Project cargoes keep AAL’s ships calling US Gulf ports – FreightWaves

Project cargoes may not be the fastest movers on the high seas, but they have proved much less volatile than the U.S. container trades during the coronavirus pandemic.

Christophe Grammare, commercial director, AAL Shipping (Photo: Courtesy)

Singapore-based AAL Shipping, one of the world’s largest marine project cargo carriers with 25 vessels, has witnessed a steady increase in ship sailings involving the transport of large capital equipment from Asia to U.S. ports during the first half of 2020. Between April and June alone, the carrier completed 12 sailings to the U.S.

“This has been driven mostly by our 2020 strategy to increase our coverage of the Asia-U.S. trade lane and commit tonnage and resources to really expanding our presence in the region,” Christophe Grammare, AAL’s commercial director, told American Shipper.

However, he noted this continuation of business during the virus-induced economic upheaval hinges on the nature of project cargo shipments, which by their nature can take years of logistics planning.

“Although some project equipment manufacture was delayed by the COVID pandemic, the movement of these projects continues reasonably unaffected at this stage,” Grammare said.

The AAL fleet consists of 10 “mega-size,” 31,000-deadweight-ton, multipurpose (MPP) vessels, which have on-board cranes capable of handling cargo loads up to 700 tons and are suitable for large capital goods.

“Looking at our cargoes in 2020, we have noticed that the majority of our sailings have been filled with single cargoes, which smaller MPP vessels simply cannot transport in an economically efficient manner,” Grammare said.

Energized by wind

Some of the large-scale project cargo loads transported by AAL to the U.S. during the first five months of 2020 include gantry cranes, transformers, gas processing and mining equipment, and wind turbine components.

These cargoes, which originate in Asia and Europe, generally arrive at the ports of Houston and New Orleans but are also delivered to other Gulf ports such as Corpus Christi, Galveston, Aransas, Brownsville and Freeport, Texas; Tampa and Manatee, Florida; and Mobile, Alabama; as well as the East Coast ports of Savannah, Georgia, and Philadelphia, where they are offloaded and prepared for inland transport by heavy-duty truck or rail.

The U.S. oil and gas sector, which experienced record low oil prices in May, postponed many projects and capital investments during the first half of the year. Grammare expects that with a gradual recovery of oil prices later in the year, these types of project investments will pick up in the fourth quarter of 2020 or the first quarter of next year. “Nevertheless, these projects will not generate cargo movement for another year or so,” he said.

According to the U.S. Energy Information Administration (EIA) in early June, U.S. crude oil production will continue to decline to 10.6 million barrels per day through March 2021 due to ongoing low prices and usage rates during the COVID-19 pandemic.

“Typically, price changes affect production after about a six-month lag. However, current market conditions have shortened this lag as many producers have already curtailed production and reduced capital spending and drilling in response to lower prices,” EIA said.

Fortunately for AAL, the U.S. wind energy sector has remained strong during the COVID-19 pandemic, continuing to import numerous turbine components for ongoing wind farm projects throughout the country.

“The trend here is shifting towards larger and larger wind turbines for which AAL’s mega-size fleet is very well suited,” Grammare said.

Wind turbine blades being offloaded from AAL Shipping vessel. (Photo: AAL Shipping)

The U.S. wind energy sector anticipated a banner year in 2020 for construction of wind farms —  combinations of giant wind turbines spread across thousands of acres of open spaces — which is stimulated by a significant federal production tax credit. The electric power generated by these wind farms is fed into utility power grids.

According to the Washington-based American Wind Energy Association (AWEA), the U.S. wind industry installed more than 1,800 megawatts of new wind power capacity during the first quarter of 2020. That is more than double the capacity installed during the first quarter of last year, the association said.

In addition to the federal tax credit, U.S. wind farm development has been stimulated by the ongoing commitment by large American corporations purchasing clean electric power generated by wind turbines. More than 140 companies have purchased U.S. wind-generated electricity. Google (NASDAQ: GOOG) is the top corporate wind energy customer in the U.S., with 2,397 megawatts contracted. Facebook (NASDAQ: FB) is the second-largest purchaser, with 1,459 megawatts, followed by Walmart (NYSE: WMT), AT&T (NYSE: T) and Microsoft (NASDAQ: MSFT), AWEA said in mid-June.

Return to health

The COVID-19 pandemic has, however, put a dent into AAL’s ability to secure “part” or “completion” cargoes to top off some of its vessel voyages. These cargoes typically include smaller equipment and structural steel. “This decrease is directly related to a drop in demand in the U.S.,” Grammare said.

AAL maintains an office in Houston to work with its U.S. customers.

“Generally, we feel that the U.S. trade volumes, especially those outside of capital projects, are very much reduced in 2020,” Grammare said, though he did not provide a figure. “Nevertheless, it is fair to say that the European market is feeling a similar effect, while Asia seems to be less affected — most likely as the virus has hit Asia first and the initial sharp drop in cargo movement we experienced earlier this year is already behind us and Asian economies are now recovering.”

He said smaller project cargoes and other breakbulk shipments will take longer to recover.

“Once the COVID-19 pandemic subsides, we will see an uplift in cargo volumes driven by companies trying to catch up with time lost and stock levels,” Grammare said. “This could be months away and will very much depend on the overall economic impact of the COVID-19 pandemic in the U.S. and ongoing U.S.-China trade negotiations which will hugely affect supply chains.”

Related Articles:

SAL Heavy Lift sails on IT cloud

Will wind turbine transporters continue to roll during COVID-19?

Virginia lays out offshore wind supply chain roadmap

Click to read more FreightWaves/American Shipper articles by Chris Gillis.

Project cargoes keep AAL’s ships calling US Gulf ports – FreightWaves

Project cargoes may not be the fastest movers on the high seas, but they have proved much less volatile than the U.S. container trades during the coronavirus pandemic.

Christophe Grammare, commercial director, AAL Shipping (Photo: Courtesy)

Singapore-based AAL Shipping, one of the world’s largest marine project cargo carriers with 25 vessels, has witnessed a steady increase in ship sailings involving the transport of large capital equipment from Asia to U.S. ports during the first half of 2020. Between April and June alone, the carrier completed 12 sailings to the U.S.

“This has been driven mostly by our 2020 strategy to increase our coverage of the Asia-U.S. trade lane and commit tonnage and resources to really expanding our presence in the region,” Christophe Grammare, AAL’s commercial director, told American Shipper.

However, he noted this continuation of business during the virus-induced economic upheaval hinges on the nature of project cargo shipments, which by their nature can take years of logistics planning.

“Although some project equipment manufacture was delayed by the COVID pandemic, the movement of these projects continues reasonably unaffected at this stage,” Grammare said.

The AAL fleet consists of 10 “mega-size,” 31,000-deadweight-ton, multipurpose (MPP) vessels, which have on-board cranes capable of handling cargo loads up to 700 tons and are suitable for large capital goods.

“Looking at our cargoes in 2020, we have noticed that the majority of our sailings have been filled with single cargoes, which smaller MPP vessels simply cannot transport in an economically efficient manner,” Grammare said.

Energized by wind

Some of the large-scale project cargo loads transported by AAL to the U.S. during the first five months of 2020 include gantry cranes, transformers, gas processing and mining equipment, and wind turbine components.

These cargoes, which originate in Asia and Europe, generally arrive at the ports of Houston and New Orleans but are also delivered to other Gulf ports such as Corpus Christi, Galveston, Aransas, Brownsville and Freeport, Texas; Tampa and Manatee, Florida; and Mobile, Alabama; as well as the East Coast ports of Savannah, Georgia, and Philadelphia, where they are offloaded and prepared for inland transport by heavy-duty truck or rail.

The U.S. oil and gas sector, which experienced record low oil prices in May, postponed many projects and capital investments during the first half of the year. Grammare expects that with a gradual recovery of oil prices later in the year, these types of project investments will pick up in the fourth quarter of 2020 or the first quarter of next year. “Nevertheless, these projects will not generate cargo movement for another year or so,” he said.

According to the U.S. Energy Information Administration (EIA) in early June, U.S. crude oil production will continue to decline to 10.6 million barrels per day through March 2021 due to ongoing low prices and usage rates during the COVID-19 pandemic.

“Typically, price changes affect production after about a six-month lag. However, current market conditions have shortened this lag as many producers have already curtailed production and reduced capital spending and drilling in response to lower prices,” EIA said.

Fortunately for AAL, the U.S. wind energy sector has remained strong during the COVID-19 pandemic, continuing to import numerous turbine components for ongoing wind farm projects throughout the country.

“The trend here is shifting towards larger and larger wind turbines for which AAL’s mega-size fleet is very well suited,” Grammare said.

Wind turbine blades being offloaded from AAL Shipping vessel. (Photo: AAL Shipping)

The U.S. wind energy sector anticipated a banner year in 2020 for construction of wind farms —  combinations of giant wind turbines spread across thousands of acres of open spaces — which is stimulated by a significant federal production tax credit. The electric power generated by these wind farms is fed into utility power grids.

According to the Washington-based American Wind Energy Association (AWEA), the U.S. wind industry installed more than 1,800 megawatts of new wind power capacity during the first quarter of 2020. That is more than double the capacity installed during the first quarter of last year, the association said.

In addition to the federal tax credit, U.S. wind farm development has been stimulated by the ongoing commitment by large American corporations purchasing clean electric power generated by wind turbines. More than 140 companies have purchased U.S. wind-generated electricity. Google (NASDAQ: GOOG) is the top corporate wind energy customer in the U.S., with 2,397 megawatts contracted. Facebook (NASDAQ: FB) is the second-largest purchaser, with 1,459 megawatts, followed by Walmart (NYSE: WMT), AT&T (NYSE: T) and Microsoft (NASDAQ: MSFT), AWEA said in mid-June.

Return to health

The COVID-19 pandemic has, however, put a dent into AAL’s ability to secure “part” or “completion” cargoes to top off some of its vessel voyages. These cargoes typically include smaller equipment and structural steel. “This decrease is directly related to a drop in demand in the U.S.,” Grammare said.

AAL maintains an office in Houston to work with its U.S. customers.

“Generally, we feel that the U.S. trade volumes, especially those outside of capital projects, are very much reduced in 2020,” Grammare said, though he did not provide a figure. “Nevertheless, it is fair to say that the European market is feeling a similar effect, while Asia seems to be less affected — most likely as the virus has hit Asia first and the initial sharp drop in cargo movement we experienced earlier this year is already behind us and Asian economies are now recovering.”

He said smaller project cargoes and other breakbulk shipments will take longer to recover.

“Once the COVID-19 pandemic subsides, we will see an uplift in cargo volumes driven by companies trying to catch up with time lost and stock levels,” Grammare said. “This could be months away and will very much depend on the overall economic impact of the COVID-19 pandemic in the U.S. and ongoing U.S.-China trade negotiations which will hugely affect supply chains.”

Related Articles:

SAL Heavy Lift sails on IT cloud

Will wind turbine transporters continue to roll during COVID-19?

Virginia lays out offshore wind supply chain roadmap

Click to read more FreightWaves/American Shipper articles by Chris Gillis.

Project cargoes keep AAL’s ships calling US Gulf ports – FreightWaves

Project cargoes may not be the fastest movers on the high seas, but they have proved much less volatile than the U.S. container trades during the coronavirus pandemic.

Christophe Grammare, commercial director, AAL Shipping (Photo: Courtesy)

Singapore-based AAL Shipping, one of the world’s largest marine project cargo carriers with 25 vessels, has witnessed a steady increase in ship sailings involving the transport of large capital equipment from Asia to U.S. ports during the first half of 2020. Between April and June alone, the carrier completed 12 sailings to the U.S.

“This has been driven mostly by our 2020 strategy to increase our coverage of the Asia-U.S. trade lane and commit tonnage and resources to really expanding our presence in the region,” Christophe Grammare, AAL’s commercial director, told American Shipper.

However, he noted this continuation of business during the virus-induced economic upheaval hinges on the nature of project cargo shipments, which by their nature can take years of logistics planning.

“Although some project equipment manufacture was delayed by the COVID pandemic, the movement of these projects continues reasonably unaffected at this stage,” Grammare said.

The AAL fleet consists of 10 “mega-size,” 31,000-deadweight-ton, multipurpose (MPP) vessels, which have on-board cranes capable of handling cargo loads up to 700 tons and are suitable for large capital goods.

“Looking at our cargoes in 2020, we have noticed that the majority of our sailings have been filled with single cargoes, which smaller MPP vessels simply cannot transport in an economically efficient manner,” Grammare said.

Energized by wind

Some of the large-scale project cargo loads transported by AAL to the U.S. during the first five months of 2020 include gantry cranes, transformers, gas processing and mining equipment, and wind turbine components.

These cargoes, which originate in Asia and Europe, generally arrive at the ports of Houston and New Orleans but are also delivered to other Gulf ports such as Corpus Christi, Galveston, Aransas, Brownsville and Freeport, Texas; Tampa and Manatee, Florida; and Mobile, Alabama; as well as the East Coast ports of Savannah, Georgia, and Philadelphia, where they are offloaded and prepared for inland transport by heavy-duty truck or rail.

The U.S. oil and gas sector, which experienced record low oil prices in May, postponed many projects and capital investments during the first half of the year. Grammare expects that with a gradual recovery of oil prices later in the year, these types of project investments will pick up in the fourth quarter of 2020 or the first quarter of next year. “Nevertheless, these projects will not generate cargo movement for another year or so,” he said.

According to the U.S. Energy Information Administration (EIA) in early June, U.S. crude oil production will continue to decline to 10.6 million barrels per day through March 2021 due to ongoing low prices and usage rates during the COVID-19 pandemic.

“Typically, price changes affect production after about a six-month lag. However, current market conditions have shortened this lag as many producers have already curtailed production and reduced capital spending and drilling in response to lower prices,” EIA said.

Fortunately for AAL, the U.S. wind energy sector has remained strong during the COVID-19 pandemic, continuing to import numerous turbine components for ongoing wind farm projects throughout the country.

“The trend here is shifting towards larger and larger wind turbines for which AAL’s mega-size fleet is very well suited,” Grammare said.

Wind turbine blades being offloaded from AAL Shipping vessel. (Photo: AAL Shipping)

The U.S. wind energy sector anticipated a banner year in 2020 for construction of wind farms —  combinations of giant wind turbines spread across thousands of acres of open spaces — which is stimulated by a significant federal production tax credit. The electric power generated by these wind farms is fed into utility power grids.

According to the Washington-based American Wind Energy Association (AWEA), the U.S. wind industry installed more than 1,800 megawatts of new wind power capacity during the first quarter of 2020. That is more than double the capacity installed during the first quarter of last year, the association said.

In addition to the federal tax credit, U.S. wind farm development has been stimulated by the ongoing commitment by large American corporations purchasing clean electric power generated by wind turbines. More than 140 companies have purchased U.S. wind-generated electricity. Google (NASDAQ: GOOG) is the top corporate wind energy customer in the U.S., with 2,397 megawatts contracted. Facebook (NASDAQ: FB) is the second-largest purchaser, with 1,459 megawatts, followed by Walmart (NYSE: WMT), AT&T (NYSE: T) and Microsoft (NASDAQ: MSFT), AWEA said in mid-June.

Return to health

The COVID-19 pandemic has, however, put a dent into AAL’s ability to secure “part” or “completion” cargoes to top off some of its vessel voyages. These cargoes typically include smaller equipment and structural steel. “This decrease is directly related to a drop in demand in the U.S.,” Grammare said.

AAL maintains an office in Houston to work with its U.S. customers.

“Generally, we feel that the U.S. trade volumes, especially those outside of capital projects, are very much reduced in 2020,” Grammare said, though he did not provide a figure. “Nevertheless, it is fair to say that the European market is feeling a similar effect, while Asia seems to be less affected — most likely as the virus has hit Asia first and the initial sharp drop in cargo movement we experienced earlier this year is already behind us and Asian economies are now recovering.”

He said smaller project cargoes and other breakbulk shipments will take longer to recover.

“Once the COVID-19 pandemic subsides, we will see an uplift in cargo volumes driven by companies trying to catch up with time lost and stock levels,” Grammare said. “This could be months away and will very much depend on the overall economic impact of the COVID-19 pandemic in the U.S. and ongoing U.S.-China trade negotiations which will hugely affect supply chains.”

Related Articles:

SAL Heavy Lift sails on IT cloud

Will wind turbine transporters continue to roll during COVID-19?

Virginia lays out offshore wind supply chain roadmap

Click to read more FreightWaves/American Shipper articles by Chris Gillis.

Project cargoes keep AAL’s ships calling US Gulf ports – FreightWaves

Project cargoes may not be the fastest movers on the high seas, but they have proved much less volatile than the U.S. container trades during the coronavirus pandemic.

Christophe Grammare, commercial director, AAL Shipping (Photo: Courtesy)

Singapore-based AAL Shipping, one of the world’s largest marine project cargo carriers with 25 vessels, has witnessed a steady increase in ship sailings involving the transport of large capital equipment from Asia to U.S. ports during the first half of 2020. Between April and June alone, the carrier completed 12 sailings to the U.S.

“This has been driven mostly by our 2020 strategy to increase our coverage of the Asia-U.S. trade lane and commit tonnage and resources to really expanding our presence in the region,” Christophe Grammare, AAL’s commercial director, told American Shipper.

However, he noted this continuation of business during the virus-induced economic upheaval hinges on the nature of project cargo shipments, which by their nature can take years of logistics planning.

“Although some project equipment manufacture was delayed by the COVID pandemic, the movement of these projects continues reasonably unaffected at this stage,” Grammare said.

The AAL fleet consists of 10 “mega-size,” 31,000-deadweight-ton, multipurpose (MPP) vessels, which have on-board cranes capable of handling cargo loads up to 700 tons and are suitable for large capital goods.

“Looking at our cargoes in 2020, we have noticed that the majority of our sailings have been filled with single cargoes, which smaller MPP vessels simply cannot transport in an economically efficient manner,” Grammare said.

Energized by wind

Some of the large-scale project cargo loads transported by AAL to the U.S. during the first five months of 2020 include gantry cranes, transformers, gas processing and mining equipment, and wind turbine components.

These cargoes, which originate in Asia and Europe, generally arrive at the ports of Houston and New Orleans but are also delivered to other Gulf ports such as Corpus Christi, Galveston, Aransas, Brownsville and Freeport, Texas; Tampa and Manatee, Florida; and Mobile, Alabama; as well as the East Coast ports of Savannah, Georgia, and Philadelphia, where they are offloaded and prepared for inland transport by heavy-duty truck or rail.

The U.S. oil and gas sector, which experienced record low oil prices in May, postponed many projects and capital investments during the first half of the year. Grammare expects that with a gradual recovery of oil prices later in the year, these types of project investments will pick up in the fourth quarter of 2020 or the first quarter of next year. “Nevertheless, these projects will not generate cargo movement for another year or so,” he said.

According to the U.S. Energy Information Administration (EIA) in early June, U.S. crude oil production will continue to decline to 10.6 million barrels per day through March 2021 due to ongoing low prices and usage rates during the COVID-19 pandemic.

“Typically, price changes affect production after about a six-month lag. However, current market conditions have shortened this lag as many producers have already curtailed production and reduced capital spending and drilling in response to lower prices,” EIA said.

Fortunately for AAL, the U.S. wind energy sector has remained strong during the COVID-19 pandemic, continuing to import numerous turbine components for ongoing wind farm projects throughout the country.

“The trend here is shifting towards larger and larger wind turbines for which AAL’s mega-size fleet is very well suited,” Grammare said.

Wind turbine blades being offloaded from AAL Shipping vessel. (Photo: AAL Shipping)

The U.S. wind energy sector anticipated a banner year in 2020 for construction of wind farms —  combinations of giant wind turbines spread across thousands of acres of open spaces — which is stimulated by a significant federal production tax credit. The electric power generated by these wind farms is fed into utility power grids.

According to the Washington-based American Wind Energy Association (AWEA), the U.S. wind industry installed more than 1,800 megawatts of new wind power capacity during the first quarter of 2020. That is more than double the capacity installed during the first quarter of last year, the association said.

In addition to the federal tax credit, U.S. wind farm development has been stimulated by the ongoing commitment by large American corporations purchasing clean electric power generated by wind turbines. More than 140 companies have purchased U.S. wind-generated electricity. Google (NASDAQ: GOOG) is the top corporate wind energy customer in the U.S., with 2,397 megawatts contracted. Facebook (NASDAQ: FB) is the second-largest purchaser, with 1,459 megawatts, followed by Walmart (NYSE: WMT), AT&T (NYSE: T) and Microsoft (NASDAQ: MSFT), AWEA said in mid-June.

Return to health

The COVID-19 pandemic has, however, put a dent into AAL’s ability to secure “part” or “completion” cargoes to top off some of its vessel voyages. These cargoes typically include smaller equipment and structural steel. “This decrease is directly related to a drop in demand in the U.S.,” Grammare said.

AAL maintains an office in Houston to work with its U.S. customers.

“Generally, we feel that the U.S. trade volumes, especially those outside of capital projects, are very much reduced in 2020,” Grammare said, though he did not provide a figure. “Nevertheless, it is fair to say that the European market is feeling a similar effect, while Asia seems to be less affected — most likely as the virus has hit Asia first and the initial sharp drop in cargo movement we experienced earlier this year is already behind us and Asian economies are now recovering.”

He said smaller project cargoes and other breakbulk shipments will take longer to recover.

“Once the COVID-19 pandemic subsides, we will see an uplift in cargo volumes driven by companies trying to catch up with time lost and stock levels,” Grammare said. “This could be months away and will very much depend on the overall economic impact of the COVID-19 pandemic in the U.S. and ongoing U.S.-China trade negotiations which will hugely affect supply chains.”

Related Articles:

SAL Heavy Lift sails on IT cloud

Will wind turbine transporters continue to roll during COVID-19?

Virginia lays out offshore wind supply chain roadmap

Click to read more FreightWaves/American Shipper articles by Chris Gillis.

Project cargoes keep AAL’s ships calling US Gulf ports – FreightWaves

Project cargoes may not be the fastest movers on the high seas, but they have proved much less volatile than the U.S. container trades during the coronavirus pandemic.

Christophe Grammare, commercial director, AAL Shipping (Photo: Courtesy)

Singapore-based AAL Shipping, one of the world’s largest marine project cargo carriers with 25 vessels, has witnessed a steady increase in ship sailings involving the transport of large capital equipment from Asia to U.S. ports during the first half of 2020. Between April and June alone, the carrier completed 12 sailings to the U.S.

“This has been driven mostly by our 2020 strategy to increase our coverage of the Asia-U.S. trade lane and commit tonnage and resources to really expanding our presence in the region,” Christophe Grammare, AAL’s commercial director, told American Shipper.

However, he noted this continuation of business during the virus-induced economic upheaval hinges on the nature of project cargo shipments, which by their nature can take years of logistics planning.

“Although some project equipment manufacture was delayed by the COVID pandemic, the movement of these projects continues reasonably unaffected at this stage,” Grammare said.

The AAL fleet consists of 10 “mega-size,” 31,000-deadweight-ton, multipurpose (MPP) vessels, which have on-board cranes capable of handling cargo loads up to 700 tons and are suitable for large capital goods.

“Looking at our cargoes in 2020, we have noticed that the majority of our sailings have been filled with single cargoes, which smaller MPP vessels simply cannot transport in an economically efficient manner,” Grammare said.

Energized by wind

Some of the large-scale project cargo loads transported by AAL to the U.S. during the first five months of 2020 include gantry cranes, transformers, gas processing and mining equipment, and wind turbine components.

These cargoes, which originate in Asia and Europe, generally arrive at the ports of Houston and New Orleans but are also delivered to other Gulf ports such as Corpus Christi, Galveston, Aransas, Brownsville and Freeport, Texas; Tampa and Manatee, Florida; and Mobile, Alabama; as well as the East Coast ports of Savannah, Georgia, and Philadelphia, where they are offloaded and prepared for inland transport by heavy-duty truck or rail.

The U.S. oil and gas sector, which experienced record low oil prices in May, postponed many projects and capital investments during the first half of the year. Grammare expects that with a gradual recovery of oil prices later in the year, these types of project investments will pick up in the fourth quarter of 2020 or the first quarter of next year. “Nevertheless, these projects will not generate cargo movement for another year or so,” he said.

According to the U.S. Energy Information Administration (EIA) in early June, U.S. crude oil production will continue to decline to 10.6 million barrels per day through March 2021 due to ongoing low prices and usage rates during the COVID-19 pandemic.

“Typically, price changes affect production after about a six-month lag. However, current market conditions have shortened this lag as many producers have already curtailed production and reduced capital spending and drilling in response to lower prices,” EIA said.

Fortunately for AAL, the U.S. wind energy sector has remained strong during the COVID-19 pandemic, continuing to import numerous turbine components for ongoing wind farm projects throughout the country.

“The trend here is shifting towards larger and larger wind turbines for which AAL’s mega-size fleet is very well suited,” Grammare said.

Wind turbine blades being offloaded from AAL Shipping vessel. (Photo: AAL Shipping)

The U.S. wind energy sector anticipated a banner year in 2020 for construction of wind farms —  combinations of giant wind turbines spread across thousands of acres of open spaces — which is stimulated by a significant federal production tax credit. The electric power generated by these wind farms is fed into utility power grids.

According to the Washington-based American Wind Energy Association (AWEA), the U.S. wind industry installed more than 1,800 megawatts of new wind power capacity during the first quarter of 2020. That is more than double the capacity installed during the first quarter of last year, the association said.

In addition to the federal tax credit, U.S. wind farm development has been stimulated by the ongoing commitment by large American corporations purchasing clean electric power generated by wind turbines. More than 140 companies have purchased U.S. wind-generated electricity. Google (NASDAQ: GOOG) is the top corporate wind energy customer in the U.S., with 2,397 megawatts contracted. Facebook (NASDAQ: FB) is the second-largest purchaser, with 1,459 megawatts, followed by Walmart (NYSE: WMT), AT&T (NYSE: T) and Microsoft (NASDAQ: MSFT), AWEA said in mid-June.

Return to health

The COVID-19 pandemic has, however, put a dent into AAL’s ability to secure “part” or “completion” cargoes to top off some of its vessel voyages. These cargoes typically include smaller equipment and structural steel. “This decrease is directly related to a drop in demand in the U.S.,” Grammare said.

AAL maintains an office in Houston to work with its U.S. customers.

“Generally, we feel that the U.S. trade volumes, especially those outside of capital projects, are very much reduced in 2020,” Grammare said, though he did not provide a figure. “Nevertheless, it is fair to say that the European market is feeling a similar effect, while Asia seems to be less affected — most likely as the virus has hit Asia first and the initial sharp drop in cargo movement we experienced earlier this year is already behind us and Asian economies are now recovering.”

He said smaller project cargoes and other breakbulk shipments will take longer to recover.

“Once the COVID-19 pandemic subsides, we will see an uplift in cargo volumes driven by companies trying to catch up with time lost and stock levels,” Grammare said. “This could be months away and will very much depend on the overall economic impact of the COVID-19 pandemic in the U.S. and ongoing U.S.-China trade negotiations which will hugely affect supply chains.”

Related Articles:

SAL Heavy Lift sails on IT cloud

Will wind turbine transporters continue to roll during COVID-19?

Virginia lays out offshore wind supply chain roadmap

Click to read more FreightWaves/American Shipper articles by Chris Gillis.

Project cargoes keep AAL’s ships calling US Gulf ports – FreightWaves

Project cargoes may not be the fastest movers on the high seas, but they have proved much less volatile than the U.S. container trades during the coronavirus pandemic.

Christophe Grammare, commercial director, AAL Shipping (Photo: Courtesy)

Singapore-based AAL Shipping, one of the world’s largest marine project cargo carriers with 25 vessels, has witnessed a steady increase in ship sailings involving the transport of large capital equipment from Asia to U.S. ports during the first half of 2020. Between April and June alone, the carrier completed 12 sailings to the U.S.

“This has been driven mostly by our 2020 strategy to increase our coverage of the Asia-U.S. trade lane and commit tonnage and resources to really expanding our presence in the region,” Christophe Grammare, AAL’s commercial director, told American Shipper.

However, he noted this continuation of business during the virus-induced economic upheaval hinges on the nature of project cargo shipments, which by their nature can take years of logistics planning.

“Although some project equipment manufacture was delayed by the COVID pandemic, the movement of these projects continues reasonably unaffected at this stage,” Grammare said.

The AAL fleet consists of 10 “mega-size,” 31,000-deadweight-ton, multipurpose (MPP) vessels, which have on-board cranes capable of handling cargo loads up to 700 tons and are suitable for large capital goods.

“Looking at our cargoes in 2020, we have noticed that the majority of our sailings have been filled with single cargoes, which smaller MPP vessels simply cannot transport in an economically efficient manner,” Grammare said.

Energized by wind

Some of the large-scale project cargo loads transported by AAL to the U.S. during the first five months of 2020 include gantry cranes, transformers, gas processing and mining equipment, and wind turbine components.

These cargoes, which originate in Asia and Europe, generally arrive at the ports of Houston and New Orleans but are also delivered to other Gulf ports such as Corpus Christi, Galveston, Aransas, Brownsville and Freeport, Texas; Tampa and Manatee, Florida; and Mobile, Alabama; as well as the East Coast ports of Savannah, Georgia, and Philadelphia, where they are offloaded and prepared for inland transport by heavy-duty truck or rail.

The U.S. oil and gas sector, which experienced record low oil prices in May, postponed many projects and capital investments during the first half of the year. Grammare expects that with a gradual recovery of oil prices later in the year, these types of project investments will pick up in the fourth quarter of 2020 or the first quarter of next year. “Nevertheless, these projects will not generate cargo movement for another year or so,” he said.

According to the U.S. Energy Information Administration (EIA) in early June, U.S. crude oil production will continue to decline to 10.6 million barrels per day through March 2021 due to ongoing low prices and usage rates during the COVID-19 pandemic.

“Typically, price changes affect production after about a six-month lag. However, current market conditions have shortened this lag as many producers have already curtailed production and reduced capital spending and drilling in response to lower prices,” EIA said.

Fortunately for AAL, the U.S. wind energy sector has remained strong during the COVID-19 pandemic, continuing to import numerous turbine components for ongoing wind farm projects throughout the country.

“The trend here is shifting towards larger and larger wind turbines for which AAL’s mega-size fleet is very well suited,” Grammare said.

Wind turbine blades being offloaded from AAL Shipping vessel. (Photo: AAL Shipping)

The U.S. wind energy sector anticipated a banner year in 2020 for construction of wind farms —  combinations of giant wind turbines spread across thousands of acres of open spaces — which is stimulated by a significant federal production tax credit. The electric power generated by these wind farms is fed into utility power grids.

According to the Washington-based American Wind Energy Association (AWEA), the U.S. wind industry installed more than 1,800 megawatts of new wind power capacity during the first quarter of 2020. That is more than double the capacity installed during the first quarter of last year, the association said.

In addition to the federal tax credit, U.S. wind farm development has been stimulated by the ongoing commitment by large American corporations purchasing clean electric power generated by wind turbines. More than 140 companies have purchased U.S. wind-generated electricity. Google (NASDAQ: GOOG) is the top corporate wind energy customer in the U.S., with 2,397 megawatts contracted. Facebook (NASDAQ: FB) is the second-largest purchaser, with 1,459 megawatts, followed by Walmart (NYSE: WMT), AT&T (NYSE: T) and Microsoft (NASDAQ: MSFT), AWEA said in mid-June.

Return to health

The COVID-19 pandemic has, however, put a dent into AAL’s ability to secure “part” or “completion” cargoes to top off some of its vessel voyages. These cargoes typically include smaller equipment and structural steel. “This decrease is directly related to a drop in demand in the U.S.,” Grammare said.

AAL maintains an office in Houston to work with its U.S. customers.

“Generally, we feel that the U.S. trade volumes, especially those outside of capital projects, are very much reduced in 2020,” Grammare said, though he did not provide a figure. “Nevertheless, it is fair to say that the European market is feeling a similar effect, while Asia seems to be less affected — most likely as the virus has hit Asia first and the initial sharp drop in cargo movement we experienced earlier this year is already behind us and Asian economies are now recovering.”

He said smaller project cargoes and other breakbulk shipments will take longer to recover.

“Once the COVID-19 pandemic subsides, we will see an uplift in cargo volumes driven by companies trying to catch up with time lost and stock levels,” Grammare said. “This could be months away and will very much depend on the overall economic impact of the COVID-19 pandemic in the U.S. and ongoing U.S.-China trade negotiations which will hugely affect supply chains.”

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Click to read more FreightWaves/American Shipper articles by Chris Gillis.

Inbound package rates rise; market braces for sticker shock – FreightWaves

The Universal Postal Union (UPU) regulations increased inbound package rates within the U.S. as of today, July 1. As agreed to by the UPU and the U.S. in October 2019, the deal will ensure that the country remains a part of the UPU. The changes were put in place after the U.S., the largest importer in the world, threatened to leave the UPU, citing mandated cheaper parcel rates granted to countries with a “developing” status tag – including China. 

The UPU was forced to come to the table for negotiations, because if the U.S. left the union it would potentially destabilize the organization. The UPU convened the ‘extraordinary Congress’ meeting in this regard, an event that has only been held twice previously in UPU’s history. 

The fundamental issue that bothered the U.S. was that packages shipped domestically within the U.S. could be priced higher than inbound packages from other countries. For instance, a $10 phone case bought in California and shipped to Detroit could cost more than the same phone case being purchased from China and shipped into the U.S.

The new deal will ensure that postal rates can be up to 70% of the domestic prices, with an added option of increasing rates by 1% every year to 80%. Though this is not exactly leveling the playing field, international shippers will have less of an undue advantage than before. 

FreightWaves spoke with Krish Iyer, the director of strategic partnerships at ShipStation, to understand the impact of the increase in package rates on the U.S. market. “The history behind cross-border shipping rates started about 50 years ago when shipping rates were subsidized to improve Asia’s economies, particularly southeast and east Asia. But with the emergence of China as a hub for lower value products and electronics, this did not make sense anymore,” said Iyer. 

The heavily subsidized rate meant China could reach U.S. consumers at a more economical rate compared to domestic U.S. suppliers, tilting commerce heavily in favor of net-exporter countries like China. With subsidies keeping inbound shipping costs very low, Chinese sellers could capture the American market, even when consumers had to wait for a few weeks to receive their orders. 

With the first phase of the changes kicking in, the U.S. could witness a massive increase in package rates with countries with which it does not have a bilateral agreement. This confusion also arises in the context of the deal, as it looks to create a new era in which countries wield more power on shipping rates. The deal will now enable countries to determine the rates that foreign postal services will charge for services when the mail crosses its borders. 

Iyer contended that the real effect of these changes would hit the market by mid-July. “The initial struggle will be people looking at rising rates and having sticker shock. But it’s important to note that a lot of bilateral agreements will have to be negotiated between countries. For instance, the inbound package rate is going to be much higher for countries in the European Union. The only exception to this could be Canada, but we still don’t know the exact details,” he said. 

The sticker shock is expected to be universal across all logistics forwarders in the U.S., including FedEx, UPS and DHL. Iyer explained that low-value goods traders and micro finance-type merchants would see significant challenges as they contend with rising costs. 

“This is a major change like we have never seen before, so we don’t know the domino effect on logistics, as there are so many other external factors at play. However, this move by the UPU was bound to happen – whether this year or a decade from now,” said Iyer. 

***

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Pilot Freight expands corporate umbrella – FreightWaves

Pilot Freight Services, a 50-year-old logistics services provider with roots in airfreight, has placed five long-time, franchise-operated offices under its direct management.

The former franchises are located in Texas, Wisconsin and Mexico. Pilot said the acquisition of these offices was attractive due to their “strong historical growth and operational performance” for the overall company.

Financial terms of the acquisitions, effective today, July 1, were not disclosed by either Pilot or its owners ATL Partners and British Columbia Investment Management Corp. (bcIMC).

However, the Glen Mills, Pennsylvania-based logistics services provider said the franchise managers and staff have been retained in the acquisitions.

John Hill, Pilot’s president and chief commercial officer, told American Shipper the franchise office integrations for the company have been “seamless,” since these locations have long operated under the Pilot brand and systems.

Most Pilot customers were not even aware that the five offices were formerly operated by franchise owners, Hill said.

According to Pilot, the recently acquired franchise offices have strong operations serving the logistics requirements of shippers in the automotive, healthcare, home furnishings, industrial products, and packaging sectors.

“By bringing the operations along the U.S. and Mexico border in-house, Pilot further improves its ability to provide seamless trade solutions to cross-border clients,” the company said in a statement.

Since 2018, Pilot has brought 25 franchise offices throughout the country under its direct control. Hill said the reasons for these acquisitions have varied. In some cases, for example, it was a matter of retirements among franchise location operators.

“It’s not our strategy to make our offices 100% company-owned,” Hill said, although Pilot today directly controls 90% of its locations. “If we have a franchise in a market that’s working well, then we’re all for that,” he said.

In the early 1990s, Pilot rapidly grew its national presence by opening franchise-operated offices throughout the country.

Today, the logistics services provider has about 1,500 employees spread across 90 North American locations and several offices in Europe and Asia-Pacific. Pilot also operates a fleet of about 1,500 freight delivery trucks throughout the U.S.

In July 2018, Pilot acquired Manna Freight Systems, a final-mile logistics provider based in Minneapolis-St. Paul. The acquisition increased Pilot’s business-to-consumer home delivery service, which focuses on heavy and hard-to-handle goods. The company said e-commerce has also generated an uptick in these types of home deliveries.

Hill said Pilot is “keeping its eyes open to future acquisitions, if they make sense.”

While the start to this year’s freight volumes was dimmed by the coronavirus pandemic, Pilot noted it has experienced an increase in both domestic business-to-business and global freight movements in recent months.

“Overall, Pilot is looking forward to a strong 2020 with growth across all product lines,” the company said.

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Click for more FreightWaves/American Shipper articles by Chris Gillis.

DHL flight puts fuel-saving steps to the test – FreightWaves

Global courier DHL Express (OTCMKTS: DPSGY) plans to leave its cleanest mark in the sky on Wednesday, July 1, when a full freighter takes off from its Leipzig, Germany, hub en route to John F. Kennedy International Airport in New York.

DHL said it is taking advantage of less busy airspace resulting from the novel coronavirus pandemic to operate a “perfect flight” for saving jet fuel and cutting carbon emissions. In-house airline European Air Transport will take more than 50 steps to maximize the Airbus A330-200’s fuel economy and minimize environmental impact. The flight will include a typical payload of 60 tons of freight.

The German-based carrier has included various sustainability considerations in the operation of the aircraft, including washing the engines before the flight to improve aerodynamics and optimizing the route from an unrestricted climb to cruising altitude to a descent at a constant angle with minimum engine power.

DHL said a total of 13 regulatory entities will participate in the flight, helping the crew to maintain optimal flight route and altitude, including navigating weather conditions, wind and other air traffic during the flight.

The carrier expects the flight to save about 1,000 kilograms of fuel, which will reduce carbon dioxide emissions by 3,150 kilograms.

“Our ‘perfect flight’ can demonstrate a route to making air freight more efficient with the lowest possible fuel consumption and a reduction of CO2 emissions,” said Roy Hughes, executive vice president of DHL Network Operations Europe, in a statement.

“With this demonstration flight we can gain important insights for the air transport industry and contribute to the Deutsche Post DHL Group’s climate goal of net zero emissions from transportation,” he added.

Environmental experts say the global airline industry contributes about 12% of transportation-related carbon dioxide emissions.

Many of the world’s airlines have committed to aircraft emission reductions plans through new aircraft acquisitions and use of biofuels. The International Air Transport Association has set a goal to reduce industry-wide emissions 50% by 2050.

Recent changes to DHL’s existing A330-200F fleet and the purchase of 14 new Boeing 777 freighters have already led to an 18% reduction in the company’s carbon dioxide emissions. Parent company Deutsche Post DHL Group has also joined aireg and the Global Alliance Powerfuels to participate in the development of cleaner aircraft fuels.

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SAL Heavy Lift sails on IT cloud – FreightWaves

SAL Heavy Lift is an expert at transporting the largest cargoes across the world’s oceans, but its biggest lift in recent years has been to digitize complex administrative processes that have long weighed down the project cargo industry.

Claas Matthies, CIO of SAL Heavy Lift (Photo: Courtesy)

Maritime project cargoes are complex undertakings both in their uniqueness and physical handling, but they are equally complicated by the persistent documentation and different communication channels associated with each shipment.

“We move assets worth millions of dollars, but technology has not kept pace in our industry,” said Claas Matthies, chief information officer of SAL Heavy Lift, which is based in Hamburg, Germany. “We need to focus on improving our data management if we want to take this industry to the next level.”

Matthies, 47,  was promoted to CIO of SAL in January to lead the carrier’s digitalization strategy, combined with his current responsibilities for global accounting and merger and acquisition activities.

“Digitalization of business processes is becoming an ever-more competitive parameter and we see great potential in developing our digital landscape even further from today,” said SAL CEO Martin Harren in a statement at the time of Matthias’ appointment to CIO. “As a modern and dynamic shipping group, information technology plays a vital role in our further growth and development.”

Complexity on top of complexity

SAL was founded in 1980 and in 2017 became part of the Harren & Partner Group. The carrier’s fleet of ships offer up to 32,000 square feet of main deck space and have on-deck cranes capable of raising cargoes of 550 to 2,000 tons.

Until recently, SAL’s operations have been driven by disparate information systems, mounds of paperwork and numerous telephone calls and emails.

“This is an engineer-driven process in which plans, drawings and calculations are put together and must be shared with the clients,” Matthies said. “We realize that there is a real potential to digitize this process and make it smarter.”

Prior to his appointment as SAL’s CIO, Matthies worked for Harren & Partner Group since 2011, where he oversaw IT and finance. He was put in charge of the company’s implementation of an enterprise resource planning (ERP) system and ship management software for a global vessel fleet consisting of about 70 ships and a global staff of 280.

In 2017, Matthies helped to integrate SAL into Harren & Partner Group’s operation. The new ERP system, MS Dynamic Navision, automated the carrier’s purchase-to-pay process, eliminating thousands of paper invoices.

Steaming past rigid IT infrastructure

A top priority for Matthies is finding suitable cloud-based information technologies for their flexibility and not being tied down to rigid IT infrastructure.

The company recently implemented a cloud-based voyage management system (Veson’s IMOS VIP application), which largely supports the important functions of chartering, operations and administration.

“In doing so, data transparency has been increased enormously and use of real-time information stored in a place accessible for users across all SAL departments and offices worldwide allows for deeper insights and better conclusions,” Matthies said.

SAL also plans to implement a new ship management application for crewing, maintenance, purchasing and quality this year.

The company declined to say how much it has invested in new IT solutions since 2017.

Matthies said SAL’s implementation of on-line collaborative communications tools last year has allowed the company to continue its IT strategy unabated, even with most of its management and staff working from home due to the coronavirus pandemic.

However, SAL still has more IT work ahead. In ocean project cargo shipping, individual contracts are the daily reality and standardizing or even blockchaining complex tenders is a monumental task, Matthies said.

Comparing containers to projects

Matthies told American Shipper that he spends considerable time studying the IT structures of the container-shipping industry.

“If you follow the idea of containerized shipping that the parcel is as important as the information then you would assume that there would be the same trend in heavy-lift shipping,” he said.

This is not the case for most international project cargoes, which by their very nature are ad-hoc and non-repetitive. However, there are still IT best practices and tools that can be gleaned from the ocean container carriers.

“I am excited to see what will materialize even in our market space, seeing liner companies embracing new opportunities for technology usage and serving as a blueprint for our business, at least in parts,” Matthies said.

New IT breeds new talent

Matthies said the implementation of new technologies in what has been a traditionally, slow-to-change industry has become easier with SAL’s younger staff willingly embracing digitization of work processes.

Long-term, he also sees the value of having the latest IT in place at SAL to attract future talent to the project cargo shipping industry.

“Putting emphasis on digitization is necessary to keep up with the crowd, but at the end of the day it is important that these investments improve our ability to make the best business decisions and increase our financial results,” he said.

Click for more FreightWaves/American Shipper articles by Chris Gillis.