(Article originally published in Sept/Oct 2016 edition.)
The collapse in commodity prices has meant tough times for breakbulk ports, but there are bright spots.
By Tom Peters
There’s no doubt that ports specializing in breakbulk and heavy-lift cargoes are struggling these days, yet some North American ports are bucking the decline, particularly those handling wind farm equipment.
The Port of Galveston is “a fairly active port on the wind farm front,” says Senior Director of Marketing Captain John Peterlin III: “We have seen one or two wind energy ships a month and hopefully that trend will continue through the remainder of the year. What we are seeing are power tubes, nacelles, generators and associated equipment, and those are all for U.S. onshore projects.”
Galveston’s ace in the hole in attracting this type of cargo is its $1.5 million investment in a specialized rail track system. “Yards are typically built on rail with eight-foot, eight-inch separation between strings of track, but we built this yard with 16-foot separations,” Peterlin explains. “That has proven to be a magnet for wind energy manufacturers.”
The slowdown in China has affected high and heavy cargo with exports of construction and agricultural machinery down from a year ago. Ditto for exports to Australia, where the collapse of the mining industry has reduced shipments of mining equipment. But it’s important to remember that Galveston is coming off a very good year in 2015 when shipments were up 13 percent from 2014, which makes favorable comparisons in the current year difficult.
Oil & Gas Hub
The Port of Houston remains the largest breakbulk and project cargo port in the country thanks to having a “captive” industry – oil and gas – says John Moseley, Senior Director of Trade Development. The port handles “everything from blowout preventers to valves and pumps and very large equipment for the industry.” Because of its location and highly developed infrastructure, Houston is also the preferred port for high, wide and heavy cargo destined for the central and southwestern U.S., including wind blades and towers.
Due mainly to the downturn in oil and gas, overall cargo at Houston is down about 15 percent so far this year. Moseley says most of the decline is due to steel, which is off by 60 percent. Steel pipe is used in the drilling process. The good news is that space normally used for breakbulk and project cargo is being filled by automobiles. “We have a major Volkswagen, Porsche and Audi distribution center here, and they are taking up a lot of that space,” Mosely explains. “We’ve also got a lot of wind blade business as well and some rail car activity.”
In January the Port of New Orleans demonstrated its ability to handle heavy-lift cargo when a 718-ton, 164-foot-long absorption tower was discharged at its Louisiana Avenue wharf. It was one of the heaviest cargo lifts, from ship to barge, in the port’s history. Port President and CEO Gary LaGrange says the lift underscored the port’s ability to handle the largest and most complex cargoes and adds the port has realized a real boost in project cargo in the past year.
Matt Gresham, the port’s Director of External Affairs, notes that project cargo is “being driven by investment in the chemical and refining industry concentrated in the Mississippi River corridor between New Orleans and Baton Rouge and in the Lake Charles area.” In 2015 New Orleans handled 4.526 million tons of breakbulk cargo. The major commodities were steel at 3.27 million tons; non-ferrous metals, 500,000 tons; natural rubber, 364,265 tons; and forest products, 158,000 tons.
Wind Farm Ports
Project cargo shipments through the Great Lakes-St. Lawrence Seaway have been increasing over the past two years as wind farm equipment manufacturers see the value of importing components directly by water to their projects in the U.S. Midwest and Western Canada, says the Chamber of Marine Commerce (CMC), which represents the binational Great Lakes and St. Lawrence commercial marine industry, including ports in the U.S. and Canada. Other general cargo shipments, which include heavy-lift project cargo and machinery via the St. Lawrence Seaway, have increased by 69 percent this season.
At the Port of Thunder Bay, Ontario, CMC says Logistec Corporation has been handling more and more project cargo and out-of-gauge pieces destined for Western Canada. The port's high-module clearance envelopes make it a practical location for both imports and exports including heavy lift, super bags and containers. The port is known for handling wind farm equipment and grain, and it's been a full season again this year with the addition of wood pellets.
“Shippers are recognizing that the Great Lakes-St. Lawrence Seaway is competitive for exporting/importing not just to and from Europe but other global markets as well. Our carriers and shippers are telling us that shipments should remain steady for the balance of the season," says Bruce Hodgson, Director of Market Development for the St. Lawrence Seaway Management Corporation.
South of Albany, New York on the Hudson River is the innovative and privately-owned Port of Coeymans marine terminal, which handles bulk and heavy-lift cargoes similar to those on the Great Lakes. Coeymans was instrumental in supplying components for the new Tappan Zee Bridge farther downriver and currently handles upwards of two million tons of cargo annually.
At the southern tip of Texas, the Port of Brownsville is getting a lift from windmill components. There are three wind farm projects currently being developed in the Rio Grande Valley where the port is located, and it has handled hundreds of blades, nacelles, hubs and cones.
Last year Brownsville processed over two million tons of breakbulk cargo and more than 10.1 million tons of cargo overall. It also inaugurated a new heavy-load-capacity dock, says Patty Gonzales, Director of Marketing and Public Relations. “Additionally, the port purchased its second mobile crane with a lifting capacity of 125 tons,” she adds. Brownsville is the only deepwater port on the U.S./Mexico border and is the largest landowner port in the U.S. with 40,000 acres.
Bucking the Trend
On the West Coast, the Port of San Diego is bucking the downward trend in breakbulk and other cargoes. Due to strong customer demand and a healthy U.S. job market, there’s been growth in automobiles in the last few years, says Public Information Officer Tanya Castaneda: “Our numbers are back to where they were prior to the Great Recession. In 2015 the district handled 425,000 automobile units.”
San Diego is also home to the largest shipyard on the West Coast, National Steel and Shipbuilding Company (NASSCO, a General Dynamics subsidiary). NASSCO’s contracts with the U.S. Navy and several commercial carriers have been a big boost to the port’s Tenth Avenue Marine Terminal, which has been busy handling ship engines, steel components, propellers, machinery, ladders and LNG tanks, among other items.
In Jacksonville, breakbulk volumes at Jaxport are running 20 percent ahead so far this year, says Frank Camp, Director, Non-Containerized Sales. In 2015 the port handled 726,242 tons of breakbulk. Camp says forest products such as paper rolls, pulp and lumber are heading the breakbulk lineup. Fuel is also doing well as is steel wire headed for the construction industry.
On the project cargo side, it’s been an exciting year. “We’ve seen a few moves of some large power generating equipment like transformers and a large generator,” Camp notes. In early September the port served as a transportation hub for a 269,000-pound, gas-fired reciprocating engine headed for Gainesville, Florida. Jaxport has excellent connectivity to rail and Interstate highways, and its rail clearances are exaggerated for high and heavy cargo – a big advantage when competing for business.
Although the Port of Savannah is located in one of the fastest growing regions, population-wise, in the country, it’s not immune to some of the negative trends in project and breakbulk cargo. “I think we are seeing the decline, especially in project cargo, because of a few things,” explains Mark Troughton, Global Accounts Executive, Georgia Ports Authority. He points to a downturn in the mining industry globally because of the collapse in raw material pricing, mostly due to the decline in Chinese consumption. He also points to the impact of oil and gas pricing: “When it declines below an acceptable level of profitability, they just start capping wells.”
As for breakbulk, Troughton says China has had a big influence, particularly in iron and steel. Chinese consumption of these products peaked in 2015: “Right now there are about 700,000 tons of excess capacity in China. They started dumping steel products in the U.S., resulting in a lot of U.S.-based manufacturers filing anti-dumping suits. Our iron and steel volumes are down about 20 percent or more in some cases, which is a lot better than the volumes in other ports.”
Savannah is best known for its container business – it’s the fourth busiest container port in the country and the second busiest for containerized exports. Savannah has also seen growth in certain breakbulk segments such as imports of wood pulp and natural rubber.
“We continue to market all of our facilities – container, breakbulk, ro-ro and bulk,” says Troughton. “We are always working on project cargo shipments as well because we have a 500-ton heavy-lift crane based at our Ocean Terminal facility. Savannah is located in the center of the Southeast, so we can serve a lot of the region from our facilities.” – MarEx
Halifax-based Tom Peters is a frequent contributor to the magazine.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.