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Breakbulk April 2018

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8 The Journal of Commerce | April 2018 Cover Story Breakbulk & Project Cargo OFFICIALS AT US breakbulk ports say President Trump's planned steel and aluminum tariffs threaten two import- ant import commodities and could hurt exports by inviting other coun- tries to retaliate against US products. "My greatest fear all along has been that an action like this could lead to retaliation that could affect our ex- ports. I'm afraid that's where it could lead us," said Jimmy Lyons, CEO at the Alabama State Port Authority. "In a trade war, there are no winners." Trump's abrupt announcement tainer line recently that they have no intention of backing off from that cargo," Oatway said. Drewry estimates that at the end of 2017, there were approxi- mately 3,210 multipurpose, project carriers, or premium project carriers, with total capacity of 29.5 million deadweight tons and average age of 16 years. Project carriers are defined as vessels with lifting capacities of 100 to 250 tons. Premium project carriers have lifting capacities of more than 250 tons. The composition of the global multipurpose and project fleet is changing. Simple multipurpose vessels average 20 years in age and are gradually being scrapped. New invest- ment is concentrated in larger ships with heavy-lift gear. Drewy expects the project carrier fleet to expand by almost 3 percent a year through 2019, while similar multipurpose vessels decline at a similar rate. There was a slight uptick last year in scrapping, to about 500,000 dwt. "We expect this trend to continue and rise slightly in the medium term," Oatway said. She said more vessel demolition is need- profitability will remain challenging for multipurpose and project carriers. A big reason, Oatway said, is competi- tion from bulk carriers for breakbulk commodities such as steel and lumber, and from container lines for project cargo and commodities. "As always, it's the competing fleets that overtly affect this sector," she said. Roll-on, roll-off carriers also have become solidly established in market sectors that historically have been the preserve of multipurpose and project carriers. The latest generation of ro-ro carriers features adjustable high-ca- pacity decks, large doors, and ramps with capacities of up to 500 tons. Though ro-ro carriers are in the market to stay, Oatway said recovery in bulk and container markets could lead these carriers to focus on their core markets instead of competing with multipurpose and project car- riers. That theory, however, assumes recovery of demand, rates, and profitability in bulk and container sectors, which continue to struggle. And some container lines say they're in the breakbulk and project market for the long haul. "I was told in no uncertain terms by one con- US ports slam Trump tariffs Planned steel and aluminum tariffs could have unintended and harmful consequences, ports say By Joseph Bonney ed. "There are still a huge number of overaged simple multipurpose vessels," she said. A year or two ago, there were forecasts that impending Interna- tional Maritime Organization rules on emissions and ballast water storage would sharply reduce the supply of older ships. Oatway said it now looks as if these changes will be more gradual, as vessel owners try to extend ships' lives. Consolidation of the fragmented multipurpose and project sector also has increased during the last few years, without much impact on capacity. "Consolidation doesn't necessarily affect supply," Oatway noted. "What often happens when two companies merge is they get an injection of cash and go out and order new ships." And when supply and demand eventually come into balance, vessel operators often find it hard to resist adding capacity. Shipping compa- nies tend to have short memories, Oatway said, making for "a really cyclical market." l email: twitter: @JosephBonney of tariffs of 25 percent on steel and 10 percent on aluminum followed Commerce Department reports that argued US producers of those com- modities were being unfairly hurt by imports. Steel and aluminum are import- ant cargoes at US ports on the Gulf, East and West coasts and the Great Lakes. Top steel gateways include Houston; Mobile; New Orleans; Del- aware River terminals; Brownsville, Texas; and several ports in the Pacific Northwest and Great Lakes. Alabama's Port of Mobile handles about 5 million tons of steel annu- ally, including about 3 million tons of imported slabs, many of which are processed into coils or other products and exported, primarily to Mexico. In 2015, the port opened a new terminal for steel shipments. Lyons said an initial survey of port customers indicated that most expected to build the higher costs into their prices. Most auto parts manufacturers and other large importers rely on steel with specific About 80 percent of New Orleans' steel imports move up the Mississippi River on barges, many of which return with bulk grain for export. Port of New Orleans

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