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A less rosy future for project cargoes?

October 15 - Having escaped the headline-grabbing drop in traffic levels suffered by the container shipping lines over the last two years, the prospects for the multipurpose, heavy lift cargo shipping is looking a little less rosy, writes James Graham.

Attendees spoken to at the 20th Annual Breakbulk Conference in New Orleans report that capital and infrastructure clients are cutting back, industrial projects are being put on hold and contracts for new projects are remaining unsigned while the backlog of projects clears.

As major projects generally take two or three years, and sometimes longer, a backlog has been built up and this has provided a buffer for companies specialising in project cargo which is now diminishing.

There remains a glimmer of light in the darkening outlook: the economics of building big ships has meant there has never been an excess of capacity that has had to undergo costly mothballing and a number of new projects are being put out to bid.

That was the premise of discussion of shipping industry experts during yesterday's opening session of the Conference.

Gerhard Janssen, director of marketing and sales, Rickmers-Linie, told delegates that a core reason for the lack of over-capacity in the market is that one in three multi-purpose ships are more than a quarter of a century old. All the multipurpose ships on order currently will not replace this capacity when it retires: this will lead to a shrinking project cargo fleet in time.

While the sector has escaped the woes of the container lines, project cargo carriers must not assume there will be no impact on them from the troubled box lines. These lines have invested in ro-ro ships for wheeled traffic streams that can now be switched to breakbulk, high and heavy and project cargo.

In terms of potential traffic, the last few months have suggested a strengthening of demand from EPCs and others seeking to undertake project cargo movements.

Gerald P. Haley, vice president of global procurement for shipper Chicago Bridge & Iron was upbeat in his assessment of where his market was heading, citing a number of significant projects being lined up for the next few years.

However, a number of these potential projects are being put at risk as certain clients are pinning down suppliers such as Chicago Bridge very hard on prices. The uncertainties of oil prices and the inability to secure significant finances for a number of projects is also worrying Haley.

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