Tuesday, October 4, 2011

Bulk and Breakbulk Report

By Jim Shaw

Several trends have developed recently in the handling of bulk and breakbulk cargos in North America. One is an awaking of the potential for coal exports, with a number of facilities already being built or planned as China’s appetite for the commodity grows, moving US coal exports to their highest level since 1992. Another is grain, with a new grain export facility coming on line at Longview, Washington and an existing facility at the Port of Vancouver (USA) being expanded. Grain exports have also been up on the Great Lakes this year, and the Port of Long Beach has begun preparing an environmental impact report on a proposed new grain facility to be built on Terminal Island (see Pacific Maritime Magazine, September 2011).

The Great Lakes have also been seeing a substantial growth in the shipment of wind energy components, as have ports in Texas and along the Pacific Coast. The size and weight of some of these components has mandated specialized handling machinery, laydown areas and inland transportation corridors. These same requirements have also come into play for very large structures and modules being moved to oil sand development projects in Canada as well as to the petroleum production fields of Alaska. The export of logs and lumber is also making a comeback, with log exports up 79 percent and lumber exports up 83 percent through the first half of the year, benefitting such Pacific Northwest ports as Astoria, Olympia and Tacoma.

Forest Product Jump
Although it is not known how long the current export boom in logs and lumber will last, several West Coast ports have managed to garner some of the business, with Oregon’s Port of Astoria returning to the log trade for the first time in nearly 15 years. The logs being exported out of Astoria are being moved by Westerlund Log Handlers using the Port’s Pier 1 and Pier 3, with most storage taking place at Pier 3.

In Tacoma, Washington, where log exports nearly disappeared three years ago, TPT US Limited, a New Zealand-owned company, has been shipping logs out of the port’s export facility on the Hylebos Waterway, with the 100-millionth board-foot of timber loaded aboard the bulker TPC Longview in August. TPT began shipping logs through Tacoma in June of last year, a move that boosted the port’s total logs exports by nearly 200 percent through the middle of this year.

TPT representatives said tariffs imposed on wood exports from Russia, of which China has been a major customer, have stimulated log purchases in North America, while Japan’s devastating earthquake and tsunami also helped boost exports of lumber. The log export boom has helped the Port of Olympia, Washington set a new record in operating revenues for the first half of this year, with more than a dozen ships loaded. According to the US Forest Service’s Pacific Northwest Research Station, a total of 569.2 million board feet of softwood logs and 232.2 million board feet of softwood lumber were exported from the West Coast during the second quarter of this year, with logs up nearly 38 percent over first quarter figures.

Wind Energy
Another cargo witnessing substantial growth has been wind energy components destined for inland wind farms. These components, principally made up of support towers, turbine nacelles and blades, had been moving through a relatively small number of gateways that could furnish sufficient lay-down area, crane capacity, and inland transportation corridors. However, the number of ports now handling the components has grown, diluting to some extent the cargos offered to the original importing ports. Stepping into the wind energy sector this year has been the Port of Searsport, Maine, where 22 wind turbine sets were unloaded from the heavylift ship BBC Orinoco this past summer. Although the ship was able to self-discharge the tower sections and blades, Donjon Marine’s derrick barge Chesapeake 1000 had to be moved north from Port Newark, New Jersey by the tug Atlantic Salvor to handle the heavier turbine nacelles. All of the components were destined for the Record Hill wind farm development located in Western Maine.

Another East Coast port moving into the turbine business this year, although on the export side, was Florida’s Port of Pensacola, which has been moving nearly 300 wind turbines to Brazil. The turbines, manufactured at a nearby GE Wind Energy plant, are transported from the plant to the port by specialized trailers. Eight vessels are to be loaded this year, each ship handing between 35 and 40 nacelles.

Record Coal
In nearby Alabama, the largest export coal shipment ever handled at the Port of Mobile departed the port’s McDuffie Coal Terminal in late July aboard the post-Panamax bulk carrier E.R. Boston. The ship loaded 129,016 short tons of coal, breaking the previously record, which had been set 11 years ago. The cargo, bound for Immingham, England, brought the McDuffie terminal’s total export volume to 7,589,753 short tons for the current fiscal year. Jimmy Lyons, director and chief executive officer for the port, credited recent investment in port infrastructure and harbor deepening for the new record. “Our investments at the Port of Mobile to handle larger post-Panamax sized vessels are paying off for our shippers by providing customers with economies of scale shipments along with new harbor and terminal capabilities,” noted Lyons, who added that Mobile now has a 45-foot-deep channel as well as a new turning basin while McDuffie’s infrastructure has been improved with new Post-Panamax cranes.

The 178,978-dwt E.R. Boston, which has a beam measurement of 148 feet, was loaded in a little over three days at a load rate of 1,596 short tons per hour.

Coal throughput at McDuffie is expected to improve still further toward the end of this year as Walter Energy, a metallurgical coal mining company which currently ships all its export product through McDuffie, completes its acquisition of the Mobile River Terminal Company from US Steel. “This acquisition will help ensure that we will have unconstrained shipping capacity to support our long-term coking coal production plans in Alabama,” said Walter Energy’s chief executive officer, Joe Leonard.

West Coast Coal
In Texas, Kinder Morgan Energy Partners LP has agreed to invest $18 million to expand its exporting facility at Houston, Texas to handle up to 2.2 million tons of Colorado coal annually. The company exporting this coal has not been identified but the mine is said to be located west of Trinidad, Colorado, near the New Mexico border. Kinder Morgan CEO Richard Kinder remarked that the Colorado export deal was the result of a “tremendous increase” in the demand for coal overseas.

St. Louis-based Arch Coal, which has been investing in West Coast coal terminal expansion at Longview, Washington and Prince Rupert, British Columbia, owns Colorado’s West Elk Mine. At the start of this year, Arch signed a five-year agreement with British Columbia’s Ridley Terminals Inc. (RTI) at Prince Rupert giving the firm a throughput capacity at the Canadian gateway of up to 2 million tons of coal for the rest of this year and up to 2.5 million tons for 2012 through 2015.

The deal follows Arch’s acquisition of a 38 percent stake in Millennium Bulk Terminals last year, which is preparing to construct a major new coal exporting facility at Longview, Washington on the former site of Reynolds Metals Company. However, Millennium’s plan has run into considerable local opposition, particularly after it was revealed that the firm’s parent company had discussed plans to expand the terminal’s throughput capacity to a much greater degree than originally presented. Following public comment, Millennium withdrew its permit application for the terminal this year but said it plans to resubmit next year. In the meantime it has been working with the property owner to clean up the site, which is still contaminated from decades of aluminum making.

SSA at Cherry Point
Another potential West Coast coal exporting site is also facing criticism. In February of this year Seattle-based terminal operator SSA Marine submitted preliminary documents to Whatcom County, Washington agencies and the US Army Corps of Engineers concerning its plan to develop a $500 million dry bulk cargo terminal just south of Birch Bay on Puget Sound.

The site, located between the BP Cherry Point oil refinery and the Alcoa Intalco Works aluminum smelter, has been zoned industrial for many years and current land use regulations envision eventual construction of the type of pier that SSA is proposing. Although the new terminal is being permitted to handle a variety of dry bulks, including grain, potash, iron ore and calcined coke, coal is expected to be its major export commodity, with Peabody Energy of St. Louis, Missouri having already reached an agreement to export 24 million tons of coal per annum through the facility, most of it to Asia. The coal would be shipped to the terminal from Peabody’s Powder River Basin operations in the Rocky Mountains by the BNSF Railway.

However, in July disagreement arose between Whatcom County Planning and Development Services and the consulting firm of AMEC over land clearing and road building on the site, which AMEC said was necessary to conduct field testing for SSA, but which the county said was not authorized. On August 1, a coalition of environmental groups that had signed an earlier agreement to drop a lawsuit that had blocked SSA’s first plan for a much smaller terminal said they were ending negotiations with SSA. Nevertheless, SSA says it still hopes to begin construction of the facility by 2013 and have the three-berth terminal one line by 2015.

Gain in Grain
Yet another West Coast bulk terminal project experiencing problems is the new EGT grain elevator at the Port of Longview. EGT, which is a partnership of Bunge North America, Itochu Corp. and STX Pan Ocean, had planned on shipping grain through the new $200 million facility by this month, following its completion by general contractor T.E. Ibberson, but labor protests have held up these plans. Protests by International Longshore and Warehouse Union (ILWU) members prevented train deliveries to the elevator starting in mid-summer and had not tapered off by early September, despite the issuance of a temporary restraining order by a federal judge in Tacoma. On September 8, ILWU members at Seattle and Tacoma walked off the job to join the protest, which brought a clash with police and some damage to equipment at the EGT terminal. Talks between EGT and the ILWU over labor use at the facility had broken off earlier this year and EGT later hired General Construction Company of Federal Way, Washington to operate its facility, with General choosing to hire workers affiliated with local 701 of the Operating Engineers union.

The Port of Longview said it had assumed those jobs would be given to ILWU members when it finalized its 30-year lease with the company in 2009. However, EGT said its lease with the port gives it the option not to hire union workers. EGT hopes to eventually use the complex to ship grain from growers in the Midwest and Western states to China, Japan and Korea but the first grain train confronted by ILWU members suffered more than 70 dumped carloads and numerous cut brake lines.

Vancouver (USA) Elevator Expansion
As the EGT facility struggles to come on line at Longview, the United Grain Corporation (UGC) at the Port of Vancouver (USA) has been adding an additional 60,000 tons of grain storage space at its site along the Columbia River, part of a $72 million expansion project. Two obsolete port buildings located on the site have already been leveled and a third is about to be dismantled, all to make way for both the terminal expansion and the port’s on-going West Vancouver Freight Access (WVFA) rail project.

The cluster of new storage silos being put up by UGC are being built using the “slipform” method which concrete is poured into a continuously moving form that is jacked up as the concrete sets, moving about one foot per hour. The completed bank of 24 silos is to stand over 300 feet, or roughly 20 stories high. Once handling machinery is installed, the new silos will be used to clean, sort and store corn and soybeans destined for export to the Orient.

According to Curtis Shuck, the port’s director of economic development and facilities, China’s rising middle class, with its appetite for more meat, is fueling the demand for more US-grown corn and soybeans to serve as livestock feed. The new storage capacity is expected to come on line by next autumn and will add an additional two million tons of export capacity to the UGC elevator, which already ships out an average of 3 million tons of wheat each year.