SHIP TO SHORE
Safe harbour for uncertain times
In the face of reduced automotive volumes in 2019 Wallenius Wilhelmsen enhanced operations at its North American port facilities both in terms of infrastructure and digital technology, as well as building its short-sea service between Mexico and the US
Across its two divisions ro-ro shipping and vehicle logistics provider Wallenius Wilhelmsen operates 130 vessels servicing 15 trade routes to six continents, while also providing local inland distribution network, 120 processing centres and 11 marine terminals.
In terms of global trade, 2019 was full of headwinds. In its annual report for 2019 WW said that trade wars, the oil price and Brexit all contributed to a year of low confidence in the market. Global automotive markets softened across the year, accounting for roughly half of the reduced volumes the company experienced in its ocean segment compared with 2018. Changing tariffs on goods, slowing economies and new environmental regulations on vehicles in various markets led to a decline in consumer confidence, impacting vehicle sales and a decline in volumes for WW, according to the company’s report.
Nevertheless, the landside business – WW Solutions – processed 4m units in North America in 2019 (out of 7m globally) across seven facilities. They include four terminals at the ports of Baltimore and Brunswick on the US east coast, and the ports of Hueneme and Tacoma on the US west coast. The company also has processing facilities at the ports of Jacksonville (Jaxport), Los Angeles and Savannah.
Cloud-based terminal technology
WW Solutions launched its new global cloud-based terminal operating system (Itoms) across its US terminals last year. The new platform, which replaces a 20-year-old legacy system, provides customers with a configurable dashboard that gives them secure access to a real-time view of their terminal activity. It means that finished vehicle haulers can see gate information and are notified when their cargo is ready to be picked up, and carmakers can see when their units have been discharged from a vessel.
Terminal staff are also able to use the information to manage berth and yard activity, which the company said leads to more efficient space utilisation and quicker vessel loading and unloading.
“[The] old legacy system served us well but simply did not have the modern architecture or capability to scale, leverage our data in a meaningful way or drive operational efficiency in our very complex operating environment,” says Brett Bennett, senior vice-president, Terminals & Stevedores, at WW Solutions. “Itoms does all that for us.”
WW Solutions terminals have been operating efficiently during the rollout and the only challenge last year, according to Bennett, was some minor congestion at the port of Hueneme caused by vehicle dwell and Navy exercises, an issue Bennett says was managed by close working between the port leaders and other stakeholders to keep the cargo flowing.
Dwell time affects capacity and throughput, and for WW Ocean, the vessel operating side of the business, the only challenges arise when processors do not have enough capacity to receive all of the vehicles being delivered on a vessel, which causes delays for those vessels. The problem is more one for the customer and it could be solved, according to Flavio Batista, WW Ocean’s vice-president of sales for North America, by working with one single provider offering integrated solutions for both ocean and land-based services.
VPCs for OEMs
A good example of that in terms of vehicle processing is seen in the vehicle processing centre (VPC) WW Solutions began managing for Jaguar Land Rover (JLR) at the port of Brunswick in October last year. The carmaker was previously operating across two separate processing facilities. Now all processing work, pre-delivery inspections (PDIs), accessory installation, software upgrades and mechanical repairs are taking place in one area. WW Solutions says the 35% increase in the processing area, which also offers additional lifts and bays, enables it to increase the number of JLR vehicles processed through PDI.
WW Solutions has also built a 560 sq.m warehouse alongside the JLR processing facility that will be used for storage of JLR parts.
Speaking in October last year, Jim Harrington, port operations and vehicle logistics manager at JLR said: “In 2020, we’re bringing the Defender model back to the US after a 20-year hiatus, so this move will accommodate processing of this heavily-accessorised model. We appreciate WW Solution’s commitment to meet our expansion needs and support us in our future growth.”
Last year, WW Solutions also expanded its VPC near the port of Hueneme for carmaker Subaru. The existing 26-hectare Oxnard VPC has been extended by a further two hectares, meaning it can now handle an additional 30,000-plus vehicles every year. WW Solutions has renovated a 2,800 sq.m building to create the new vehicle processing space and office area. WW Solutions Itoms operating system is also being used at the VPC.
WW Ocean strengthened its short-sea services between the US and Mexico in 2019 by offering two sailings a month between Altamira in Mexico and the ports of Brunswick, Charleston and Baltimore.
“WW Ocean had a very positive development in 2019 with regards to the short-sea service between Mexico and US,” says Batista. “We have been awarded new business which solidified our presence in that market.”
The transit time from Altamira to Brunswick will take just five to six days, while services between Altamira and Charleston will take six to seven days.
Batista says that the future of that business has been given stability by the signing of the US-Mexico-Canada Agreement (USMCA), which replaces Nafta and came into effect in July.
“The USMCA agreement will provide some level of stability for the OEMs to make automobiles within all three countries, which Wallenius Wilhelmsen Group and its customers will benefit from as we will continue to invest on our short-sea ocean service between Mexico and USA, but also on the WW Solutions services at all three countries,” he says.
WW Solutions in numbers
4m units processed in North America
7 vehicle processing facilities (including 4 terminals)
35% increase in the processing area for JLR at Brunswick port
30,000+ extra vehicles through Oxnard VPC following expansion
50% drop in vehicle volumes in Q2 because of coronavirus
One of the other major impacts on vessel operations this year is the introduction of strict caps of 0.50% on the sulphur content used in marine fuels. The limits, imposed by the International Maritime Organisation (IMO) and known as IMO 2020, have cost the shipping sector millions and have created uncertainty around fuel availability, quality and cost.
WW Ocean’s response has been to operate primarily with different types of low-sulphur fuel on the majority of its vessels, something it has been rolling out over the last decade.
It has also installed abatement technology or ‘scrubbers’ on a few of the most suitable vessels. Scrubbers remove particulate matter and harmful components, including sulphur and nitrogen from vessel exhaust gasses.
“We wholeheartedly embrace the IMO’s new scheme to drastically reduce sulphur emissions [and for] many years we have led an industry-wide collaboration, the Trident Alliance, to support and advocate for full and effective enforcement of the new low sulphur requirements,” says Anna Larsson, head of corporate communications at Wallenius Wilhelmsen Ocean and Solutions.
Performance in pandemic
The coronavirus pandemic has presented a whole new raft of challenges for ocean and terminal services in 2020. As with the majority of terminal operators, WW Solutions terminal services have continued during the pandemic with strict precautionary measures in place, though some port and land processing sites in the US and Mexico have closed or been disrupted because of little or no activity at the car plants. The impact on volumes has been in decline over two quarters.
In the first quarter of this year WW Ocean volumes declined 20% year-on-year because of Covid-19, combined with generally slower markets. Performance in land-based services fell as a result of lower volumes, again partly because of Covid-19. That situation worsened in the second quarter.
“The beginning of the second quarter indicates a drop in ocean volumes of about 50% for Q2,” says Larsson. “Given the indications we see of reopening of production plants we expect this to be the low point of the Covid-19 crisis for us when it comes to volumes, with a recovery starting in Q3. The development of the pandemic and its impact remains very unpredictable, but we have every reason to believe that it will take some time before we are back to pre-Covid levels.”
Through the crisis, WW Solutions has been providing additional services for its OEM customers.
“We have stored cars to support our customers in managing the production and demand fluctuations, and worked with the OEMs for vehicle maintenance programmes while vehicles are being stored,” says Wayne Washington, vice-president Business Development VPCs, Americas.
One other economic impact of the coronavirus and the drop in ocean volumes has been to force many vessels into earlier-than-expected retirement, which has put more attention on vessel recycling practices.
According to Larsson, Wallenius Wilhelmsen recently decided to retire four vessels early, providing the company with the opportunity to share and promote its Responsible Vessel Recycling Policy.
“Given the lack of enforceable global regulation in this area, we were delighted to see BMW and John Deere join the Ship Recycling Transparency Initiative and call for all carriers to disclose their recycling practices,” she says.
Modern factory, modern technology
WW Ocean had a very positive development in 2019 with regards to the short-sea service between Mexico and US. We have been awarded new business which solidified our presence in that market
Flavio Bastista, WW Ocean
The beginning of the second quarter indicates a drop in ocean volumes of about 50% for Q2. Given the indications we see of reopening of production plants we expect this to be the low point of the Covid-19 crisis for us when it comes to volumes, with a recovery starting in Q3
Anna Larsson, WW Ocean and Solutions
We have stored cars to support our customers in managing the production and demand fluctuations, and worked with the OEMs for vehicle maintenance programmes while vehicles are being stored
Wayne Washington, WW Solutions
WW Solutions has been active on a number of fronts including technology and expanded service capability. We launched our new global terminal operating system (Itoms), replacing a nearly 20-year old legacy system
Brett Bennett, WW Solutions