Each offshore wind power project is different. The challenges vary, including moving the all-important support structures from origin to site. Steel tube monopiles are the most common, while the larger footprint multi-pile and tripods, jackets, and steel or concrete gravity base structures are also being used on a number of projects, especially as wind turbines get larger and are being located in deeper water.

As wind farm development becomes more complex, it is important to ensure that your supply chain resources are the best. Take the transport of monopiles from production sites in, say, Germany or South Korea to the United States. On a full charter basis, the costs can be significant. An experienced logistics provider can bring transportation solutions that can reduce the costs. The Cape Cod wind farm project in the U.S. will need 130 monopiles, for instance, which requires a large number of shiploads as well as unloading and transporting to the sites. The delivery of so much heavy wind farm equipment can be a real supply chain challenge, and not only due to the size of the monopiles but also the additional cost impact.

You know how important it is to control your project’s installation, substructure, and O&M activities, but what about the transportation and logistics? Your supply chain is only as strong as the weakest link. No matter what you are transporting, selecting the right resource is important; one that has the ability to build a supply chain management solution for each offshore project, not just a “one size fits all” turnkey solution. Be wary of companies that say they have the expertise to manage complex offshore projects but do not. You must do the due diligence.

For each offshore project a supply chain management process should be developed during the initial planning process, not in the later stages. Some project logistics resources confront issues as they occur. Instead you should insist on a fixed contract to ensure that the resources deliver what was asked for. You need a company that has no limitations in its ability to manage every stage of your supply chain. Well-managed supply chains depend on planning, process, and execution; end-to-end accountability, especially at critical points. A clear plan of deliverables and contingency actions means you leave nothing to chance. It is about a full range of services, including detailed studies, transportation procurement—including chartering special transport equipment—storage, shipping, and delivery to final destination.

Time is a major cost factor, and the biggest unknown. Weather and significant wave heights are likely to be major contributors to costs and plant downtime, and what happens when cargo is delivered to the harbor and offloaded but the weather is so bad that nothing can be done? This means extra costs that may not be covered in the contract. Waiting for improved weather results in ship detentions, which are very expensive. Your provider must be able to predetermine if cargo can be handled even in difficult and challenging weather conditions.

The logistics provider should have experience at the global level, with strong local networks and relationships that can cut through red tape. A resource that can guarantee ship availability and navigate the maze of Customs clearance processes to ensuring time-critical deliveries. Those global resources are important, especially when you consider that material is often being shipped from multiple destinations.

About the author: Hüseyin Kizilagac is director of business development for BDP Project Logistics. Call + 49 911 965223-19, e-mail hueseyin.kizilagac@bdpprojects.com.

To read the article in the magazine, click here.

Logistical challenges are high. Any changes that must be made that affect the contract, or any problems that surface, can prove costly and could be devastating to the contractor. Remember that by agreeing to the contract the contractor is basically guaranteeing results and fully responsible for all outcomes of the wind power project, including all activities of the suppliers and vendors participating in the project. Penalties can be severe for any contract breaches, and there are no allowances for cost escalations in an EPC contract.

Contractors must build reliable networks and identify the most experienced resources. By concentrating on their core competencies they should bring in logistics resources that can provide the degree of experience and knowledge necessary for the contractor to meet all obligations. That includes each and every issue that will or could impact the success of the project—locally, regionally, and globally.

Why should EPC companies work with an experienced project logistics provider? Project efficiency. A reliable provider gives the contractor one point of contact, enabling tighter management of all transportation and logistics issues. The provider streamlines the monitoring and coordination of the logistics management process, including sourcing needs, and gives step-by-step accountability.

EPC contractors rely on their reputations, which depend on their ability to deliver on their contractual promises. They don’t want to compromise their reputation by working with unreliable sources. All the more reason why contractors should identify experienced partners they can trust and with whom they can build strategic alliances.

When contractors source wind power equipment, transportation is still one of the key factors to ensure the equipment arrives on time, intact and within budget. Because they don’t always have deep resources for truck, reloading, transshipment, and sea freight services, contractors often source from local forwarders. In many cases, however, the necessary equipment is not always available through those local sources, which means it has to be brought in from elsewhere. A global resource with wide sourcing capabilities can access the equipment and move it quickly and efficiently.

Due to its wide network, an experienced global logistics provider also knows the local and regional business habits and has an established “on the ground” presence. While local logistics or forwarder resources are familiar with their own areas, they may not be experienced enough to respond to last-minute problems or changes, especially those that require resources beyond their control. It is often a race against time, which is a luxury contractors and their clients do not have. Working with reliable logistics partners will be particularly important over the next few years, due to transportation capacity and equipment shortages. As we mentioned in an earlier issue of Wind Systems, general equipment availability and transport capacity will continue to tighten up as demand outstrips supply, adding more pressure to supply chains in the wind power industry. The fight for shipping capacity promises to be immense. It’s not just equipment and capacity challenges, however, but also a cost issue. Contractors have commitments to their wind power clients, who are on a fixed schedule, so time and speed are key components. Schedules must be met. If time is lost and penalties are incurred, the result can be failure and loss of credibility by the contractor in the wind power marketplace.

Within the next 12 months we expect significant increases in freight costs, adding more strain to an EPC contract. A logistics provider with access to and agreements with global transportation partners can make a positive difference. Just as contactors must be experienced in many areas, so must their logistics resources. Time is money, after all, and reputations depend on the success of each and every wind power project.

About the author: Hüseyin Kizilagac is director of business development for BDP Project Logistics. Call + 49 911 965223-19, e-mail hueseyin.kizilagac@bdpprojects.com.

To read the article in the magazine, click here.

That’s why it’s important for anyone with a stake in the logistics to be prepared and involved from day one.

You can take specific steps to reduce or eliminate potential problems by planning, taking a proactive approach to events, effectively communicating across the supply chain and most important of all, ensuring you have a reliable logistics resource that can help you navigate throughout the process.

Companies based outside China should look for a logistics provider/freight forwarder with both a global presence and local expertise.  Such a company has deep domain knowledge in the local processes, government regulations and Chinese Customs.

Comprehensive logistics controls should be implemented and monitored from the start.  Budgets should include independent surveyors, repackaging where necessary, temporary storage facilities prior to shipment and other precautionary measures that normally would not have to be considered if similar plant and equipment were being sourced from other countries.  For buyers, this should not be a major hardship since China-made products often provide significant savings in the first place.

Failure to properly control the logistics process can have dire consequences, such as project delays and massive losses from damage.

An experienced logistics provider knows what can go wrong, especially with shipping documentation.  Some Chinese suppliers reduce costs by skimping in areas they believe are less important, such as documentation and packaging.  Language variances, cultural differences and Chinese engineering specifications often contribute to inaccurate and incomprehensible documentation that can prove disastrous with Customs at the final destination.  In many destination countries, such inconsistencies cause delays, extra costs and even affect the tax or duty holidays that should apply to such cargoes.

Do not rely solely on updates from the supplier.  Visit the factory or facility personally or have your forwarder do this on your behalf.  You should always check on the actual status and readiness of your cargo.  Go through the draft packing list and shipping documents with the supplier, and check the packaging.

Packaging is where some Chinese suppliers try to minimize costs by providing material that fails to meet international standards.  If goods cannot be packed correctly the first time, add a clause in the contract with your supplier for a surveyor to approve the packaging.  If the surveyor declares the packaging unacceptable, the supplier would have to repackage at his own expense.

An inaccurate packing list will cause problems with Customs in the receiving country, and it can affect transport permits, causing further delays.  A properly prepared purchase order will prevent this.  If all else fails, use clear, concise communications to resolve problems.

Project cargo imports into China can also be a challenge because Customs regulations can be vague or lack specificity.  Because regulations in China are more general and are not uniform, they are open to inconsistent interpretation by Customs officers.

Suppliers in China often are large quasi-government or 100 percent government-owned organizations, so they tend to be bureaucratic and often take a long time to make a final decision on an issue, slowing down the process.

A global logistics provider with a strong local presence in or near the sourcing locations can build a bridge between the suppliers and the buyer – so the cargo arrives on time and intact.

Jon Leong is general manager, BDP Project Logistics in Shanghai.  He can be reached at jon.leong@bdpprojects.com.

One of the first wind farms in the world is in the North Sea off the northeast coast of the UK, which also has awarded licenses to develop 32 gigawatts from a number of wind farm locations ranging from the English Channel to the North and Irish Seas. The European Wind Energy Association anticipates 70-percent growth in its offshore wind sector this year, leading to that sector providing 10 percent of the electricity in the European Union upon completion of all planned projects. China is developing its own share of the market. Asia’s first offshore wind power plant recently completed the installation of 34 wind turbines in Shanghai. According to a senior energy official, China will give top priority to developing offshore wind power projects this year. Spain, home to the world’s largest wind power producer, is also expanding its presence in the offshore market.

Although the United States has dragged its feet on offshore power, a recent government report by the U.S. Department of Energy pointed to latest estimates of the nation’s wind energy potential as three times what the agency had estimated earlier. Not counting Hawaii and Alaska, they say production could be 37-million gigawatt hours of wind power annually, which is nearly 10 times the total power generated in the U.S. in 2009, around four million gigawatt hours. Problems for offshore power development could be just over the horizon, however, unless the right resources are in place.

As the offshore wind market grows there are already bottlenecks in the supply of transportation components. Ironically, in the UK, offshore wind is competing with offshore oil and gas for many of the same vessels and support craft, of which there are currently very few. While there are plans to build more specialized vessels, the supply-demand situation means there could be significant delays.

Just like the development and erection of onshore wind farms, the logistics and construction pieces have to fit perfectly for offshore. It is still about reliability—on-time delivery, and within budget. While larger components for offshore farms generally can be transported more easily than onshore, there are special or additional logistics expertise required for offshore projects, such as selecting the most appropriate port facilities for successful deployment, infrastructure issues, and specialized vessels for transportation, as well as loading oversize components on vessels and their safe transit to the site even in the most difficult weather conditions—the new Siemens 3.6 megawatt wind turbine towers are around 230 feet tall and have blades 192 feet long, for example.

It makes sense to work with a logistics provider that is already engaged in the wind power industry and has deep experience in the maritime and civil engineering sectors; an experienced 3PL and 4PL resource that can see and resolve logistical challenges before they become problems and has the proven capacity to deliver. That means a company with a global network that can provide a vast sourcing perspective to bring all the components from various suppliers to a final destination in a cost-efficient manner. A project logistics company with experience in key trade lanes—such as China to Europe and the United States—is important, especially as the volume of components being shipped continues to increase. As the offshore wind power industry evolves and develops, you need an experienced logistics partner to help you overcome the inherent challenges.

About the author: Hüseyin Kizilagac is director of business development for BDP Project Logistics. Call + 49 911 965223-19, e-mail hueseyin.kizilagac@bdpprojects.com.

To read the article in the magazine, click here.

Termocandelaria turned to several project logistics experts, including cargo agent Interflex S.A. of Colombia and its global partner, BDP Project Logistics, to bring in the equipment needed to modernize the facility.  Given the tough competition in the electricity market, Termocandelaria wanted the project cargo quickly and at competitive rates.  About 40 percent of the cargo for the project was shipped out of the Port of Houston, with the remainder coming from the U.S. ports of Baltimore, Charleston, Miami and New York, as well as from ports in Japan, Germany and Israel.

The components were sent both by ocean and air transportation, including an aircraft chartered from Germany to Colombia.  Other shipments were airlifted from Japan since ocean transportation would have taken 45 days.

The operation included trucking various components from sourcing facilities, moving it to warehouses and packing, including vacuum packing to prevent corrosion on some of the cargo, for ocean and air shipments to the Port of Cartagena and Cartagena’s international airport.  Most of the over-dimensional cargo was trucked at night using special trailers, which meant some roads in the Cartagena area had to be closed.

By: Leticia Lozano

Ports lack cranes able to move components weighing more than 100 metric tons. Transport companies are sometimes forced to create their own thoroughfares through muddy jungle with bulldozers. And Colombia’s terrain, which ranges from mountains to jungle, is daunting.

“Here you have to work with what there is,” said Hector Suarez, project manager at Kuehne + Nagel in Colombia. “We are used to overcoming obstacles — and there is a great invisible infrastructure that is the creativity and experience of our engineers.”

Colombia is in the process of improving its road network, however.

The International Finance Corp., the investment arm of the World Bank, is the financial adviser for the $2.5 billion Ruta del Sol, a 1,000-kilometer corridor between Bogota and Santa Marta that will cut through tough mountainous terrain and is considered by many to be a project second only to the Panama Canal in scale and importance. Construction is scheduled to start this year.

Construction is also under way on the La Linea tunnel, which will make traveling between central Colombia and the Pacific far more efficient.

Colombia is also seeking to build a 652-mile rail line at a cost of $440 million, although the concession was held up last year by accusations that Spanish investors tried to bribe officials to win the project bid. The ports of Buenaventura, Barranquilla and Santa Marta are all undergoing modernization, and the government aims to build new terminals in Tribuga, in the Choco region, and in the Golfo de Uraba, in the Antioquia region.

Colombia has also made headway in reducing bureaucratic headaches. “Customs in Colombia has also changed a lot,” said Arndt Droegemueller, BDP Project Logistics’ director of business development in South America. “The processes are very easy, and customs is no longer a problem for investors who are bringing equipment to Colombia.”

By: Leticia Lozano

Source:  Breakbulk Magazine, March/April 2010 Issue – India has survived the global recession relatively unscathed.  Just look at its gross domestic product – growth of 7.3 percent in 2008 and an estimated 6.4 percent in 2009, according to the World Bank — compared with global GDP growth of 1.7 percent and minus 2.2 percent, respectively.

But a booming economy may be cold comfort to project carriers and forwarders fighting for business in India.  Heavy-lift specialists must not only survive the market lull until contracts start flowing for a dazzling array of projects, but they also must face India’s numbingly inadequate infrastructure and a cutthroat negotiating tradition that tends to pare rates to the bone.

To read the full article, click here.

That’s why barge transport is often the best and most sensible solution when a high-and-heavy project cargo needs to go where traditional modes of transportation cannot.  But even barges can be tested by high seas, bad weather, physical limitations and pirates.

To read the full article, click here.

Colombia’s growing political stability is good news for the project cargo industry, because the past eight years under President Alvaro Uribe have allowed safe access to energy and mining projects that investors had earlier been forced to abandon when FARC rebels roamed the countryside.

Many foreign transportation providers who are doing business in Colombia are impressed by Uribe’s progress, although guerrillas are still at large, and security problems are contained rather than resolved.

“We don’t live in fear that rebels are going to assault one of our cargo trucks (loaded) with 40 to 50 tons of goods like they did in the past,” said Hector Suarez, who has two decades of experience in project cargo logistics in the country and is now project manager at Kuehne + Nagel in Colombia. In a sign of the dramatic turnaround, Colombia ranked ahead of Brazil and Chile and 37th overall in a recent World Bank report on ease of doing business in a total of 183 countries.

After emerging from the global economic crisis without suffering a major recession, Colombia’s gross domestic product is expected to grow 4 percent this year. Colombia expects total investments of $49 billion in the mining and energy sectors between 2010 and 2015, Mines and Energy Minister Hernan Martinez Torres said recently.

Projects will include oil exploration and production, refinery expansion, gas and oil pipelines, and power projects including wind turbines and thermoelectric plants. Analysts say that during the next decade, total investment in energy and mining could surpass $60 billion, with a focus on oil, gas, coal and gold projects. “I would hope that with investment just in refinery expansion, new hydroelectric plants and the renovation of thermoelectric plants, we would see at least 5 million tons in project cargo during this decade,” Suarez said.

As these huge capital investments start up, global transport and logistics firms expect growth of between 20 and 25 percent in the project cargo business in Colombia during the next decade. In part, that growth will also be due to projects currently under way, including the construction of a new coal port terminal in Santa Marta province, on the Caribbean; hydroelectric plants, such as Pescadero Ituango at the mouth of the Ituango River in Antioquia province; and the expansion of the Reficar refinery near Cartagena, on Colombia’s Caribbean coast. Reficar supplies Ecopetrol, the fourth-largest oil company in Latin America.

“The Reficar project in Cartagena is starting to develop, and the intention is obviously to participate with a significant cargo volume. The same can be said for Santa Marta,” said Mauricio Lozano, head of sales in Colombia for Seaboard Marine.

Seaboard operates weekly services from the Port of Miami and the Port of Houston to the Port of Puerto Bolivar on Colombia’s Caribbean coast, services already busy with project cargo and heavy machinery used to supply the huge multinational coal mine Carbones de Cerrajon, owned by global miners Anglo American, BHP Billiton and Xstrata.

The Caribbean port of Santa Marta is already a large port with railway access, and the government is spending about $800 million to modernize coal facilities there as well as at the Port of Barranquilla and the smaller Pacific port of Buenaventura. Exports of Colombian coal have increased about 70 percent since 2001, reaching a record 75 million metric tons in 2009. The government intends to increase that volume to 180 million metric tons by 2019 by attracting new mining companies and improving the rail and port infrastructure that serves the coal mines.

The excitement surrounding Colombia’s revival is spreading beyond the Americas. BDP Project Logistics, a project cargo transportation and logistics company based in Singapore, is increasing its presence in Colombia this year following the success of its contract to handle the logistics for the construction of the Termocandelaria thermoelectric plants (see sidebar, this page), a multimillion-dollar project in the cities of Cartagena and Barranquilla.

“The company has a lot of confidence in the Colombian market, so that is why we are investing and increasing our presence here,” said Arndt Droegemueller, BDP’s director of business development in South America who is based in the Colombian capital of Bogota. “The energy sector represents about half our focus, and in 2010-2011, we are going to be really dedicated to that,” he said. “In terms of oil, we have closed an important contract, and we hope by the middle of the year to participate for more logistics contracts in several energy concessions that have been recently announced and have their financing confirmed.”

Economists, business leaders and political analysts agree that Colombia is benefiting from the deterioration of the energy and mining investment climate in neighboring Venezuela, where insecurity and drug smuggling is growing and socialist leader Hugo Chavez has taken control of strategic sectors such as energy, banking, telecommunications and mining.

Bogota and Caracas are now poles apart on the global investment map, particularly in mining. Colombia is attracting companies ranging from Canadian exploration companies to mining multinational AngloGold Ashanti. For example, Canada’s Greystar Resources aims to become the country’s largest precious metals miner in production in 2012 at its Angostura gold and silver mine and expects to invest $600 million in the project.

While it is still a little early for Greystar to be handing out project cargo contracts, the miner’s confidence in Colombia echoes the sentiment of many. “After nearly eight years of government under Uribe, we have seen that the country has been put on very strong footing and made very significant progress in economic growth and legislation to improve decisions for investment,” said Frederick Felder, executive vice president at Greystar.

However, worries about political stability have not disappeared entirely.

One area of concern for Colombians is whether Uribe plans to run for a third term in a presidential vote in May. Some observers say Colombia risks weakening its democracy because Uribe is barred from seeking re-election and would need to win a referendum to change the constitution.

While time appears to be running out for the Harvard- and Oxford-educated lawyer, the risks for investors are seen as slight because several strong presidential candidates have emerged in recent months.

By: Leticia Lozano