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4 THE JOURNAL OF COMMERCE www.joc.com EDITORIAL JULY 2016 EXECUTIVE EDITOR The Journal of Commerce and JOC Events Chris Brooks 973.776.7818 chris.brooks@ihs.com MANAGING EDITOR Barbara Wyker 973.776.7817 barbara.wyker@ihs.com EXECUTIVE EDITOR, JOC.COM Mark Szakonyi 202.872.1234 mark.szakonyi@ihs.com SENIOR EDITORS Joseph Bonney, Breakbulk/Project Cargo, Gulf Coast 973.508.2417 joseph.bonney@ihs.com William B. Cassidy, Trucking and Domestic Transportation 202.872.1228 bill.cassidy@ihs.com Bill Mongelluzzo, West Coast 562.428.5999 bill.mongelluzzo@ihs.com Hugh Morley, Northeast, Mexico 973.776.7811 hugh.morley@ihs.com Greg Knowler, Asia Editor, IHS Maritime & Trade +852 3975 2647 greg.knowler@ihs.com Turloch Mooney, Global Ports, IHS Maritime & Trade +852 9011 9109 turloch.mooney@ihs.com ASSOCIATE EDITOR Reynolds Hutchins, Intermodal, Government/Regulation, Southeast Ports 202.572.1487 reynolds.hutchins@ihs.com RESEARCH EDITOR Marsha Salisbury 973.776.7828 marsha.salisbury@ihs.com ASSISTANT WEB EDITOR Dustin Braden 973.776.8652 dustin.braden@ihs.com ECONOMIST Mario O. Moreno 973.776.7850 mario.moreno@ihs.com SENIOR CONTENT EDITOR Alessandra Gregory Barrett 860.248.5238 alessandra.barrett@ihs.com SENIOR DESIGNER Sue Abt, 973.776.7825 sue.abt@ihs.com DESIGNER Bryan Boyd, 973.776.7827 bryan.boyd@ihs.com PUBLISHER Tony Stein 770.295.8809, tony.stein@ihs.com SALES Cindy Cronin, Strategic Account Manager Southeast, Gulf, Canada sales, 954.551.8305 Zachary Gorman, Account Executive Northeast sales, Classifi eds/Reprints/Copyrights 973.776.7820 Misty Belser, Senior Sales Executive 919.869.7404 Ria Van den Bogaert, Sales Representative Europe, Middle East sales, +32 2 569 8905 Bon Kwok, Sales Representative Asia sales, +852 31707373 For Magazine Subscription Customer Service: www.joc.com/help 2 Penn Plaza East, 12th Floor, Newark, N.J. 07105 973.776.8660 • 800.952.3839 Managing Director, Media and Events, IHS Maritime & Trade, Rhiannon James Senior Director, Content, IHS Maritime & Trade, Peter Tirschwell Director, JOC and RailResource, IHS Maritime & Trade, Amy Middlebrook MANAGER, PRODUCTION, Carmen Verenna MARKETING PROGRAMS MANAGER, PIERS and JOC, Jesse Case WHAT ARE YOU selling? That's an eternal question that will determine winners and losers — and survivors — in a diffi cult market for breakbulk and project cargo carriers. Oversupplied with ships ordered in the boom years before the 2008-09 fi nancial crisis, operators of multipurpose carriers are struggling with soft demand and grow- ing competition from container, bulk and roll-on, roll-off carriers. Which carriers will still be standing when the smoke clears? The ones with something special to sell and enough buyers willing to pay for it. This supply-demand equation is out of balance for operators of most vessel types. With demand slow to come back, many operators are desperately trying to hold on. Operators of basic multipurpose vessels are in a par- ticularly tough spot. Everyone's seeking a piece of their business, and most have nothing unique to sell. It doesn't take a sophisticated ship to carry a load of steel or alumi- num ingots. Better positioned are operators of the 900 or so multipurpose ships that qualify as project carriers, with lifting capacities of more than 100 tons, or premium project carriers, which can lift more than 250 tons. These ships can carry the increasingly heavy cargoes for projects, many energy-related, in addition to run-of-the-mill breakbulk commodities. They have something unique to sell. Operators of roll-on, roll-off ships that carry wheeled equipment and vehicles also fi gure to be around for the long haul. There are only a few of these big global carriers. They've invested in big, modern ships built to give them an edge in attracting heavy and oversize cargoes. The sales pitch of container ship lines is more complicated. Their weekly sailings provide shippers with fl exibility and a way to ship in smaller incre- ments. Their new, larger ships provide more room for out-of-gauge shipments on fl atracks or in holds, at least until container shipping demand picks up. But specialized cargoes will always be secondary to container lines' pri- mary business. And their Achilles' heel for high-and-heavy cargoes may be constraints at ports. Marine terminals have all they can handle with regular container shipments, without the additional complications of a 200-ton tur- bine thrown into the mix. Drewry analyst Susan Oatway believes multipurpose carriers have another couple of years of rough seas before things level out. Because most multipurpose carriers are privately owned, there's limited visibility into their fi nancial condition. But given market conditions, it's a safe bet that few are rolling in profi ts. Some undoubtedly will fall by the wayside, and the fi rst to go will be those with nothing unique to sell. Because carriers can't control demand, Oatway says, they must restrict supply by accelerating the scrapping of older, less-effi cient ships. In addition, she says operators need to relearn the old-school basics of securing cargo commitments before ordering ships. "That's what shipowners used to do," she said. "We forgot about that when the market boomed, and I think we have to get back to that." ● ● Joseph Bonney WINNERS AND LOSERS