Transportation

Air

• HK and Frankfurt cargo up

Sea

• Capacity and containers
• Singapore remains the port of choice in Asia
• Pricing change for Panama Canal

Intermodal

• European Intermodal Transport:  an illusion or a driver of innovation?

Supply Chains and Logistics

• Seeing more clearly:  A smarter view of your supply chain and the purchase order process
• Wind Systems:  Demand for transportation and equipment could soon outpace supply, so choose an experienced logistics solutions partner to help ensure you’re not left hanging in the wind
• BDP establishes new company in Vietnam
• World’s executives confident but cautious-supply chain worries increase

Global Trade Management

• 10+2 compliance adds up for shippers
• BDP receives ISO accreditation for environmental management in 10 Asia Pacific countries
• BDP Shanghai advisories on Expo 2010 Shanghai

Risk Management

• Cargo insurance:  Why every shipper or consignee should consider this low-cost protection

Business Factors

• Taking stock of global inventory
• Bridges over troubled waters?
• Japanese exports surge
• Global corporations ill prepared to meet increasing demand
• M&A activity continues

Sectors

• Retail/Consumer Goods
• Life Sciences/Healthcare

Region Watch / Country Profiles

• China
• India

Green

Events

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.

Exhibitors include the world’s major carriers, forwarders and ports that handle specialized heavy-lift, project and breakbulk cargoes. The Breakbulk Asia event is an outgrowth of the Breakbulk Conference and Exhibition held in New Orleans, USA since 1989 and the Breakbulk Europe event held in Antwerp since 2006.

In addition to a bustling exhibition floor, Breakbulk Asia will feature a 2-day conference with top speakers addressing industry issues. The in-depth program will delve into today’s most pressing breakbulk transportation topics. Speakers will also discuss the hottest regions for breakbulk and project cargo, and review sectors such as oil and gas, and other power generation markets.

For more information, please visit the show site.

We look forward to seeing you in Singapore at Suntec for Breakbulk Asia 2011!

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.

The conference will take place at the Shanghai New International Expo Center in Shanghai, China from September 1st through 3rd, 2010.

For more information, please visit the show site.

Commentary

• Getting ocean cargo moving again
• Business Technology and Customer Innovation:  Two sides of the same coin

Transportation

Air

• Air-cargo experts see traffic recovering to 2007 peak by end of year
• US cargo screening deadline looms for airlines
• Scanning and screening
• Driving efficiencies and improving competitiveness

Sea

• Report says global ocean container trade will grow around 11% in 2010
• US ports climb out of shipping slump
• Container traffic at Chinese ports reached an all time high in first quarter
• Meanwhile, at the port of Rotterdam and Antwerp
• Foldable shipping containers try to stack up

Supply Chains and Logistics

• Wind Systems:  Engineering solutions can mitigate increasingly complex infrastructure problems, allowing you to eliminate risk from your wind project before transportation begins
• Global logistics and exprses market to reach US $4 tr by 2013
• How the US Consumer Product Safety Improvement Act could forever change the supply chain

Global Trade Management

• BDP/Centrx Compliance Seminar
• BDP Singapore awarded BizSAFE Enterprise Star Accreditation
• Companies outsourcing compliance as trade, security regulations increase
• Insurance, long considered a financial side issue, is moving closer to center stage

Business Factors

• Growing confident
• US exports to China remain strong
• The power of yuan
• Too much, too soon?
• Onshoring or reshoring – will it add up to success?

Sectors

• Chemicals
• Retail/Consumer Goods
• Life Sciences/Healthcare

Region Watch / Country Profiles

• China
• India
• Brasil

Green

Events

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