Increasing rates across all modes are posing serious questions of forwarders moving heavy cargoes contracted months ago. However, in the USA and Europe heavy railfreight operators have been strengthening their fleets, reported strong performances in 2020, and believe the prospects going forwards are promising. Ian Putzger reports.

Fracht is gearing up for more business on the rails in North America. The company’s top management has given its blessing to the acquisition of 12 railcars. “We are expanding our fleet. We still see strong demand, and we see a strong benefit in owning and controlling our equipment,” said Benjamin Liewald, executive vice president projects.

One of the new cars is a caboose – a locomotive – the rest being heavy-duty flat cars. “We have a nice variety of depressed[1]centre cars. The flat ones will be great for anything long, tall and heavy – compressors, boilers, vessels, etc. We have a move coming up with a 120 ft (36.6 m) vessel that we will spread over two cars. We will use bolster plates,” said Liewald

The first three units are joining Fracht’s existing line-up of nine railcars during the spring; the rest will follow over the summer. “We were not looking for 12 new cars, maybe five or six, but the opportunity came up,” he added.

Over in Europe, Spedition Kübler is boosting its heavy rail and road equipment and capabilities. It has taken control of Daher’s heavy transport department in Germany. Essentially this gives Kübler the former heavy transport division of Deutsche Bahn, which Daher had acquired in 2007. Through the agreement, which was announced in November 2020, Kübler has gained some 40 employees in the four locations of Daher Projects Germany, as well as its road and rail fleets, which include about 110 special railcars that can carry up to 454 tonnes.

We are expanding our fleet. We still see strong demand, and we see a strong benefit in owning and controlling our equipment. – Benjamin Liewald, Fracht

For Kübler, the acquisition marks a large step forward in the rail logistics segment, which the company has been developing in recent years. According to Thomas Hoffmann, coordinator worldwide transport and projects, the full integration will take about one year but the bulk of the work has already been more or less completed. “We knew the company before and worked together with it,” he said, noting that expansion in this arena is important as the company is presently quite busy.

Record year

Other operators also have their hands full. For BNSF Logistics, 2020 was a record year, according to Robert Sutton, executive vice president innovation.

Bill Taylor, managing partner of Colossal Transport Solutions, also noted: “Our rail business has been busy.” He has not seen any shifts in the make-up of Colossal’s business, nor any changes as a result of the Covid-19 pandemic.

Others reported some slowdown. A lot of projects were put on hold or postponed, but long-term projects have gone ahead, observed Hoffmann. Gerald Hess, president of Ambercor Shipping in Canada, said: “I think major investment has slowed down a bit because of Covid-19. Some projects have been postponed.”

Repercussions from the pandemic are being felt in transport costs, which have increased significantly across all modes. “A lot of projects were budgeted 12 months ago. Clients are struggling with the existing rates,” remarked Liewald.

While some projects are in limbo, the outlook is strong. Taylor is bullish about the prospects. “As of right now, it looks like everything is going to stay pretty much the same. Everything seems to be clicking.”

Hoffmann, meanwhile, sees no shortage of work for Kübler – which specialises in covering the European markets. “The whole German electricity network needs to be changed,” he noted. Kübler is also preparing for some large power cable projects that will connect the North Sea to Germany. That project is still in the approval phase and should hit the market in one or two years at the earliest, he believes.

Renewables focus

In the USA, the new administration’s focus on renewable energy promises plenty of work in that sector, particularly on wind energy. “There are dollars on the horizon because of green initiatives,” said Liewald. “Wind is certainly an area where we are trying to expand.”

Ambercor also has the sector in its sights, but Hess remains cautious. “There is going to be more activity in wind, but it is a difficult market to break into. There are a limited number of manufacturers and they often have their connections with forwarders and truckers. We have not made big inroads in that market,” he explained.

The US government is particularly eager to develop offshore wind energy generation but this is unlikely to have much bearing on the rail segment, as the size of blades used in offshore wind farms are often too large for rail transport, noted Sutton. Wind components for onshore installations are also getting larger, he pointed out.

“We spend a lot of time on R&D to be able to leverage our North American rail network,” he said. “The changes we have seen created some unique challenges, especially the length of blades.”

The port of Vancouver, Washington, which has established itself as the premier gateway for wind energy shipments on the West Coast, received blades last year that were nearly 250 ft (73.2 m) long. Moving those out of the port by rail would have been challenging without a new gate for wind traffic that was completed earlier in 2020. According to the port authority, it was the only way to move these blades and avoid any sharp turns

There is going to be more activity in wind, but it is a difficult market to break into. There are a limited number of manufacturers and they often have their connections with forwarders and truckers. – Gerald Hess, Ambercor Shipping

BNSF Logistics has been using special fixtures that it developed in-house to carry longer blades. These ‘Blade Runner’ devices have been used to move blades of 73 m in length. The company’s engineering department has also come up with another solution called ‘Blade Controller’, which was devised for one particular client to move cargoes around bends with large wing-outs. Sutton thinks this can be marketed to a broader audience.

Wind energy traffic

Fracht is looking to its flat railcars to move wind energy traffic. “They are very suitable for wind components – for tower sections, turbines and blades. We can use two railcars,” said Liewald

In the future, Fracht and Ambercor expect to see a reduction in wind energy shipments coming through the ports. “We hear about a push to more domestic production. Clients want to source locally because of the volatile shipping market. They do not know when they can get things from Asia with all those delays. Part of the industry is looking for more domestic production,” Liewald noted.

International moves are also down for Kübler with export and import activity diminished, observed Hoffmann. He attributes this primarily to the impact of Covid-19, as companies have put investment plans on hold.

Wind energy traffic used to be lively for Kübler, but this has slowed down considerably over the past year. “In Germany, wind energy is not going strong at the moment. Wind farm development is on hold. There is a big discussion about getting permits to build wind farms,” he reported.

In North America, Hess is expecting to see activity around the US administration’s drive to invest in infrastructure, although he does not anticipate a lot of opportunities for Ambercor itself, as it does not own the transportation equipment, he said.

In Canada, Ambercor recently coordinated the movement of two 110,000 lbs (50-tonne) reactor units by rail from the port of Halifax to Ontario. It has also used rail to bring some transformers that landed in Halifax to the interior.

“We do some rail business in Canada and the USA, mostly transformers,” Hess said. This business has been steady, but margins are thin, as a lot of forwarders are competing in this space, which makes it difficult to build up market share.

“Transformers and generators are a fairly stable market,” added BNSF Logistics’ Sutton, noting that gas turbine moves have also been quite steady.

Power focus

For Kübler, transformers and power stations have been the main focus recently with business activity continuing. Hoffmann sees a trend for multimodal moves, which may involve barge, rail and road. “I think there is more need for trimodal shipments going forward. Real heavy stuff goes trimodal,” he reflected.

In North America, equipment availability has not been a problem but when it comes to highly specialised gear, sometimes it is necessary to order three or four months in advance, according to Hess. For more common types, three weeks in advance usually suffices.

Transformers and generators are a fairly stable market. – Robert Sutton, BNSF Logistics

The USA’s rail system has been under heavy strain from high volumes of container traffic that have clogged up ports and rail yards, creating massive delays. Nevertheless, Colossal’s Taylor said that the impact on moving outsize cargo has not been dramatic. “There are some challenges with performance with rail, but in our business there are always challenges anyway,” he commented. “Railroads are up and down. Some are fine, some are absolute messes right now. It goes in cycles.”

Hess drew attention to the understanding that railways are still not overly keen on moving heavy cargoes on the rails. “It disrupts their regular schedules. They are busy with containers and bulk traffic,” he said, adding that pricing is high, so many clients avoid rail if possible. “If we can avoid it, we often find other solutions that are less expensive. In most cases the final mile is by truck anyhow,” he said

Rail preferences

In some cases avoiding rail requires some formal steps, though. The authorities in Ontario and Quebec will not issue permits for road moves of heavy loads unless the applicant can produce a letter from a rail provider that the cargo cannot be moved by that mode, Hess reported. There is also more resistance from local authorities to trucking heavy equipment through their areas, noted Sutton.

in Germany, fees for road permits have gone up. A permit to move a machine that weighs 50, 60 or 70 tonnes over the road now can cost between EUR800 (USD962) and EUR900 (USD1,082), reported Hoffmann. “It may be cheaper on rail,” he said.

Still, with continuing volatility and uncertainty about delays, buffers are called into schedules. “We have to consider these things when we plan. We also have to consider what the rail companies prioritise,” remarked Liewald.

This article has been taken from the May/June 2021 edition of HLPFI.