By Leo Ryan, AJOT While Canadian ports remain an active player for breakbulk project cargo activity related to Alberta oil sands, wind energy and other dimensional shipments, the global recession has provoked a significant change in some market trends.
In the words of Jan Beringer, a leading international project freight forwarder, “I always say in the shipping business – if it is not coming in, then it’s going out.” Beringer is president and CEO of Calgary-based Rohde & Liesenfeld Canada Inc., a company that is heavily involved in major project cargo developments.
Interviewed by AJOT, he pointed out that “we have taken an about face from the mega projects in oil sands and wind energy fuelling our economic growth to the stark reality of a growing trend of dismantling and shipping out Canadian assets. Assets, like for example, auto parts plants, forest product mills, steel mills, shipyards and other brick-and-mortar businesses are being loaded on breakbulk and container vessels destined for growth markets like India and China.”
“In addition,” Beringer continued, “mobile assets like drilling rigs, cranes and heavy equipment are being auctioned off across Canada and being shipped out to overseas buyers. This trend is directly linked to the downturn in our Canadian oil and gas and mining sector activities, where this equipment is now no longer required, and the equipment owners are desperate to dispose of the assets as quickly as possible.
“The economic reality is that increasing environmental restrictions and the high cost of unionized labor in North America are shifting our brick-and-mortar plant and equipment assets to overseas markets.”
According to Beringer, “at least in the short term, the relocation of assets out of Canada represents a stimulus package for both breakbulk and container vessel operators.”
During the interview, Beringer indicated “since the economic crisis hit us head-on, we have seen a substantial increase in our own revenues involving the dismantling and shipping of plant and equipment – almost to the point that we are as busy shipping out equipment as we were previously shipping in new equipment.”
(In its most recent analysis, the Bank of Canada revised upwards its outlook for the Canadian economy to a 2.3% contraction this year from a previous forecast of three percent contraction, and 2010 GDP growth is expected to attain three percent.)
Beringer said that other areas breakbulk activity in the project sector can be traced to mining equipment being exported and imported for potash plants. “The mining sector involving potash seems to have ignored the economic downturn primarily because the end-product of these mines, potash, essentially the main ingredient of fertilizer, is and always will be a growth market as the world’s population grows. We are currently handling the logistics for several large potash mines being developed in Saskatchewan.”
Beringer also singled out an emerging business opportunity in Canada in the establishment of plants for processing of essentially waste logs from pine beetle and damaged forests in western Canada to produce an end-product of wood pellets. “These pellets are then shipped to markets in Europe for wood burning stoves and other heating and power end uses.”
In Beringer’s view, the oil sands mega projects will come back on stream in a big way once world oil prices attain a sustainable level in the $80 range.
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“This will again result in large volumes of equipment coming in from offshore markets filling the holds of heavy lift ships calling traditional project ports like Houston and Duluth,” Beringer said before concluding that industry observers s