This article was published in the November 2010 issue of World Port Development. To receive a pdf of the article in its original format including charts and pictures please send an email to archive@worldportdevelopment.com
Self-unloading vessel firms in new build frenzy
Ray Dykes reports on how fleet owners of ocean-going self unloading vessels have fared during the rough seas of the global recession.
Instead of being idle during the recession, several of the world’s leading ocean self unloader vessel companies have plunged their money into new builds to expand their fleets. Saga Forest Carriers, Gearbulk, and Grieg Star Shipping, for example, have vibrant new build programs in Japan, South Korea and China, which should see their fleets expand as early as 2012. Gearbulk leads the way with 19 new builds in its current replenishment program. Things are a little different on the 3,700-kilometer long Great Lakes St Lawrence Seaway System – the life-line of North America trade – where some of the self unloading vessel fleet has been idle during the tougher months of the recession and are only now being dusted off and pressed back into service as cargo volumes return to near normal or better. But, whether on the open ocean or on the Great Lakes of North America, there’s no doubting that self unloading vessels bring huge advantages. Many can load or unload without shore-side assistance from equipment or personnel. Because they do not need any land-based help, on the lakes at least, these vessels can literally arrive in the middle of the night, discharge their cargo and depart before day break. Ocean fleet self unloading vessels offer high-capacity gantry cranes, jib cranes, or pneumatic or mechanical unloading systems depending on the commodity carried.
New markets
Some of the ocean carriers such as Saga, Grieg and Gearbulk have also moved from their traditional markets as they chase new cargoes in recent years. Saga, for example, once the mainstay of the British Columbia pulp and paper market up and down the West Coast, has pulled out of BC and closed its Vancouver office. The new main market for Saga is now Brazil and a more vibrant forest products industry there. “We are much more active in other markets such as Brazil,” explains Saga Forest Carriers President, Lars Traaseth from his Tenvik, Norway head office. “We have a fleet of 24 self unloaders now and two 50,000 deadweight tonne new builds are also being constructed in Japan for delivery in 2013-2014.” Saga’s box-shaped, open hatch bulk carriers and their specialised gantry cranes of 32 to 42 tonnes loading and discharging capacity are equipped with modern, semi-automatic pulp and lumber frames, container spreaders, and vacuum clamps for newsprint and other rolled products. Forest products are still 60% of cargoes handled, but these days the product range is much wider, says Traaseth, and includes charter cargoes, steel, bulk cargoes such as petroleum coke, aluminium, wood pellets and grain, plus specialised cargoes such as over-sized containers up to 62 feet that are manufactured in the Far East for the North American market.
Product shift
For Grieg Star Shipping, based in Bergen, Norway, there has been a market shift since it began in 1961 reliant on a fast-growing trade in wood pulp and paper for 90% of its business. Today, forest products are just a little over 50% of the products carried by the gantry-crane equipped, open-hatch fleet. Those gantry cranes range up to 70 tonnes capacity and are also ideal for project cargoes such as mining or port bulk handling equipment, pipes, windmills, metals, newsprint, containers and bulk cargoes. Despite what it calls “a shipping market that experienced a sharp downturn in 2009,” Grieg still turned a healthy profit of NOK 390 million in and is faring well in 2010. The Grieg Group, into which Grieg Star was consolidated in 2009, has a bold plan to diversify its fleet and has recently completed delivery of four new, open hatch vessels. The next new build program will see up to 10 more delivered by Hyundai Mipo in South Korea. These 50,000 dwt ships will feature a new crane design and should be in the fleet by 2014. And Grieg has also contracted to buy two supramax dry bulk vessels, which will be built by the Chinese shipyard, Yangzhou Dayang Shipbuilding. The 58,000 dwt vessels are scheduled for delivery in the second half of 2012 and are part of a plan to increase the fleet to36 vessels.
World’s largest
Another of the major international self unloading vessel companies, Gearbulk boasts the world’s largest fleet of open hatch gantry craned vessels as well as open hatch jib crane ships up to 72,860 dwt. Today, Gearbulk has management of 77 vessels, including 63 owned by the company, and the 19 new builds on order. Founded in Bergen, Norway in 1968, Gearbulk now has Mitsui OSK Lines as a major shareholder at 49%. And Gearbulk is big. It has over 600 staff in branches around the world and more than 3,000 operational and seafaring staff.
Supplier lament
On the supply side, business was slow in 2009 for one of the major equipment companies of self discharging systems. Cargotec’s MacGregor Bulk AB, of Sweden, is one of the world’s best known system suppliers and business has been down, with “ports not really opening up, but there are signs of activity and the market is on its way to recovery,” according to Bjorn Samuelsson, Director of Marine Selfunloaders. Cargotec sees the BRIC countries – Brazil, Russia, India and China – as being the drivers of what Samuelsson sees as a bright future. The company has developed what he calls “a few new products” related to handling coal and iron ore, which it will soon announce. The new products are expected to improve environmental aspects of self unloading vessels by giving operators better options and lessening the risk of local spillage.
Lake revival
After a “terrible” 2009, members of the Lake Carriers Association (18 American companies that operate 55 US flag vessels on the Great Lakes) are experiencing improved fortunes as the major commodities such as coal, iron ore, and limestone were all up significantly in September 2010 over the same month a year earlier. However, some still remain below their five-year average despite the September increases. In 2009 the iron ore total was the lowest since 1938, so increases this year are not unexpected. Many vessels never sailed last year, says Glen Nekvasil, Vice President of Communications, for the Lake Carriers Association. On the coal side, recovery has been slight so far and six vessels have never operated this year. Self unloaders make up most of the lake fleet, but industrial activity drives Great Lakes shipping and Nekvasil says while America seems on the mend, “the recovery is far from complete and remains fragile. It is premature to sing, Happy Days Are Here Again,” he laments. The key operational issue in any sustained recovery, however, remains the need for lake dredging. Nekvasil says the largest of the lake self unloading vessels lose 270 tonnes of cargo for each inch of draught lost. “We hope our legislation that will ‘fence off’ the Harbour Maintenance Trust Fund will pass this Congress,” he adds. “Then the corps (Army Corps of Engineers) will have the money to dredge the lakes to project dimensions year after year.”
Canadian carrier
A major Canadian carrier on the Great Lakes and St Lawrence Seaway, the Algoma Central Corporation, which lists 14 of its 35 vessel fleet as self unloaders, still sees customers in difficulty despite increasing cargo volumes. Algoma President & CEO, Greg Wight, says 2010 has been only a little bit better overall than 2009. “We still see a lot of customers struggling with iron ore and steel being up and down in 2010.” A big grain surge earlier in the year has been offset by a poor Canadian crop. But, the best indicator for Wight of how lake and seaway traffic are recovering is the iron ore industry, which he says is the “bell weather of the economy.” Iron ore still has “a lot of room to grow, but the ind
ustry is going in the right direction.” Wight believes 2011 will see continued growth back to levels where lake traffic was in 2007 and 2008 when “customers were then vibrant.” For the shipping companies, Wight sees the biggest priority is renewing the fleet and Algoma recently welcomed the Canadian Mariner as a new build owned by Upper Lakes Shipping and pooled with 26 other ships through Seaway Marine Transport. A recent Canadian government decision to scrap a 25% import duty on vessels built offshore is also expected to be a big help.
2011 and beyond
For the ocean self unloading fleet, how does the future look? Lars Traaseth, boss of Saga Forest Carriers, admits he doesn’t have a crystal ball on his desk. World markets are being more and more influenced by China, he says, with its continued strong development driving the dry bulk market. But, this is countered in the USA and Europe where the recession seems to be lingering and some countries have big problems with employment and a national deficit. What happens in 2011 depends on China and in the meantime the supply side is being increased by “a lot of new builds.” Saga retired some of its older vessels early in 2009, selling them to another trader not in competition with them. For Traaseth the year ahead doesn’t look that promising yet with widespread unemployment, foreclosures and so on . . . “it’s a mess basically.” He says there are some opportunities, some challenges and some problems ahead. “The world has completely changed in the past 10 to 15 years. It was once all about Europe and the United States. Now it’s all about China, Brazil and even countries in West Africa,” he says. “Things are getting more complex than ever before.”
