Currently depressed global oil/gas and commodity prices are slowing the pace of major project developments across many industry sectors in Asia and worldwide, with a resulting negative impact on related cargo volumes.

One of the many results of those various influences is a ramping up of the already intensive pressure on forwarders and heavy lift carriers handling project cargo to develop additional innovative solutions to help further reduce overall logistics costs.

The wide-ranging depressive effect of current low energy prices on general project cargo work around the world was confirmed by Leo Ge, managing director of Chinese international forwarder Global Star Logistics (China).

“Lower oil and gas prices are not just impacting future developments in that particular industry, they are also slowing down other infrastructure projects in countries which rely heavily on revenue from oil and gas to fund that investment,” he said.

“From recent talks I have had with some vessel owners, they are seeing some civil engineering projects in Africa, for example, being delayed. They are also expecting to see a more general slowdown in construction material traffic through the rest of this year.”

The negative impact of lower mined commodity prices on project cargo markets was highlighted by Brad Skelton, a director of Depth Logistics, an Australia-based logistics provider and consultancy whose core activities include managing the shipment of used mining and other industrial equipment in Australasia. “When it comes to the international movement of used machinery, we need to see a recovery in commodity prices to get that market going again,” he stated.

Predictably, lower commodity prices have had a particular impact on mining industry projects, a point confirmed by Martyn Lawns, head of mining sector - industrial projects group for DHL Global Forwarding. Specifically, he said, declining prices had led to recent cutbacks in worldwide mining industry capital investment, particularly in large new mines.

However, both he and Global Star Logistics’ Ge remained optimistic about longer-term prospects for other project cargo business in their particular markets. Lawns, for example, said that in the light of declining commodity prices, mining companies were looking to increase throughput at some existing mines by investing in new capital equipment to improve efficiency and productivity. “That is often being done in a phased way, resulting in smaller but more frequent shipments,” he stated.

For his part, Ge suggested that Chinese government efforts to balance the country’s weaker international trade sector were likely to encourage more and more infrastructure development involving Chinese contractors, both in their home market and overseas. “So when it comes to future project cargo business opportunities, we’re cautiously optimistic,” he added.

Meanwhile, though, admitted Lawns, current economic conditions were keeping up the pressure on all players to try and further reduce project cargo shipping costs. In the mining sector, for example, some major companies and their contractors were looking to achieve that by switching cargo from specialist breakbulk/heavy lift vessels to container shipping services.

“We have seen a shift in the last 24 months towards companies trying to break down some of their larger modules into smaller shipments, with fabrication and final assembly done closer to the mine, so they can take advantage of regular container shipping services and related lower freight rates,” he said.

Another feature of that industry’s current focus on reducing costs, continued Lawns, was an increase in inquiries from mining houses specifically targeting working capital. “Outside of projects, they are focusing not only on the logistics component of moving equipment to site but also questioning why they should be holding stock.

“We have done a number of exercises in the last 12 months looking at cross-docking, staging post operations and integrating our relationship with the OEM (original equipment manufacturer) supplying the mining company to create a partnership and greater transparency when it comes to the movement of goods from A to B.”

The more general need for continuing innovation to further improve the efficiency of project-related logistics operations was outlined by Ronald Hoefmans, group technical director for ALE, a UK-headquartered worldwide provider of lifting, transport, installation and other services for large/heavy loads.

“Innovation is driven by a combination of factors, including economics, the need to speed up projects, the fact that the components are in many cases getting ever larger and safety considerations,” he stated.

In some cases, continued Hoefmans, the demand for innovation came from clients which wanted their logistics provider to work with them to develop the best solution for a particular project or type of project. “If a project requires a special piece of equipment to produce the best solution, then we will look to develop that for the client.”

In other instances, though, he added, ALE used innovation to create its own market. “We develop an idea and design a new system which puts us ahead of the market and makes it possible for us to offer clients solutions which they might not previously have thought of.”

Further confirmation of the requirement for innovation in project logistics was provided by Richard van Looij, commercial manager for engineered heavy logistics service provider Mammoet Europe. “We have a solutions department, with people who are constantly thinking outside the box to look at new innovations beyond our existing normal daily activities,” he commented. “We are always looking for universal solutions, so the costs can be reduced to a minimal versus one-off solutions.”

One of several specific examples of project cargo transport innovation launched this year saw US-based BNSF Logistics recently introduce new universal fixtures, operated under the service name Blade Runner, for multimodal wind turbine blade movements.

BNSF Logistics explained that with the ratio of logistics costs for wind energy projects running at nearly twice those for other industries, it had teamed up with Energo, an engineering and design company with a long history in the wind sector, to develop transport fixtures which would “greatly increase efficiency and drive down logistics costs in moving wind components”.

“Using the same technology for ocean, rail, truck and storage will allow blades to move without the need for attached fixtures, which have historically been both expensive and difficult to manage,” it claimed.

By Phil Hastings

Europe Correspondent | London