By Keith Norbury
Breakbulk volumes on Canada’s part of the St. Lawrence slumped in 2013, although some industry insiders suggested better times were ahead. “Last year was certainly not a good year for us,” said Bruce Hodgson, Director of Market Development for the St. Lawrence Seaway Management Corporation. “Our general cargo volumes were down.” Volumes dropped by 400,000 tonnes to 1.6 million tonnes, compared with 2 million tonnes in 2012.
Mr. Hodgson noted that those were aggregate numbers for the Canadian part of the Seaway and that certain carriers, such as McKeil Marine Limited, had a good year despite the overall downturn. Also, much of McKeil’s business would have gone through Toledo, on the U.S. side, and not captured in the Canadian figures that Mr. Hodgson referenced.
That isn’t to say the U.S. economy was any better than Canada’s. Business on both sides of the border, such as in the automotive trade, didn’t rebound in 2013 the way analysts had anticipated. “When we started off the year I think everybody was forecasting that it would be a relatively good year but that was not the case,” Mr. Hodgson said.
Instead, steel imports were down because of the flat automotive trade. Even project cargo into the Alberta oil patch was flat in 2013 compared with 2012, he said. Wind also came out of the sails of the wind turbine market, he said, citing a delay in the U.S. in implementing a tax credit for wind power developers. “As a consequence, there were no major wind projects within the Great Lakes basin last year,” Mr. Hodgson said. Mr. Hodgson expects business to rebound this year, however. Early indications are that project cargo business related to the Alberta oil sands is on the rebound. And the steel business is also expected to be strong. “International carriers are telling us it should be a good year this year. They’re seeing a real build up through 2015,” Mr. Hodgson said. “What they’re telling us is 2014 should be definitely an improvement over last and 2015 and should be even better.”
Barge carrier bucks the trend
Project cargo business has already been chugging along for Hamilton-based McKeil Marine, which has a fleet of about 30 barges and 25 tugboats and employs about 200 people. “It looks like there will be quite a bit of activity on the Great Lakes this coming year,” said company President Steve Fletcher. “Certainly in terms of where we are versus where we were during the recession, I think things are fairly good right now. There is a lot of activity. Lots of capital is being spent on projects, which translates into more project cargoes to be moved.”
McKeil mostly transports cargo between Canadian ports. However, it also serves U.S. ports. For example, McKeil regularly moves steel coils between Sault Ste. Marie and Chicago or Detroit. McKeil also has a lot of work these days in Newfoundland, while about five to ten per cent of its business is in the Arctic. Among the project cargoes McKeil has been moving on the Great Lakes have been gigantic transformers that are too big to move by rail or road. In some cases, the shippers cannot even obtain permits to move such pieces by land. In other instances, the ultimate destination might be inland 100 kilometres. But McKeil can haul a load much of the way by barge to reduce “the amount of expensive trucking,” Mr. Fletcher said. Meanwhile, McKeil is “extraordinarily active in Newfoundland,” Mr. Fletcher said. That includes providing brand new barges for the Hebron oil project. Among the jobs those barges are assisting with is construction of an oil rig in Bull Arm, a sheltered harbour on the isthmus of the Avalon Peninsula, about 150 kilometres west of St. John’s. “It’s almost like a flotilla of barges (used) as a big work platform,” Mr. Fletcher said. Some barges in the flotilla support cement plants and power generators, while other barges shuttle materials back and forth to what is essentially a floating construction site.
Cranes perform plenty of heavy lifting
Also in Newfoundland, Port of St. John’s terminal operator A. Harvey & Company recently purchased a second LHM 180 Liebherr mobile harbour crane, said Steven Sewerniuk, Liebherr’s Canadian sales engineer for port equipment.
“Its operation allows its existing LHM 150 and the newer LHM 180 to really take advantage of the LHM’s versatility by switching efficiently in a matter of minutes between handling salt, containers for the offshore supply ships, project cargo, and much more,” Mr. Sewerniuk said by email.
Machines built by German equipment giant Liebherr perform much of the heavy lifting of breakbulk and project cargo at Canadian ports and elsewhere in the world. These machines include mobile harbour cranes, ship-to-shore container cranes, rail-mounted and rubber-tired gantry cranes, material handlers, reach stackers, and mobile and crawler cranes. The Liebherr LRS 645 Reachstacker, which is used traditionally for handling containers, can also handle project cargo of all kinds. At the A. Harvey & Company terminal in Argentia, Nfld., for example, the LRS 645 is carrying steel rebar long distances.
Another common application for Liebherr cranes is lifting wind turbines, which Mr. Sewerniuk predicts “will continue to represent a large part of the project cargo that comes into Canada.” He also expects those components to become increasingly larger, which will require greater lifting capacity. “An interesting market which has been developing in Canada over the years and will continue to develop are the large parts and components that are required to come in for many of the big construction projects destined for Alberta and British Colombia,” Mr. Sewerniuk said. “On the other side of the country we’re looking at large projects such as the creation of the gravity-based structure for Hebron’s offshore oil platform as well as the Muskrat Falls energy project.”
Canadian rose loses a bit of its bloom
Another major manufacturer of heavy equipment, Terex Corporation, also supplies material handling machinery to Canadian ports. That includes reach stackers and front-lift trucks at Vancouver, said Steve Filipov, President of Terex Material Handling & Port Solutions, at the ConExpo-Con/Agg heavy equipment trade show in Las Vegas in March. Terex Corporation CEO Ron DeFeo, who served as an executive with Speedy Muffler in Toronto in the 1980s, said in an interview at ConExpo that the Canadian market remains strong, although a little weaker than it was last year. “It is resource-based,” Mr. DeFeo said. “So with commodities down a little bit, a little bit of the bloom has come off the rose. But I think Canada remains pretty positive.”
The biggest opportunities in Canada for the company are in the oil sands, said Terex Cranes President Tim Ford. Cranes can also do the heavy lifting for alternative energy projects such as wind farms. For example, the signature machine on display at the Terex ConExpo stand — the Superlift 3800 — is targeted at the wind energy space, Ford said.
The Canadian economy has slowed down again because of low commodity prices, and several projects have been pushed back or postponed, Mr. Sewerniuk noted. Nevertheless, Liebherr has delivered many machines – including mobile and crawler cranes and port equipment – through Canada in recent years. “The Canadian market looks extremely promising over the next couple of years with many projects approved or soon to be approved all over the country,” he said.
Stronger automotive market expected
Mr. Hodgson said reduced steel imports accounted for the biggest drop in general cargo business last year. An expected rebound in the U.S. auto industry didn’t materialize, although the industry is showing signs of improvement so far this year, Mr. Hodgson noted. The Wall Street Journal recently reported on a 5.7 per cent increase in March sales of light vehicles in the U.S., “putting the industry back on track for growth this year after two months of winter doldrums.”
Steel imports to the Seaway from Europe are looking very positive, Mr. Hodgson said. However, when he visited Europe in March, he encountered little optimism regarding the European economies themselves. “No matter what country you go to, they’re being very careful in terms of their spending and in terms of their forecasts for this upcoming year,” Mr. Hodgson said. “However, there continues to be a lot of optimism with regards to North America when you talk to the Europeans.”
Another positive light is the Canadian European Trade Agreement reached last year, he said. However, it is too early to tell what the benefits will be, he added.
Arctic opportunities explored
McKeil’s Mr. Fletcher said the steel market already looks “fairly decent” because of a stronger automotive market. He has also noticed that steel companies are looking for cost-effective means to move their raw materials and finished products. “They’re seeing what we’re doing successfully for other companies and I think it’s opening up more doors. They’re saying, ‘If you can move that kind of cargo for them, could you move this for us?’” Mr. Fletcher said.
Most of McKeil’s competition is with trucks and rail, and rarely with ships. That’s because of the sizes of the cargoes the barges handle. Larger loads of, say, 25,000 tonnes are more economical to move by ship. A barge, though, can be ideal for a load of 10,000 tonnes that would entail sharing space with other cargo on a ship. Barges can also more easily service a shallow-draught port or even bring freight to where there isn’t any port at all.
In December, McKeil announced it has formed a new enterprise with Avataa Explorations & Logistics Inc. — Avataa McKeil Marine Services — to serve the Nunavik region of northern Quebec. McKeil has historically had a presence in Nunavik, such as delivering project cargo to Deception Bay for Glencore Xstrata’s nearby nickel mine, Mr. Fletcher said. The long term outlook for shipping breakbulk and project cargo the Arctic “is very positive,” Mr. Fletcher said. Increasing mining activity in that part of the world is a major factor, he said.
He expects that climatic changes will also play a role by making it easier to develop mines in that region. “There’s going to be a growing interest in companies that want to start up there,” Mr. Fletcher said. A limitation has been the availability of capital for mining companies to expand anywhere, he noted. “But from what I gather in talking to some of the mining companies, some of the deposits up there are excellent,” Mr. Fletcher said. “So I think there’s going to be increasing opportunity for us.”
Toronto steel flows through Oshawa
Meanwhile, Port of Oshawa expects a lot of breakbulk steel to arrive this spring, said Frank Robertson, Manager of Oshawa Stevedoring Inc., a subsidiary of Quebec Stevedoring Company Ltd. But that steel has little or nothing to do with the automotive sector. “This is mostly construction steel, mainly rebar,” Mr. Robertson said. “We also have pipe and wire coil coming in. This steel is going to be used in construction around the Greater Toronto Area.” Last year, Oshawa handled almost 100,000 tonnes of rebar, which is about the 10-year average, but down from 2012, which was a record year because of a construction boom in Toronto. So far, 2014 is off to a good start, with four vessels arriving in April.
On the project cargo side, Oshawa has quoted on a few shipments but had received no firm commitments by early April. Last year Oshawa handled windmills for Siemens and a few 150-tonne presses shipped to Portugal from an auto plant that was undergoing a modernization. “They brought those presses from Germany in 1986, and they sent them back in 2013,” Mr. Robertson said.
He was also hoping the port would handle generating equipment for an upgrade to the nearby Darlington nuclear power plant, but the Ontario government abruptly cancelled that project in October 2013. He is optimistic that the port will receive some windmill generators from Europe this year.
Carrier notices improved breakbulk market
For Montreal-based carrier Fednav, the breakbulk and project cargo handled on its FALLine service accounts for 7.5 per cent of the 25 million tonnes annually that Fednav carries in all its services, said Suzanne Bleau-Myrand, the company’s Marketing Director. That works out to around 1.8 million tonnes of breakbulk and project cargo carried on FALLine vessels each year. She said the breakbulk business has picked up since the recession in 2008 when money was tight. “I think we have about 40 sailings a year, which is pretty decent. It went down to probably 22 sailings, which was a record low,” Ms. Bleau-Myrand said.
FALLine vessels carry project cargo up to about 300 tonnes, such as yachts, transformers, dryers, and “all sorts of equipment” from Europe, she said.
Big move wins kudos for trucking specialist
For the Precision Group, a highlight of 2013 was winning the Hauling Job of the Year from the Specialized Carriers & Rigging Association for moving a 21-foot high load from the port of Oshawa to Peterborough, Ont., in November 2012.
“It was second time in 65 years a Canadian company has won,” said Ed Bernard, Vice-President of Precision Project Cargo Division Inc. and Precision Specialized Division Inc., two of the parent company’s four divisions. It was Precision Specialized that won the award, for moving a 50-tonne vacuum pressure impregnation tank from the BBC Wisconsin docked at the port of Oshawa to General Electric in Peterborough, 180 kilometres away. “The biggest challenge was the unwieldy nature of this German-built piece of equipment,” says the narrator on a video posted on Precision’s website. The total length of the load including truck and trailer was 116 feet. Moving the 19-foot wide load required a special 11-axle transport trailer that was modified to extend its well space. It also had a hydraulic and air-ride capabilities to raise and lower the load en route.
Another recent Precison project involved moving 13 loads of radiant steam generation equipment from Cambridge Ont. to an oil sands site in Alberta. The equipment shoots steam into the ground in order to soften the sludge so it can be removed from the ground. “These things are big,” Mr. Bernard said. About three years ago, Precision moved condenser from Alberta to New York. And 16 months ago, it transported a 175,000-pound steel press die from Ontario to Ohio.
Precision is receiving a lot of requests of late to move power generation equipment from China to Alberta, including to the oil sands, what Mr. Bernard called “your meat and potatoes.” His company is also receiving requests to move equipment manufactured in Ontario to Alberta because high labour costs in the booming prairie province have sent fabrication costs “through the roof,” Mr. Bernard said. About 40 to 50 per cent of Precision’s business is breakbulk and project cargo, said Mr. Bernard, who defines breakbulk as cargo involving a port. The company, which employs 134 people, has 68 trucks and 172 trailers. Headquartered in Woodbridge, Ont., Precision also has offices in Laredo, Texas, and Fontana, Calif.
It’s still a “very challenging” market
An executive with a major Canadian transportation company, who asked not to be identified, said the breakbulk market remains “very challenging.” His company is quoting on more and more cargo, but often in competition with other companies vying for the same business. “So everyone’s trying to get a piece of the pie,” he said. “That keeps us quite busy from a marketing standpoint but in the end, you don’t generate more business from it.”
One bright spot for his company has been the wind energy sector, which he said has been the strongest since 2005. While he noted that the overall market for wind energy has diminished in recent years, his company is still picking up “significant volumes because of our positioning” and having its equipment close to where wind farms are being built. Looking ahead, however, he said wind energy faces “a lot of challenges,” including availability of subsidies to support its financial viability.
Saint John searching for breakbulk business
At Port of Saint John in New Brunswick, there is little to report on breakbulk and project cargo, said Andrew Dixon, senior Vice-President of Planning and Development. One recent example of project cargo was a turbine destined for New Brunswick Power’s Point Lepreau nuclear power generating station, about 50 kilometres southwest of Saint John. It was an over-dimensional piece that required road closures and a police escort. “In 2013 we didn’t have a major project cargo project where it would take up some acreage like we have some other years,” Mr. Dixon said. The port is, however, still storing cable reels in a shed. Those reels will eventually go to a tidal energy project on the Bay of Fundy. The port is also tracking the tidal power program for project opportunities, “but there is no activity so far this year,” Mr. Dixon said.
Saint John’s breakbulk shipments are much smaller than they were historically because of the shift to containerization. However, some breakbulk – in the form of wood pulp and corrugating medium used in making cardboard — is still leaving the port. Mr. Dixon estimated that such breakbulk totalled less than 100,000 tonnes in 2013. “There’s all sorts of breakbulk that goes around the world that could go in containers, but for reasons of economics it still makes sense to ship them breakbulk,” Mr. Dixon said. For example, stuffing and de-stuffing several thousand tonnes of pulp into containers can be time-consuming whereas the large gantry cranes on a breakbulk vessel can load the cargo at a rate of 120 tonnes to 1,000 tonnes an hour. “So loading breakbulk can be very efficient,” he said.
Halifax terminal expansion nears completion
At the port of Halifax, a $73 million expansion of Richmond Terminals, the port’s general cargo terminal, is progressing as planned, said Patrick Bohan, the Port Authority’s Manager of Business Development. “We have a new 75,000 foot cargo shed that will be ready next month and the work on the new 1,500 foot dock will be ready for operations later in the summer,” Mr. Bohan said.
General cargo volumes dropped 9.1 per cent during the first quarter of 2014, according to statistics on the Port’s website. The volume for the quarter was 105,595 tonnes compared with 116,166 in the same period in 2013. Nevertheless, work continues at “a good clip” at Ocean Terminals, which is “handling steel of all kinds, as well as project cargoes of specialty fabrications both inbound and outbound,” Mr. Bohan said before those first quarter figures were available. As in the past, the terminal is handling minerals and heavy equipment as well as reloading lumber and other forest products into containers, he said.
Halifax is also bracing for spinoff business from $35 billion in contracts from the National Shipbuilding Procurement Strategy. The lion’s share of that work is slated for Irving Shipbuilding Inc.’s Halifax Shipyard adjacent to Richmond Terminals. “The Halifax Shipyard is currently undergoing a massive re-build in preparation for that project,” Mr. Bohan said. “A new large module shop is presently being constructed there. Our understanding is that first steel on the vessels will be cut next year.”
In total, the Atlantic Provinces Economic Council has pegged the value of active and planned megaprojects on the books in the region at $115 billion. They include oil-exploration projects, the Muskrat Falls hydroelectric power project in Labrador, and the Maritime Link undersea power line project. The council will hold an update session on those projects in Halifax this May, Mr. Bohan said.
Halifax has already been busy this spring as a home base for seismic vessels for BP’s exploration program. Mr. Bohan also noted steady activity to support Shell Oil’s program.
About 115 kilometres to the north of Halifax, the port of Sheet Harbour, which the Halifax Port Authority now manages, is also “getting a lot of interest” from those involved in the proposed megaprojects. “We are anticipating a very healthy outlook for breakbulk and non-containerized activity,” Mr. Bohan said.
Breakbulk volumes up slightly at Vancouver
On the west coast, Fraser Surrey Docks “had a great start to the year” for breakbulk and project cargo, said Brady Erno, Manager of Sales and Customer Service. Those cargoes made up for a lot of business that Fraser Surrey Docks lost during the container truckers strike that plagued Port Metro Vancouver until it was resolved March 26.
Steel volumes have been strong, although Mr. Erno didn’t have figures to report. He expected volumes of both breakbulk and project cargo to remain steady until at least June. “We’ve had some of our highest volume of cargo on dock in many years here,” Mr. Erno said. “So it’s been a push from our side to turn around cargo as much as possible to try to get it continually moving off the docks because we have more ships coming up the river for discharge.”
Port Metro Vancouver reported that breakbulk volumes for January and February 2014 were 1.7 per cent higher, at 2,498,278 tonnes, than in the first two months of 2013, when they totalled 2,455,708 tonnes. In 2013, Vancouver handled 17.05 million tonnes of breakbulk, up two per cent from the 16.68 million tonnes in 2012, which was up from 16.05 million tonnes in 2011. Logs accounted for most of the volume and increase. Breakbulk logs totalled 9.06 million tonnes in 2013, an eight per cent hike over the 8.38 million tonnes in 2012. Volumes of basic metals also increased, by 30 per cent in 2013, to just over 1 million tonnes.
Those soaring log and metal volumes masked decreases in other breakbulk commodities, such as wood pulp (down 10 per cent), construction and materials (down 15 per cent), lumber (down 34 per cent), and machinery (down six per cent).
Wood pulp holds steady on Howe Sound
At Squamish Terminals, on Howe Sound, 32 nautical miles north of Vancouver, the flow of breakbulk, mostly wood pulp, has been steady, said President Ron Anderson. A persistent deep freeze across much of Canada this winter did make it difficult to secure empty rail cars. “But it’s not been a full blown disaster,” Mr. Anderson said. It meant having to use many more trucks than otherwise because usually 90 to 95 per cent of pulp travels by rail to the port. “But we’re still pretty much the same amount of cargo.” Pulp volumes, which average 700,000 to 750,000 tonnes a year, were down about five per cent in 2013, Mr. Anderson said. But that was within the normal fluctuations and not something he would attribute to an economic downturn. “I think the customer base is fairly solid,” Mr. Anderson said.
At the time he spoke, however, the container truckers’ strike was still in full swing in the Vancouver area. So there was some uncertainty about what impacts the strike might have on the breakbulk business. It didn’t have any short-term impacts at Squamish because vessel carriers wouldn’t have had enough time to react. “There are no vessels just waiting around empty,” he said. “That would be foolish.”
However, Doug Mills, senior account representative for bulk and breakbulk cargo for Port Metro Vancouver, said Vancouver did have additional sailings during the strike for traditional breakbulk commodities — such as lumber, pulp, and paper — and that the available space booked quickly. Those shipments didn’t encounter any run-ins with the strikers because the commodities arrived by rail. “Instead of going to a transloader, where it would then go to containers, they’ll just bring it directly on the dock because all of our breakbulk terminals have on-dock rail,” Mr. Mills said.
Container strike settled before shift
During the container truckers’ strike, there were rumblings that more cargo might shift back to breakbulk, had the strike dragged on. At Fraser Surrey Docks, however, Mr. Erno said while such contingency plans were discussed, there wasn’t enough time to execute them. “Some of the different points that have been agreed on will increase costs for container drayage which could result in some of the cargo moving over to breakbulk,” Mr. Erno said. “I don’t know. That’s just speculation.” He noted that higher minimum wages for truck drivers as well as an increase in the fuel surcharge will increase costs to the trucking companies. Mr. Mills agreed with that assessment but pointed out that “the container industry has been notorious for dropping their rates” to attract shippers of pulp and lumber. And once those users made the switch, they discovered that containers provide better protection for their products.
Mr. Anderson said that a greater shift to breakbulk would have been inevitable had the strike continued for an extended period. “But it takes time to be able to get the rotations for the vessels in place and to get them filled,” he said.
The majority of the pulp that leaves Squamish heads for Asia, a market that is still strong, he said. And every six weeks to two months, a ship will call to take pulp to Europe. Squamish also handles the occasional yacht, “which is always exciting,” and inbound steel from time to time. “Of course we’re always looking for any type of inbound or outbound project cargo,” Mr. Anderson said. “But there hasn’t been a huge demand in the first quarter of 2014.”
Squamish would also be interested in handling large diameter pipe again. Those pipes fit well on rail cars and trucks. “It’s not something we’ve seen a lot of this year, but we’re always working on it,” Mr. Anderson said. “We have lots of capacity. We’re always looking for more business.”