CRANE WARS

01 Mar 2004
Teesports new Liebherrs: seriously impressed by the Kalmar Nelcon too Kleiss: better to be honest Long sea voyage deliveries: arguments for and against

Teesports new Liebherrs: seriously impressed by the Kalmar Nelcon too Kleiss: better to be honest Long sea voyage deliveries: arguments for and against

At anywhere upwards of $6m apiece, ship-to-shore container cranes don' t come cheap. So it' s hardly surprising that price is an issue in this specialist sector where a handful of European and Far Eastern manufacturers battle it out for market share. Nick Elliott reports.

There's nothing new in hearing Europeans bemoan how the Far East has stolen the march on their markets. It's been going on for years and today the Chinese manufacturers ZPMC and SMPC, are reckoned to have at least half the world market, in STS gantry cranes between them.

The Chinese - notably ZPMC - have scored on every front. Not only do they have the advantage of low steel prices but their labour costs are also minimal. If this wasn't enough to give them the edge, they have consolidated their position by cornering the market in multiple orders, by getting control of transport costs with their own fleet of heavy-lift vessels. Also the Chinese quote in dollars which, as it tumbles, has effectively reduced their prices by another 16-17%.

Another more questionable tactic lies within the late delivery penalty clause. Are the Chinese allowing themselves to be manipulated into paying out penalties for late delivery? Why, goes the question, do the Chinese agree to delivery dates they know they can't meet? And are customers using this as a device to drive down already low prices insisting on unattainable delivery dates to earn penalty payments that will reduce the final cost even further? Said one European manufacturer: "We see nowadays that Far Eastern suppliers have a poor track record on delivery because they are too busy. It seems they promise the delivery time the customer wants to hear and accept the possibility that huge penalties will be incurred."

Pricing aside there's a further debate surrounding crane commissioning. At Liebherr for example, all cranes are preassembled, but not erected, at its Killarney plant. "All joints are assembled and checked, all drives are tested under load conditions, but because of where we are and the infrastructure at the port we ship from, we cannot ship in fully erect condition, " says sales and marketing manager Gerry Bunyan. "So we normally charter a vessel with heavy-lift gear, load the pre-assembled components and erect on site, usually in a convenient location so as not to interfere with terminal operations." Typically, erection takes 8-12 weeks.

STRUCTURAL STRESSES "We are concerned about cranes being shipped in a fully erect condition, " says Bunyan, "particularly in rough seas where they're likely to experience stresses in the structure which maybe they're not designed for. I know there are experts out there who will analyse these stresses on the cranes during shipment and with bracing, etc. but we still prefer to ship our cranes in large pre-assembled units so the customer knows there are no stresses already built into the structure as a result of the transport. Another benefit of doing it the way we do is that we're putting money back into the local economy by employing local skilled labour and supervisors to assist at the erection site."

Liebherr is a niche supplier. "We don't quote for the big projects where they're looking for eight or twelve cranes because we manufacture just 12-15 cranes a year. We're not in the business of putting all our eggs in one basket and quoting for the big orders because that would tie up all our production with one client. We prefer to participate where there are projects for one to four cranes where we can be very competitive."

For an insight into what the customer thinks, PS spoke with Allan Mundy, maintenance engineer and manager at PD Teesport, representing a comparatively small operation that has just equipped its new terminal with two widespan Panamax Liebherrs.

"Delivery time was very important for us and from signing to commissioning was around 12 months. I was seriously impressed with the Kalmar Nelcon. It was an excellent crane. But we'd had ten good years with another Liebherr and I think that did sway us."

On the erection issue he makes an important point: "For our operators it would be nice if it just arrived and was put in place on the quay ready for work. But from an engineering viewpoint, when it comes in pieces, we put a fitter and an electrician on the job during the commissioning stage so we learn while the manufacturer's team is still here. We get a lot of valuable training time that way because there are always bugs. If it's brought in already erected on a barge, we don't get all that extra time before it gets used 'in anger'."

Mundy has had experience of quay cranes with too much movement for comfort where the crane's boom flexes from side to side and the drivers complain of seasickness! Other sources say Chinese-built cranes have had the same problems with ZPMC having had to retrofit cranes with extra strengthening. Mundy points to the view that the longer established manufacturers have been through the learning curves of building cranes and know what they can and cannot get away with. Following last year's damage to quay cranes in Busan wrought by Typhoon Maemi, the need to be wary of structural integrity issues has come into sharper focus.

Another European port engineer PS spoke to made a valid point in favour of shipping the crane full erect. He said that because of space constraints at his port, for the last three or four crane orders they had not been able to consider erecting on site. "So we role the crane straight onto the quay rather than spend three months assembling it here. That situation restricts some of the European suppliers as they don't have the facility to ship fully erect cranes from their factory."

Theoretically, shipping a crane on a long sea voyage does no harm.

The cranes are analysed for the accelerations on the voyage and they have special bracings fitted. Cosmetically this may be a nuisance because these bits have to be removed and there is regrinding and painting which is not ideal either. But if you don't want an erection site in your port then receiving it duly assembled is the answer. Then again, depending on local legislation, there may be responsibilities the terminal has to take on in terms of health and safety when hosting the assembly team on your land. Certainly under the UK's liability laws, even though it may be the manufacturer's site, a terminal operator cannot walk away from what amount to his responsibilities as a landlord.

What do other manufacturers think? Kalmar, who acquired quay crane manufacturer Nelcon in 2001, doesn't bid outside Europe because transport costs would make delivered prices uncompetitive but Rene Kleiss, vice-president, Kalmar ship-to-shore cranes, is phlegmatic: "There's a healthy demand in Europe and we can serve that market quite well."

Kleiss also stresses how crucial the delivery/erection issue is:

"We can ship fully erect, semi erect or in bits and pieces. It always depends on the customer's situation. Shipping a crane fully erect is a rather expensive way to do it as long as you have to buy the shipping capacity in the open market. For the Chinese it's a different story but for us there are companies like Dockwise who are expensive. But there may be advantages for the customer particularly if they need cranes delivered to an existing terminal in an operational environment, the commissioning time can be reduced to a few weeks so it would make sense."

As to delivery times, Kalmar has just signed a contract with Interforest in Rotterdam with delivery in eight months. The Hesse Nord Natie contract for Antwerp it signed last December will see the first crane delivered in November and every four weeks thereafter.

"We will be very severely punished if we do not meet our delivery times, " says Kleiss. "As Nelcon we had a perfect track record and too with Kalmar now we do what we say. If someone asks for a tenmonth delivery and we feel we can't meet it then we'll say sorry we can't achieve that. If that means losing an order it's a pity but it's better to be honest."

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