Heavy Mettle in the USA

By John Bensalhia

From Issue 5 of Breakbulk Magazine, reporter John Bensalhia takes an in-depth look at how regular breakbulk and heavy-lift business is offering a steady revenue stream for U.S. ports that are willing to invest in and expand their portfolios.
 

Poised to take advantage of the heavy-lift market, American ports are investing in both equipment and expertise to ensure that they deliver at the highest level.

“South Jersey Ports is positioned to be at the epicenter of the heavy-lift industry,” said Dennis Culnan Jr, marketing consultant for South Jersey Ports. “Our Paulsboro Marine Terminal is the only location in the U.S. where monopiles are being manufactured and as such, we have ‘first mover’ advantage in being a key hub for manufacturing and supplying monopiles to the offshore wind industry in North America.

“Additionally, the State of New Jersey is building a Wind Port nearby which will serve as a marshalling site for the component pieces. They have already received their first tenant.”

Heavy-lift is proving to be a viable alternative to other more competitive sectors.

Greg Borossay, principal for maritime business development at the Port of San Diego, cites the example of the container space. With volatilities and the sheer investment involved in the container market, he said it is hardly worth the effort to compete.

“Take a port like ourselves,” he said. “We’re in the shadow of Los Angeles/Long Beach. From a container standpoint, it makes very little sense to try to go in and cherry-pick much of their business and compete directly. You can look around the world and there are any number of medium-sized ports such as San Diego that stand in the shadow of large, established container ports.

“So, we ask ourselves: ‘How do we build our portfolio so that it’s a mixed, healthy portfolio?’ We have done so with automobiles, military, bulks, cruise... and we are now putting the press on the breakbulk space. We have the cranes now, which will be a huge difference maker, and we have the expertise.”

Borossay explained that the reason for ports looking to enter the heavy-lift sector is twofold. “The competitive factor is Number One. Number Two: it allows a medium-sized port to play in that space and there’s a myriad of things that they can become involved in.”


Reaping the Rewards

The rewards for entering the heavy-lift market are encouraging, as the sector is helping U.S. ports to boost their year-on-year growth. North Carolina Ports reported 12 percent year-on-year growth for general cargo volume. The port’s annual report spotlighted the Ports of Wilmington and Morehead City, which in FY23, moved nearly 4.6 million short tons of bulk and breakbulk cargo.

The Port of Everett’s chief operating officer Carl Wollebek explained that the port has reaped the benefits of heavy-lift for many years. “We identified several years ago that project business was the best and highest use for our facilities given our geography, rail and road connections, labor, and equipment availability. We also pride ourselves in supporting this industry.”

Borossay said that there are other benefits with respect to heavy-lift cargo. “You have the revenue aspect, where if you don’t have a huge amount of layout space or massive terminals as we don’t – we are in San Diego and San Diego is known well for the Navy, tourism, and ‘oh by the way, we have a couple of cargo terminals.’

“We do really well with them, but we have a 97-acre facility on Tenth Avenue, which is where we focus on breakbulk, and then we have another automotive terminal, which is about 130 acres. You compare that to a terminal elsewhere in Long Beach – one terminal is 400 acres, and they have 13 of them (between LA and Long Beach). The same goes for other ports on the east coast – ports like Baltimore that do some containers... you have ports that are focused on this breakbulk space because of the revenue and because of the lack of land.”

The other factor for a port like San Diego is that it is a regional port, serving the Baja California area. The region includes San Diego County, Imperial Valley and the border of Mexico.

“So, for projects that are coming up in the breakbulk space, the Port of San Diego can be a good solution for many of the shippers. We don’t have the supply chain issues and again, when you focus on containers, there’s so much infrastructure investment required there, so that breakbulk for those ports becomes a case of ‘oh, by the way, we can do breakbulk, but we really don’t do it so well.’”


Safety Strategies

Despite the promise of heavy-lift cargoes, there are still challenges to be managed, an important one being safety.

Keith Palmisano, general manager of Ports America Louisiana, said that the biggest safety challenge is working aloft when rigging gear. However, he added that planning is key to safe and successful operation: “Having a good strategy plan prior to the vessel’s arrival is critical for providing a safe working environment.”

Borossay outlined a general problem that some ports face. “If you have a port that’s not accustomed to working with multiple breakbulk pieces, and you’re doing this with a labor group that’s not really trained or geared towards that, then it could be a safety issue for the workers and staff and maybe even issues with damage for the vessels and so forth.

“We have the required expertise to handle breakbulk safely and efficiently. We feel really good about the fact that our labor group here have really good expertise. They are people who have been doing this work for decades and know how to handle this kind of piece.”

Safety issues outside the gate again relate to how cargo is run through an urban area. “You need to get the permitting,” Borossay said. “We get our permits all the way up to the California border. We have to take great pains to ensure that the drayage companies are well equipped for that. Also, clearances for railroads have to be calculated before the cargo can leave the dock.”

Another consideration is cost. While as Borossay explained “cost is everybody’s biggest challenge and it’s certainly ours,” in order to effectively compete in the heavy-lift world, U.S. ports still need to splash the cash to get a good return on investment.

“The U.S. west coast is not inexpensive,” Borossay said. “We are challenged in that sense because labor costs are high. We’re working really hard to electrify every aspect of our supply chain and to set an example in California to be on the leading edge of electrification. The downside of that – at least for now – is that this is more costly, the same sort of paradigm that we all know – electric cars are expensive now, but maybe in a decade they won’t be so expensive, they’ll be the norm. So, to be on the leading edge, means a little bit higher expense.”

In the short term, he said the port has to “muddle through” until everybody else catches up. He gives the example of Texas, which is known for being a state that focuses heavily on fossil fuels.

“They are not leading the way with environmental issues and many shippers just look at cost. We really have to sharpen our pencil on that and sometimes, it makes no sense at all. We’re not going to compete for certain cargoes if the end points don’t make sense. But we do think in particular that for cargo coming out of Japan, Korea, North China and Southeast Asia – because of the deviation of the Panama Canal and because there’s this significant back-bulk cost from Texas to the southwestern states, that we do have a benefit.”


Palpable Payback

The Port of Everett continues to prioritize infrastructure investments that support growth in the breakbulk/ project sector. “Over the past decade, the port has invested more than US$150 million to modernize its seaport facilities and expand cargo handling capabilities,” Wollebek said.

“From adding terminal capacity, modernizing facilities, adding on dock rail capacity, procuring additional cargo handling equipment, and implementing sustainability features to help ‘green’ the supply chain.”

Two game changing upgrades have also been recently completed by the Port of Everett. These have increased the port’s capacity and provided the ability to support more breakbulk and project cargoes.

“In 2021, the port opened its modernized South Terminal,” Wollebek explained. “The US$57 million upgrade added another full-service berth in Everett with two post-panamax container cranes to support larger ships and heavier cargo.”

In December 2022, the port opened the first all-new cargo terminal on the U.S. West Coast in over a decade, adding critical cargo capacity to the global supply chain. The new US$40 million Norton Terminal project nearly doubled the port’s upland capacity to support even more breakbulk and project cargo. It features 40-acres of paved, lit and secure cargo yard, with future opportunity for adaptive reuse of an existing 396,000 square foot warehouse.

Looking at the future, Ports Americas Louisiana’s Palmisano expected there would continue to be support for multipurpose vessels carrying breakbulk, bulk, project cargo, and heavy-lifts.

“By working in the heavy-lift sector, ports can support growth and improvement in our country’s infrastructure.”

South Jersey Ports’ Culnan Jr added: “We are certainly seeing more ports position themselves for heavy-lift business along the Atlantic Coast in order to support the growth and to capture the economic benefits of the burgeoning offshore wind industry.”

Wollebek said that government and private infrastructure investments should make this a viable industry for years to come, while Borossay concluded that the breakbulk industry is a stable, regular business and one that will always remain.

“It makes a lot of sense to build breakbulk into the portfolio because it’s the kind of cargo that keeps coming on a regular or semi-regular basis and it also has the capability of adding quite a lot of revenue as compared to the amount of volume that you’re handling. The payback there is palpable.”


Amanda Duhon, regional director at the Energy Industries Council, will present an “Industry Sector Review” on the main stage at Breakbulk Americas 2023 on September 27 from 12:00pm-12:20pm. The session will provide updates on the state of play across four key sectors for breakbulk – mining, oil and gas, renewables and manufacturing.

Check out the full main stage agenda for this year’s event, happening on 26-28 September at the George R. Brown Convention Center in Texas, Houston.

TOP PHOTO: Port of Galveston, Texas. CREDIT: Ports of America
HEADSHOT 1: Greg Borossay
HEADSHOT 2: Keith Palmisano