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Breakbulk Rising

Despite tariff concerns and driven by new energy projects, breakbulk cargoes at U.S. ports are growing.

file photo
file photo

By Tom Peters 2018-12-26 23:55:19

(Article originally published in Sept/Oct 2018 edition.)

Maritime research consultancy Drewry suggested earlier this year in its “Multipurpose Forecaster and Annual Review” that the multipurpose shipping market, which includes both breakbulk and project cargoes, would show improvement this year after a few years of downturn.

This year has started with renewed optimism,” noted lead analyst Susan Oatway, “and it is Drewry’s belief that the market has finally turned the corner. Rate rises are never stratospheric in this sector, but we believe a steady growth of around two to three percent per year is possible.”

Tariff Concerns

However, with the unpredictable impact of tariffs by the Trump Administration, getting to a two or three “percent increase on these types of cargoes is a bit concerning for some ports. “We continue to monitor the tariff situation,” says Bill Hensel, Manager of External Communications for Port Houston. “Our steel volumes through the end of July were 2.6 million tons compared to 2.0 million tons for the same period in 2017.”

So it’s “so far so good,” at least for Houston. As the biggest breakbulk port in the nation, Houston handles a wide variety of cargoes. “Each terminal is uniquely designed to handle a wide range of cargo types to meet customer needs,” Hensel explains, “from steel to heavy-lift project cargoes to wind turbines and blades. Houston is the national leader for breakbulk cargo due to the large laydown areas located adjacent to the general cargo and heavy-lift docks.”

Farther south at the port of Freeport, Texas, Director of Business & Economic Development Jason Miura agrees there has been little impact from tariffs to date but cautions: “However, over time there is concern the sanctions on steel imports could affect pipe and steel billet imports and lead to delays in future petrochemical projects along the Gulf Coast due to the added cost. Tariffs could delay or even prevent an estimated $110 billion of new petrochemical projects by adding or threatening to add 25 percent to the cost of these investments. Imagine a $4 billion project becoming a $5 billion project overnight!”

Miura says most of these new plants would likely manufacture resins and petrochemicals for exports, so Gulf Coast states like Texas and Louisiana – and the U.S. as a whole – could lose a golden opportunity to positively impact the deficit and create thousands of new jobs if they do not come to fruition. “Add to this the fact that all the roads, bridges and highway improvements that states are eyeing could be delayed or cost 25 percent more to build and you have a recipe for potential disaster,” he adds.

Fueling Growth

That being said, one industry that’s fueling the growth Drewry predicted is energy, and it’s a positive for Freeport. “Being located in Texas, shale oil and gas are the greatest drivers of breakbulk and project cargo we have,” Miura states. “Over the last five years we have seen petrochemical manufacturing and gas production facility investments of approximately $25 billion in our navigation district.”

Another Texas port, Corpus Christi, which bills itself as “America’s Energy Port,” received its first shipment of wind turbine components in July at its new Rincon West Yard. Wind turbine manufacturer Vestas will import nacelles, hubs, drive trains and blades through the Rincon West Yard for the Blue Cloud Wind Farm in the Texas Panhandle.

The future of wind energy is important to Corpus Christi and the U.S.,” says CEO Sean Strawbridge, “and our Rincon West Yard is an incredibly viable logistics option for the innovative wind energy industry. The port is proud to play a support role for Texas in leading the nation in wind energy development, and we are pleased to partner with Vestas in facilitating the transportation of wind energy infrastructure to the Blue Cloud construction site.”

Pipelines & Power Plants

Natural gas pipeline projects and the heat-recovery steam generator market have helped the port of Baltimore show a slight increase in breakbulk cargo year to date, says Richard Scher, Director of Communications for the Maryland Port Administration. “As natural gas continues to gain traction as a main source of electricity, this market should see additional increases in 2018.” Scher adds that the port’s public terminals have made significant inroads with other breakbulk cargoes including wind turbines, transformers, locomotives, and refinery and energy production equipment.

Two heavy-lift cranes and enhanced on-dock rail capabilities allow direct discharge on and off a ship,” he notes. “Dundalk Marine Terminal upgraded another direct-to-rail berth that includes upgraded weight-to-axle capabilities. Dundalk sports three heavy-lift pads with a capacity of 32.5 tons per axle per pad, which will help the port handle heavier loads.”

With Florida now the third most populous state in the U.S., a lot of power and energy are needed to support that growth, and the Port of Jacksonville (JAXPORT) has stepped up to create a gateway for ever-increasing tonnage with two terminals, Blount Island and Talleyrand, routinely handling breakbulk and project cargoes.

A lot of what we are seeing related to upgrades in power generation not only in Florida but the entire Southeast,” states Director of Cargo Sales Frank Camp, “is not only for power generation but also for the new manufacturing companies locating here.”

In addition to the normal types of breakbulk and heavy-lift cargoes, JAXPORT has had its share of unique pieces. What it called its “moment of Zen” arrived when the port handled eight stone Buddhist statues, each weighing 70,000 pounds. The statues arrived from Vietnam on their way to a temple in Gainesville, Florida.

Power-generation equipment also figures largely in the breakbulk and project cargoes handled at the South Carolina Port Authority in Charleston. “Our Columbus Street Terminal serves as the Southeast’s premier roll-on/roll-off, breakbulk and project cargo terminal, handling growing vehicle volumes as well as large machinery, gas turbines and specialized heavy-lift and project moves including power-generation equipment,” states Erin Dhand, Manager of Corporate Communications & Community Affairs.

The Columbus Street Terminal is Charleston’s busiest location for breakbulk business, which is also handled at other Charleston terminals including Union Pier, Veterans, Wando Welch and North Charleston as well as the port of Georgetown. According to Dhand, breakbulk cargo represents 14 to 15 percent of the port’s business from a revenue perspective.

Last year a new $16 million paving project was completed at the Columbus Street Terminal to serve heavy project cargo and ro-ro customers BMW and Daimler and to prepare for the arrival of Volvo cars. A new Volvo plant will begin production this fall.

Construction & Infrastructure

Heavy-lift, project and breakbulk cargoes at the Port of South Louisiana have been getting a big boost from the $23.3 billion worth of projects announced for the region. Investors from countries including Taiwan, Malaysia, Russia, Norway, the U.S., China and Japan have committed to major projects such as steel and gas facilities, oil storage and methane production.

Executive Director Paul Aucoin says the port assists these projects with pre-constructed heavy-lift items and ongoing infrastructure investment: The port is always investing in infrastructure to help increase tonnage. We are presently in the design phase of constructing a new dock access bridge, strengthening our general cargo dock and purchasing two new cranes.”

Port Tampa Bay is Florida’s largest port for handling steel products, states Wade Elliott, Vice President of Marketing & Business Development. Much like South Louisiana, many of the breakbulk, products moving through the port are headed for construction projects: “A lot of it goes into the construction industry, which is experiencing significant growth driven by population and more people moving to Florida, but also for manufacturing and industrial use. The Tampa Bay area alone has over $13 billion in new real estate development through 2022.”

The port’s heavy-lift cargo includes fabricated steel structures like bridge components and petroleum storage tanks built for export markets by tenants like Tampa Tank/Florida Structural Steel. Recent project deliveries include 12 passenger rail cars manufactured in Japan for the $417 million automated people-mover project at Tampa International Airport.

A Taste for “Suds”

The port of Coeymans – on the Hudson River in upstate New York – leans heavily on breakbulk, heavy-lift and project cargoes, which comprise 35 to 40 percent of its overall cargo business, says Stephen Kelly, Vice President of Sales & Business Development. With North America’s growing thirst for new “suds,” the increase in the microbrewery business has meant higher sales of large tanks being shipped out.

The port’s diversified cargo mix includes aluminum, steel and agricultural products along with specialty items like cooling towers, generators, transformers, steel pipe, bridge girders and pre-cast concrete structures. Many of these products are used in upgrades and expansions to projects like New Jersey-based Public Service Enterprise Group’s gas-fired power plants, the new Tappan Zee bridge over the Hudson River, and the remodeling of LaGuardia Airport. – MarEx

Tom Peters is the magazine’s Canadian correspondent.

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.