Project forwarders in North America are busy these days, thanks to a broad uptick in business that has even extended to the troubled mining and oil and gas sectors.
“We’ve seen a general uptick in both ocean and air traffic. There is a lot more than in early 2016,” reported Jessie Baiza, senior project manager at BNSF Logistics.
Jeff Cullen, CEO of Rodair International, a forwarder with a diversified portfolio with much regular traffic, said that his firm’s project business has come back alive after a relatively dormant spell over the past two years. “We do a fair bit in power generation and also in the mining sector,” he added.
Heavy haul and project forwarding firm Omega Morgan has been busy moving machinery, a sector that has regained strength, reported CEO Greg Tansey. For BNSF Logistics, project traffic for solar farms has shown a huge uptick and automotive business has picked up too, according to Baiza.
Movements of wind energy components, power generators and transformers kept going through the global economic downturn, although wind energy imports were put in limbo for a while by some delay in renewing energy credits in Washington. The slowdown was most pronounced in the resources field, notably oil and gas and mining. Recently both sectors have shown signs of recovery. Aerodyne Cargo Services, a charter broker and GSA for Volga-Dnepr, was busy this spring with a project for a mining firm that involved over 20 flights between North Bay and Nunavut with Ilyushin Il-76 freighters, said managing director Ron Buschman.
KOG Transport, which was acquired by German logistics group Rhenus two years ago but continues to operate in North America under its old banner, has picked up some projects in the oil and gas sector. “We thought business would be slow. It has been better than expected,” said CEO Colin D’Abreo.
Other forwarders have also registered some improvement in the oil and gas business. However, they stressed in unison that it has been a modest recovery so far. Despite several false starts in an upward direction this year, oil prices are still relatively stable – at a level that is not fuelling significant activity.
“For exploration, [oil prices] need to be way up there again,” said Buschman. “Unless it’s really urgent because of a shutdown, we are not seeing charters.”
Ports like Albany that have traditionally focused much on project and outsize shipments, are not complaining about lack of activity. “Business is booming,” said Rich Hendrick, the port’s general manager. This has gone on since last autumn, and at times operators have bene pressed to find space for their cargo.
Thanks to a General Electric production facility nearby, Albany has seen a steady outbound flow of generators and transformers and other heavy equipment, but the recent surge was caused chiefly by imports of equipment for several power plants.
The Port of Toledo is poised to host a significant amount of vessel and rail traffic for a US$700 million project on its own patch after a large mining and natural resources company signed up to take a 100-acre lot at the port’s Ironville terminal to set up a hot briquetted iron production plant. The new tenant will build more on-dock rail and other cargo infrastructure on the site, said Joe Cappel, the port’s director of cargo development.
Charter brokers have reported a rise in enquiries as well as actual charters for projects, but they are still facing an abundance of regular lift in many markets. “We have had no issues with capacity,” confirmed Baiza.
Brokers reckon that the ongoing recovery will dry up surplus lift and boost demand for charters, although much hinges on the oil price, one said privately.
For his part, Buschman thinks that the oil and gas industry will be in no hurry to embrace charters again. Energy firms have become decidedly frugal during the downturn, he noted, pointing to a recent project that involved a large piece of equipment to be shipped by air from Calgary to Abu Dhabi. Instead of chartering an Antonov An-124, the shipper decided to dismantle the piece to the extent that it could be fitted into a Boeing 747 freighter, he recalled.
To boost their loads and revenues, a number of scheduled freighter operators have been more interested in charters, but they are equally willing to divert a scheduled freighter to pick up some project load from a point not too far from the regular route. Project forwarders have welcomed this. “It gives us an additional option,” said Baiza.
According to Buschman, many energy firms have hired forwarders to take control of their logistics, which has resulted in tighter, more economical supply chains with less need for charters or air freight altogether, he said.
Project logistics executives’ delight over the strengthening of business is tinged with some concerns about having enough resources to handle this, notably manpower. “The labour shortage is an issue,” said Tansey. Recently Omega Morgan pulled out of a bid for a project because it could not muster enough staff in the area.
As a growing number of experienced employees head into retirement, the problem is widely expected to get worse. Still, project logistics executives find this preferable than a shortage of work.
By Ian Putzger
Correspondent | Toronto