ONE CAREFUL OWNER FULL SERVICE HISTORY. . .
The trade in secondhand (or pre-owned) cargo handling equipment is booming. From forklifts and terminal tractors to ship-to-shore gantries and entire bulk terminal projects, demand is outstripping supply as Nick Elliott finds.
On the downside he warns: "A risk is the age: a 30 year-old STS crane may incur additional costs after a couple of months or years.
That is why we offer pre-owned cranes only if we are sure they are in good condition - either the existing condition is good or we will propose repairing certain items. And most cranes offered have old electrical systems which need to be modernised or replaced for reasons of reliability as well as availability of spares."
Kalmar works the pre-owned market through its established network of subsidiaries, dealers and agents who are involved in new equipment sales. Says Bernt Eriksson: "The machine still needs support particularly if it is old. It will need servicing and spare parts so it is important that our local contacts are involved." African customers for example prefer to rent, but we prefer to sell them because you cannot control the maintenance of the machines if they are rented. But there, our partner takes care of the business locally and normally we transfer the machines to their inventory. There is a risk of interfering and disturbing established relationships if you go in direct."
Gottwald's Peter Klein points to lower investment cost and shorter delivery time whilst cautioning that buyers forfeit the benefits of leading-edge technology although he says: "Gottwald offers upgrade programmes to provide older cranes with state-of-the-art technology."
Klein estimates three-quarters of Gottwald's secondhand sales are made direct, the rest through dealers. By and large, manufacturers and dealers work together harmoneously. Groth comments: "There are some dealers with good customer relationships and/or selling skills. But they can sell the cranes only as they are. They are not crane specialists. So they look for companies who can support them and who can offer additional services like dismantling/erection plus commissioning, modernisation or transportation."
Liebherr's Thomas Bachmann says they cannot avoid the secondhand market "because it may be requested by a potential customer that you take back a used crane and try to resell it for them. We have seven or eight cranes at present for sale but we try not to go too far beyond that figure.
"We certainly have a good idea of how the market looks. So we would put it on our website and pass it onto our sales staff so they promote that equipment in case somebody shows interest and we can then arrange direct contact between buyer and seller. We try to keep the deal as simple as possible. We have our global service network and whatever applies to brand new equipment can also be offered to secondhand cranes, provided it is a Liebherr."
Liebherr has shipped two or three cranes recently from Belgium and Holland to customers in the UK. "For whatever reasons the UK is a good market for secondhand equipment. Agents and dealers are constantly looking at what is available on the market and making good money from this. So we also sell to dealers as well as to the final customer."
PS spoke with the dealers too. Dennis Connors of US based International Equipment Exchange: "We buy and sell so we are traders and most secondhand sales are handled in that way. Ports don't often go to the trouble of selling their used equipment direct as they are not in that business."
Bob Brown of the UK's Container Lift Port Equipment (CLPE) says his company has good working relationships with Kalmar, CVS Ferrari and SMV: "We give them guarantees to buy their secondhand units before they've even sold the new machines. So whilst they are trying to win an order for one or two new machines, they will ask us to price and guarantee the purchase of the used machine before they put the quotation to the customer." CLPE will tackle bulkier projects too. They are currently handling a coal reclamation plant the Israelis are selling having switched their electricity generation to oil. CLPE will offer the full turnkey transfer of the plant to its new site. But container handling equipment is a cornerstone business for them. They sell STS gantries from Israel to Tenerife and Valencia, RTGs from Amsterdam to a yet-to-be-disclosed northern UK port, and have regular orders from Indonesia.
WHERE DO THEY GO?
Whilst emerging markets such as Southeast Asia, Africa, South America and the new EU members, form an important sector, other customers include terminals and depots that require equipment at short notice for one reason or another, and increasingly, off-dock depots for storing both empty and loaded containers.
Konecranes' Dirk Groth: "Asia is booming for pre-owned cranes and suppliers are now buying equipment from the US or Europe as the Asian market does not have enough to offer. Also the European market seems to be empty of reliable equipment of a reasonable age since so much old equipment has been sold in recent years."
Groth says of the container crane pictured: "Kubi Konecranes carried out the complete project management, purchase of the crane, dismantling in Rostock, transportation to Worms, engineering and design of one cantilever extension, installation of additional reinforcements, partial renewal of the electrification, corrosion protection and new painting, re-erection and commissioning.
Gottwald is selling around 20 pre-owned MHCs a year, not all of them their own brand. Favorite countries of origin are Italy and Belgium. "In these two countries the Gottwald crane population is extraordinarily high, " says Peter Klein, "and most of the cranes sold stay in the same region.
"It is a growing market and one driver is the growing Gottwald fleet of MHCs which exceeds 900 cranes in mid-2004. Whilst Scandinavia used to be a good market, presently Southeast Asia and Latin America have become more important."
Liebherr's Thomas Bachmann says there is no real pattern to the market: "Whilst many sales are to ports in the developing world who cannot afford new equipment, conversely a customer may become aware of a secondhand crane for sale and, if it has not been operated too much and is a reasonable price, then it may make sense for them, although they could afford a new crane, to go for the available secondhand machine, particularly if they negotiate well in terms of the warranty, etc."
RO-RO TRAFFIC HAS EXPLODED Ole Larsen of dealer NC Nielsen in Denmark, says: "We are selling around 200 machines a year - forklifts, reachstackers, custom-built machines, cranes, special self-propelled trailers, heavy-lift trailers, cassette trailers. The ro-ro sector is very important to us because trade is developing all around the Baltic, between the new EU member countries - Estonia, Lithuania, Latvia and Poland - and Scandinavia and Germany. Ro-ro traffic has exploded in this sector.
The ports on the European and Scandinavian side have upgraded accordingly to cope with the need for extra capacity. But because much of the development in the new member countries is being funded by the EU, new equipment is going in on special leasing contracts taken care of directly from the manufacturers. This is because these countries do not really have knowledgeable dealers and suppliers yet. Sometimes we are in a position to supply nearly new or very slightly used equipment to these markets but the tendency is towards new equipment."
And he adds: "If we look back just two years many of the countries we used to export to now have import restrictions which prevent them importing machines that are more than 10 years old. Especially in Asia and the Middle East there are many such import restrictions."
But Nielsen is still one of the more active traders and has recently supplied customers in New Zealand, Greece, Estonia, Lithuania, New Caledonia and Hong Kong - mostly reachstackers and big forklifts.
IEE's Connors spots influences that are affecting the used equipment market: "One phenomenon is that it has been so cheap to build a container in China that it was a better financial investment to buy the container over there and ship those Southeast Asian exports to the US, than to return an empty container from the US."
Consequently huge stacks of boxes accumulated in off-dock depots which all required empty container handlers. "One individual in particular had 28,000 empty containers stacked in Newark/New Jersey. And the ports have to move the loaded containers out rapidly as well. So they give only three days free storage after which demurrage is $200 a day. So people have gone to their trucker and asked to store the containers at the depot. So the trucker comes to us and asks: have you got a really inexpensive used container handler?"
And he adds: "The US intermodal market, growing at 15-18% annually, is also feeding demand for used equipment. To have a truly good port you have to have the rail on site. You've got to be able to load those trains because the truck is congesting our market.
"The way the market flows over here, " concludes Connors, "is that new equipment is bought by the ports, which are mostly statesupported anyhow with substantial budgets. We then buy the equipment as a bid item. It's bought by public tender so it has to be sold in the same way. We then distribute our purchases between our customers here, who are basically truckers getting into the container business, and the Latin American market where the customer is likely to be a port because unless they are involved with one of the major global stevedores, they cannot afford to pay $400,000 for a new piece of equipment.
As to equipment types, Konecranes' Dirk Groth says demand is always strong for straddle carriers but they are often run into the ground and good only for scrap. "Some port clients are looking for post-Panamax STS cranes in the age-range of 5-10 years which are hard to find. Bulk cranes like grab unloaders or continuous ship unloaders in the coal or iron ore ports are not that much for sale as again, operators will run them for 30 years."
Kalmar's Eriksson points to forklifts, reachstackers, empty container handlers and terminal tractors as the mainstays. "When we talk about straddle carriers and RTGs, then it starts to be difficult. We have tried but they are maintained for a very long time and if and when they are traded in, they are very complicated to sell.
After 15 years on the seaside they are difficult to dismantle. Every bolt is stuck so you have to cut it in pieces and then you have big problems reassembling it so they have to go in one piece. Then the transport cost is far higher than the machine itself. But inquiries are still coming in from such machines."
Ensuring the equipment is in and remains in good working order, is a big part of the trade. The manufacturers and dealers PS spoke to all offer maintenance agreements - in Kalmar's case it is a strong focus point - though warranties are a different matter. Nielsen's Larsen says: "We often send a service technician out to reassemble machines. We also train the local drivers and mechanics to operate and maintain the machines, but giving a warranty on used equipment, especially when that equipment is far away, is difficult. Most customers know when they buy a machine that there is a certain risk and that is reflected in the price."
IEE's Connors says: "We conduct rigorous surveys ourselves because we're going to pay for this stuff so when we go look at one and there's anything suspicious about it - inordinate exhaust smoke or the gear shift doesn't seem quite right - we'll call in a specialist to do an oil analysis or an engine and transmission inspection.
CLPE will arrange refurbishment, new electrics, modifications, transportation and turnkey assembly on the quayside ready to go to work. "There are often long negotiations to find out how much work the customer is prepared to do himself and how much needs done, " says Brown. "The Israeli coal plant for example is currently in operational condition. The client will want it dismantled, semi-refurbished and reinstated, all of which can be costed out. Some of these bigger projects take 18 months or two years to come to fruition."
TRANSPORT BUGBEAR Transportation can kill the deal. Depending on what and where, shipping costs can often exceed the equipment's value, particularly with bigger machines.
Liebherr's Thomas Bachmann says: "We normally ask the customer to keep the crane on his site for a certain period, say six months, so we would not have to return it to Europe or some other location, and store it. We then try to resell the crane within this defined period. So we say, give us the right to leave the crane somewhere on your terminal where it doesn't bother anyone, then we'll do our very best to find a new customer and remove the crane within the agreed period.
"We offer the secondhand buyer the alternative of arranging his own transport so he can compare that with what we are offering.
Typically four to five major components such as the undercarriage, the slewing platform, the tower and the jib will be disassembled for shipment but we have cases where the whole crane is shipped assembled, in which case a tug and barge are required."
Ole Larsen points to rising freight costs: "The cost of shipping a new or used machine is exactly the same so there is, again, the tendency towards preferring new equipment. But there is nevertheless a trend towards secondhand equipment going to privately operated container yards and trucking depots. This applies even in markets such as Africa where the ports are increasingly buying new equipment. So in this sense the market is moving inland.
"The Iraq war has placed a great demand on the kind of tonnage required for shipment of such cargoes: ro-ro or multipurpose services, " he says. "What we sell cannot be containerised. But if you can book it on a project cargo vessel because there are construction projects in the area, then you can get a reasonable freight, sometimes."
Dennis Connors says 50% of the time IEE arranges the transport but would rather not: "Transport can take up all of your time if you let it. For example we had an order for eight pieces of equipment for Karachi. Unknowingly, because we are not in that trade all the time, we could not do it because all the ro-ro service capacity was taken up by the military for Iraq."
Bob Brown adds rail mounted cranes can cost $1m from site to site. "For MHCs the cost is much lower - perhaps $180,000 to move it within Europe."
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