Breakbulk cargo facing big challenges in Eastern Canada

By: | at 08:00 PM | Channel(s): Maritime  Ports & Terminals  

Leo Ryan, AJOTIn Eastern Canada, stakeholders heavily or partly dependent on breakbulk cargo, from terminal operators to ports, shipping lines and freight forwarders, are gritting their teeth in search of business.
Economic growth in North America may be gaining traction in the wake of the recession, but there has been little evidence of a rebound in critical steel shipments in particular. And current depressed breakbulk flows could last for an indefinite period.
On the East Coast, a key player is Logistec Corporation, which provides container, bulk and breakbulk cargo handling in 23 ports in Eastern Canada, the Great Lakes and the US East Coast in addition to marine transportation services geared primarily to the Arctic coastal trade.
“Our breakbulk terminals continue to be linked to low volumes, principally for steel and forest products,” Logistec President Madeleine Paquin told AJOT. “Other breakbulk cargoes are showing more steady volumes, including project cargoes, northern cargoes and perishables.”
The first quarter 2010 financial results of Logistec showed consolidated revenue up 18.2% to C$47.2 million. Whereas breakbulk cargo was down, the company’s bulk cargo and container volumes were up as well as its environmental services segment.
Major changes in steel sourcing
“Although steel seems to have improved due to reduced inventories in North America, I believe there has been a fundamental change in the sourcing of steel based on industry consolidation,” Paquin said.
In what she called “the new reality,” Paquin foresees “less imports and less overseas trade, with continents becoming more and more self-sufficient.”
In this connection, Paquin singled out the corporate policies adopted by ArcelorMittal, the world’s leading steel company with operations in some 60 countries (including a steel mill at Hamilton on Lake Ontario).
“We must adjust our terminals to lower volumes,” she continued. “Also, economies of scale will be more difficult to find in the coming years as many terminals will be fighting for fewer cargoes, putting a strain on margins.”
Assessing the outlook in forest products, Paquin declared: “With respect to forest products, export and import, these are linked to the poor housing market for building products and fundamental changes in the communications industry as regards paper products. Electronic communication vehicles are clearly replacing the more conventional newspapers, magazines and even books, particularly with the newer generations.
“We therefore need to right-size our terminals and reduce fixed costs in order to stay competitive for our customers.”
In certain circumstances where more volumes have shifted to containers, it will be hard to justify regular breakbulk vessel calls, Paquin said.
In an interview, Paquin also stressed major changes in global sources for forest products and the need to measure the impact of volatile currency patterns.
“One has to judge the competition on the world market with all the currency changes. Latin America, for instance, is well positioned to be competitive because of its plentiful resource.”
Among recent developments, Paquin indicated that Logistec was “pleased to renew a contract with Del Monte in Port Manatee (Florida) whereby we will invest in new terminal equipment, which result in improved productivity.”
In conclusion, Paquin commented: “The challenges in the next couple of years will be linked to right-sizing steel and forest products facilities and, if there is a reduction in the number of facilities that will handle such cargo, that ours remain amongst the leaders.”
For his part, Andrew Chodos, President of Empire Stevedoring, which operates facilities in eastern Canada, Houston and New Orleans, remarked that “We see a blip here and there, but breakbulk activity is down, especially in steel cargoes in Canada and the Gulf of Mexico. Houston is operating at 30% capacity in steel.”
Like Madeleine Paquin of Logistec Corporation, Chodos suggested that “th

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American Journal of Transportation