Interview: Breakbulk specialists AAL
Interview with Karim Smaili, owner’s representative Middle East, AAL – based in Dubai.
How do you see the breakbulk/project cargo sector in the Middle East performing in the coming year?
It’s clear that the Middle East is going through one of the most transformative periods in its history, which will ultimately redefine the region as we know it. Navigating change of this scale will require smart, strategic judgment. Energy cargoes will continue to dominate in the short term, but we’re also seeing a number of sectors, such as the steel market, moving in a positive direction.
What impact has the oil price had? What other factors are influencing the market?
PwC estimates that more than $200 billion worth of global O&G projects have been canceled or postponed in 2016, and it is our understanding that oil companies are now routinely negotiating for 10 to 30 percent discounts from oil-field service providers. While oil and gas is still the most important sector in the region, the downturn has been noticeable.
In the long term the outlook for global consumption of petroleum products remains relatively robust. We’ve been in this business long enough to understand its cyclicality, and remain ready to help our clients in the region with the next turn of the business cycle.
Talk us through your fleet and what sets it apart?
Established in 1995, AAL operates the multipurpose sector’s youngest fleet – multiple classes of modern multipurpose heavy lift vessels (ranging from 12,000, to 31,000 dwt) – and offers superior infrastructure with side-mounted heavy lift cranes, large and even deck space, removable and height-adjustable ‘tween decks, large box shaped cargo holds with independent dehumidifiers, strengthened tank tops as well as appropriate lifting and lashing equipment. These highly versatile multipurpose vessels mean that we can load and transport all manner of industrial and commercial heavy-lift and dry bulk cargo to and from the busiest, or most remote, ports across the world.
What are some of the challenges specific for this sector and how are you overcoming them?
The volume of big-ticket construction jobs that drive volume in the sector has declined substantially since the financial crisis. Once a company has reached a certain point on a new refinery or chemical plant, it usually makes more sense to finish the job than to leave it incomplete. However for new projects, it’s a very different calculation.
Additionally bulk and container operators seeking to solve their own overcapacity problems are entering the sector. However bulkers and box ships cannot provide the logistical insight, the technical knowhow, the specialist lifting and transportation equipment, or the years of experience required to safely and consistently shift complex cargoes from A-to-B. It’s leading to a real loss of quality in the sector, and risks putting both crew and cargo in harm’s way.
Fundamentally those in the construction sector know that that the integrity of their supply chain depends upon the safe and reliable movement of their critical and often high value cargoes, and at AAL, we are proud of our multiple award-winning reputation for the highest standards of cargo care. In our market, simply ‘going for the cheap option’ often ends up costing a lot more in the long run.
What developments can we expect from you in the coming months/year?
The coming decades will require innovative enterprises that can adapt to the Middle East’s changing markets to deliver the projects vital to its development. The businesses that do will enjoy substantial organic growth. For AAL as a specialist breakbulk, heavy lift and project cargo operator, this is significant opportunity
In October this year we celebrated the first anniversary of our Middle Eastern headquarters in Dubai, and we’re here for the long haul. Our current semi liner service out of Asia to the Red Sea has put us at the centre of an emerging and strategically important region for the project shipping sector, as government and private equity investment across the region brings exciting new infrastructure and energy developments into the fore. There is a real opportunity to work on-the-ground, to deliver competitive transportation solutions for complex and high value cargo in this important region, and we look forward to playing our part in its evolution.
We see huge opportunity in trade with the Middle East, and through our Tramp & Projects division have made a significant investment in the region. We’ve established three scheduled fixed route services from the US and Asia into the Middle East, via both the Gulf and the Red Sea. These services harness our acclaimed 31,000dwt heavy-lift A-Class Vessels and have already proved popular.