By Keith Norbury
As containerization is responsible for an increasing share of traditional breakbulk commodities like lumber, Canada’s transportation supply chains are turning to project cargoes such as windmills and oilfield equipment to fill those holds and trucks.
Depending on which industry insider one asks, 2013 is shaping up to be either a great year for project cargoes or a bust. Nevertheless, the consensus outlook remains, as always, one of optimism for the future of moving oversized loads into and out of this country.
What follows are examples of recent developments in the project cargo and breakbulk realms from across Canada, as well as the thoughts of industry insiders on where those sectors are heading.
Expanded Halifax terminal ready for project action
Starting on the Atlantic coast, at Port of Halifax, work is proceeding on the $73 million expansion of its Richmond Terminals, said Patrick Bohan, Manager of Business Development, Port of Halifax. “We expect to have it all complete by early 2014,” Mr. Bohan said. By mid August, the new dock was largely complete. Work remaining included finishing of the adjacent laydown area and revamping of a shed that was expected to be done by November. “It will give us a much needed facility because that business has been very healthy and our Ocean Terminals facility is handling all of it right now. And that gets a little crowded at times,” Mr. Bohan said.
The new Richmond facility should be ready in time to handle project cargoes for Irving Shipbuilding Inc.’s nearby Halifax Shipyard. In October 2011, Irving won $25 billion in contracts from the $35 billion National Shipbuilding Procurement Strategy. In August, Irving announced that it is investing about $300 million in its Halifax Shipyard Modernization Program, with $127.7 million in contracts already awarded. Other sources of new project cargo business for Port of Halifax include Shell’s and BP’s oil offshore explorations projects in the works, the Muskrat Falls hydroelectric power project in Labrador, and the Maritime Link undersea power line project. “We think there are bright days ahead in that sector because there’s $115 billion in megaprojects on the books,” Mr. Bohan said.
At present, Halifax is handling healthy volumes of breakbulk steel in the form of plate, rail and coils, much of it destined for manufacturing plants in Ontario, Mr. Bohan said.
Halifax has also handled “super sacks,” or totes, of minerals from South Africa – Mr. Bohan declined to offer specifics – as well as cranes and heavy excavation equipment for the Alberta oil patch.
Another development at Halifax is that it is now a port of call for Bahri, the National Shipping Company of Saudi Arabia. Its fleet specializes in carrying roll-on roll-off cargo and project cargo. Most of what Bahri handles from Halifax is outbound project cargo, such as oilfield equipment, Mr. Bohan said. “They put them on those roll trailers and tow them on and off the vessel,” he said. “Over the course of the year, you get some really fascinating things that cross the docks here.”
“Inbound and outbound project cargoes generally balance each other out at Halifax. Some years the balance tilts toward exports; other years it tilts toward imports. That’s the case in 2013,” Bohan said. “There are many ongoing resource projects and so on in Canada, and equipment needs to be brought in from all over the world.”
Dalhousie expects big project news soon
In New Brunswick, Port of Dalhousie isn’t currently handling a lot of project cargoes, said Brian Hyslop, the Port’s Director of Business Development. But he expects that to change in the not so distant future. “It’s looking very positive for a couple of big projects to come into the Port,” Mr. Hyslop said in mid August. “But we’re not quite there yet.”
He expected one project to be announced in early September and the other to follow about two months later. “It’ll be project cargoes,” he said without revealing any specifics. “It’ll generate an awful lot of business on the rail coming into town, ships bringing product in, as well as a lot of truck movement as well, and barge shipments. And it’ll be breakbulk. It’ll be containers. It’s going to be a mix.”
Fednav orders new “box” hold vessels
Montreal-based Fednav International Ltd. has ordered new vessels, many of them designed to better handle breakbulk and project cargoes, said company President and CEO Mark Pathy. “Out of the twelve we have on order, six will be ‘box’ hold, not open hatch but wide-hatch vessels, which of course are ideally suited for breakbulk and project cargo,” Mr. Pathy said. Those cargoes would come “almost exclusively from Europe,” he added.
As the company announced in May, those six box-hold ships are 34,000 tonne Japanese-built carriers ordered from Sumitomo Corporation and Oshima Shipyard. Mr. Pathy said the company won’t take delivery of the ships until 2016. Predominantly, these Great Lakes suitable vessels will replace existing ships in the Fednav fleet. The new vessels, once they arrive, will bring to 27 the new ships Fednav has acquired since Jan. 1, 2012. Of these, 14 are lakers.
As its name implies, a box hold is rectangular as opposed to following the contours of the ship. That makes it ideal for stowing various types of steel, such as coils, pipes, beams, and rods, said Mr. Pathy, who pointed out that the company already has box-hold vessels in its fleet. “The stowage therefore is easier and you need less dunnage,” Mr. Pathy said.
Many of these cargoes are destined for U.S. manufacturing centres like Cleveland, Detroit and Milwaukee, Mr. Pathy said. “In general, there has been a move in manufacturing down to the southern states. But there still remains a strong and actually growing manufacturing base in the midwest as well,” Mr. Pathy said. He said that purchasing the new box-hold vessels is evidence that Fednav remains committed to the breakbulk and project cargo business. That business has shown signs of improving since the 2009 economic downturn, although not back to pre-recession levels. Mr. Pathy admitted that he didn’t know to what extent new oil and mining projects in Canada and the U.S. have affected project cargo volumes. But, regarding steel, which is Fednav’s primary breakbulk commodity, Mr. Pathy said, “We’re starting to see signs of recovery as the economy in the U.S. is slowly improving.” In fact, he expects to see a return to pre-recession levels within the next few years. “We believe in the future of this trade and, despite the economic downturn, believe that it continues to have a future. We remain committed to it,” Mr. Pathy said.
Very little breakbulk or project cargo is exported from eastern Canada, Mr. Pathy pointed out. Most carriers take grain or mining aggregates on their outbound journeys.
Business still slow, says Windsor trucker
Project cargo business is still sluggish in the wake of the 2008 recession, said Marc Girard, Transport and Logistics Manager for KMJ Machinery Transportation of Windsor, Ont. “We’re not recovering yet,” said Mr. Girard, whose company of about 50 employees handles project cargo pieces of up to 85,000 pounds. “The last year and a half has been the weirdest it has been in the industry,” he said. January to March, usually a slow period, was busy, he said. Then business slowed down in April and May. July, meanwhile, is usually when plants shut down for maintenance and retooling, except that didn’t happen this year, he said. “There was no shutdown period. Nobody did anything. So there was no money being spent,” he said.
That meant another slow period for his business, which moves presses, moulds, and automotive production lines in need of retooling or repair. Meanwhile, he is seeing more and more Ontario factories being torn apart and shipped into the U.S. and Mexico.
“We have a plant move that’s coming up soon, that’s coming out of Ontario. It’s a complete plant that was here 85 years and they’re moving it to the U.S.,” Mr. Girard said. “It’s a plastic injection plant. I can’t give you more detail than that.”
He blames such moves on the stronger Canadian dollar making Canadian industries less able to compete with their counterparts across the border. “Everybody thinks they’re trying to turn us into a service type of country, but you can’t bring everything from China,” said Mr. Girard, who has been in the trucking business for 30 years. The solution, he said, is for Canada to be more protectionist, especially when it comes to the country’s natural resources. “To me, raw materials aren’t a commodity,” Mr. Girard said. “They’re our resources; they’re not something that we produce and make.”
Factory moving from Mexico to Ontario
The movement of plants isn’t entirely one way. Perry Lo, General Manager of Caanan Transport Group Inc., said the company received a request in August to relocate an entire factory from Mexico to Toronto. Mr. Lo could not provide specifics about the factory because the deal was still being negotiated. However, he did say it involves the movement of machinery, furniture, and generators from an office and laboratory – either by rail or truck. “Obviously I don’t know the reason why they’re doing it. I just know they’re doing it,” Mr. Lo said.
Caanan, which was founded in Vancouver in 1981 and is now based in Toronto, also received a request a few months ago to move equipment manufactured in Nova Scotia to the oil sands. “We were going to bring the items by barge through the Great Lakes into Thunder Bay and then Thunder Bay over to Fort Mac,” Mr. Lo said. At present, breakbulk and project cargo accounts for about 10 to 20 per cent of Caanan’s business. But Mr. Lo is hoping to increase that share to 20 or 30 per cent. “We are assigning more people onto project cargo and breakbulk cargo because we are trying to grow that business,” Mr. Lo said. “It is a hugely profitable business because the margins that you can get are much higher than you can get on normal containerized shipments.”
He is encouraged that business overall has almost rebounded to pre-recession levels. “We actually see it continuing to grow incrementally,” he said. “It won’t grow that fast, obviously, because Canada’s economy, let’s be honest, [is] not a fast growing economy. We’re really heavily reliant on trade. And luckily for us we have a lot of things to trade.”
Thunder Bay finds 2012 a tough act to follow
Port of Thunder Bay had a great year in 2012 for project cargo, handling 135,000 freight tonnes at its Kiefer terminal. “That set a record,” said Tim Heney, the Port’s CEO. “We’ve been going pretty strong on that for the last five or six years,” Mr. Heney said. However, he expected those volumes to drop this year because of fewer shipments of wind turbines than last year. “We’ve got some projects coming in the fall but they’re not going to be like a shipload of wind towers would be in terms of volume,” Mr. Heney said.
Last fall the Port took delivery of, and installed a Liebherr LMH 320 mobile harbour crane which has provided Thunder Bay with capabilities for handling a wide array of project cargoes. “It’s a versatile machine,” Mr. Heney said. “It’s 104 metric tonne (capacity) at 18 metres, so it’s got a big capability. It’s efficient. It can do clamming. It can do kraft pulp. It can do wind towers.”
Transporting the crane to Thunder Bay was a project cargo move itself. It had to travel from Stockton, Calif., where it was in service as a container crane, through the Panama Canal en route to the Great Lakes. “They were going to try trucking it to Thunder Bay but some of the pieces were just too dimensional for that,” Mr. Heney said. In the end, a Detroit-bound ship from Thailand picked up the crane in Stockton and brought it to its new home.
Mr. Heney is also hoping that the crane movement foreshadows Thunder Bay receiving more project cargo from the Pacific, such as oilfield equipment from Asia destined for Alberta. He noted that, in response to protests and blockades on U.S. Highway 12, a preferred route for oversized oilfield cargo, oil companies are now moving toward smaller modules. “They’re now looking at rail-sized modules that you could actually rail out of Thunder Bay and some that could be trucked as well,” Mr. Heney said. “It does bring our corridor back into the picture.”
Thunder Bay has already handled “remarkably heavy pieces,” shipped from Japan and Korea, Mr. Heney said. About the largest were 500-tonne pressure vessels destined for the oil sands. Proposed potash developments in Saskatchewan are another potential source of business. “We have a lot of staging area that a lot of ports don’t have,” Mr. Heney said. “That becomes attractive to the oil sands. A lot of coastal ports will charge quite heavily for laydown area because they want you off the property.” Thunder Bay has been building more laydown area, such as putting down engineered gravel pads, to accommodate project cargo, he said. The terminal has 80 acres in total.
A proposed pipeline to the east coast, if it’s ever built, would also provide breakbulk opportunties for Thunder Bay, Mr. Heney said. “When you get into projects of that size, pipe will come from everywhere; there isn’t enough production capacity in Canada to supply the needs.”
Sluggish mining sector weighs down prospects
Jan Beringer, President and CEO of Rohde & Liesenfeld Canada, doubts that Thunder Bay will be able to compete with west coast ports or Houston for that Alberta business.
“The problem with Thunder Bay is the transit time from Asia is just too long,” Mr. Beringer said. “And the problem is the vessels again have no out-bound cargo, they would have to ballast their way out from there.” (Mr. Heney, however, said ships leaving Thunder Bay often carry bulk commodities like potash and wheat, which are the port’s mainstay.)
Overall, a sluggish mining sector has been bad news for the project cargo business, said Mr. Beringer, who is based in Calgary. His company had planned to be involved in a major development Teck Corp. was planning near Tumbler Ridge. But that project has been delayed. “I don’t see anything changing in the next 12 months,” Mr. Beringer said. “So I think for project freight forwarding there have to be other areas that we need to focus on.” In B.C. that would include turbines, generators and other equipment for small run-of-river power plants now in the works. However, in the longer term, he and others are bullish on Prince Rupert as a project cargo hub to serve liquified natural gas pipelines in northern B.C. (See related article.)
Project business up at Vancouver as steel slumps
At Port Metro Vancouver, Doug Mills, the Port’s Senior Account Representative for bulk and breakbulk cargo, said project cargo volumes have been doubling annually for the last three years. “And we’re probably early into what will be potentially significant project development in many of the energy sectors,” Mr. Mills said. Among those are Kinder Morgan’s proposal to twin its pipeline to Vancouver, and wind and hydro power projects in eastern B.C.
At PMV’s two breakbulk terminals, there have been conflicting appraisals of the state of the market for breakbulk steel. At Fraser Surrey Docks, Vice-President of Marketing and Sales, Bill Wehnert, said overall steel volumes at the port are down compared with last year. However, Keith Moger, the outgoing Vice-President of Operations for Western Stevedoring, which operates the Lynnterm facility in North Vancouver, stated that steel volumes “have been sustaining fairly well over the last six months.”
Another industry source, who asked not to be identified, said that steel bound for the oil fields has slowed down. “A lot of steel was brought in late last year to avoid paying anticipated newly imposed duties,” he said. Bridge construction projects on the lower mainland are now complete, he said. However, pilings are still being imported for such projects in the region as work on the Trans-Canada Highway.
For January to June of this year, the combined imports of five main categories of steel pipe into B.C. were down considerably from that same period in 2012, according to figures from Industry Canada’s Trade Data Online. For the first six months of 2013, the value of steel pipe imports dropped 10 per cent to $389 million from $432 million. That was despite imports being higher in January and April of this year than in those months in 2012. In July, B.C. steel pipe imports surged to $123 million compared with $52 million in July 2011.That was in anticipation of the Canadian Border Services Agency slapping provisional duties of 90 to 110 per cent on certain small diameters of carbon and alloy steel pipe, commonly called piling pipe, from China. At the time, Mr. Wehnert said the flood of pipe was “really starting to stretch our abilities to bring more cargo in and move it.” Figures for this July weren’t available at press time.
“What’s happened is everybody’s expecting the oil sands and the gas industry to perk up a bit sooner than it has,” Mr. Wehnert said. “There’s a lot of pending projects coming down the line now. We expected those to be set and on their way by this time of year. Everything’s off by about three or four months right now.”
In August just before his retirement, Mr. Moger said that Western Stevedoring had recently secured a new contract of sappy, dissolving pulp, which will boost Lynnterm’s throughputs over the next two years. Breakbulk lumber, however, is a declining market.
“More than 90 per cent of the packaged lumber leaving the coast of B.C. now is containerized,” Mr. Moger said. “So the volumes we get tend to be niche volumes and they’re incremental volumes. We don’t see that recovering.” Nevertheless, Mr. Moger, Mr. Wehnert, and others remain bullish about the prospects for project cargo in Vancouver. “The market is not as strong as it has been in any sector but we’re positive,” Mr. Moger said. “We still manage to keep our heads above water. And we think there are some exciting things out there for the future.”
Nanaimo waiting for infrastructure boost
Little in the way of project cargo has gone through the port of Nanaimo on Vancouver Island, said Doug Peterson, Manager of Marketing and Sales for Nanaimo Port Authority. However, he added that a lot of infrastructure projects are in the hopper on Vancouver Island that could change that. For example, B.C. Hydro plans a $1 billion renovation of its John Hart Elk Falls power plant, he said. A decision on that is expected as early as the end of September. “We don’t know where this is going to go but that’s certainly a project that we’re watching,” Mr. Peterson said.
Without offering specifics, Peterson said Nanimo has quoted on some business to move heavy lift items this fall. While he is confident the Port will win that business, it’s often the case that decisions on those contracts are made at the last minute, he said. “There have been a few big projects that we’ve been asked if we could not only handle the discharge from ships but also look at storing the pieces here for distribution at a later date,” Mr. Peterson said. “This isn’t just for local. This could be for projects up the coast.”
Most of those heavy lifts now take place at Nanaimo’s Duke Point deep-sea terminal. However, Peterson noted that a $9 million renovation announced this summer of Nanaimo’s downtown Assembly Wharf would also enable heavy lifts from that location, which also has a “fairly significant paved storage area.”
Breakbulk lumber shipments from Nanaimo are softer this year than in recent years, Mr. Peterson said. From January to June 2013, breakbulk lumber exports from Nanaimo totalled 64,000 tonnes. That was barely half of the 104,000 tonnes shipped in the same period in 2012.
Nanaimo previously reported on its lumber volumes in board feet. But the port decided to change to metric measures in order make it easier to compare with volumes of other commodities, Mr. Peterson said. (Roughly speaking, 1,000 board feet equals about 1.4 tonnes, he said.)
Most of that lumber is bound for China. “Western Forest Products seems to feel that the market could be changing a little bit over there. In the last quarter of this year we may see an uptick in the market again. But I don’t think our lumber volumes are going to be up to last year’s volumes by any stretch. But on the other hand, I guess what we’re seeing is that container volumes are increasing,” Mr. Peterson said.
Breakbulk logs shipments meanwhile have been holding their own in Nanaimo. Those exports increased during the first months of 2013 to 294,000 tonnes, compared with 282,000 in the first half of 2012.
At Port Alberni, on the west coast of the island, international tonnage of logs totalled 746,993 tonnes in 2012. That compared with 864,936 tonnes in 2011, a 13.6 per cent decrease. However the 2012 figure was still much higher than the 2010 figure 456,404 tonnes. Going back further, those figure were 307,353 in 2009, 264,749 in 2008, and 165,483 in 2007. Port Alberni log shipments, at 450,954 tonnes, also increased during the first six months of 2013 compared with the first six months of 2012 when 438,323 tonnes of logs were shipped.
This year, Nanaimo also began handling breakbulk shipments of scrap steel, which from January to June 132,000 tonnes. “We’ve never loaded scrap steel before. This is something new to us,” Mr. Peterson said. The scrap, handled by Schnitzer Steel, comes from all over the Island and the mainland. It includes everything from rail cars to automobiles and steel from demolished buildings. Mr. Peterson suspects it ends up in Asia. All in all, Mr. Peterson is optimistic about the outlook for breakbulk and project cargo. “From our experience last year with wind turbines, we’ve got certainly the skilled labour with the experience to handle project cargoes,” he said.