The Port Community: Breakbulk Quarterly
Thinking outside the box

By Peter Hull

The well-documented freefall in worldwide container traffic wasn’t the only cargo sector to hit the bottom line of port operators.

From automobiles and other roll on-roll off freight, to project and general breakbulk cargo, the deepest recession in generations affected cargo shipments across the board.

At the advent of a new decade, Cargo Business News took the pulse of key players in the breakbulk field along the Gulf and East coasts to gauge what the future holds — and asked if they were pleased to see the end of 2009.

Their responses paint a stark picture, and maybe a bright spot on the horizon.

Jim White, executive director, Maryland Port Administration, Baltimore
“We were happy to see 2009 end. I think most ports in this country and around the world were.

We have seen some pretty encouraging signs in the fourth quarter with ships returning, but they’re not working as long as they were before. I think that’s the first sign you’re going to see — the frequency will come back first and the volume will follow later.

For our automobile business, a year ago we were in freefall. Last year, around January and February, we did an inventory of what we had on the ground, and we had in excess of 50,000 cars. We had so many we moved cars from the marine terminals to the long-term airport parking lots. We’re under 30,000 cars right now.

The ro-ro market is still way down. We haven’t seen improvements in the ro-ro market the way we’ve seen in containers, automobiles and pulp.

We’re hoping that we’re going to see a rebound in 2010. We’re watching it very closely.”

Byron Miller, public relations director, South Carolina State Ports Authority, Charleston
“In Charleston we’ve taken a renewed focus on breakbulk and project cargo, and we’ve had some successes with it.

Charleston primarily has been known as a container port, but we have the facilities to handle breakbulk cargo on a large scale. We added that focus because of the decline in the container business, but our focus changed without taking anything away from the container side of our business.

We’ve handled steel billets going to South America, and the project cargo side handled several power generation projects on the import side. On the ro-ro side, we’re narrow. We handle principally exports of new BMWs manufactured in South Carolina.

Overall, because of the increased breakbulk focus, 2009 was positive. Looking forward, we believe we have the right combination of facilities and the aggressive approach, so we’re looking for even more in 2010.”

Roy Schleicher, chief commercial officer, Port of Jacksonville
“The only real growth we had was in containers because of the Asian carriers that are now calling at the port that weren’t calling in 2008. And our cruise business is doing tremendously well.

The biggest drop we had in any one commodity was in ro-ro, which is mostly automobiles. We were down close to 40 percent from 2008 to 2009. The other ro-ro business dropped off quite a bit, too.

We’re starting to see that come back up for 2010. We’re seeing more auto ships coming in. We’re seeing more cargo moving.

When you’re talking about breakbulk, project cargo and ro-ro, West Africa has become a very big player for us. We’ve got several ro-ro carriers that go there. We also have steamship lines that have combo container/ro-ro.

We have a nice little niche there, and it seems to be where a lot of the breakbulk cargo goes.

Generally, all the carriers are saying the same thing: They expect growth in 2010, but they expect it to be a slow growth. You’re not going to wake up and have it be 2007 again.”

James K. Lyons, director and chief executive officer, Alabama State Port Authority, Mobile
“From a general cargo standpoint, our business held up pretty well. Forest products were down but only a few percentage points, maybe 100,000 tons. Steels products did ok and had a reasonably good year. Project cargo had a bang-up year.

All the equipment for a new steel mill is moving through our port, and we had a good bit of equipment that’s going into new and expanded auto plants. The industry has become quite important to the Southeast United States.

South Carolina has the BMW plant. Georgia landed the Kia plant that just opened — we moved a lot of the equipment for that through here.

We have the Hyundai plant here, and Honda and Mercedes have done expansions. And there’s the Toyota plant in Mississippi that hasn’t opened yet, but they did move some equipment in and we benefited from that.”

Ricky Kunz, vice president of origination, Port of Houston Authority
“2009 was pretty tough for us from a breakbulk standpoint. For auto and ro-ro we were down 40 percent on the import side. Exports were up 28 percent because of POVs (previously owned vehicles). General cargo, which includes project cargo and all breakbulk, was down 21 percent.

As for steel imports – and that’s the big one for us – in 2008 we had 6 million tons of import steel. When the numbers are in, 2009 will end at about 2.5 million tons on the import side.

Through November 2009 we were down 57 percent. That’s substantial. From a breakbulk standpoint, we are glad to see
2009 gone.

For 2010 we’re forecasting autos to be up about 13 percent and steel to decline another 7.5 percent. The economy is still trying to recover. Construction is down, oil exploration is down, so that affects the freight coming in. We expect general breakbulk to be flat.
2010 will not be as bad as 2009. I think we’ve seen the bottom in some areas. There is some optimism. We’re hoping for the best.”

Steven M. Cernak, director, Port of Galveston
“Am I glad to see the end of the year? Yes, but not just because of cargo numbers — also because we’re coming out of Hurricane Ike.
At the end of November, revenue met budget and was about $1 million ahead of November 2008.

Ro-Ro is doing fine. We’ve been putting a lot of automobiles through here – POVs on the export side and a lot of farm equipment on the import side.

We’ve also started handling some new BMWs on the export side that are destined for Venezuela.

I see 2010 at least being stable. I actually anticipate slight growth here. If that holds true, I will count my blessings for having worked through this relatively unscathed.

The picture I paint is, the sky is not falling in. There’s opportunity here.”

Paul Bingham, managing director of world trade and transportation markets, IHS Global Insight — global commerce and transport group, Washington
“The recession was pretty bad almost everywhere.

There are significant sectors, such as non-residential construction — which tie into project cargo — that are lagging in the recovery. And that affects shipping that feeds that activity.

Overall, the economy is clawing back, and we’re seeing some upticks from where we were a year ago.

At one point last year, we had auto sales down 50 percent and tremendous cutbacks in production. At the end of the year the automakers were happy to see any increase at all, but shipments were at their lowest for years.

For 2010 we’re not forecasting that consumers are going to be roaring back into showrooms buying up cars. The general feeling is that the worst is probably over but the recovery will be slow.”

In This Issue

Up Front

News, Trends & Analysis
New Items

Trade Tools: How Uncle Sam helps exporters

Capital Watch: Larger issues loom behind federal transport agendas

Supply Chain
Chris Steele: Development opportunities north and south of the border

Compliance Corner: Denied Party Screening – Make sure you comply...
comprehensively and timely

Tech Trends

Product Review: Invoicing and Auditing solutions

Commentary
David Bennett: Early signs of trouble

Gateway Glance
Panama

China

The Port Community
Game Changer: Expansion of the Panama Canal will reshape global trade patterns

All-weather ports are “all-in”

Breakbulk Quarterly: East Coast - Thinking outside the box

Breakbulk Quarterly: Brighter outlook for West Coast breakbulk in 2010

The Shipping Environment

Casualties
Navy tanker breaks loose, container crane topples,
longshoreman dies at Virginia port ... and much more

Final Say
Getting TIGER by the tail