
AHLERS
LUC MATON
General Manager-Asia Region
The unstable political and
economic climate will further
increase the volatility of mar-
kets and trade lanes in 2013.
The uncertain business
environment may lead to last
year’s scenario: delayed execu-
tions of some projects during
the first half of the year, but a
much stronger second half.
The energy business,
and especially the oil and gas
industry, will rule the break-
bulk waves. The growth and
potential of shale gas are shak-
ing up the industry and may
change the playing field.
Solar- and wind-related
projects are in the lift. Con-
struction and steel businesses
will remain relatively weak.
I see the Caspian Sea, Cen-
tral Asia, the North Sea, APC
and further emerging Africa as
growth areas for the breakbulk
and project business.
The manufacturing base of
the goods will be increasingly
in China as the main source
and in India and Southeast
Asia as secondary markets. In
trade with Africa, there will
be more and more competition
between India and China.
Carriers will face heavy
competition. The volatility of
markets and difficult external
circumstances, such as the
bunker price, will not make
things easier.
DREWRY SHIPPING
CONSULTANTS
SUSAN OATWAY
Senior Consultant
Drewry Shipping Consul-
tants expects firm growth in
demand for all dry cargo of
5 percent in each of the next
two years. Most growth in
demand is likely to be from
the project cargo sector,
with the main growth area
expected in the Asia-Pacific
region.
Drewry expects to see an
overall growth in multipur-
pose vessel demand of
8 percent per annum to 2014.
The multipurpose fleet
numbers around 3,108 ves-
sels, with a combined total
deadweight of 28.3 million
tonnes and an average age
of 14 years. The majority are
classed as simply MPV, but
36 percent of the fleet (by
capacity) has enhanced lift
capacity and is classed as
project carriers.
The order book at the end
of 2012 amounted to about
196 vessels totaling
2.7 million deadweight tons,
representing 10 percent of
the current fleet.
Newbuilding is expected
to drop back to levels seen
before the boom of around 1
million dwt per year. Slippage
is still running at 40 percent
at most shipyards. Taking this
into account, we expect simple
MPVs to see very little (if any)
growth with little investment
beyond replacement tonnage.
But the project carrier fleet
shows growth of 3 percent per
annum to 2014.
This difference in demand
and fleet growth should allow
the market to perform on a
more even keel. Rates are not
expected to improve signifi-
cantly over the period, but they
are unlikely to crash again.
That said, competition
from the container and bulk
carrier fleets is always the fly
in the market’s ointment. The
former has capacity issues to
address, but carriers could see
small profits again during 2013.
Meanwhile, the bulk sector
had a real “annus horribilis” in
2012, with rates falling another
22 percent in the Handysize
and 37 percent in the Supra-
max sectors, which compete
directly with the MPV sector.
Dry bulk demand is set to
improve, and the supply side is
calming down if owners stop
ordering new ships. But the
competition for breakbulk and
project cargo is still likely to be
high — and this will keep rates
down in the MPV sector until
competition wanes or demand
strengthens further.
It is a year to keep calm
and carry on innovating, to
offer shippers the extra value
that only a multipurpose
vessel gives. BB
I SEE THE
CASPIAN SEA,
CENTRAL ASIA,
THE NORTH SEA,
APC AND
FURTHER
EMERGING AFRICA
AS
GROWTH AREAS...
NEWBUILDING IS
EXPECTED TO DROP
BACK TO LEVELS
SEEN BEFORE THE
BOOM...
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