Reasons to be Cheerful

By Felicity Landon

Earlier this year, the European Union signed off a European Commission proposal to invest €1.04 billion in five cross-border infrastructure projects under the Connecting Europe Facility, or CEF, for trans-European energy networks.

The proposals are in support of Europe’s Green Deal and the largest amount of funding, €657 million, is earmarked for the EuroAsia interconnector project to support the
first electricity interconnection between Cyprus and the European grid.

The other projects are the Baltic Synchronisation Project Phase II, for grid reinforcement in Poland and transmission infrastructure upgrades in the three Baltic States:
• The Aurora Line, involving development of a third transmission line between Sweden and Finland, to support the integration of onshore and offshore renewable electricity.
• The Chiren expansion to increase gas storage facilities in Bulgaria.
• The Northern Lights Phase II, where a study will consider the expansion of CO2 transport and temporary storage capacity in Norway.

Well integrated energy infrastructure networks are necessary for the energy transition, as they facilitate the integration of renewable energy, enhance security of supply and help keep energy prices in check, said Energy Commissioner Kadri Simson. “The allocation of CEF funds therefore supports the implementation of the European Green Deal.”

Notably, Simson’s comments were made before the Russian invasion of Ukraine, which has placed far greater pressure on Europe in terms of the need for energy security.

The story is not only around these specific projects. Assuming they move ahead, there will inevitably be a knock-on effect in terms of green energy investments. And across Europe, countries are investing heavily not only in energy but also in transport infrastructure.

“Looking at the details of the European energy deal, the program will provide much-needed aid in developing a well-integrated energy infrastructure network necessary for some of the region’s green energy transition,” said Eike Muentz, AAL Shipping’s general manager Europe.

Depending on the engineering, procurement and construction companies involved in the targeted project areas and the decisions they make as to where geographically their components and materials might be sourced from, this could provide solid cargo opportunities for the long-haul MPV sector, he said. “A final, formal decision by the Commission on the CEF grants is expected in the coming weeks.”


Renewables Commitment

Energy-related investment will play a major role during the next few years, particularly when related to green technologies, said Franco Ravazzolo, head of project logistics & breakbulk at Gebrüder Weiss in Austria. “The present situation is pushing this development even more.”

However, he said, the recent announcements are not about to deliver instant business for project logistics. “We often attend our clients from the very early planning stage until the realization of the projects – a timeframe that can encompass several years.”

There is a lot of talk of investment in Europe, Ravazzolo said. In Austria, for example, the government has set targets for a huge increase in solar and wind power by 2030.

“They are talking about increasing total output from 8 terawatt, or TW, to about 28-30 TW. That sounds great, but the Austrian market right now consumes about 90 TW per year, so it’s 10 percent at best.” The target is aiming for 30 percent based on today’s consumption, he added – and energy consumption is growing, so the percentage will lessen.

Plans include hundreds of new wind turbines mostly in the western part of Austria, together with an investment in solar panels, including on the roofs of private homes and official buildings.

“There is a lot of investment discussion, but these projects will take a lot of time to be realized,” he said. “Politicians can announce things now, but it can take up to a decade to be transformed into reality.”

Among recent jobs, Gebrüder Weiss has moved project cargo for the Voith Vorotan water power project in Armenia, the Palmavossen water power project in Norway and the Energie Ausserschyz biomass power plant in Switzerland. “Depending on the routes, we combined road/river ship/sea transport – cargoes were as long as 36 meters and as heavy as 150 tonnes.”

Ton Klijn, director of ESTA, the European association for the abnormal road transport and mobile crane rental sectors, agreed that moves will take some time to ramp up: “I think you would have to wait until at least 2023 or 2024 before you see the first things moving [relating to the EU plans].”

A priority should be dramatically increased road infrastructure investment, he said, as underlined by recent accidents. “We have seen a few major accidents in Italy, for example; related to, on the one hand, deteriorating infrastructure – bridges, crossovers, culverts, etc., – and on the other hand people not abiding by normal permitting rules and just driving without a permit. One ran over a bridge and the bridge collapsed.”

There was a similar case in Germany: “Someone without a permit used a flyover over a valley. The load was far too heavy. But also, a lot of infrastructure in Germany has been downgraded. Typically, a permit for transport that is a bit heavy can involve huge detours – perhaps doubling the distance of the original route.”

The issues are not only whether your infrastructure is better or worse, but also how many people want to make use of it, Klijn said. “For example, it is Germany where the problems are biggest; it is Eastern Europe, including Slovenia and Romania, where the infrastructure is worst, but there is not so much traffic.”

Some countries are responding to the deterioration of road infrastructure and high maintenance costs by avoiding the issue and slapping bans on heavy transport. “France already has regions that don’t allow transport if it is only transiting,” he said. “If the end destination is not that region, they won’t let the load in. But if they all do that, no one can go anywhere.”


Waiting Game

Wallenius Wilhelmsen is keeping a particularly close eye on – and expects development – in infrastructure construction. “While the NextGenerationEU plan is less targeted in terms of sectors, there are clear references to transport infrastructure there as well,” said Robert Berg, WW market intelligence and finance manager.

Sarah Schlüter, Hapag-Lloyd’s senior director, niche products, meanwhile, said that any impact of specific infrastructure projects announced in Europe had yet to be seen in terms of higher demand for moving breakbulk and project cargo.

“A lot of things would be built in China/Asia and at present we just have our regular flows where parts can be loaded on container ships, but we don’t really see anything on top of that. As far as bigger parts are concerned, it is business as usual for now.”

She said a timeframe of two to three years would be expected from initial announcements, to allow for tendering and ordering, before cargoes start moving, but noted that Hapag-Lloyd was seeing an increase in requests from sectors such as oil and gas, wind power and mining.

“In general we are optimistic, and if the market continues to be strong, Hapag-Lloyd would be willing to continue to invest in additional equipment,” she said. The wind turbine sector is definitely one where the line is involved, she added.

AAL Europe deals with a number of green energy projects around the world, with these being controlled out of Europe, Muentz said. “Therefore, the European multipurpose shipping segment relies upon major global industries staying buoyant and active – energy, mining, oil and gas, construction, agriculture.

“As long as there is demand from these sectors and majors involved show an appetite for investment and progress, then we will see cargo volumes. In turn, these industries rely upon consumer demand and that depends heavily upon geopolitical stability and economic sustainability. As a carrier, we take all these factors into consideration as well as developing markets and trade lane cargo flows.”

AAL Europe works extensively with renewable energy majors and their projects, he added. “Wind is already a huge driver for the project industry and has in terms of cargo volume shipped at steadily growing levels for many years. At the same time, the wind sector may not deliver hugely exponential growth in terms of cargo volumes over the next five years, as it has already been booming for the last eight or so years anyway. However, what certainly is changing is the size and scope of wind projects worldwide and their components and we expect to see much larger onshore windmills as well as much more substantial offshore projects soon.”


‘Quality, Not Quantity’

At Gebrüder Weiss, Ravazzolo said the need was likely to be quality rather than quantity when it comes to handling, lifting and transport equipment for the projects to come.

“There is already a lot of equipment in the market – after the 2008-09 crisis, the project market was not that strong, so for years there was more equipment than was needed. Right now, it is maybe balanced. The future will be more about very specialized equipment – not the sheer amount. For example, if you build wind turbines in the mountains, you need a special trailer to transport the blades. These have the possibility to lift the blades into a vertical position during transport to move around very tight corners.”

It is quite easy to find a trailer to move a cargo that’s three meters wide, Ravazzolo said. “There are plenty of trailers that can move that. But if the case is six-by-six meters, then there are far fewer trailers. The trend in this industry is going for the biggest modules possible and the demand is going to be for moving these really big units.”

More challenging, he said, is the ‘whole catalogue of rules’ in Germany, as well as slow permitting procedures and a political push to get cargo on to the water.

ESTA’s Klijn explained a bizarre ruling within Germany’s VEMAGS online system for applying for road permits for abnormal and heavy loads. It makes sense that if your permit is for 340 centimeters wide, then if you try to move 345 centimeters wide, you will be stopped and have to apply for a new permit, he said. However, the rules also apply if a load ends up smaller. “If the load is 320 centimeters wide, it will also be stopped because the rules only allow a 15-centimeter difference from the size you say.”

The same applies to weight – if the load is 5 percent lighter than the weight stipulated, the load is stopped and a new permit will have to be applied for, which can take a month, Klijn said.

Ravazzolo pointed out that it might only require a change in packing to make the load “too small.” “You have to be very exact. But sometimes clients are not 100 percent sure – it depends on last-minute packing or modification at the last minute and perhaps they ask for a few centimeters more to be on the safe side, but that is now a problem if it is smaller.”


Best Practice Gamechanger

ESTA is in favor of having more enforcement and checks on permits and loads, Klijn said, “because it helps the bona fide companies and gets cowboys off the road” – but it has long campaigned for streamlining and alignment of European permitting rules. “Every national government has its own permitting procedures and plethora of rules. Everybody is doing something different.”

He said the sector is now at a pivotal point as a review is under way of the EU directive 96/53 covering European road transport, weights and dimensions.

“I think the EU has listened to us – in the consultation sent out on the revision, it states that one of the objectives is to revise the abnormal transport best practice guide that has been in place since 2008. It is time we got some alignment. If a best practice guide is put into the directive and compulsory to follow, not just left on the shelf, it could be a gamechanger.”

ESTA is also pushing for heavy transport corridors in Europe. “We are advocating dual use of the military corridors created for NATO – if a tank on a trailer can drive through, what about our abnormal loads?” He hopes that within the next two years, such a network could cover the whole of the EU, providing corridors east-west and north-south.

However, in line with the green agenda, Germany is pushing for the relocation of abnormal transport – away from roads and on to water and rail.

“The idea is they are going to make huge environmental gains and use ships and inland waterway or rail for transporting heavy cargo, proposing that there will be a central organization in Germany that will decide – before the permitting process – whether the load can go by rail or water,” Klijn said.

“This has interesting points to it. At ESTA, we think it will not give you any environmental gain.” Moving a large module by inland waterway, he said, means “you have to load it on a truck first, drive it to the quay, bring in a huge crane, lift it on to the ship, move it by water, then find another crane to lift it off, and bring in more road transport to take it to the site. Ninety-eight percent of the sites are not connected directly to waterways. The cranes would have to be mobilized, transported, demobilized. In 80 percent of the cases, putting something into a ship will give you a negative impact environmentally – and that’s apart from the economic impact, where it will usually be more expensive.”


Port and Waterway Restrictions

Ravazzolo praised the push to switch more cargo from the road to the navigable river network, but agreed there are difficulties that need to be considered. “If you go by river, you have to pay a special truck to reach the next river port, you have to pay for crane handling, river ship, another double craning in port from water to terminal to truck. Green transport costs so much more and companies are not willing to pay that.”

The whole permit situation in Germany is the object of wide discussion all around Europe, he said. “We are all hit by that. There are so many routes through the region where you have to cross Germany.”

On the subject of waterways, he also mentioned problems on the lower Danube, where he said many ports are not equipped to handle heavy cargoes. Cranes are missing, quays need reinforcing and road access needs improving. “The lack of investment is historic. So many ports, even if they seem to be in a good location on the map, are not able to handle the cargo. Some are in the middle of a town. Others are well located but focusing on bulks – grain, sand, woodchips – and this type of cargo doesn’t require heavy cranes or strong piers. But when you discharge a 200-tonne generator, you have that weight plus the 80-90 tonne crane and trailer and tractor. A lot of quays would not resist that pressure.”

Many ports have no storage space for large pieces of cargo, he added. “When you come with full river ships with ten big units, you can’t get 10 trucks simultaneously for direct delivery. You need space for at least a couple of days to move the cargo piece by piece to the job site. This is hampering the movement of cargo.”

The challenges in Europe for project cargo movements are wide-ranging, but not insurmountable. If the work on aligning the bloc’s abnormal transport policies is successful and investment into crumbling infrastructure materializes, Europe has an exciting energy transition just waiting to be supported by the project cargo industry.  


Felicity Landon is an award-winning freelance journalist specializing in the ports, shipping, transport and logistics sectors.

Image credit: BBC Chartering