Feb 26 | 2020
The Americas has long been a land of opportunity. So it remains for project cargo contract seekers.
Construction of new capital projects will prove to be a key driver of breakbulk activity. Of course, some issues will affect shipping, but on the whole, the outlook is cautiously optimistic.
According to Contractor Magazine, Canada’s construction pipeline holds a $1.1 trillion valuation.
While it is currently skewed more towards late-stage developments, with 54.5% of in-progress developments in pre-execution or execution stages, a significant chunk of these are still in their preliminary phase.
Infrastructure is the main driver. Canada has put in place a major spending plan. Government-led investment in just infrastructure construction totals over $139bn, with overall nationwide plan delivery due by 2028.
The energy sector represents $82.7m in value, the largest individual sector in terms of investment, followed by transit projects at $43.6bn spread across 23 developments.
Currently, the highest individual project is the $40bn LNG Canada project spearheaded by Shell and partners. Slated for opening in 2025, this British Columbia megaproject involves construction of a 670km pipeline, a brand new liquification and storage plant, plus a terminal for LNG vessels.
Much of the activity is set on Canada’s east coast. Forecasts from BTY’s Market Intelligence Report suggest construction in Ontario will grow at between 6-7%. Quebec’s growth is rated at 4-5%.
Another factor is three Western oil & gas pipeline projects have been given approvals in 2020. The Keystone, Line 3 and Trans Mountain pipelines have the go ahead to start construction, suggesting activity will pick up on the Pacific seaboard soon.
Brazil’s infrastructure sector has been bolstered by a public-private partnership and privatisation strategy for President Bolsonara.
So far, Brazil’s asset disposal program has managed to generate concessions - the right to use land or property for a specified purpose, granted by a government - for a new highway and 32 small and medium sized airports.
However, it is renewable energy that holds huge potential. As we examined in our Americas 2020 Outlook, 900 wind projects have been registered with Brazil’s government since 2015. 15 GW worth of new wind power, delivered through new major wind farms, is expected for delivery by 2026.
Petrobras, the nation’s NOC, has also sold out assets worth $10.3bn, generating new capital for a fresh wave of oil & gas development in South America’s largest economy.
The picture is not entirely rosy though. Argentina is in deep recession. This is causing consternation for investors, as they look to other South American states to pour money into.
Despite this, Argentina is aware of its need to support its energy and power sectors. Renewables have been identified as a potential solution. The Argentinian government has set strict targets to reach 20% energy consumption from sustainable sources by 2025.
For context, the current figure is 4%. Much work is needed for Argentina to meet its clean energy goals.
South America’s largest Solar Plpant, Cauchari, is under construction in northern Argentina, promising to deliver 300mw of power. 1.2m solar panels are being installed here, making it one of the most significant solar parks in the world.
There is also infrastructure. The Tunel de Agua Negra, a 13.9km tunnel linking Argentina to Neighbouring Chile, is in the planning phase. Expect project capital floats around the $1.5bn mark.
However, as mentioned above, the spectre of recession continues to haunt Argentina. Attracting investment will be difficult as long as the Argentinian economy underperforms. Project cargo contracts maybe hard to come by here.
However, Colombia maybe worth a look. Construction and infrastructure are very much on President Duque’s agenda. He has said that he hopes infrastructure to be a “transformer” of Columbia.
In practical terms, this means continuing some long-anticipated megaprojects.
Bogotá Metro is amongst the largest undertakings Colombia is eyeing up. This important work involves construction of 24km of underground track, as well as building 16 stations and 13m above-ground viaduct. A $4.3bn contract is expected to be awarded soon.
Overall, Colombia is forecast to be a South American construction leader. Projected growth is expected to exceed 5% between now and 2022.
We’ve talked about this a lot at Breakbulk recently, but it bears repeating. President Trump’s higher tariffs on metal goods has ramped up prices. In turn, construction and material costs on future projects have greatly increased.
But that does not mean the project portfolio is empty.
Strong growth in renewables include on/off shore wind and solar is already underway. In offshore wind in the US East Coast should help to bolster projects, particularly since projects must start by year end 2020 in order to qualify for the various Tax Credits available.
Onshore wind continues in the middle of the country. Solar projects are also in demand.
A Bechtel engineer advised that “lots of the new projects this year are in the US”.
Other projects include those in infrastructure – bridges, metros, and stations; roads and tunnels, dams, as well as a broad range of oil, gas and chemical projects, particularly in the US gulf coast – will continue to create breakbulk demand.
Breakbulk Americas is where the project cargo opportunities will be, as well as the region’s largest gathering of sector professionals.
Book your place today.
Projects driving breakbulk activity in the Americas
Canadian construction in a healthy place
According to Contractor Magazine, Canada’s construction pipeline holds a $1.1 trillion valuation.
While it is currently skewed more towards late-stage developments, with 54.5% of in-progress developments in pre-execution or execution stages, a significant chunk of these are still in their preliminary phase.
Infrastructure is the main driver. Canada has put in place a major spending plan. Government-led investment in just infrastructure construction totals over $139bn, with overall nationwide plan delivery due by 2028.
The energy sector represents $82.7m in value, the largest individual sector in terms of investment, followed by transit projects at $43.6bn spread across 23 developments.
Currently, the highest individual project is the $40bn LNG Canada project spearheaded by Shell and partners. Slated for opening in 2025, this British Columbia megaproject involves construction of a 670km pipeline, a brand new liquification and storage plant, plus a terminal for LNG vessels.
Much of the activity is set on Canada’s east coast. Forecasts from BTY’s Market Intelligence Report suggest construction in Ontario will grow at between 6-7%. Quebec’s growth is rated at 4-5%.
Another factor is three Western oil & gas pipeline projects have been given approvals in 2020. The Keystone, Line 3 and Trans Mountain pipelines have the go ahead to start construction, suggesting activity will pick up on the Pacific seaboard soon.
A variety of breakbulk contract opportunities in South America – but caution advised
Brazil’s infrastructure sector has been bolstered by a public-private partnership and privatisation strategy for President Bolsonara.
So far, Brazil’s asset disposal program has managed to generate concessions - the right to use land or property for a specified purpose, granted by a government - for a new highway and 32 small and medium sized airports.
However, it is renewable energy that holds huge potential. As we examined in our Americas 2020 Outlook, 900 wind projects have been registered with Brazil’s government since 2015. 15 GW worth of new wind power, delivered through new major wind farms, is expected for delivery by 2026.
Petrobras, the nation’s NOC, has also sold out assets worth $10.3bn, generating new capital for a fresh wave of oil & gas development in South America’s largest economy.
The picture is not entirely rosy though. Argentina is in deep recession. This is causing consternation for investors, as they look to other South American states to pour money into.
Despite this, Argentina is aware of its need to support its energy and power sectors. Renewables have been identified as a potential solution. The Argentinian government has set strict targets to reach 20% energy consumption from sustainable sources by 2025.
For context, the current figure is 4%. Much work is needed for Argentina to meet its clean energy goals.
South America’s largest Solar Plpant, Cauchari, is under construction in northern Argentina, promising to deliver 300mw of power. 1.2m solar panels are being installed here, making it one of the most significant solar parks in the world.
There is also infrastructure. The Tunel de Agua Negra, a 13.9km tunnel linking Argentina to Neighbouring Chile, is in the planning phase. Expect project capital floats around the $1.5bn mark.
However, as mentioned above, the spectre of recession continues to haunt Argentina. Attracting investment will be difficult as long as the Argentinian economy underperforms. Project cargo contracts maybe hard to come by here.
However, Colombia maybe worth a look. Construction and infrastructure are very much on President Duque’s agenda. He has said that he hopes infrastructure to be a “transformer” of Columbia.
In practical terms, this means continuing some long-anticipated megaprojects.
Bogotá Metro is amongst the largest undertakings Colombia is eyeing up. This important work involves construction of 24km of underground track, as well as building 16 stations and 13m above-ground viaduct. A $4.3bn contract is expected to be awarded soon.
Overall, Colombia is forecast to be a South American construction leader. Projected growth is expected to exceed 5% between now and 2022.
Metal pricing issues affect US construction & projects but potential renewables push is coming
We’ve talked about this a lot at Breakbulk recently, but it bears repeating. President Trump’s higher tariffs on metal goods has ramped up prices. In turn, construction and material costs on future projects have greatly increased.
But that does not mean the project portfolio is empty.
Strong growth in renewables include on/off shore wind and solar is already underway. In offshore wind in the US East Coast should help to bolster projects, particularly since projects must start by year end 2020 in order to qualify for the various Tax Credits available.
Onshore wind continues in the middle of the country. Solar projects are also in demand.
A Bechtel engineer advised that “lots of the new projects this year are in the US”.
Other projects include those in infrastructure – bridges, metros, and stations; roads and tunnels, dams, as well as a broad range of oil, gas and chemical projects, particularly in the US gulf coast – will continue to create breakbulk demand.
Discover new contracts at Breakbulk Americas
Breakbulk Americas is where the project cargo opportunities will be, as well as the region’s largest gathering of sector professionals.
Book your place today.
