By Lori Musser
Grain might feed the world, but it has always been a predominantly bulk business and hasn’t fed into the global breakbulk and project cargo industries in big way.
That might be changing, as new grain-related project cargoes emerge riding the coattails of record global grain production and a billion-gallon increase in global grain ethanol production last year.
In October, the U.S. Department of Agriculture released its Grain: World Markets and Trade 2016/2017 outlook, projecting that U.S. and global wheat, rice and corn production will set records.
Moreover, according to the U.S. Energy Information Administration’s U.S. Fuel Ethanol Plant Production Capacity report released in June 2016, U.S. ethanol plant capacity has increased for the third consecutive year. America is home to almost 200 ethanol plants that offer up 15 billion gallons of nameplate capacity, the volume of denatured fuel ethanol that can be produced during the year under normal operating conditions. This figure is up a half-billion gallons over the prior year. U.S. capacity represents more than half of global production capacity, which increased by 1.13 billion gallons last year, according to the Renewable Fuels Association.
Diverse Business
The potential stream of ethanol-related project cargo is diverse. First, the production plants require a plethora of large-scale equipment – pumps, milling equipment, driers, turbines, generators, tanks, distillery components, and so on. Second, because most ethanol is used as a gasoline additive, there is affiliated distribution, storage and blending infrastructure. Third, clean energy technologies and regulations vary between countries and regions, and continue to change, requiring infrastructure updates.
As economies introduce ethanol into their gasoline mix, or alter the ratio, new distribution equipment is sometimes needed.
Geoff Cooper, senior vice president of the Renewable Fuels Association, documented the infrastructure components subject to change: new railcars, new tank barges, new tank trucks, new and retrofitted storage tanks and blending equipment at petroleum terminals, unit train receiving infrastructure, manifest rail receipt facilities, and marine terminal infrastructure.
As with other energy-related infrastructure, ethanol plants offer project cargo potential during construction. There are also ongoing opportunities that persist long after start-up. Evolving technologies and dynamic expectations are especially prevalent in this sector.
Projects underway, such as the Iowa-based Summit Agricultural Group’s US$115-million project developing Brazil’s first corn ethanol plant, are expected to generate project cargo opportunities for a number of years.
Examples of ongoing upgrades abound. In September 2016, for example, Pacific Ethanol Inc. announced installation of a 5-megawatt solar photovoltaic power system designed and built by Borrego Solar Systems for Pacific Ethanol’s Madera, California plant. The solar PV system is expected to reduce operating costs and improve its carbon score. In another example, in March, ICM contracted with The Andersons Albion Ethanol LLC to design and build an expansion to the Albion, Michigan, dry-mill ethanol location, doubling the facility’s capacity. The plant was originally engineered for future expansion. And, in late October 2016, Ener-Core Inc., a developer of gas conversion technologies for industry, delivered two of its 2-megawatt power oxidizers to the Stockton biorefinery site owned by Pacific Ethanol.
Industry experts suggest ethanol capacity, especially cellulosic capacity, in the U.S. and worldwide will continue to expand.
Numerous cellulose-fed plants are commissioned or have begun production in the U.S., including Abengoa’s facility in Hugoton, Kansas; DuPont’s biorefinery in Nevada, Iowa; and POET-DSM’s plant which opened in September in Emmetsburg, Iowa.
Grain Opportunities
There are also several existing breakbulk trades in grain. Traditional bagged and palletized shipments to developing countries and remote markets persist, for now, according to Daniel B. Loughney, trade and business development director with the Port of Lake Charles, Louisiana. And there are finite but respectable markets for grain shipments moved in Gaylord bins, or in the proliferant super sacks and similar packaging.
The Port of Portland, for one, has a robust bulk grain business. There are three elevators in Portland harbor, contributing to its ranking as the top U.S. wheat port. Sebastian Degens, director of marine marketing for the Port of Portland, said there has been a mini-grain infrastructure boom, with investments totaling US$500 million, by all seven terminal operators on both sides of Columbia River. Triggered by the deepening of the main port channel in 2010 from 40 to 43 feet, every grain operator has upgraded shiploaders, belts, and storage capability.
Much of the project cargo destined for the grain terminals went unseen by public docks. Degens said some arrived by rail from domestic fabricators and were delivered right to the elevator site. “Because the elevators are on the water, what project cargo there was moved direct to terminal,” he added.
For Portland, the grain infrastructure improvements are already paying dividends. Between 2015 and 2016, Columbia River total grain volumes were up about 23 percent for wheat, soybeans and corn, according to Port of Portland statistics.
Food For Peace
At the Gulf Coast Port of Lake Charles, Loughney talked about an unusual grain-related breakbulk niche business: U.S. P.L. 480 cargo – the U.S. Agency for International Development’s ‘food for peace’ program.
P.L. 480 is distributed primarily to third-world countries as bagged cargo. Loughney said that the U.S. donates more food aid than the rest of the world combined, a fact borne out by International Grains Council Food Aid Committee statistics, which also lists the European Union, Canada, and Australia as important donors.
Loughney said the U.S. government purchases food from American farmers through a competitive process, and exports the mostly bagged/palletized product through select U.S. ports. He has seen these cargo levels fall off in recent years, with volumes now running at about 120,000 tons per year, with Lake Charles’ share of the lift closing in on 25 percent. Cautious about the program’s future, he said that technological advancements are revolutionizing nutrient delivery. “The industry has changed. It is now possible to fit all the nutrients a person needs into a squeeze pack.”
Lake Charles is the 11th-largest U.S. port by tonnage, moving bulk, breakbulk and other general cargoes. It boasts two general cargo facilities for breakbulk and project cargo. Those terminals are short-line rail served, offer 1.6 million square feet of covered storage, and can dock 12 ships simultaneously. In a unique twist, the Intracoastal Waterway bisects the portís ship channel, enabling freight access as far north as Canada by barge.
While it was once a world-class rice port – the surrounding Parish of Calcasieu produced two-thirds of all rice grown in the U.S. in 1926 – the Port of Lake Charles is today an important bulk energy port.
For Loughney, project cargo shipments are a happy offshoot to US$102 billion in announced natural gas and related infrastructure investments in the region. In the ramp-up to the natural gas build-out, the port has offloaded several over-dimensional heavy-lift deconstructed cranes. Loughney added that project cargo for grain-related industry is far from commonplace, but has been handled at the port.
Port Infrastructure
Around the world there is a steady stream of milestone deliveries of grain hoppers, conveyors and shiploaders for elevators or terminals, and similar infrastructure for mills.
In an overview, published in September, of its most recent survey of ship loader and unloader manufacturers, World Grain concluded that large capacity equipment will enjoy greater demand in coming years, to help deliver economies of scale. It said there is an especially active equipment demand in South America and greater Asia, with emphasis on Brazil and China, where facilities are needed to accommodate increased grain production.
Other trends include customer concerns and requirements related to environmental issues, downtime, and a preference for a single contractor.
There has been a bevy of recent elevator and mill announcements. For example, on Sept. 28, Minneapolis-based Miller Milling Co. announced a production expansion at its Saginaw, Texas, flour mill to 24,000 hundred-weights. The project will entail necessary infrastructure for grain handling, packaging, storage and load-out capabilities.
At the end of October, Viterra Pacific unveiled a US$100 million investment in its Pacific Terminal at the Port of Vancouver, Canada. The terminal can now accommodate more than 6 million tons annually, tripling its previous capacity. Improvements included a shiploader, new bulk weighers, upgrades to shipping conveyors and rotary cleaners, and improved electrical and dust control systems.
And on Nov. 1, Archer Daniels Midland Co. announced plans to build a new, modern feed facility to replace its current operations in Quincy, Illinois. The company also has a new plant in Glencoe, Minnesota, new facilities in China, and a facility under construction in Effingham, Illinois.
Some of the hot dialogues in mill and elevator infrastructure are about facilities such as grain silos being built for seismic, wind or snow loads, silos with high grade galvanization, and high-capacity silos and handling equipment. There is also continued interest in energy efficiency. Any upgrade or expansion to an existing facility presents an additional opportunity to the global project cargo industry.
Almost every grain terminal, elevator or mill, and every grain ethanol production project or expansion, will generate project cargo opportunity that includes over-dimensional, overweight or other critical infrastructure components. While the niches for ports, carriers, 3PLs and other logistics providers may be somewhat esoteric, they will remain solid during this growth period for grain and ethanol production.
Did you subscribe for our daily newsletter?
It’s Free! Click here to Subscribe!
Source: Breakbulk
