The only certainty in the project cargo sector at present is uncertainty, as some investments are put on hold, while others are going full steam ahead.
According to Cyril Varghese, global logistics director of strategy at the Fluor Corporation, ongoing conversations with heav y haulers, ocean carriers and freight forwarders around the world have identified this uncertainty as one of the major challenges in the sector.“There is also concern over the protection of balance sheets and the preservation of cash.
There are efforts in every business to reduce waste and save cost,” he said during an online conference on the boardroom view of the current global breakbulk environment.
“There is also genuine concern about final investment decisions (FID) that are either moving to the right or are shrouded in complete uncertainty.”Examples of this include the Rovuma liquefied natural gas (LNG) project, the Port Arthur LNG facility, Rio Grande, the Texas LNG and Driftwood LNG projects.“
Deferments of FIDs will have an impact on the heavy haul logistics industry as it determines what cargo is out there for the market to perform.”Varghese said overall capex reductions on projects currently ranged from 20 to 40% depending on whom one spoke to.“It is, however, not all bad news, because there are also positive developments taking place.”
Not just practically in that it had forced the heavy haul industry to improve operations and do things more efficiently, said Varghese, but also in some of the projects that were forging ahead – such as the Chinese approval of two new coal mine projects in its north-western regions and ongoing expansion by oil and gas producers in the country.
According to Varghese there were signs of hope for the project industry not only in China, but around the world. The Surat Gas Project in Queensland in Australia had its first phase sanctioned in June this year with construction set to begin before the end of the year, while Exxon Mobile had broken ground in the Alaska LNG project, he said.“Exxon have also broken ground on a multibillion-dollar project in Guangzhou in China.”Closer to home projects were also showing some positive signs.
Deutsche Bank Luxembourg completed a $3-billion financing deal for the Nigerian LNG projects, while Total announced it had secured $15 billion for its gas project in Mozambique.“On the mining side there have also been promising developments with some of the commodity movements we have seen in recent days. Prices are improving, gold is on a steady increase and the outlook for renewable metals is very good. Interest in carbon capture and storage projects continues.”
Varghese said another development in the heavyhaul sector was the push for digitalisation. “It is a very logical move as it will make supply chains leaner and more agile.”He said as an industry it was key for the breakbulk community to support each other. “This is the time to find each other, to speak to each other, to mentor each other. It is the time to share our burdens with our colleagues and for all of us to work together to make this crisis less painful.
We need to let go of those things that we have no control over and work together towards finding a place where we, as an industry, fit in and make a difference."