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Breakbulk September 2019

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6 The Journal of Commerce | September 2019 www.joc.com Breakbulk & Project Cargo Cover Story "Consolidation has always been going on in the industry and will continue. I think there will be others to come, especially given the Mam- moet–ALE deal will create by far the biggest heavy transport and lifting operator worldwide, and be consid- erably bigger in terms of revenue, global presence, and staff than its closest competitor," Tippmann said in an interview with The Journal of Commerce. Commenting on the merger at the time, a senior executive with a global engineering contractor told The Jour- nal of Commerce, "It's like the grand old lady and the new kid on the block ganging up against their brother. ALE has grown exponentially, taking over several smaller firms over the last few years, so it'll be interesting to see how the cultures fit together." report an operating income of $720.3 million for the year. Fabio Belli, Fagioli's CEO, said his firm is considering acquisitions that would increase its global reach, specif- ically in North America, Southeast Asia, and the Middle East. "Fagioli is more interested in covering new geo- graphic areas than technical gaps. We are more interested in covering com- plementary activities and business," he said, adding that consolidation will benefit the whole market. "The heavy haulage and lifting industry made huge investment in previous years without getting ade- quate returns. I believe there is more equipment than is actually needed, and this is reflected in margins. Com- panies in the sector made significant investments, took big risks, and have not been adequately paid by clients," Belli said. Mammoet and ALE weren't able to comment on the pending merger beyond company statements issued at the time of the announcement. Echoing Belli's comments, Jeff Latture, senior vice president of sales and marketing at Barnhart Crane and Rigging — one of the largest heavy-lift transport companies in the United States — told The Journal of Com - merce, "Our industry is in dire need of consolidation to shore up pricing and reduce the temptation to price for cash flow instead of value. We work in an extremely demanding and volatile busi- ness where margin is needed to provide sufficient resources and contingency to mitigate the inherent risks surrounding the amazing work of our people." Barnhart's purchase of Memphis- based Burkhalter Rigging, announced in June; the Mammoet–ALE merger; as well as the move by San Leandro, California-based Bigge to exit project services and instead focus on equip- ment rental "all point to the need to rebalance supply and demand," Latture said. Given the size of the soon-to- be-merged Mammoet–ALE, other heavy-lift players will likely be forced to combine in order to compete, said Riccardo Tippmann, a business and strategic advisor in the heavy-lift and project forwarding sector. Tippmann has recently set up a consultancy after 33 years at Fagioli, during which he spent time in top management positions. As a result, Tippmann said, other heavy transport operators "will not remain on standby and may attract new finance to support their devel - opment, also through new mergers and acquisitions." Another result might be engineering, procurement, and construction (EPC) contractors increasing their in-house heavy transport capabilities by buying assets. This could boost their compet- itiveness and independence, he said, in traditional EPC markets such as industrial and petrochemical plant construction, both heavy users of engineered transport. Project forwarders could also invest in heavy transport equipment and expert staff if mergers result in rationalizations or equipment sales, said a forwarding executive who spe - cializes in heavy transport. ALE's Mega Jack systems jack up heavy modules on sites where space is restricted or congested. ALE Riccardo Tippmann Senior Advisor, RTC Yannick Sel Global Sales Director, ALE

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