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Published: October 2017      

Still maintaining a full tank

Tank container manufacturers show little sign of scaling back production, despite fragile demand recovery.

Despite an excess supply streaming onto the market in recent years, there has been little let up in new tank container manufacturing.

This year’s Annual Tank Container Fleet Survey, published by the International Tank Container Organisation (ITCO), estimates that 44,450 units were built during 2016, based on figures supplied by the major manufacturers, and an estimate for smaller builders.

That figure represents an uptick on the previous year, when 43,780 were built, although it is still some way down from the record 48,200 constructed in 2014. But the trend line since 2010, when just 25,000 or so were manufactured, is still upwards (see Table 2, p32).

It all means that the global fleet of owned and leased tanks continues to grow. Based on last year’s production, that fleet now stands at 458,200, against 236,000 in 2010. Certain caveats need to be applied owing to the sometimes unclear picture from more marginal tank builders, but the overall picture of steady fleet growth remains accurate.

This has caused a problem for both freight rates secured by tank operators and leasing rates by tank rental firms. A flood of new tanks in the past few years encouraged both owners and lessors to renew their fleets on attractive purchase terms. The problem, however, is that demand has not kept up with supply, as the rate of scrapping of older tanks has not kept pace with new ones ordered.

Demand might be turning a corner, though, says Reginald Lee, president of both ITCO and the Asian Tank Container Organisation (@tco). Acting in his @tco capacity ahead of the merger of both organisations later this year, Lee said member companies are now seeing higher demand in most regions, which has helped bring freight rates back to “more realistic levels”.

But it will take a while yet for excess tanks currently held in stock at some of the major manufacturers to enter service.

“It is hoped that this will not start another round of tank building by manufacturers without them having actual orders, which could result in another oversupply situation in the industry,” Lee wrote in his @tco president’s report.

Big players

Increased production has largely been concentrated among the major manufacturers (see Table 1, p32).

Market leader CIMC Group built 22,000 units last year, against 20,000, 24,000 and 18,300 in the prior three years, respectively. South African manufacturer Welfit Oddy completed 6,300 tanks, compared with 6,000, 6,320 and 5,900 over the same period, while another Chinese builder, Nantong Tank (NTtank), made 5,800, against 5,500 in each of 2015 and 2014.

Only Singamas seems to have significantly cut back on production, building just 3,850 tanks last year, compared with 5,700 in 2015, and 4,850 in 2014.

Indeed, revenue from tank container production in 2016 showed a sharp decline during that year, to just over US$76M from US$111M the year before.

On the other hand, Singamas is on track to establish a liquid tank logistics operation for industrial chemicals in India. It has signed a joint-venture agreement with Apollo LogiSolutions Limited, a logistics firm in India. Singamas will have a 30% stake.

The joint venture will focus on movement of all types of non-POL (petroleum, oil and lubricants) liquids, either by rail or road, operation and management of movement of tanks, maintenance and cleaning.

Fluctuations

Indeed, CIMC recognises the fundamental problem in the current tank container business climate. CIMC Enric, which incorporates the group’s various energy and chemical equipment lines, said in its 2016 report that, while recent years have seen the chemical equipment division recording modest growth on the back of a sluggish global economic recovery, the group’s tank container business has experienced cyclical fluctuations. In 2016, higher sales volumes were compounded by much weaker selling prices.

But the group is pinning hopes on a new government initiative. In January 2017, the Chinese Ministry of Transport, together with 17 other government ministries, announced the “Notice on Promotion of Intermodal Transportation”, which aims to boost the penetration of tank containers within China.

“In view of tightening safety regulations, the safe, eco-friendly and efficient logistics of tank containers will further take over from lower-end modes of transport,” the company said. “Therefore, while we expect that cyclical fluctuations will last in 2017, the growth of the tank container business will remain positive.”

Moreover, a rebound in steel prices is expected to nudge selling prices for tanks upwards, compared with the depressed prices witnessed in 2016.

Like other big tank builders, CIMC has spent recent years investing in the development of more specialised units. These have the advantages of carrying slightly higher margins than socalled ‘commodity’ tanks, while also allowing the major manufacturers to exploit economies of scale in their existing facilities.

During the first half of 2017, CIMC says it successfully developed an ultra-light structure swap body tank and a new type of powder tank.

New materials

The business has focused on development and application of new materials, in order to promote the use of tank containers in response to “enormous demand” from the chemical logistics industry for transporting special chemical agents. It is also stepping up its effort to develop the market for LNG tanks in China.

Looking longer term, CIMC wants to expand its after-sales services, including depot services, repair and maintenance, annual inspection, and tank containers managed via the Internet of Things (IoT).

It will also explore opportunities in new products and integrated logistics for medical and hazardous goods waste. Much of this focus will be built on leveraging the resources of Burg Service, which has increased CIMC’s presence in the European market, and provided access to advanced technologies for repair and modification of tanks in Europe.

Regionally speaking, the group sees Europe and the USA as being largely mature markets, while emerging markets should continue to experience gradual growth due to the replacement and upgrade of traditional transport modes – e.g. road tankers or even drums, in local chemical sectors. These will drive the sustained growth of the global tank container market, the group reckons.

The rise in inter-regional trade in chemicals should boost demand, too. Moreover, as the number of new chemicals and derivatives continue to emerge, in line with developments in the chemical industry, the market for special tank containers is expected to post “significant growth”.

One objective of this R&D drive is to develop tanks to meet demand for high-volume, lowcost transport. It could be that CIMC has an eye on the collaboration between chemicals giant BASF and Belgian tank manufacturer Van Hool.

Transformation

Earlier this year, BASF started formal operations to transform its internal plant logistics using automated guided vehicles (AGVs) to move 45ft and 52ft tank containers around its vast production plant in Ludwigshafen, Germany.

These BASF class tank containers (B-TC) can be transported with container rail wagons, offering greater flexibility than shunting conventional rail tank cars.

The B-TC has a maximum volume of 73,000 litres, and a payload of 66t. This means that the load capacity is double that of today’s typical tank containers, and similar to that of a chemical rail tank. Storage is also an important consideration, as up to six of the tank containers can be stacked empty.

Van Hool is now supplying a further 480 or so units as part of BASF’s ambition to roll out the special tanks onto the wider intermodal network. Besides the logistical benefits, in terms of loading and fleet optimisation, Van Hool says the new container offers other cost advantages over tank wagons. For example, the annual circulation of a tank wagon averages just 25,000 km, compared with 180,000 km for a container wagon.

“Overall, this large volume tank container will significantly increase the competitiveness of rail tank transport, and potentially encourage the shift of liquids transport from road to rail,” the firm stated.

Step on the gas

According to a report by research firm Research and Markets, the global LNG tank container market is forecast to grow by 6.83% a year between now and 2021. One of the major drivers for this market, the report says, is the rise in intermodal freight transport.

Using specially designed LNG tank containers offers end-users the flexibility of receiving product in more remote locations, and in smaller volumes, where large-scale infrastructure, such as pipelines, is not cost-justified.

They also act as static storage units where customers can draw down the contents as and when needed.

Consequently, tank builders have been quick to launch products to meet the demand. Most recently, LNGTainer, which is based in Finland, unveiled a unit that it claims is a “game changer”.

The new tank has a lighter, flexible internal barrel and outside pressure vessel. For the internal internal tank, LNGTainer chose Finnish steel company’s Outokumpu’s Supra 316plus steel grade. This allowed the tank manufacturer to cut the weight of the unit by 30%, and increase its capacity by 15%.

Tom Sommardal, CEO of LNGTainer explains that, as the weight of the inside tank is significantly less than in competing units, the time for cooling of the inside tank is considerably shorter.

LNGTainer first considered using aluminium for the internal tank, but then Outokumpu offered Supra 316plus because of its properties, such as better lowtemperature performance compared with similar materials. The strength and ductility actually improve as the temperature drops down to the lowest measured cryogenic temperature of -196 degC. LNG is transported at a temperature of -164 degC, and then warmed back to gas when delivered.

“By having excellent low temperature properties, Supra 316plus enables thinner gauges, which translates into savings in weight, fuel, and energy costs, as well as a lower carbon footprint. LNGTainer’s new tank is a real breakthrough, and it demonstrates the best use of stainless steel properties in extreme conditions,” says Juha Kela, Outokumpu product manager.

Supra 316plus has higher chromium and nitrogen contents, and less nickel and molybdenum. Thanks to this composition, the grade has good corrosion resistance and its performance is claimed to be superior to conventional steel grades when the temperature drops down to cryogenic temperatures. In addition, the price of the grade is competitive and stable, the steelmaker says.

Caribbean deal

A good example of how ISO tank containers can aid the growth of using LNG is the island of Barbados. This year the island’s energy concern Barbados National Oil Company (BNOC) inked a deal with Dominican Republic-based energy group AES Dominicana to receive LNG from the latter’s terminal.

The fuel is loaded at the terminal’s truck rack, and shortsea shipped in LNG tank containers to Barbados, where the country is looking to replace oil products with cleaner natural gas. Locally produced gas production has been steadily declining, and Barbados began importing LNG in small quantities to supplement supply.

Similar breakbulk shipments have been pioneered by US carrier Crowley Maritime, which began shipping containerised LNG to customers in the Caribbean, Central and South America in 2013.

In May, Crowley was awarded a multi-year contract to supply US-sourced LNG to a major pharmaceutical company’s manufacturing plants in Puerto Rico. The contract includes the fuel supply and transport of LNG, which helps lower the customer’s emissions, and provides an alternative to its current fuel source, diesel.

Value-added

One specialist tank maker has recently expanded its range of value-added services beyond pure production.

WEW launched an integrated logistics service for the support and refurbishment of tank containers at its newly expanded facility in Weitefeld, Germany.

WEW’s tanks are used by military, chemical and logistics customers worldwide, transporting storing and delivering gas and liquids – from potable water to highly toxic chemicals. The firm says that the high reliability of its products and their serviceability ensure that they can continue to withstand the rigours of multimodal transport and storage in extremely harsh environmental conditions throughout their decades- long lifecycle.

The service process begins with a visual and functional survey, carried out by ultrasonic scan, X-ray, vacuum and pressure tests, or other inspections as required. Work includes repair of damage to structural elements, such as head frames, longitudinal rails, tank body, and attachment parts. Sealings are replaced as required, wear and tear checks are carried out on all components, and hydraulic and/or electric equipment is checked and repaired, including integrated heating/ cooling equipment, valve control, pumps, electronic devices and power generators. The tanks are then typically pressure-tested and repainted if required.

Repaired, upgraded and refurbished units are tested and certified before their return to the customer.

Depending on the work carried out, servicing can extend a tank’s usability by between 30 months and five years, while extensive refurbishment can extend the unit’s life by a further 10 to 20 years....


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This complete item is approximately 2000 words in length, and appeared in the October 2017 issue of WorldCargo News, on page 31.

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