“An upbeat mood amid improving conditions”
is the title of the article on the future of the Project Cargo Sector in 2022, published in the January-February issue of Heavy Lift Magazine, by David Kershaw, editor of the magazine. We share here his most relevant conclusions.
Despite the challenges posed by volatile rates, capacity issues across all modes of transport and supply chain difficulties, the heavy lift and project logistics market is optimistic for 2022.
Demand for project forwarding and transportation engineering services is increasing, driven by improving conditions across multiple verticals that create heavy lift and project cargo transport opportunities. In addition, the project cargoes stored or deferred in the last year due to the pandemic will need to be moved eventually. Although the supply chain continues to be affected, particularly at the mayor shipping hubs, the general consensus is that container and multipurpose shipping rates will stabilize around their current levels.
Also, different conditions are occurring in the sectors with the highest demand for project cargo, which will lead to an increase in project cargo volumes over the next few years:
- Late net-zero emissions declarations from all countries around the world will mean that renewable energy projects, both traditional and innovative, will be needed in far greater volumes than seen presently.
- Oil and gas companies are reporting record-breaking cashflows at a time of widespread uncertainty, with covid-depressed demand and the global energy transition speeding up. The Middle East is expected to remain a hotbed of oil and gas production for at least the next five years. Some $100 billion will be spent there between 2021 and 2023, to expand oil and gas facilities.
- Mining houses are scrambling to develop sites capable of providing the metals required for the battery-powered revolution.
- Civil infrastructure projects are taking off too, driven primarily by government stimulus packages.
However, there are still some risks clouding this favorable outlook:
- Demand continues to outstrip supply, which significantly affects companies’ logistics budgets due to demurrage or surging rate.
- Equipment and staffing shortages will continue to be a challenge in 2022, and managing customer expectations will be an ongoing issue for both carriers and freight forwarders.
- Market dynamics still favour shipowners and these operators that charter tonnage, which is causing some carriers to want to diversify their offerings beyond marine cargo carriage. The largest lines and terminals have been busy collecting freight forwarders and other supporting infrastructure to make themselves global logistics service providers.
- Inflationary pressures, souring relations between West with China and Russia bode ill, and worsening economic indicators in China cannot be ignored. The woes of Chinese property giant, Evergrande, which missed repayments on $300 billion of debt las year, sent shockwaves through the economy.
Despite all this, conditions for businesses are certainly It seems as though activity will ratchet up another gear.