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Breakbulk April 2019

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SAL, contemplating ordering newbuildings for the first time in a decade, says any new ships will be versatile "Swiss army knives of the sea." SAL Heavy Li 22 The Journal of Commerce | April 2019 Breakbulk & Project Cargo orders. A pickup in downstream activity over the past 12 to 24 months is already affecting vessel availability, Archard said. "I expect we will place newbuild- ing orders within this year or next — either 2019 or 2020. I would be willing to stick my neck out and say that we will order new ships in this next two-year period." He declined to comment on how many vessels would be ordered but said the company has been "devel- oping plans for our next generation (of ) vessels for some time. We've got three basic hull forms on the table which all do different tasks. The last time we built vessels was 10 years ago, so we have to look at fleet renewal, as well as modernization and technical capability. We need to continually evolve and adapt to the changing dynamics of the industry." Part of that evolution lies in the functionality of SAL's vessels. Because of changing customer ex- pectations and the threat of another downturn, newbuildings would need to be adaptable to various different cargo types, a "Swiss Army knife of the sea," Archard said. That means in addition to handling oil and gas-re- lated cargo, new ships would also have to work for construction and infrastructure cargo. "Anybody around in 2014 would see our vessels regularly carrying lots of bridge sections, iron ore jetties that were installed on piles in harbor," he said. Despite the upbeat outlook, Archard remains cautious about the prospects of a full recovery for the heavy-lift sector, noting that the pos- itive sentiment present at October's Breakbulk Americas event in Hous- ton has dissipated a bit following a slump in oil prices in late 2018. "Our industry needs a functioning oil and gas market to squeeze vessel supply — oil and gas provides a lot of cargo. "Certainly, the outlook contin- ues to be variable, with both good days and bad days. But we're in a very cyclical business and exposed to many external influences over which we have no control ... That we're still here, with a positive atti- tude, is testimony to our spirit and business endeavor," he said. l email: developed in a very quick way," he said. SAL has won contracts to trans- port blades and other components for offshore wind projects in Taiwan, which is "investing in a big way. China is growing, too." However, the biggest onshore wind market of all could prove to be the US, thanks to favorable tax breaks and other incentives to support green- er energy. "The US market will prob- ably eclipse all other markets, with plans to add an enormous amount of new capacity [over] the course of the next five years," Archard said. Infrastructure projects are also ongoing sources of project cargo. SAL recently completed a shipment of bridge sections from Nantong, China, to Malm, Norway, for the Beitstadsundbrua highway bridge, about 400 miles north of the capital, Oslo. SAL has been contracted to transport further bridge sections. The return of the forward order book, expansion of oil and gas ac- tivity, and oil prices maintaining at least their current levels of around $60 a barrel are leading SAL Heavy Lift to consider placing new vessel contracting in 2019," Myers said in a research note in January. He noted companies and regions to watch in- clude French energy firm Total, which is planning to drill 22 high-impact wells, as well as Northwest Europe and Central and South America, especially Guyana and Brazil. Global wind energy is also set for solid growth, with capacity in Europe rising by an average 16.5 GW a year through 2022, according to a recent report by WindEurope. Archard said the explosive growth in renewable energy, especially wind power, over the last 10 years provid- ed a lifeline for heavy-lift and project cargo shipowners. "Without the re- newables business, operators would not have survived. Investment in both onshore and offshore wind farms has probably made the differ- ence between shipowners making it and not making it," Archard said. Since 2014, renewable invest- ment has been centered in Europe, especially in offshore wind in Britain, Denmark, and Germany, but that is changing. "Now we're starting to see projects in Asia being

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