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Nov.30, 2015

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Page 48 of 63 THE JOURNAL OF COMMERCE 49 BREAKBULK A t the moment, the outlook on breakbulk and project markets depends entirely on the person you are asking. From the ocean carrier's perspective, corporate performance is dictated by a whole litany of factors including overcapacity, depressed rates, cross-modal competition and overall activity in the project sector. Beyond the basic issue of freight offerings, port operators are juggling concerns such as facilities development and improvement, competition for scarce waterside acreage and terminal/ infrastructure funding. Roger Strevens, vice president and global head of key accounts for Wallenius Wilhelmsen Logistics provided the carrier overview. "The overall breakbulk market is neither at a high nor low water mark. Some sectors such as oil and gas and mining are at an ebb due to weak markets for those commodities, which is hampering investment. However, rail and power generation segments are performing well and have interesting projects on the horizon. For example, major rail projects from the United States to Asia are on the rise, and we're also seeing a good deal of activity between Europe and South America. Additionally, exports of finished and SKD (semi-knocked down) rail cargo from Japan to the United Kingdom will continue at a relatively high level throughout much of 2016." An increase in freight poaching among the different modes has developed as an interesting side effect of the current state of international trade. For example, containership operators pursue over- dimension freight to load atop the box stacks on their vessels. Roll-on, roll-off carriers are more than happy to handle containers on chassis or breakbulk/neo-bulk consignments that can be rolled aboard on bolsters. For their part, breakbulk lines will batten their hatches down and then top-load containers, often deploying vessels to ports that lack channel depth or the shoreside facilities to accommodate container ships. Strevens confirmed the trend, noting that capacity is not tantamount to reliability. "It's no secret that an increasing number of ro-ro carriers have an eye on the breakbulk market. This is reflected in the breakbulk handling capabilities of many of the deep- sea ro-so vessels being built. However, from the shipper's viewpoint, this does not mean that all carriers are equal. For many, there is a significant difference between having fleet capabilities and offering a fully developed, global breakbulk liner service with a superior focus on quality, efficiency and expert handling," he said. One sector that has performed particularly well is U.S. automotive exports. With a number of foreign-based manufacturers emplacing U.S. facilities, outbound shipments of cars have tripled over the last 10-12 years, and doubled since 2009. In 2013, the combined value of cars and light trucks exported exceeded $57 billion. The United States' North American neighbors Canada and Mexico ranked No. 1 and No. 5 respectively among the top five export destinations, joining Saudi Arabia China and Germany. As a breakbulk and project specialist, the Port of San Diego is uniquely qualified to address the state of the trade. Aimee Heim, maritime policy and administration manager delivered a highly upbeat report. "Our most recent Comprehensive Annual Financial Report (FY14) shows the Port of San Diego's total operating revenues increased by $10.5 million from the prior fiscal year, with a three year upward trend for maritime operations revenue. Additionally, our most recent Economic Impact Report, completed by Economic & Planning Systems Inc. for calendar year 2013, shows the Port of San Diego's overall economic impact on the region is $7.6 billion with $3.5 billion of that coming from the maritime industry." Throughout the container era, investments in capital improvements have been largely centered in this mode. Ports and carriers alike allocated their resources toward equipment and facilities that would enable them to compete for a share of the burgeoning container trades. That trend continues unabated. There remained a core of cargo that defied containerization by virtue of configuration, destination and/or cost-efficiency. By John Powers UNCERTAIN WATERS Breakbulk Balances on Changing Tide

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