Go east, young man

Hitachi bullet train arriving in the UK

James Graham

A small detail at Wallenius Wilhelmsen Logistics (WWL) world headquarters demonstrates that Australia is very much at the fore of WWL’s thoughts, even though it is half a world away. As a visitor enters the cool Scandinavian décor of the company’s 21st century headquarters at Lysaker on the edge of Oslo fjord, the first sign you see in the foyer is a plaque for the Honorary Consul for Australia.

WWL is a deep-sea shipping company with three trades, and for almost a decade it has specialised in the bulk transport of finished automobiles. It undertakes some 4.3 million movements of vehicles and rolling equipment globally using a fleet of more than 60 vessels, some of which are capable of moving up to 8,000 cars per voyage. Over time this activity has shifted from simply transporting vehicles to offering full automotive supply chain provision, accompanied by a growing high-and heavy project-forwarding traffic.

Its other two trades are rolling equipment, such as buses and lorries, and static, high and heavy cargo such as mining equipment and other project forwarding loads.

WWL is owned 50:50 by shipping companies Stockholm-based Wallenius Lines (WL) and Oslo-based Wilh. Wilhelmsen (WW). It sources capacity from both owners and third parties as well as developing its own fleet.

Since WWL was founded in 1999, many goalposts in the global economy have been moved, not least in the importance of South East Asia and China both as a source of business and destination for cargo.

Another major change has been the arrival in the boardrooms of global business a concern for green issues. WWL executives acknowledge that shipping has long been immune to the headline attention that emissions from aircraft, vehicles and buildings have acquired. However, within the last 18 months to two years, the green agenda in shipping has been driven by the media and consumers, and cannot be ignored.

With Nordic pride, WWL is keen to claim that it led the way in eco-shipping issues. Arild B Iversen, WWL’s CEO, is proud that a commitment to ecological matters was built into the company’s founding principles and business plan nine years ago, and that the company is not simply jumping on a bandwagon. The company is committed to such a degree that it is prepared to shift to operations even if these can have, at the very least, a negative impact on its bottom line: activities such as slowing its ships, refurbishing instead of recycling redundant vessels, and developing a ‘green passport’ for its ships.

“Our environmental concerns are completely driven by our owners. Customers have not pushed for the measures we have taken,” says Iversen. “They are traditional shipowners managing their capital investments and know they will take a hit on their profits. They know, however, that being at the forefront of environmental concerns and practices does give our company a keen market differentiation.”

“We plan to rejuvenate, not recycle, our ships in the future. Recycling a large steel ship is extremely expensive in terms of environmental cost. It is better to keep those pieces that still function and replace just life-expired material. We know it is better not to break it up, melt it down and build a new one. That is just not very green.”

The line is developing a ‘green passport’ for all its ships that will show how they are built and what materials they contain.

WWL is keenly moving to the use of low-sulphur oil. WWL started its use in 2004, three years before the IMO target of 2007. The company has sought for more than two years to develop a secure and dependable source of this fuel. But this oil is not cheap and the company is faced with paying a premium for every tonne it uses. In these uncertain times, Iversen acknowledges that WWL is operating in a world that could soon see a $1,000 per tonne price for marine oil, another hit on its bottom line.

Senior management has outlined key ambitions in order to allow the company to be an ‘environmental forerunner’:

• reduce fuel consumption;

• reduce emissions both to air and sea;

• minimise ballast water release impact;

• limit use of on-board chemicals;

• plan to replace hydraulic and stern tube oils with a biodegradable version.

Another structural market change that has implications for the way WWL does business is the ability of global car producers to quickly switch production and assembly across national borders, even between continents, at relatively little notice. The days when a car factory was a mega-industry employing thousands of workers on one site, often located in a smoke-stack industrial area in oldworld countries and unable to move, are gone. Growing middle-class affluence in developing countries has drawn global car manufacturers, as well as smaller domestic operators, to locate new plants in emerging economies. The traditional routes for finished cars continue but are much diminished, and WWL has picked up new car delivery export routes as they have developed.

Future in Asia

Despite its Nordic credentials, WWL sees its future very much increasing in Asia, says Kai Kraass, WWL’s chief operating officer, Ocean Services.

As a volume car carrier, it is not surprising that its main trade nine years ago was car movements from Japan to Europe and Japan to North America. It was simple then, as since the 1980s, the Japanese industry had been a star performer in the global car business. Its badges were in demand throughout the developed world. Some 85 per cent of deep sea shipments were trades out of Japan two decades ago.

Fast forward 20 years and the world in which WWL operates is incalculably more complex. Today, import and export of finished automobiles take place between all regions in the developed and less-developed world. Japanese trades now only account for around 45 per cent of deep sea shipments.

“In 1990, mature markets accounted for around 90 per cent of global car sales and production,” says Kraass. “WWL considers that by 2010, mature markets will account for only 50 per cent of global sales and production. This switch has been accompanied by a fragmentation of trade lanes that has significantly added to the complexity of the outbound supply chain.”

In the opinion of many business com mentators, the rise of China as an economic force is unstoppable. WWL has a surprising take on the impact China is having on its business.

Kraass says: “At present, Chinese exports of motor vehicles is very low, barely

500,000 a year by WWL estimates. This contrasts with 5.7m from Japan. Where WWL is being hit, is the Chinese impact in matters such as shipbuilding and steel consumption, an unstoppable demand that has driven up global manufacturing costs.”

Where once Korean carmakes were unknown outside of South Korea, highways around the world now boast Kia, Hyundai and Ssangyong badges. This has led to a massive investment by WWL and Eukor, one of the world’s largest car carrying shipping companies and owned 40 per cent by Wilh. Wilhelmsen.

The two companies are jointly investing in two new Ro-Ro terminals, terminal 11 and terminal 12, at Pyeongtaek, South Korea. Each terminal has a capacity of 300,000 vehicles.

The three manufacturers have plants located near the port at Pyeongtaek. WWL and Eukor hope to attract other imported car manufacturers and local exporters who are currently using all-purpose terminals in Incheon, west of Seoul. Despite South Korea importing and exporting three million cars a year, it has only two dedicated Ro-Ro ports: Ulsan in the south and Pyeongtaek. A new joint company will be established between Eukor and WWL, each with a half share of the capital.

At present, Kia Motors owns the only two Ro-Ro terminals in Pyeongtaek, terminals 9 and 10. This monopoly will be broken in October 2010 when the new terminals 11 and 12 are due to open.

G’day

For WWL, Australia is in its Oceania region and is definitely a market that the WWL prizes as one with good potential. A growing demand in Australia for imported vehicles is bringing items from the Asia and South Africa regions, while the insatiable hunger for mining equipment and capital equipment by mining operators will encourage high and heavy movements on the shipping line’s decks.

An era of orange or green ships going under the Sydney Harbour Bridge came to an end in October last year when WWL moved its port operations to Port Kembla in Wollongong.

The move was the outcome of a decision by the New South Wales Government to move all Ro-Ro activities from Sydney harbour to Port Kembla, about 90 km south of Sydney, with effect from October 2008.

In alignment with this move, WWL also opened a new high-and-heavy facility in Kemblawarra, six km from Port Kembla. The technical services facility has become the standard for the region’s future technical services sites.

The Kemblawarra facility handles equipment such as agricultural and truck products, as well as mining and industrial equipment. A key component of the facility is the ability to perform ‘off the wharf’ work if desired. Additionally, rainwater tanks have been installed for the recycling of rainwater on site.

With Australia’s stringent fumigation requirements for equipment entering the country, the ability to strip down and clean high-and-heavy equipment is vital. A characteristic is that much high-and-heavy equipment is purchased second-hand or moved by contractors from site to site, often across the ocean. This equipment will often be operated in environments where flora and fauna forbidden to enter the country are present. An Australian Quarantine Inspection Service (AQIS) wash bay has been located at the facility to provide the required cleaning services to customers.

A total of AUD 6.83m was invested in the new 42,3000 sqm facility, made up of a AUD1.23m grant from the AusIndustry Port Kembla Industry Facilitation Fund (PKIFF) and AUD5.6m from WWL.

WWL’s logistics vice-president for Oceania, Tony Paragalli, says: “Kemblawarra provides for the growth of our logistics business in New South Wales with its vastly improved facilities.”

He adds: “The new facility is part of our regional strategy for building sustainable, best-in-class technical infrastructure in Australia. It helps to support our aim of providing a globally integrated factory-to-dealer logistics service to vehicle makers.”

For WWL’s inland distribution, the line has a long-established working relationship with NSW-based Hunt Specialised Transport (HST), which stems from an 18-year relationship between HST and WWL owner, Wilh. Wihelmsen. In 1990, agricultural equipment manufacturer Case was a major customer of both businesses. At the time, Wilh. Wihelmsen brought the machinery to Australia where HST acted as the Customs agent and inland transporter. This led to an agreement for HST to unload WW vessels.

A decade ago an opportunity to tender on a major contract with Case New Holland (CNH) arose. WW and HST had worked separately on Case and New Holland movements prior to this.

Paragalli, together with then regional director of WW, Peter Dexter (now WW chairman) and Albert Hunt, founder of HST, met and agreed to form a strategic alliance partnership to handle the CNH contract.

The 30-year-old HST has five depots in Australia, a large, multi-purpose transport fleet, including road train operations, and offers high-and-heavy transport services throughout the country. As well as owning the WWL Kemblawarra Technical Services Site, HST supplies and operates some storage for WWL and provides over-dimensional and special cargo transport for the line.

WWL currently calls at Fremantle, WA; Melbourne, Vic; Port Kembla, NSW; and Brisbane, QLD.

* Excerpted from Australasian Freight Logistics Issue 12, June/July 2008 (pp.44-8)

MREC HERE

You may also like to read:


, , , , , , , ,

Comments are closed.

Newsletter

Sign up with your business email address to keep up with the latest industry news from T&L. Newsletter sent every week.

Most Read

THE ICONIC to trial delivery by drone
THE ICONIC, the online fashion retailer, has signed up as a ...

Supported By