By Keith Norbury
Inbound breakbulk steel volumes to B.C. grew last year as a percentage of the total inbound steel market, said Bill Wehnert, Vice-President of Sales and Marketing at Fraser Surrey Docks, which is celebrating its 50th anniversary in 2012.
He predicted those volumes will increase again this year, although for competitive reasons he declined to offer precise figures. “Now these aren’t huge growth numbers and still, it’s important to note, below historical (Pacific) Gateway volumes in breakbulk,” Mr. Wehnert said.
A good portion of steel – 20 to 30 per cent – is now imported in containers, whereas 7 or 8 years ago it was only 7 or 8 per cent, he said. However, the rate of containerization plateaued a couple of years ago, he added.
It’s a little more complicated than that, however. Small diameter drilling pipe, for example, now tends to go into containers, he noted. However, efforts to containerize steel coil has proven problematic because curling and lashing of the coils can affect the steel’s integrity.
“Inbound steel in Western Canada predominantly comes from the Pacific Rim countries as well as certain parts of Europe for specialized steel,” Mr. Wehnert said. “And the inbound steel is really for the construction industry in Western Canada and the oil and gas and mining industries in the West part of Canada.” By West, Mr. Wehnert means from Manitoba to the Pacific Coast.
Tubular steel is high on that list. However, steel pipe can come in many forms, from large diameter for moving oil and gas, to smaller diameter for removing tailings from a mine, he said. Other pipe is used in construction, such as bridge work, as are concrete pilings.
“Last year, volumes have started to grow. It’s mainly because the activity in Western Canada has picked up slightly,” Mr. Wehnert said.
Stronger U.S. steel bolsters offshore imports
An important factor is that as the U.S. economy has strengthened, it is exporting less steel because it is consuming more domestically.
“When times are down in the U.S., they tend to flood the Canadian market with some of their steel and that creates a challenge for offshore imports, whereas in good times U.S. export prices strengthen, which provides greater competitive opportunity for imported products,” Mr. Wehnert said.
Frank Vannelli, Senior Vice-President, Commercial and Business Development at Montreal-based Logistec Stevedoring Inc., said prices have become more competitive between European and U.S. steel, which his company handles at a small port in Connecticut. Previously, a huge consolidation in U.S. steel had led to so much local manufacturing that European steel could not compete on price.
“We’ve seen an uptick on our steel imports from Europe and also from Brazil,” Mr. Vannelli said. “So that’s a nice development.”
Seaway breakbulk cast largely in iron
Iron and steel made up the majority of the breakbulk carried on the St. Lawrence Seaway last year, said Bruce Hodgson, Director of Market Development with the St. Lawrence Seaway Management Corporation.
General cargo volumes, which included breakbulk and project cargo, weighed in at 1.49 million tonnes in 2011 on the Montreal/Lake Ontario and the Welland Canal part of the system. Of that, steel accounted for 1.3 million tonnes. That was only a fraction of the 37.5 million of total cargo for the Seaway in 2011.
Figures were not available for 2011 for the Great Lakes and Seaway as a whole. However, 164 million tonnes of total cargo were moved on the system in 2010, according to an October 2011 economic impact study. Since most of that moved between ports in the system itself, the volume of cargo handled was nearly double that, at 322 million tonnes.
“It is estimated that general cargo, such as steel, wind energy equipment and project cargo (such as oversized boilers, locomotives, machinery and equipment, etc.) account for about 17 per cent of all cargo moving on the Great Lakes-Seaway system on foreign-flag ships,” the study reported. “In contrast, general cargo accounts for about 1 per cent of the cargo moving on Canadian- and U.S.-flag vessels.”
The St. Lawrence Seaway Management Corporation is forecasting a 3 per cent increase in cargo volumes, to 38.5 million tonnes in 2012. For general cargo, the forecast increase is just over 10 per cent.
“Percentage-wise it’s still a good increase, but I think really the message is that we’re seeing things remaining relatively buoyant,” Mr. Hodgson said.
Last year, the Seaway was open for a record 284 days, although that beat the previous record – set in 2006, 2007 and 2008 – by just one day. Still, the outlook is for the shipping season to grow longer as the climate warms.
Aside from a change in the weather, two factors could dampen that outlook. “One is that the U.S. economy appears to be recovering, albeit slowly,” Mr. Hodgson said. “But the other big factor we’re watching very closely is the European situation from a financial standpoint because that’s our largest market, not only from a project cargo standpoint but from a bulk standpoint as well.”
Breakbulk not Montreal’s bread and butter
At Port of Montreal, breakbulk and project cargo, which included RoRo (roll on/roll off), totalled 130,000 tonnes in 2011, said Communications Manager Yves Gilson.
Of that, 81,000 tonnes was RoRo, and 27,000 tonnes was steel.
“It’s not a really big deal here at Port of Montreal,” Mr. Gilson said of breakbulk, which accounted for about half of 1 per cent of the port’s total 2011 volume of 28.5 million tonnes of cargo. “That’s not our bread and butter, if I may say so,” he added.
The big categories are containers and liquid bulk, such as petroleum. Liquid-bulk volumes increased 30 per cent in 2011 over 2010.
Halifax promotes its breakbulk capacities
Further East, at Port of Halifax, Michele Peveril, Senior Manager of Strategic Relations, said that despite increasing volatility on many cargo fronts, trends for breakbulk are promising.
One reason is that the Port and its private operators have been “really pushing the breakbulk cargo-handling capabilities of Halifax,” she said. That push has also had an economic impact on the city because of the many jobs created by the labour-intensive nature of breakbulk work.
Halifax is also in the midst of a $73-million upgrade of its Richmond Terminals, slated for completion in 2013. The Port Authority and the federal government are sharing the cost of the project, which involves strengthening older piers to enable them to handle heavier cargo, as well as creating an additional pier and upgrading warehouse space. Breakbulk volumes at Halifax rose to 47,444 tonnes in the first quarter of 2012 compared with 20,392 tonnes in the same period last year. That represented a 132.7 per cent increase. While most of the breakbulk is imports, the biggest shift was in breakbulk exports, which increased nearly threefold in the first quarter of 2012 compared with the first quarter of 2010.
Examples of export breakbulk from Halifax include utility poles bound for Europe, auto parts, and other vehicle components. Imports include bagged nickel sulphide from Cuba, steel coils, and rubber.
With the work underway at Richmond Terminals, the port’s Ocean Terminals “was essentially chock-a-block” with cargo at times during the first quarter of 2012, Ms. Peveril said.
Consistency is a good thing
For Atlantic Container Lines (ACL), which calls at Halifax, breakbulk volumes increased 15 per cent this year in comparison with recent years, said Robert J. Willman, ACL’s General Manager of RoRo special projects. However, the volumes have not yet returned to the levels of 2007 and 2008, “which were historic peaks,” he said in an email message.
“We do not publish specific figures but can say the Canadian volume is approximately 8 to 9 per cent of our total lift,” he said. “While the U.S.A. market has grown this year, the Halifax portion has grown stable.”
ACL has five ships in its fleet and markets its RoRo/breakbulk space exclusively with its weekly “A Service” that calls at Baltimore, Norfolk, New York, Halifax, Liverpool, Antwerp, Hamburg, and Gothenburg. “The company also offers through service for non-containerizeable cargo to the Mediterranean, Middle East, South Africa, Australia, Far East, Russia and just about any place in the world,” Mr. Willman added.
For Canada, Westbound imports dominate ACL’s breakbulk trade. ACL anticipates growth of about 8 to 10 per cent for this year and the next five years. “Canada has remained a steady and vital component of our RoRo lift,” Mr. Willman said. “It did not suffer the precipitous drop in volume that our U.S.A. market experienced starting in late 2008.”
For that reason, Canada is not now experiencing a big volume increase. But that’s fine by Mr. Willman: “The consistency of the Halifax market is a welcome attribute.”
Breakbulk service shifting
Mr. Vannelli of Logistec noted that outside of wood pulp and paper, there have been no dramatic increases in the forest products industry for general cargo.
“However, we have a very good operation stateside where we’re receiving paper and handling wood pulp from Brazil,” he said. “On the Canada markets, obviously, there were quite a few mill closures over the years. So our volumes there are still dramatically down.”
The company, which was founded in the late 1950s, originally focused on loose breakbulk cargo. Since becoming publicly traded in 1969, Logistec has made a conscious decision to diversify its portfolio so that breakbulk now accounts about for 40 per cent of its business with containers and bulk splitting the remainder. At the same time, the shift to containerization also had an impact on the breakbulk business. “You need more gangs to be working. You need more equipment,” said Mr. Vannelli, whose company has 32 locations in North America and 400 employees, and as many as 1,000 other workers the company can call upon as needed.
Another development is that many carriers have also pulled back on regular liner services. “Quite a few carriers, obviously, with the marketplace shrinking, could not continue to sustain those types of operations,” Mr. Vannelli said. A shift to spot service, where a client will charter a vessel, has been ongoing for at least a decade, he added.
Squamish breakbulk mostly pulp
Back in B.C., Ron Anderson, President and CEO of Squamish Terminals Ltd., 32 nautical miles from Vancouver at the North end of Howe Sound, said that 2011 was a strong year. However, he anticipates a bit of a downturn in 2012.
About 90 to 95 per cent of the cargo the terminal handles is pulp, although it does have capacity for steel and handles occasional volumes of that as well.
“The beginning part of the year there were a few market changes going on and it seemed to slow down in China just a little bit. So it doesn’t take too much of a change or a tweak to bring it down for our side,” Mr. Anderson said.
Most pulp shipments are to Pacific basin countries with China now a major market. However, the terminal, which is owned by the Norwegian shipping line Grieg Star Shipping AS, also sails pulp to Europe once a month.
“Lynnterm (in North Vancouver) and ourselves are probably the two major breakbulk terminals and, between the two of us, we handle by far the largest volume of pulp,” Mr. Anderson said. He said Squamish Terminals, which has been in operation since 1972, now handles about 800,000 to a million tonnes of pulp annually.
Dave Lucas, Terminal Manager at Lynnterm, which is run by Western Stevedoring, could not be reached for comment. However, Lynnterm’s website says it handles 1.5 million tonnes of pulp a year. Mr. Lucas told Canadian Sailings last fall that the terminal was projected to handle 400,000 to 500,000 tonnes of steel pipe in 2011.
Terminal operator steels for pipeline boom
Squamish Terminals — which, unlike Lynnterm and Fraser Surrey, is outside of Port Metro Vancouver — has handled significant volumes of steel in the past, but not in recent years. Mr. Anderson expects that will change, though, should the controversial Enbridge pipeline in Northern B.C. go ahead.
“They’ll need terminals like ours to handle portions of that pipe, if not all of it,” Mr. Anderson said. “Because I don’t think there’s any one terminal that can handle everything on the import side.”
As he spoke, there were about 10,000 tonnes of steel pipe on his dock in late April. Were the pipeline project to proceed, such a sight would become commonplace.
“You’d have the 10,000 tonnes flowing through on a continuous basis,” Mr. Anderson said. “You’d get the shipment in, move it out as quickly as possible and another vessel would arrive. You’d just keep that cycle going until the entire project was moved through.”