Within the world of logistics, there are a number of specific segments that require a set of unique solutions. One such example is the offshore logistics sector, which presents its own varied mix of challenges to be overcome.
To gain an insight into the sector and how it is evolving in 2024, we reached out to Kevin Green, Business Development Manager at GAC Energy. the energy sector arm of the global GAC Group.
In this insightful Q&A session, Kevin Green sheds light on the challenges faced by the offshore logistics market in 2024, particularly amidst the accelerating transition to renewable energy and the surge in offshore windfarm installations. He also delves into GAC’s strategic approach to addressing these challenges, emphasising flexibility, adaptability, as well as the importance of providing both quick and dependable logistics in a cost-efficient manner.
Read on to learn:
- How GAC is utilising consolidation hubs in the Middle East
- How GAC turned to sea/air combination following the Evergiven incident in the Suez Canal
- Why offshore logistics demand is set to grow in Taiwan
- How visibility and other tech developments have improved offshore logistics
What are the most significant challenges faced by those in the offshore logistics market in 2024, and how is GAC seeking to address them?
The increasing pace of the transition from fossil fuels to renewable energy and the sheer volume of offshore windfarm installations has led to a scramble for cost-effective, fast and reliable logistics resources. Further, multi-purpose offshore support vessel owners and managers are experiencing exceptional levels of demand which puts additional pressure on logistics suppliers’ resources.
More and more, the sector as a whole is being called upon to be flexible to remain competitive, ensure projects stay on schedule and keep costs low. Project managers need to work closely with their logistics partners and support networks to adapt to emerging risks.
The global drive to harness offshore wind power makes for a busy time ahead for the sector as countries seek ways to wean off fossil fuels, produce more zero-carbon power and become more energy-independent. But it is a journey fraught with challenges. Offshore projects face global inflationary and supply chain pressures which raise uncertainties in long-term commercial and investment decisions. Further, their financial viability is coming under scrutiny amid rising energy prices and costs of raw materials used in the construction and servicing of offshore installations, especially as offshore wind farms become bigger and more widespread than ever.
The upturn brings significant supply chain challenges for our customers. Without the necessary infrastructure and expertise, there is a risk that transportation bottlenecks could develop, and compliance with increasingly strict regulations can add further obstacles. The already high demand is high for accessible warehousing and yard storage is growing. GAC helps meet that demand with our own strategically located facilities and supply base management solutions around the world.
We also tackle supply chain challenges using regional consolidation hubs in the Middle East to stock critical spare parts that either have large transportation costs or a short shelf life. This gives rig managers flexible access to spare parts across the region whilst keeping costs down and eliminating the risk of having excess parts in one location and none at another. Similar solutions are provided in key energy locations globally, supported by a network of over 300 offices.
What factors are crucial in planning and executing offshore logistics operations successfully?
Communication is key. GAC provides a seamless service and the peace of mind for customers that comes from working with the same partner for all their shipping, logistics and marine requirements.
Customers choose us as their logistics partner, safe in the knowledge that our experience covers a wide range of offshore logistics requirements. Whether it’s the transportation of a drill pipe to a land-based yard, sourcing parts, people and equipment to onshore or offshore destinations, rig mobilisation, agency services for supplies and personnel, or delivering specialised heavy equipment and spare parts through an integrated supply chain, GAC Energy offers customised, safe, sustainable and flexible services and support at every stage of the process.
Owning our own fleet of vessels including workboats, anchor handling vessels, tugs, barges and more is another major benefit for customers providing another strong link in their supply chains,
even more seamless operations and cost efficiencies.
When challenges arise, a logistics suppliers’ understanding of local requirements, coupled with long- standing local relationships, is a key factor in its ability to move quickly and efficiently to provide the solutions the customer needs.
How does GAC help to ensure resilience in its clients’ offshore logistics supply chains, especially in the face of unexpected challenges or disruptions?
From geopolitical trials to squeezed supply chains, the offshore sector is facing stronger headwinds than ever before. Increasingly, logistics partners are being called upon to provide effective preparation and support to help customers circumnavigate these issues. GAC specialises in enhancing efficiency, reducing turnaround times and helping to boost overall trade in the face of global disruptions.
Geopolitical situations drive the demand for logistics partners well-versed in thinking and acting on-the-fly to provide solutions. When the ‘EverGiven’ container vessel blocked the Suez Canal, GAC’s local team, together with our global network and hub agency services, eased our customers’ voyages on the longer, costlier route around Africa when they opted for that alternative. With offshore projects, however, when the cargo is often out-of-gauge or critically urgent, chartered air freight or sea/air freight might be the only viable option and this too is where GAC’s experience and expertise come to the fore.
As with any long-term projects, even seemingly small-scale or one-off tasks that are not well-managed can create a domino effect, impacting costs and causing hold-ups, as highlighted in a recent Onyx Insight report (Ever-Changing Winds: The State of the Wind Industry in 2024 and Beyond) which cites “the perfect storm of supply chain issues and too many turbine designs to support”. Dealing with a single partner with an integrated portfolio of shipping, logistics and marine services, rather than many, mitigates the risk of such a domino effect.
Are there specific regions or markets that are currently driving growth in the industry?
While Europe maintained its position at the forefront of energy transition in the early years, the rest of the world is now catching up – and fast.
A prime example is Taiwan which has ambitions to become an offshore wind powerhouse. The island aims to increase the share of renewables in its electricity supply to 70% by 2050, with an expansion of wind deployment earmarked as a natural and necessary step in that process. Half of that capacity is on track to be built by 2035 with more than 130 offshore wind farm projects currently under development including the Greater Changhua wind farm project. GAC opened a new office at Taichung Port in Taiwan in November 2022 to strengthen offshore operations support for projects like Greater Changhua.
Offshore energy construction and maintenance projects are also gathering pace elsewhere. And while mainland China, the United Kingdom, and several countries in Northern Europe are still clear market leaders in the sector, Brazil and the United States are among those now ramping up production. And GAC is now applying its experience gained in those first regions to support other projects in Taiwan, India, Singapore, the Americas and the Middle East.
In parallel with the rise of renewables, we are also seeing significant growth in the traditional oil & gas sector. In the UAE, GAC Energy played a key role in a major Engineering, Procurement and Construction (EPC) project, managing the urgent delivery of several major components worth US$4 million for the construction of a new offshore oil & gas installation in Emirati waters. Some of the structures were up to 14.5 metres in length, 9.2 metres in width, 6.2 metres in height and 80 tonnes in weight, and were transported using a combination of heavy load trucks, barges and tugs – all safely, successfully and cost-effectively supported by GAC.
How competitive is the offshore logistics market, and what steps has GAC taken to maintain its competitiveness?
More than ever, customers are looking to drive down costs. This imperative, along with the need to maintain operational excellence, has created a highly competitive environment where service providers continually strive to offer cost-effective solutions without compromising safety or quality standards. GAC is continually innovating, integrating advanced technologies and optimising processes to meet demands for greater cost efficiency. The adaptability for which GAC is renowned is more critical than ever in today’s oil & gas and offshore markets.
How has technology evolved in the offshore logistics sector, and what impact has it had on operations?
Warehouse and yard management systems are the backbone of modern logistics supply chains. The visibility technology offers enables customers to pre-empt supply chain breakdowns that can result in delayed shipments and increased costs. That is why logistics providers must embrace technology to provide transparency in their supply chain management, regardless of scale.
GAC has long been at the forefront of technological innovations in the warehousing and logistics sector. We have introduced a number of digital systems to our facilities worldwide to optimise supply chain efficiency, including a proprietary and flexible warehouse management system that provides customers with real-time data, KPI reporting, connectivity with the customer’s own ERP and a host of other features.
Cumbersome paper-based documentation can significantly slow the supply chain which is reliant on rapid turnaround and fast delivery. It also makes it more susceptible to potential human error. GAC met those challenges by being an early adopter of automated and digital documentation processes.
Digitalisation facilitates faster deliveries, smoother trading partnerships and round-the-clock order processing while enabling staff to focus on higher-value activities.