Market hotspots indicate strong bounceback

The pandemic, and the containment measures necessary to minimise its impact, altered the evolution of the global economy during 2020. In Spain, it resulted in a sharp fall in GDP, a significant and persistent increase in public debt and the unemployment rate, and a general reduction in activity – mainly affecting the hotel, catering and transportation industries, observed Igor Muñiz, general manager at Erhardt Proyectos. The pandemic also affected project cargo activity, “turning it into a spot market”, he added.

Indeed, the virus and countermeasures have had an impact on the planning and execution of projects across Spain since last March. The situation created “a very complicated environment for the development of projects”, said José Luis Salamanca, sales director Spain at Mammoet in Madrid.

Activity levels

However, he noted: “By a daily follow-up of this crisis we have been able to succeed in keeping every project active and on time, providing our standard level of service to our clients even in such difficult circumstances. That meant that our level of activity has not been deeply affected.

“Of course there are more day-to-day challenges such as the technical complexity of a civil project, the sea transportation of an oversized item, or the logistical challenges of a power plant located in a remote area in Africa – but these are the challenges we are prepared for and willing to face in our daily activity,” he said.

Several trends have driven Mammoet’s activity in Spain over the past year: “The works performed in ports and port infrastructure have been one of the main segments for us in Spain, constituting a significant portion of our activity. Renewable energy has also been a field of increasing demand, especially for us in the offshore wind industry, while the civil construction market has been a significant part of our activity abroad.”

Salamanca also mentioned the assembly and installation of ship-to-shore cranes at the ports of Cádiz and Tangier, and the loadout of floating foundations for offshore wind turbines (floaters).

Sarens has also long been active in the Spanish market and has executed a number of projects in the country recently. It mobilised a Terex CC9800 to a Navantia shipyard to support an offshore wind energy project, and a Liebherr LR11350 was stationed at the Astican shipyard for another heavy lifting operation. It was also called on to assist with the installation of a new hangar roof at Barajas airport.

Kleopatra Kyrimi, group marketing and communications manager at Sarens, believes that 2021 will be negatively impacted by a lack of oil and gas activity. The country’s onshore wind energy market, which has been a hotbed of activity for the company in preceding years, might also start slowing down. “The peak seen during the last years is now gone and local crane suppliers are covering the market,” she explained.

Spain currently ranks sixth among the world’s greenest nations, behind Finland, Iceland, Sweden, Denmark and Slovenia. It has become a leading player in the renewable onshore and offshore industries, which (alongside oil and gas refinery, power generation, nuclear infrastructures, rail, mining and port equipment) are key sources of business for Erhardt Proyectos.

Green growth

In 2020, Spain’s renewable industry grew more than ever before – 12 percent more than in the previous two years, according to Muñiz. He is confident that 2021 will bring further growth for the sector as both businesses and governments continue to push for the development of green energies.

For instance, major energy multinationals such as Siemens Gamesa, Acciona, Iberdrola and Naturgy are promoting renewable energies through investments in photovoltaic plants and wind farms.

Examples include Iberdrola’s development of more than 1,800 MW of wind and photovoltaic power generation in the Velilla region of Castilla y León over the coming years. Iberdrola is also installing 1,300 MW of photovoltaic power in Extremadura and intends to double its renewable capacity in that region to 5,500 MW by 2023.

It is certain that the energy transition can be a driving force in the transformation of the industrial sector and for a green recovery in the economy and the job market. – Iberdrola

Furthermore, it has plans for new photovoltaic plants in Valencia and Alicante, and is leading a project in Aragón to produce ‘green’ hydrogen for heavy road transport vehicle fleets, buses, light private and industrial vehicles, and the railway sector, as well as projected airport use.

Iberdrola said it is “certain that the energy transition can be a driving force in the transformation of the industrial sector and for a green recovery in the economy and the job market”. To achieve this, it has launched an unprecedented investment plan worth EUR75 billion (USD89.3 billion) for the 2020-2025 period, of which EUR14.3 billion (USD17 billion) will be spent in Spain.

Rising renewables

According to Iberdrola chairman Ignacio Galán, the company’s renewable energy capacity will rise from 32 GW in 2019 to 60 GW in 2025, with 26 GW of onshore wind, 16 GW of solar and 14 GW of hydro. The remainder will be offshore wind.

Galicia-based Greenalia, meanwhile, announced in September 2020 that it had submitted planning and environmental applications for four new floating wind farms to the southeast of Gran Canaria, in addition to its nearby 50 MW Gofio project – taking its total capacity in the Canary Islands to 250 MW.

Greenalia said it is “endorsing its commitment to floating wind energy as one of the renewable energy sources that will lead the green growth in Europe over coming years, where 80 percent of the offshore wind resource is located at depths of more than 60 m”.

In January, the company won 13.5 percent of the total capacity allocated for wind technology in an auction held by Spain’s Ministry for the Ecological Transition and the Demographic Challenge. Greenalia will have nine onshore wind farms under construction in Galicia during 2021.

Meanwhile, Jimmy Jaber Bringas, managing director of Sparber Transport, affirmed that Spain is, and will remain for some time, one of the world’s top exporters of cargoes relating to the wind energy sector.

“30 years ago ships were filled with steel products; today they are full of wind energy equipment,” he said. “This will last for a few more years – until the market is saturated. Regular container lines have got squarely into this type of traffic, as well as the usual breakbulk ships.”

Wind turbine exports

According to data from the Spanish Wind Energy Association (Asociación Empresarial Eólica – AEE), in 2019 Spain was the thirdlargest exporter of wind turbines in the world. A significant proportion of the components are manufactured in the hinterland of the port of Bilbao.

“Currently, Spain has a strong industrial and business fabric focused on offshore wind energy,” confirmed Inmaculada Ugarteche, director at UniportBilbao. “Spain’s presence in this market is indisputable: it has positioned itself as one of the main European hubs of knowledge and international supply.

“In this context, for the port of Bilbao the production of large fixed and floating structures, and of various wind turbine components, represents a great opportunity to act as a logistics and manufacturing hub for supporting structures and other components used in offshore wind energy generation… especially when the dimensions of such items make their transport to the port over land impossible.”

Haizea Wind, Navacel, Siemens Gamesa and Acciona are just a few examples of manufacturers that use Bilbao.

There are also new sustainable energy projects under way within the port. For instance, Petronor (the Basque subsidiary of Repsol) is constructing a hydrogen plant on a 46,700 sq m plot that will produce synthetic fuels from ‘green’ hydrogen – created using renewable energy.

“The scope of this project will broaden in the future to produce gas from urban waste products such as paper, cardboard, plastic and textiles. This gas will be used as fuel for the refinery itself,” Ugarteche said.

Given the continuing evolution of the green energy sector, project cargo service providers cannot afford to stand still. Muñiz said that in order to keep up with the pace of development and growth of those companies that require project logistics services, Erhardt Proyectos is progressively adapting its capabilities and services.

The strategy appears to be successful. “Despite being a difficult time for everyone, 2020 was a year of opportunities for Erhardt Proyectos,” Muñiz continued.

Explaining in more detail, Muñiz said: “Erhardt Proyectos reinforced its ‘Boutique & Unique’ strategy to offer a tailored response to this new scenario. Our strategy has allowed us to become a supplier and/or business partner at an extremely difficult time for everyone.

Digitisation opportunity

Like many others in the logistics community, Erhardt has made the most of a disrupted year to digitise its in-house processes. It has refreshed and extended its digital presence to ensure ongoing contact with customers through videoconferencing, its website and social media. It has also launched a ‘customer area’ to facilitate and streamline the monitoring of the progress of any operations that clients have contracted.

Muñiz said: “We are boosting our new business line involving digital solutions for supporting our customers as they digitise their key business processes (procurement, sales and operations) to become more competitive in today’s environment and guarantee their future sustainability.”

Noting that “customers have to adapt and we have to adapt with them” in order to survive, he continued: “We want to be recognised as a global yardstick in the development of digital solutions through our digital platform, which customers can use to access digital micro-services that will help them to strengthen their competitiveness, optimise their operating costs and generate more value for their own customers through logistics.

“Digitisation is a must; no company that is not digitised will be in the market in the future,” he emphasised.

As expected, the first quarter of 2021 has been somewhat atypical due to the instability caused by the increase in charters, whereby our operations have been experiencing something akin to a rollercoaster ride. – Igor Muñiz, Erhardt Proyectos.

On the rise

While there are signs of a return to normality, the growth of the Spanish economy in 2021 is still likely to be slower than initially expected; the recovery of the country’s GDP to pre-Covid figures will take a while yet.

According to Muñiz: “This will mean that there will be fewer opportunities in our local market. As expected, the first quarter of 2021 has been somewhat atypical due to the instability caused by the increase in charters, whereby our operations have been experiencing something akin to a rollercoaster ride,” he added.

But overall, Muñiz feels that the project cargo market is on the rise. He added that Erhardt Proyectos intends to continue consolidating its position and growing in various sectors over the course of this year.

At Mammoet, the company expects its activity to remain at its current level for the rest of 2021, satisfying ongoing demand from the renewable energy, power generation and infrastructure sectors.

The company will continue to carry out the assembly of ship-to-shore cranes and port relocations in which it is presently involved. Various transport and installation projects in North and West African countries are also among the projects it is set to undertake this year.

Salamanca said: “Civil, port activities and offshore renewables will continue being the main field for opportunities in Spain in the short and medium term – with potential growth of projects linked to public and governmental initiatives, given the circumstances and need for stimulation of the local industry and economy.

“I believe we all expect that in the medium term the current uncertainty related to big projects will be cleared and the level of activity, mainly in terms of oil and gas-related project cargo, will recover,” he added.

There is no doubt that Covid-19 has dramatically altered not only the global economy but also the way business is done – the acceleration of digitisation being one example of that. Bringas believes acknowledging the new reality of the project cargo market, without undue optimism or pessimism, is a must.

Looking ahead, he said: “In my humble opinion, the rest of 2021 has a lot to do with the enormous efforts that were made during 2020. It will not be easy, but the hope of a vaccine for Covid-19 brings in turn the hope of a shot in the arm for the global economy.”

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