At Global we carry out our own independent research both with in house information and information gathered from external sources.
Following are our impressions from some recent research carried out correct as of March 2006.
The total fleet for heavy lift vessels consists of about 180 vessels. This however is a mix of specialist heavy lift vessels and other conventional vessels with heavy lift capabilities. There are a few key issues that could quickly and easily provide understanding into the current heavy lift and project cargo market. The most important issue is the need for new tonnage and in this we mean newly built tonnage. Over sixty percent of the general cargo; break bulk and heavy lift vessels are over 20 year old and any of these when chartered attract an OAP. As such the demand for newer, faster and more economical tonnage is increasing.
While there are no reliable statistics for the break bulk and heavy lift markets it is estimated that over 450-500 million tonnes of non containerised cargo is being shipped around the world every year. The general perception is that rapid volume growth is envisaged as many large power, oil refinery and gas projects are planned or realised supporting the growing world economy and GDP statistics. Amongst engineering, procurement and construction companies it is reported there is growing concern on the availability of modern tonnage and they feel that supply of quality tonnage will fall short of demand in the years to come.
In the Middle East the demand for oil and gas equipment and building materials is generally strong but as reported by PWC Logistics of Kuwait the magnitude of energy projects in the region has not been the same since the 1970s. Billions of dollars are being invested by both government and the private sector into petrochemical plant, natural gas liquefaction projects and refining complexes as well as in infrastructure in general and tourist projects. A relatively small country like Qatar alone requires the import of up to three million tonnes of break bulk, much of which heavy machinery, over the next few years. Cement works are being built in the UAE and Oman and in Russia and Australia the increase in oil prices has sparked investments in power plants and other projects. In our opinion shipments on behalf of such projects will further increase and continue over the next five years.
Another trend is US diversifying its oil imports dependency away from the Middle East. As a result West Africa and its oil reserves has gained acceptance. This therefore has resulted in increased exploration and oil activity. The vast majority of the required project and related materials is expected to continue to come from the US(52%) and North Europe(41%) and their average total volume is expected to grow from some 307,000 tons in 2004 to 803,000 tons by 2015 an average of 11% year on year.
The unprecedented industrial development in China has generated a huge demand for project cargoes such as components for the building of manufacturing and power plants as well as infrastructural works, including the building of numerous ports.
The demand deriving from these developments has had its effects in the mining industry also which has witnessed increased activity with a surge in maintenance, upgrading and exploration. These again provide strong demand for the heavy lift transport market.
So therefore to summarise this thesis in a nutshell the following should hold true –
- The market for heavy lift vessels will be tight for the next 5 years.
- There will be a strong demand for new tonnage.
- Larger and heavier units will be pre-fabricated and shipped to their destinations
- Most of the new developments in the oil and gas industry as well other areas are being built in places distant from their manufacturers.
- The Oil and Gas Industry is going to be the lead industry who demands heavy lift services.
- It will be increasingly difficult to find yards capable of building new multi purpose tonnage.
Operators of heavy lift vessels who are able to fit ships into liner or quasi liner services will stand to gain the most and it is essential that the ships within this sector are built to suit the services in question.
The development of RORO services on some routes will provide good transport facilities for heavy lifts within the strength limitations of their ramps and decks, and of terminal limitations.
Contracts for the shipment of project cargoes, already an important feature, will become more common as shippers will seek firm delivery and safety commitments and operators of heavy lift vessels plan their ship schedules well in advance.
Flexibility, expertise and ingenuity will continue to be called for in the economic shipment of heavy lifts and this will favour well established and successful operators already in the field or other companies able to adapt their experience in similar fields. What is imperative is that carriers ply the right trade lanes.
The process of adapting and modifying ships to suit particular cargoes will continue in many instances in order to secure odd and diverse cargo. Single hull tankers will continue to be converted to large semi submersible vessels and will cater to the very top half of the weight scale in carrying large units and oil rigs. The phase out of single hull tankers is of course the major driver in this change.
It is clear that the heavy lift operators look to the future with confidence and they are all excited about future prospects. It is just a matter of thrifty planning and scheduling together with the right tonnage that will make the difference but then isn’t that the same with all sectors of shipping?