Canadian and European joint cement carrier venture is counting on the global rise in infrastructure projects.

NACC STAR
NACC STAR

In a joint venture aimed at capitalizing on rising demands for major infrastructure renewal in developing and industrialized states, a leading Canadian bulk shipping firm and a well-established European niche player recently decided to combine their forces.
Called NovaAlgoma Cement Carriers, the joint venture brings together Nova Marine Holding SA and its subsidiaries and Algoma Central Corporation of St. Catharines, Ontario. The latter acquired a 50% interest in NACC in late January.

For Algoma, the joint venture represents the continuation of a new strategic vision launched in 2015 to pursue growth opportunities beyond traditional domestic markets centered on the Great Lakes, sometimes referred to as North America’s inland seas.

New Strategy

This strategy has accelerated since Ken Bloch Soerensen succeeded Greg Wight as president and CEO last April. A native of Denmark, Soerensen has a substantial background in the international maritime industry, including key executive positions at A.P. Moller/Maersk and United Arab Shipping. He also served for two years as executive director of the European Liner Affairs Association in Brussels.

“The cement business is becoming more global and consolidated. We are excited by the prospects of this venture because it aims to create a dedicated group to serve the cement industry in its global logistic needs”, commented Vincenzo Romeo, CEO of Nova Marine Holding SA when the joint venture was formally announced.

Headquartered in Lugano, Switzerland, Nova Marine Holding’s wholly-owned subsidiary, Nova Marine Carriers, operates a fleet of modern bulk carriers, cement-pneumatic and belt self-unloading vessels ranging from 5,000 dwt up to 57,000 dwt. With over 50 ships under control, Nova specializes in bulk traffic in the Mediterranean, Atlantic and Persian Gulf and in Italian cabotage.

Reporting consolidated revenues of C$413.5 million in 2015, Algoma operates the largest Canadian-flag fleet of dry and liquid bulk carriers on the Great Lakes-St. Lawrence waterway, including 18 self-unloading dry bulk carriers, seven gearless dry bulk carriers and seven product tankers. In addition, Algoma has interests in ocean dry-bulk vessels operating in international markets.

Soerensen Views on Current Market Trends

In an interview with AJOT, Soerensen expounded at length on current trends in bulk shipping and where market opportunities are to be found. He put special emphasis on the short sea cement market. Asked if cement transportation, a niche sector, was relatively shielded from the current turmoil in world dry bulk shipping, he replied:

Ken Soerensen – NovaAlgoma Cement Carriers president and CEO
Ken Soerensen – NovaAlgoma Cement Carriers president and CEO

“No shipping sector can be totally shielded from the current problems of the dry bulk maritime market. A majority of ocean bound cement is still carried by standard ‘bulkers’ and highly susceptible to market conditions. “Our interest however is in the short sea cement market which typically entails small, high tech self-unloading ships that cater to specific client’s needs. This sector is much more affected by the ebbs and flows in the demand for infrastructure projects which does not, at least in the short run, necessarily follow other global shipping market drivers.”

What motivated Algoma to embark in this joint venture in terms of its overall commercial strategy?

“Algoma is looking to expand its short sea shipping focus which it has honed in domestic North American markets,” Soerensen explained. “We were fortunate to meet Nova Marine who also have a focus on short sea shipping and who had developed expertise in modern short sea cement carriers. Forming the right partnerships with strong capable counterparties has always been important to Algoma so the opportunity to partner with Nova Marine in the creation of NovaAlgoma Cement Carriers (NACC) was viewed very positively.

“NACC was an easy venture to dive into, since we found partners that shared our perspectives of sound business and our vision of a solid future in short sea shipping serving a sector that has always been very important to us.”

Referring to the planned deployment initially of five vessels, Soerensen said: “NACC’s fleet will operate globally, including, but not limited to North America and the Great Lakes and St. Lawrence market areas, the Caribbean, South and Central America, the Mediterranean and South East Asia. All are short sea markets.”

Continuing, Soerensen noted: “NACC’s newest project, the conversion of a modern bulker into a high tech cement carrier has recently been delivered from the shipyard in Turkey. This ship called the (7150 dwt) NACC Star has commenced trading in the Mediterranean region. The second project, a new build, will be delivered in China in Q3, 2016.”

Does he see the demand of the world construction industry as one of the most robust in the years ahead, and which countries or regions appear the most promising?

Great Lakes One of Target Markets

“Developing countries,” Soerensen said, “obviously provide the largest requirement for infrastructural development and thus demand for construction materials but also infrastructure renewal in developed countries remains an important source of demand.”

“Obviously the Great Lakes,’ he said, “will be one of the target markets for NACC. Algoma is the region’s largest supplier of marine transportation services for construction material producers and we do presently provide vessel technical and operations management services to two major cement producers for vessels owned by them and operating within the region.”

Asked what characteristics the global short sea business may share with Algoma’s domestic dry bulk business, Soerensen replied: “The characteristics are identical. Shippers are looking for committed suppliers willing to undertake capital spending and operating commitments to provide marine transportation assets to meet their shipping needs.”

In conclusion, Soerensen extolled the virtues of the new generation cement carriers compared with old versions, which were basically bulk carriers with cement bags handled manually.

“Cement carriage,” he said, “can be a messy business. New cement carriers tend to have pneumatic closed systems that can self-discharge cargo with speed, flexibility and reliability into storage silos or trucks. Closed systems are also not affected by weather, which commonly plagued traditional cement carriage in bulkers. Pneumatic systems have unique technical features and clear advantages over conventional mini-bulkers:

  • Clean loading and unloading since cement dust is avoided
  • No contamination or clumping of the cargo due to water ingress or cargo residues
  • Loading and unloading unaffected by weather as a result of closed loading and discharging systems
  • Ability to plan accurately and ensure punctual delivery
  • Loads by gravity or by pressure from silo along with self-discharge to silo or directly to trucks
  • No stevedoring (shore labor is required) which positively impacts shipping costs.”