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Asian breakbulk and project cargo hit

Asian breakbulk and project cargo hit

Singapore: This year promises to be a major comedown for an Asian breakbulk and project cargo shipping industry that had grown used to double-digit annual growth, delegates attending the Breakbulk Asia Transportation Conference in Singapore heard today.  

The global downturn is forcing delays and cancellations of energy and infrastructure projects from Canada to Australia. China and SE Asia appear to be less impacted than other regions because of the sheer volume of projects and investments, but that could change if the global economy worsens.   

The prospect of a dramatic drop-off in business has been added to the industry's ever-present challenges of complex logistics, poor infrastructure, red tape and capacity shortages.

Foster Wheeler's Power Group Asia's business is a case in point. The Shanghai-based company, a subsidiary of engineering, procurement and construction firm Foster Wheeler, moves close to 100,000 cubic meters of equipment per year, mostly from China. New orders were down 13% in the third quarter of 2008 compared to the average quarter in 2007.

While none of Foster Wheeler's projects have been canceled, projects are being delayed throughout Asia. It's unclear whether the delays are because of tighter credit or because companies taking a wait-and-see approach to the economy, coo Mark Garvey said.

The dynamics of the breakbulk-project shipping market have been drastically altered since the extent of the global financial crisis started to become apparent four months ago, garvey continued. Carriers have held the upper hand since the mid-1990s, when a global project boom and subsequent capacity crunch let them raise rates and dictate terms. Shippers were sometimes left dangling; Garvey recalls one case when Foster Wheeler had cargo displaced at the last moment and left at the dock.

That has changed as rates have fallen by as much as 40% in some trade lanes. Heavy-lift carriers are now willing to talk about cargoes they had previously snubbed and are offering far more flexibility around scheduling and ports of call.

"What we are seeing now in the marketplace is that carriers have become much more flexible and receptive to meeting the requirements of project cargo shippers," Garvey said. [17/02/09]

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