In March 2013, Siem Car Carriers participated in Breakbulk China for the second year running. Among the team that was present at this year’s conference were Siem representatives from China, the United States, and England. Overall, it was exceptionally rewarding to meet with our clients, make new contacts, and discover new business.

Thank you all for visiting the Siem Car Carrier booth in Shanghai. See you next year!

Mexico is rapidly becoming one of the shining stars of the automotive world. Total vehicle sales for the first three quarters of 2012 totaled 701,901 units, a significant 11.2%, increase over the same period in 2010.

The automotive industry accounts for 23% of the country’s total exports, with 80% of the value of those exports, including finished vehicles and component parts, destined for the United States. The remainder is shipped to more than 100 countries worldwide.

If vehicles and auto parts are taken together, Mexico is the fourth largest exporter in the world, higher than the BRIC (Brazil, Russia, India and China) countries.

In 2010, Mexico became the largest exporter of auto parts and vehicles to the US, greater than Canada, Germany and Japan.

This year, Mexican automotive exports will climb by around 4% to an all-time high, according to the president of the country’s auto association AMIA Eduardo Solis. Speaking to reporters last month, he announced that Mexico had exported a record 2.2 million vehicles in the first eleven months of last year and that the projected figure for 2013 is 2.45 million. By 2017, Mexico will have the capacity to produce four million vehicles per year and will be the seventh largest producer and third largest exporter of cars worldwide.

The importance of the automotive industry for the Mexican economy is beyond question. It accounts for 3.6% of the gross national product(GNP), 20.3% of the GNP of the manufacturing industry and is the principal generator of foreign currency.

The industry is also one of the country’s largest employers, with more than 509,000 formal jobs (direct and indirect), a large percentage of which are for skilled workers, and is one of the production chains offering the best pay, training and professional development opportunities.

It is expected that, by 2015, the automotive sector will double the number of direct and indirect jobs it currently generates. The projected market growth for auto parts is between seven and 10% by the end of 2012, the final figures have yet to be released.

There are many contributing factors which play a significant role in the success of the Mexican automotive industry. There is ample installed production capacity which continues to grow as the major multinational manufacturers continue to invest. In the central and northern regions of the country there are 13 large supplier clusters which have a significant base of both local and international parts suppliers.

Skilled labour is readily available in Mexico, and at a substantially lower cost than in competitive countries. Additionally, high-tech production systems have the necessary flexibility for simultaneous assembly of a range of models.

Mexico’s geographical location is ideal for exports to North America and offers considerable cost savings in time and transportation. The country also benefits significantly from the commercial treaties signed with the US and Canada (the North American Free Trade Agreement), the European Union and Japan as well as several countries in Central and South America.

One of the threats to Mexico’s continuing success as an automotive exporter is also a source of opportunity. Currently, the United States is by far the leading destination for Mexican exports and, were there to be a slump in US consumption, the implications for Mexico could be severe. There is, therefore, a need to diversify export destinations and to identify new market opportunities in a variety of areas, not just finished vehicles.

Whilst exports and domestic sales have grown significantly, despite the international economic crisis. Mexico has also sought to increase its participation in the global market. In 2008, 71% of the industry’s exports were shipped to the US, in 2011 only 64% of Mexico’s auto exports were destined for that country. While the US remains the main destination for exports from the Mexican automotive sector, Canada with 7% and Latin America 15% – mainly to Brazil, the fourth largest consumer of vehicles in the world – have currently become important trading partners for the country.

Mexican automotive production is at an all-time high and forecast to increase significantly over the next few years. The Detroit Big Three, Ford, General Motors and Chrysler, are all expanding capacity at their existing plants and Mazda, Nissan and Honda have announced plans for new factories to be built by 2014. Audi is also planning to build its first plant in North or Central America in Mexico by 2016.

Audi AG, a Volkswagen group company, has said that it will invest approximately $2 billion in its first SUV plant in Mexico as part of its strategy to compete against rivals BMW and Mercedes Benz. The expected arrival will increase the competitiveness of the company and, to a large extent, bring it closer to its goal of selling two million cars by 2020. The location of the plant will be announced in the coming months but it is worth noting that, despite having the option to install its plant in other countries like the US, the German company is betting on Mexico.

These investments confirm the evolution and relevance of the Mexican automotive industry. Companies in the sector worldwide recognise that Mexico offers excellent infrastructure, competitive costs, world-class manufacturing and a long tradition and experience within the sector.

The challenge for the automotive supply chain concerns the availability of sufficient transportation capacity to handle the increased exports from Mexico to the United States. In 2011, just under 3.5 million vehicles were produced in Mexican plants and the forecast is for an additional 2.2 million units over the next few years.

The transportation sector is already under strain, both on the road and, in particular, on rail where there is an acute shortage of rail wagons. Analysts fear that any inability of the logistics sector to provide the necessary capacity may inhibit the growth which we are already seeing in the US automotive market.

In theory, the answer is simple. Build more trucks and rail wagons. In practice, it is much more difficult. Since the economic crisis of 2008/2009, transport operators have been reluctant to invest in assets, fearing a double-dip recession. Short sea services may be the best solution to an on-going dilemma.

For a sold car, every minute of delay or lack of capacity is unacceptable to an OEM or distributor. However, with rising fuel costs, utilisation of equipment and assets and load factors are paramount to the transportation companies which have to balance their business service model. Many ocean routes have had to be rerouted and extended to balance demand and service. All parties in the supply chain have had to “right size” their businesses following the recent global economic downturn. These companies are cautious not to over build, over staff or invest too heavily as the industry and economy are still fragile. The anxiety for OEMs and distributors is, “will the capacity be there when needed for increased production?”

At the beginning of August 2012, the port of San Diego received more than 1,000 Mexican-built Volkswagen Beetles and Jettas at its National City Marine Terminal, part of a new regular service between Mexico, the US and transpacific markets operated by Siem Car Carriers. According to Pasha Automotive Services, which is processing the vehicles at the terminal, the short-sea leg between Mexico and the US offers a good competitive alternative to rail shipments.

“Europe has had short-sea transportation for a very long time and it has been very effective,” says Stan Gabara, Pasha’s Executive Vice President of Automotive and Logistics. “Short-sea has also been working well on the east coast of the US. There is a lot of congestion in the Mexican ports of Vera Cruz, Altamira and Tampico but it has been fairly effective. Short-sea has to be competitive with rail or truck, particularly rail, with the increased production out of Mexico. As a logistics provider analysing our business in the automotive industry in general, everybody talks about capacity and no-one wants to make the pre-emptive investments.

“We are not manufacturing enough railcars at the moment. With production increasing and Mexico booming, we think short sea is a viable option. The railcars are going to be travelling longer distances because of the shift in manufacturing locations, so now is the opportunity to be more creative. Take the capacity that does exist and relieve pressure off road and rail.”

When the economy worsened, Siem came up with a concept to charter three brand-new pure car truck carrier vessels and start a Pacific Rim service. “The concept was interesting, because it created a route where every 18 days they have a ship in port and they go from Lazaro Cardenas, Mexico to San Diego and the Pasha facility in Gray’s Harbor, Washington then to Russia, South Korea, China and Japan,” explains Gabara. “Previously, they went to Australia and Singapore, but that took their vessel out of rotation for too long so now they only go there on inducement. So, every 18 days there is a ship with capacity which picks up cars for export out of Mexico and also out of Gray’s Harbor where we are doing about 80,000 Chryslers a year for export to South Korea, Japan and China.”

The round trip journey is completed in around nine weeks calling at Vladivostok, Russia, one port in South Korea, three each in China and Japan and then back to Mexico.

“We have had a lot of interest from all the automotive companies, Ford, GM, Chrysler, Volkswagen and others,” says Jeffrey Campbell, Siem Vice President. “They have come to us because we call at Lazaro Cardenas directly and then we go up the US west coast to San Diego, Hueneme and Gray’s Harbor. We are interested in supporting the volume challenge but all we have moved thus far is the shipment for Volkswagen. The other OEMs have not, as yet, taken us up on our offer. We are operating three PCTC vessels servicing Mexico, the US west coast and Asia. We would love to have an opportunity to move more vehicles and we hope that we are well-positioned to do so.”

One reason for the OEMs’ current reticence to embrace short sea shipping could be that they are locked into their own arrangements with the rail companies for transport from Mexico to the US. “Everyone says they want an alternative but, to date, we have only had the one Volkswagen shipment from Acapulco,” says Campbell. “We have a good partnership with Pasha and we would love to do more from Mexico to San Diego. The OEMs just have to take us up on the offer.”

“We have a plant in Guadalajara, and we transport vehicles from there by rail,” says Dennis Manns, Vice President Sales & Logistics Planning, American Honda. “A new facility will open in the spring of 2014 which will be significantly larger than what we currently have. We don’t look at this as a Mexico logistics issue but rather as a North American logistics issue. The rail assets we utilise in Mexico are going from Mexico to the US and Canada.

“There is great interest in Mexican expansion from all the car companies, which are all congregated in the same general vicinity. There is a short list of options for moving these vehicles; rail, truck or short sea. For us, trucking is not really an option at this point, so it comes down to rail and short sea. If railcar supply is a non-issue, rail is a legitimate solution. We are investigating the short sea solution. It is a service and rate discussion and if we can get the service and the rates and make the connection at the other end it is a possible solution. It is a true, realistic, buyable option.”

Ford is one of the OEMs which does use short sea as one of its transportation modes. “We use rail, and there are issues, although there are significant investments taking place as we speak to try to open up new rail corridors through the border,” says Steve Harley, Executive Director, Global Material Planning & Logistics, Ford Motor Company. “We get a pretty decent service; however, on both the east and the west coast, we also have short sea services. We load from our Mexico City Cuautitlan plant, which is where we make Fiestas for North America, and bring the cars into the US in a combination of modes heavily biased towards short sea.

“There are services out of the west coast of Mexico which we tend to use for northern California and Washington state. If we are shipping to the southern US states such as Texas or southern California or further northeast we tend to use our rail services.”

Harley, amongst others, sees the congestion in the Mexican ports as an issue which needs to be overcome. “Because of the congestion, we tend to coordinate our plant-to-port service,” he says. “We do not deliver the cars to the port significantly ahead of the scheduled vessel arrival. We coordinate a slightly more just-in-time delivery than we would actually prefer. We would rather have a steady delivery, build up the stock and then ship when the vessel arrives, but we can’t do that, partly because of the congestion. The ports can be competitive; there is a good offering and there is some capacity available on coastal car carriers, but the ports need to step up and invest.”

Volkswagen, which has a large factory in Puebla has already made changes to its export patterns from Mexico. The company has moved from conventional rail wagons into AutoMax wagons which have more capacity flexibility.

VW also has a dedicated fleet of six Ro-Ro vessels carrying European product from Emden in Germany to Davisville, Brunswick, Houston and then to Veracruz. According to a Volkswagen spokesman, the ships are then reloaded with Mexican-produced vehicles, half of which are destined for the US market and half for Europe. The same spokesman admits that Veracruz is already over-congested, and that increased volumes could limit further use of the port.

Pasha has some 15 years experience in dealing with short-sea shipping. “We were the NVOCC (Non Vessel Owning Common Carrier) for an Asian distributor,” explains Gabara. “We were exposed to short-sea for a long time, doing our own vessel charters. Whichever line had available tonnage we would have pick up the Asia distributor’s vehicles in Manzanillo, Mexico and ship them to San Diego. The biggest challenge with short-sea when we were the NVOCC was how to get a backhaul to Mexico out of the US. Siem’s model is an extremely efficient one with its one-way direction and we have talked to many of the distributors and OEMs about it, saying that we have a chicken and egg situation.

“If they committed traffic, they could get the tonnage. However, in these economic conditions, no-one will dedicate vessel tonnage without a commitment. Not one single OEM is in a position to dedicate the necessary volume to put a vessel into annual service. Since we are an NVOCC and a freight forwarder, we talk independently to the steamship lines. They tell us that they have occasional tonnage available and, if you utilise the multiple steamship lines to service multiple OEMs who can commit a percentage of their Mexico production, you can alleviate the pressure on capacity with short-sea.

“Then there would be enough collective volume to warrant a scheduled ocean service to the US west coast. It is no different to what is going on today on the east coast. The port of Lazaro Cardenas currently has a concession for a new RoRo terminal which will be efficient with its own dedicated RoRo berth and terminal. In our opinion it is an optimum time to utilise the short-sea concept on the west coast to help with the capacity issue, both in the short and long term. If nothing else, why not have another mode of transportation which helps to keep competition as keen as possible?”

Looking at the wider picture, service providers say they cannot invest in new assets because of diminishing margins. These are affected by downward pressure on rates and increases in non-controllable costs such as fuel, labour and port charges. Already, transportation companies are going out of business.

“It appears that we are seeing the fundamentals of supply and demand guiding all the partners in the supply chain,” says Gabara. “If capacity doesn’t exist, options need to be created or financially supported with investment and/or higher rates. Contracts need to allow for investments in equipment and flexibility to deal with the volatility in the marketplace. Independently, OEMs are planning manufacturing to combat currency fluctuations and new supply chain shipping options are being revisited.”

Are the OEMs ready to integrate their volumes and involve themselves in regional network bundling? Gabara believes that much has been done in this regard going back to before the economic downturn.

“When the industry was moving towards its US peak at 17 million units, the OEMs and distributors embraced creative supply chain solutions with co-mingling of finished vehicles and utilisation of any excess capacity,” he says. “Supply chain partners, whether steamship lines, ports, railroads or trucking companies also created systems and processes to maximise capacity, improve velocity and keep costs down. Much of this was through investment in technology systems to be VIN specific and allow transparency in the supply chain.”

As a major vehicle processor, Pasha is well aware that the rectification of damage in transit is both costly and time-consuming but Gabara believes that the industry has done a very good job in this area.

“I recall the days of lift-on/lift-off cargo vessels carrying new autos where 20% damage per shipment was not out of the ordinary,” he says. “It is now standard to see less than a quarter of one percent of vessel shipments with damage and the severity of damage per claim reduced greatly. The key is communication and the review of metrics and KPIs at the exchange points in the supply chain. This however can be more expensive than the overall average damage per vehicle. A $1.50 vehicle survey inspection at each exchange with an OEM or distributor compared to a $0.35 average per vehicle shipped claims experience.”

PDI centres in Europe complain that OEMs use different codes to describe the vehicles and that performance standards vary from one OEM to another. Gabara reckons that the US is ahead in this regard.

“From our experience dealing with up to 15 different OEMs or distributors at our port facilities, there is a high degree of standardisation,” he says. “We believe that to be the case with our competitors as well. This is about working with proprietary OEMs with their own systems and processes that are linked to their financial systems, warranty and parts. We believe that, as more OEMs outsource processes there will be a gradual change of non-essential coding and information exchange to enhance standardised metrics and KPIs, allowing PDI Centers to compare information. This would also help with information exchange for export volumes to other countries, such as US cars to Asia where we have experienced different acceptance standards of vehicle conditions.”

There is a high degree of variability in OEMs production volumes which can often lead to imbalanced flows and under-utilised resources. Gabara says there is a case for granting service providers improved access to production and sales data in order to optimise distribution planning.

“An example for us was an Asian OEM shipping vehicles to our San Diego Port terminal where the ocean transit took 11 days. Fortunately, 90% of the vehicles were sold and approximately half of them went on trucks and the other half on rail. We would receive the manifest for the vessel loading 11 days in advance and share that information via our web portal to the transportation partners, truck and rail. The distributor would tell us the dealer information for the sold units allowing the preplanning for the shipment. The rail equipment would be ordered 11 days in advance and the truck loads could be built several days prior to the arrival of the vessel at the port. The transportation partners also updated transit plans daily, allowing us to receive the entire shipment and just process what was needed on a daily basis optimising the resources of port property, labour, rail equipment and trucks. We also printed the ‘Monroney’ or MSRP labels ‘on demand’ reducing administrative time. This process took several days out of the supply chain for the customer.

“This is an example of collaboration between all the supply chain partners for the specific OEM/distributor. While we do this in general, taking that collaboration to a more ‘granular’ level allows all the transportation partners to participate and support the efforts. It is important to discover and ensure benefit to all members of the supply chain.

“Both asset and non-asset-based service providers consistently have to be more innovative,” adds Gabara. “For non-asset-based service providers it is critical to demonstrate value and generally that is through innovation in their processes, communications and employees. This holds true for asset-based providers as well, but in some cases the transportation assets require such substantial investment and equipment lead time that some innovations take longer to be introduced into the supply chain, for example green technologies. Having been in the industry for a long time, I can say that empirical data provided by improved technology and information systems has let all service providers measure their processes and performance faster and more accurately, leading to continuous improvements for the customer, the industry and the service providers themselves.”

Source: http://www.automotivesupplychain.org/features/151/77/Short-sea-can-help-solve-capacity-issues-out-of-Mexico/

The initial agreement involves eight energy efficient pure car and truck carrier (PCTC) vessels capable of carrying 6700 CEU (car equivalent units) and is made up of two firm orders and options for a further six vessels.

Simon Stevens, Chairman of Siem Car Carriers, said
“We are very pleased to have played a part in helping to establish Auto Marine Transport as the tonnage provider to access the energy-efficient PCTC market. It is the intention to work closely and exclusively with Auto Marine Transport and Samjin to develop and build PCTCs beyond the initial series of 8 vessels. Auto Marine Transport is fortunate to have benefitted from the combined design expertise of Samjin and Siem Car Carriers. The innovative energy-efficient design which is being developed will result in significant savings to future charterers. In order to grow Siem Car Carrier’s own roll-on/roll-off (ro-ro) and car-carrying operations over the next 10 years, we will need access to this type of vessel.”

Young II Kang, Chairman of Samjin, said
“We are very fortunate to enter into this agreement for 8 vessels and possibly many more PCTC newbuildings with Auto Marine Transport. We believe a very good partnership with Auto Marine Transport and Siem Car Carriers has been created, which should result in the future growth of each company. We will fully cooperate to develop and deliver the most efficient and satisfactory vessels to the Buyers.”

Contact for more information: Mr Simon CG Stevens +44 207 747 0545
Ms Hyeree Heidi Kang +82 70 7732 5124

William Cook, senior manager of International Logistics and Customs for Chrysler, speaks during a ceremony Wednesday celebrating the 100,000th automobile shipped from the Port of Grays Harbor. The vehicles are processed by Pasha Automotive Services and loaded onto Siem car carriers by Pasha Stevedoring & Terminals and Local 24 of the ILWU.

Port officials, shipping representatives, dock workers, local dignitaries and a Chrysler executive were among a crowd of about 30 people who watched alongside the Höegh Beijing cargo ship as the 100,000th automobile shipped from the Port of Grays Harbor was loaded on Wednesday.

The Chrysler vehicles are processed by Pasha Automotive Services and loaded onto Siem car carriers by Pasha Stevedoring & Terminals and Local 24 of the International Longshore & Warehouse Union, then shipped out of Grays Harbor to ports in Asia.

A news release prepared for the ceremony said the number of Chrysler exports shipped out of Grays Harbor “greatly exceeds the estimated 25,000 units a year anticipated at the inception of business in January 2010, demonstrating a healthy growth for these partners in transportation.”

Pasha began operating at the Port a year prior to the Chrysler contract, and the automotive company plans to keep the cars rolling off of Grays Harbor docks well into the future.

“This Port is very important for us and for Chrysler,” said William Cook, senior manager of International Logistics and Customs for Chrysler. “The vehicles you are shipping out of here are going to Asia and the China market is important to our future.”

Cook noted that when the contract first started, there were many concerns about whether the automotive company would even still be in existence.

“I think we proved critics wrong and it’s good to see,” Cook said. “The product we are building is a lot better. The market is demanding and we can’t even keep up with the demand for these vehicles. … It’s very critical for us to have this Port operationally working the way it’s working.

“I think it surprised everybody at how fast we got to 100,000, and we have high hopes for continued growth.”

Michael Pasha, general manager for Pasha Automotive Services, said he hoped to have the same sort of success on Grays Harbor that the company experienced when it started operations at the San Diego Port in 1990. The first year in San Diego, the company shipped 30,000 cars, and it now has surpassed 4 million.

“The same potential exists at the Port of Grays Harbor,” he said. “We have nowhere to go but up, thanks to prestigious partners like Chrysler, Siem and, of course, the Port.”

The Grays Harbor Port provides a deep water berth in a strategic shipping location with available property “and a solid motivated local workforce,” the company said in a statement prior to the ceremony. The company will be “rapidly expanding its operations” to capitalize on “the growing demand overseas for U.S. manufactured vehicles.”

Simon Stevens, chairman of Siem Car Carrier Inc., thanked the Port for the success of the enterprise. Siem offers what is called “roll on, roll off (RO-RO)” liner service between North America and Pacific Asia with sailings every two weeks between the West Coast, Mexico, Russia, Korea, China and Japan.

“We have demonstrated for the last two or three years now, by sitting down together and dealing with the challenges of building a new business, that we can make it work,” he said.

Port Commission President Chuck Caldwell called the event “an awesome milestone.”

As a longtime commissioner, Caldwell said, “I thought I would count 100,000 logs but I never thought I would count 100,000 cars” being shipped from Port facilities.

The port of San Diego received more than 1,000 Volkswagen Beetles and Jettas at its National City Marine Terminal at the beginning of August as part of a new regular service between Mexico, the US and transpacific markets operated by Siem Car Carriers. According to Pasha Automotive Services, which is processing the vehicles at the terminal, the short-sea leg between Mexico and the US offers a good competitive alternative to rail shipments in the face of increased sales in the US and the threatened shortage of rail wagons (railcars)  needed to meet the demand.

The port of San Diego is the first point of entry into the US for ships coming from the Pacific side from Mexico, Central and South America. Produced at VW’s Puebla facility, the VWs were shipped from Acapulco in Mexico by Siem Car Carriers. The delivery contributes to a 22% increase in regular vehicle deliveries to the port in the last fiscal year and, according to Pasha Automotive Services, this underscores the increase in domestic and export cars sales.

Stan Gabara, Pasha’s executive vice president of automotive and logistics said the regularly scheduled service means that both the port and Pasha can offer “new and creative logistical solutions” to the auto transport industry and its customers regardless of volume.

“With the auto industry poised for a comeback and more automotive manufacturing in North America, it is anticipated there will be a shortage for rail cars,” Gabara said. “Short sea shipping is a proven transportation method. Siem Car Carriers offers competitive rates from Mexico to the US”

Jeffrey Campbell, Siem Car Carriers Vice President noted that Siem was excited to carry the VW vehicles “we enjoy a challenge and proud to have been able to solve their immediate need and looking forward to seeing how the Mexico short sea market shapes up in the future”.

As was discussed at the Finished Vehicle Logistics North America conference in May this year, rail wagon shortages are  now common, especially for growing exports from Mexico, and there are fears that the vehicle logistics industry could fall behind or even limit the sales recovery anticipated.

While truck capacity is an on-going concern, there appeared to be even more worry over rail wagon shortages at the conference and companies are now focusing on alternative options, such as short sea. VW Group, which will add an Audi factory to Mexico by 2016, already moves vehicles between Mexico and the US on vessels which move on a rotation to and from Europe, as well as by rail, and VW of America’s Jörg Schnackenberg suggested that rail shortages could lead to more short sea, although he admitted that Mexican ports might also struggle with capacity. GM’s head of global logistics, Christine Krathwohl, also called for more short sea between the US and Mexico (read more here).

Siem Car Carriers is calling approximately every 18 days at the port using five new pure car truck carrier (PCTC) vessels on the transpacific route. Each vessel completes the roundtrip transpacific journey, which in all takes in Mexico, the US West Coast, China, Russia, Korea and Japan, in around nine weeks.

Pasha stated that in the past it has handled and chartered vessels to transport automobiles through National City for several vehicle manufacturers, including Honda, Chrysler, Volkswagen and General Motors.

“What is different today is that SCC (Siem), with its regular service rotation without the need to ‘backhaul empty’ to Mexico, is more cost effective and competitive,” Gabara said. Another reason is the ship’s capability compared with trucks and the railroad.

“There are capacity constraints today in both rail and truck,” Gabara said. “It’s cost-effective, considering that you might not be able to quickly obtain the nearly 60 railcars needed for a shipment of this size.”

Stuart McMillan, the port captain for Siem Car Carriers, said 1,008 cars were delivered to the Port’s National City terminal on the first voyage.

The Volkswagens that arrived aboard the CSVA Rio Blanco were shipped from Acapulco. The vessel then headed for National City and later to the Port of Grays Harbor in Washington, where Pasha also operates. From Grays Harbor, the ship makes the 14-day trip to Vladivostok, Russia, then to South Korea for one port visit, and China and Japan for stops at three ports in each country and then back to Mexico.

Siem Car Carriers’ transpacific shipping service focuses on the transport of cars, high and heavy cargo and other types of cargoes. Its parent company, Siem Shipping, operates more than 80 other types of vessels worldwide.

Pasha Automotive Services processes about 400,000 per year year.

One of our recent successes was a shipment of compressors, coolers and associated components for the China National Petroleum Corporation (the parent company of PetroChina) and Agility Logistics.

The two previous shipments of similar products were carried on multi-purpose vessels specifically chartered for the voyage.  We loaded the 6100 cbm of cargo on to the Hoegh Beijing for its journey between the United States West Coast and China.  With a combined weight of over 1000 tonnes, we used our 40x40’ roll trailers and our own tug masters to load the vessel with the cargo.  As it’s a scheduled service, there were no surprises about departure or arrival dates so the cargo arrived as expected.

 
Darrell Jefferies, the VP of Agility emailed us to say: ‘I appreciate all the efforts you and Siem have done on this project [particularly as] Chinese New Year is upon us”.  All in all, both the customer and the receiver were impressed with Siem Car Carriers ability to handle this kind of project cargo as part of our scheduled service.  They were equally as impressed with the huge savings they made.

The shipping industry transports 90% of global trade and as you can see from the diagrams below, statistically it  is the least ecologically damaging mode of transport. However, our industry accounts for 3-4% of man-made CO2 emissions worldwide and this figure is expected to rise to 6% by 2020. Some predict that emissions will double by 2050 if no action is taken, so there is no room to be complacent.

Since the 1950s, the International Maritime Organisation (IMO) has set the regulatory standards in the shipping industry working towards international consensus. Their senior technical committee on marine pollution is the Marine Environment Protection Committee (MEPC) has the mandate to work with the shipping industry to improve environmental standards. In March they met in London and produced four sets of guidelines designed to increase energy efficiency and reduce emissions of greenhouse gases from the global shipping industry. The four guidelines adopted focus on revising the Energy Efficiency Design Index for new ships and developing a Ship Energy Efficiency Management Plan (SEEMP).

These guidelines are designed to sit alongside the mandatory regulations on energy efficiency of ships introduced by the International Convention for the Prevention of Pollution from Ships (MARPOL Annex VI) which comes into force next January. Their expected impact can be seen in this graph from the IMO.

Siem Car Carriers takes its environmental responsibilities very seriously. We focus particularly on reducing our vessels’ fuel consumption through ‘slow steaming’. A recent report ‘Regulated slow steaming in maritime transport’ by consultants CD Delft estimated that if global average maritime speeds were reduced by 10%, then carbon dioxide savings would rise to 19%.

We believe that shipping remains the most ecologically efficient way to transport products – our analysis suggests that for every ton of fuel we don’t burn across the 3 vessels operating the NAPA service, we save 150 tons of CO2 emissions every day. We hope that the IMO recognises the benefits of slow steaming in its future discussions on how the shipping industry supports international emissions reductions.

It kicked off on 29 February with more than 4,500 registered attendees and over 100 exhibitors discussing a wide range of topics from China’s breakbulk and project cargo market to transporting goods on the Yangtze River and trade in Mongolia.

One of the keynote speeches was given by Mui-Fong Goh, a partner in the A. T. Kearney’s Asia Pacific transportation practice.  She talked about trends and developments in the Chinese market for breakbulk cargo logistics.  She estimated that China’s breakbulk market grew by 11% in 2010 with export volumes reaching US$10 billion in 2010.  By 2015, she expected this to reach US$26 billion.

The growth in Chinese export volumes is helped by the strong relationship between China and the US, and we know there is a huge opportunity for companies like Siem Car Carriers to assist both US and Asian companies by moving their cars, trucks, high heavy and break bulk cargo around the Pacific.

We were delighted to hear the conclusion to Goh’s keynote speech, which noted that “transport decisions are not based simply on price alone, but on a combination of factors. Quality is becoming more and more important; there’s more integration into supply chain and demand for value-added services.”

This is great news, as our fast, direct, reliable liner service is a great example of a high quality, value-added service.

With more than 75 percent of attendees from mainland China, the conference is a great way for us to keep in touch with existing customers and showcase our NAPA break bulk and project cargo services to new ones.  For those in the Asian community that had yet to hear of us, they were very pleased to learn that there was finally a reliable and direct Ro-Ro company between the US West Coast and North Asia, especially one that has such a huge emphasis on customer service and reliability.

All-in-all, it was another great Breakbulk conference.  We are already looking forward to Breakbulk North America, 8 – 11 October 2012  in Houston Texas.

From the outset we focused on finding better solutions to joint problems – from the right port to the best practices. One of our earliest challenges was finding a port willing to support the growth of a startup shipping line. For years Pasha had wondered “what if” regarding Grays – it was a small port the world had passed by for decades.  However, it was very close to the sea allowing better transit times.  It also had a good port operating group that knew what it would take to deliver and the manpower ready to step up and bring work back to the area.

In early May 2009 we started finding our customer base, recruiting staff and enhancing the port to accommodate this new business venture between Port Of Grays, Pasha and Siem Car Carriers.

Today Siem Car Carriers carries an estimated 70,000 units of Chrysler product to China and ships Caterpillar to Russia. The port has grown tenfold and was awarded the Port of the Year in the state of Washington in 2011. Quite an achievement in less than three years.

We are very proud of our partnership and remain committed to each other’s success.

Thanks to Jeff Burgin, the Snr Vice President of Pasha for this glowing testament of our work together in Gray’s Harbor.

We are looking forward to exhibiting at the Breakbulk China conference in Shanghai that is running from 28 February to 1 March 2012.

China is a significant shipper of break bulk, driven by both imports and exports.  As a dynamic, fast growing economy, China consumes a vast quantity of raw materials and imports a wide variety of products for domestic use.  It also continues to grow its export market at a rapid rate.

This conference is dedicated to all things break bulk and project cargo as they relate to the Chinese market.  A mix of keynote speeches, networking opportunities and workshops covering a whole range of subjects from compliance to case studies and sourcing strategies to scheduling.  The conference promises to be a fascinating event for anyone interested in building their presence in China.

We will be one of the exhibitors at the conference, come and meet us at booth F18.  The conference is being held at Intex Shanghai & Sheraton Shanghai Hongqiao, for more information see the website:  http://breakbulkevents.com/?section=breakbulk_asia2012