Southeast Asia Project Cargo Demand Strengthens

By Malcolm Ramsay

Energy sector growth in Southeast Asia is set to drive renewed breakbulk demand, as operators seek advanced heavy-lift services and complex logistics, according to maritime specialist Wallem Ship Agency.

The firm recently announced plans to expand its project cargo offering, appointing a new managing director for Indochina and enhancing its in-house training for breakbulk handling. Dickson Chin, director of Wallem Ship Agency, believes the energy sector in Southeast Asia will continue to drive growth, telling Breakbulk that demand for wind turbines remains high along with large, prefabricated infrastructures as bottlenecks in both breakbulk and container traffic continue to push up rates in the Southeast Asia region.


Hyperscale Demand

While the fallout from 18 months of pandemic disruption continues to be felt globally, Asian markets appear to be recovering the fastest this year as record delays and lack of investment certaintity grind many other regions to a halt.  

Kent-Ove Jacobsen, business development manager project cargo at G2 Ocean, predicts that China and Southeast Asia are well placed to drive growth in the project cargo sector, noting that these regions “will become increasingly important for project cargo”. 

Projects such as Singaporean developer Sunseap’s proposed US$2 billion floating solar farm and energy storage facility on the Indonesian island of Batam are redefining the scale of project development in the region and promise to bring major new demand for breakbulk handling.

"This hyperscale project is a significant milestone for Sunseap coming soon after we had com-pleted Singapore's first offshore floating solar farm along the Straits of Johor,” Frank Phuan, CEO of Sunseap, said. “We believe that floating solar systems will go a long way to address the land constraints that urbanized parts of Southeast Asia face in tapping renewable energy."

Alongside growth in Indonesia, Chin of Wallem observes that “a number of key Wallem clients are targeting the project cargo market and have identified great potential in Thailand, Vietnam and Myanmar, which represent as alternatives to China in light of recent trade disputes.”

Filipino conglomerate Ayala is one firm driving this trend, recently announcing plans to invest almost half a billion dollars to build five wind farms in Vietnam. The projects will be developed by its subsidiary AC Energy and are expected to deliver a combined capacity of 440 megawatts once fully operational.

“Offshore wind is expanding rapidly with many projects in the pipeline,” Jacobsen said. “As turbine and project sizes grow, we expect an increase in demand for all types of multipurpose vessels and general cargo ships”.

To take advantage of forecast growth in Southeast Asia, Wallem recently appointed Leonard Tui as its new managing director of ship agency for Indochina as part of a renewed focus on project cargo. In his role, Tui expects to cultivate highly specialized talent to create a ‘one-stop’ service provider, stating the need for “crystal-clear communication, local knowledge, technical expertise and absolute commitment to safety”.

Highlighting the importance of team members with “a broad skill set” and “in-depth knowledge” of cargo handling, vessel and deck specifications and the equipment needed to en-sure safe transport, Tui adds that breakbulk operators “need to think outside the box to over-come the challenges” that accompany heavy-lift projects and prioritise safety and mental health in the modern workplace as the burden of Covid restrictions and port congestion adds further pressure to members of staff.

Tui also see the lack of inland transport infrastructure in Southeast Asia as a key challenge for breakbulk operators going forward, as firms must frequently build their own connecting solu-tions, adding to costs.

“Handling breakbulk cargo in these countries requires specific resources,” Chin explains “The inland logistics challenges can often be an area that is overlooked. Therefore, countries with a less mature inland connection pose the same challenge, if not bigger issues, than a port without the right equipment for moving the cargo.”


Oil Boost

Energy investment in Asia is also set to be impacted by the recent rally in LNG prices in Eu-rope and Asia, as power plant operators switch away from overpriced gas and move into oil.

Claudio Galimberti, senior vice president on Rystad Energy’s oil markets team states that there “is a significant increase for Asia, when looking at its current oil-to-power use. From a global oil balance perspective too, this would be a significant shift, and it provides support to the cur-rent rally in oil prices.”

This shift is expected to further support demand for oil prices, which have topped US$80 a bar-rel for the first time in three years, with Asia forecast to boost oil demand by 400,000 barrels per day on average over the next two quarters.

Over the past 10 years, Asia’s liquid-burning capacity for power generation has fallen steadily but still sits at about 100 gigawatts. This is good news for major upstream projects in Southeast Asia, where deep-water drilling activities are forecast to bounce back following a lacklustre 2020. Overall spending is expected to rise 51 percent this year to US$504 million, according to Rystad.