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Breakbulk February 2020

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12 The Journal of Commerce | Februar y 2020 Vessel Chartering Breakbulk & Project Cargo LOGISTICS EXECUTIVES WITH project cargo shippers, including oil majors; petrochemical giants; and engineer- ing, procurement, and construction companies (EPCs) hired by these owners to build their projects, are the decision-makers in the project cargo logistics supply chain. Back in the day, many cargo owners simply handed over their logistics transport needs to their project forwarders. However, cargo owners have become much more hands-on and serious about controlling execution costs, including transport and logistics, since the economic downturn of 2008–09 and even more so since the oil-price bust of 2014–15. Similar to many in her position, Joye Runfola, logistics principal for the Americas with air industrial gas supplier Liquide, worked in other areas of the project supply chain before joining a shipper's ranks. In her case, Runfola worked for Barn- hart, a US-based heavy engineering and transport provider. For full charters, Runfola sends her cargo specifications to the carri- ers and contracts with them directly. "BIMCO's heavyvoy [a standardized ocean contract] does a great job of being fair to both parties. You can edit or strike lines.… But you have to understand it and understand what you can negotiate," she said. If the cargo is only a few pieces — i.e., a part charter — then Runfola said she's more likely to work with a project forwarder. Moving a ship full of pipe or steel is pretty simple, but "if you've got cargo with 20 heavy-lifts and all are critical and complex, that's where the risk comes in," she said. The control factor Due to client demands, EPCs feel huge pressure to keep execution costs down, Cyril Joseph Varghese, global logistics director, strategy and commercial with the EPC Fluor, told The Journal of Commerce. The companies are forced to balance the need for a compensatory market rate for carriers with the EPCs' need to keep costs low. "You can see there are tensions that must be managed throughout the process," he said. One logistics executive with a major project owner told The Journal of Commerce that roll-on, roll-off (ro- ro) transport was the original plan for one project cargo shipment, but he was able to convince engineer- ing that shifting to lift-on, lift-off (lo-lo) would be safe. That enabled the executive, a former project for- warder, to combine two shipments into one for a full vessel charter, resulting in an estimated savings north of $2 million, or the cost of an entire voyage. A logistics executive with a global original equipment manufacturer (OEM) told The Journal of Commerce he and his team work to "onboard carriers, manage the pool, and work with various needs" across many business segments across his com- pany. When transporting smaller amounts of cargo and " factory-type" products, they use liner or semi-liner services, which have lower mini- mum revenue requirements and less risk of detention than chartered-in services. However, it becomes more difficult to take advantage of these services with larger types of equip- ment, he said. The OEM executive said he often works directly with the ocean carri- ers. He knows what they are moving and where their ships are. He may work with a broker or forwarder when business is being done in a region where vessel ownership is more fragmented. "You use brokers and freight forwarders who are stra- tegic and bring value. I don't need a forwarder to intercede with the big guys. Bring me value in a market we may not be seeing. Don't pick up the phone and call someone I've already sent a request to." Working with carriers The chartering portfolio of McDermott, a global EPC specializing in upstream and downstream energy construction, includes everything from heavy-lift module vessels, full multipurpose/heavy-lift (MPV/HL) charters, deep-ocean service vessels, flat-deck barges, and shallow-water work vessels, Steve Hill, director of global logistics and trade compliance, told The Journal of Commerce. This variety requires the expertise of a chartering staff strategically located to serve all of McDermott's global markets, Hill said. Global EPC Bechtel is "deep- ening its ability" to self-perform a variety of services, including char- tering, John Rapacki, chartering manager with Bechtel Global Logis- tics, told The Journal of Commerce. "I think this gives Bechtel a com- petitive advantage when it comes to allocating the right equipment within the schedule parameters of our projects, selecting services in-line with our high standards for ethics, safety and health, quality, innovation, and sustainability, and delivering at the lowest total cost," Rapacki said. Varghese said Fluor takes a Global EPCs like Fluor and Bechtel are forced to balance their desire to limit costs with carriers' need for compensatory rates. Naeblys / The shippers' view Hands-on approach helping breakbulk BCOs manage logistics costs By Janet Nodar

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