RO/RO TRANSPORTATION 2008 - Ro/Ro’s globalization makes for booming business at WWL

By: | at 08:00 PM | Channel(s): Liner Shipping  

By Karen E. Thuermer, AJOTThe roll-on/roll-off (ro/ro) business is rolling into a new era. Just like its container line counterparts, ro/ro companies like Wallenius Lines and its commercial operating company, Wallenius Wilhelmsen Logistics (WWL), point to how fast the business is changing.
“We have only seen the beginning,” says Kai Kraass, COO and Head of Ocean Services and Supply Chain Management for WWL. “Globalization has had a significant impact on finished vehicle logistics.”
Over the last 20 years, global trade patterns for finished vehicles have shifted dramatically. Whereas trades out of Japan accounted for approximately 85% of all deep-sea shipments and Europe accounted for approximately 10%, today imports and exports taking place between all regions. “Japanese trades account for only 45% of deep sea shipments,” Kraass says.
In fact, whereas North America, Western Europe and Japan accounted for around 90% of all global sales and production leading up to 1990, by 2010 WWL predicts those markets will account for only 50% of demand. Kraass predicts Russia will overtake Germany as Europe’s biggest auto sales market by 2011, say nothing of China’s staggering development in the last four to five years.
“Fragmentation of trade lanes have also significantly added to the complexity of the outbound supply chain,” Kraass adds.
Behind all of this is a bonanza of business for automobiles, agricultural equipment, and earthmoving machinery. Worldwide demand for all of these commodities is skyrocketing. WWL also handles complex project cargoes such as rail cars, power generators, mining equipment and yachts—areas that are also booming.
“We aren’t seeing any particular markets in a downtown,” exclaimed Robert Mintor, WWL spokesman.
This optimism may seem incredible given the bad news pouring out from US auto producers that report layoffs and factory closing. Yet exports are increasing, thanks largely to the weak dollar.
Consider this: In May, Toyota Motor Corp. reported plans to export its large gas guzzling cars produced in the United States to the Middle East and other emerging economies. German luxury automaker Mercedes-Benz A.G. also plans to build an assembly plant in the United States to produce a new four-wheel-drive family car. Automotive analysts believe that Mercedes would export aggressively from its American plant.
“In the future, Germans may be quite surprised to find out they are buying a Mercedes that is manufactured in the United States,” says Mintor.
The weak dollar and soaring labor costs abroad have compelled carmakers worldwide to consider the United States as a low-cost manufacturing venue.
Elsewhere around the globe auto assemblers are also on the move. Today KIA, for example, manufactures in Slovenia. Ford operates a significant and highly successful plant in Turkey (See related story).
“Car makers position their assembly plants where manufacturing is cheap and labor costs low,” Mintor says. “We cannot carry all of the cargo that we want to ship.”
Given the globalization of the market and the variety of product ro/ro carriers are hauling, backhaul—usually the most expensive segment of shipping—is not a problem. “We cover a range of cargos,” Mintor says. “We are seeing a lot of agricultural and construction equipment moving to the Far East and emerging markets. Luxury yachts made in Europe are also being shipped to the United States and vice versa. We are seeing a lot of vehicles going into the former Soviet Union and heading to China where there is under capacity in the market. This helps balance out the loads.”
Still, ro/ro companies like WWL are feeling the pinch. Fuel costs are escalating and cutting into profit margins. WWL is also making huge capital investments in new ships, but these will be 10 to 15% more fuel-efficient.
“The inside of the ships are being re-engineered so that we have more square footage of unobstructed cargo space,” he explain

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American Journal of Transportation