What you need to know about the booming transformers market
"Last year, everyone in the shipping industry, including our customers, faced major challenges due to port congestions, labor shortages, and general supply chain disruptions. And in times of hardship, it becomes clear who your real partners are," says Carsten Wendt, a senior manager for high & heavy and breakbulk sales based in Bremen, Germany. "At Wallenius Wilhelmsen, we have to be very selective when our capacity is stretched and prioritize long-term contracts and partners."
The transformers market is growing at an accelerated rhythm and, at a time when our industry is still facing major challenges, it’s difficult to keep up with the latest developments.
So, what do you need to know?
Why is the transformer industry booming?
According to Wendt, one reason is the current shift in power generation, with high investments in power transmission due to increased demand for electricity. He also notes that in the US, production industries are on the move going east, from California to Texas, possibly due to inter-state differences in environmental regulations.
"We have also seen similar dynamics in Germany, where energy is produced in the north and consumed in the south requiring upgrades to the existing grid. This means many transformers are needed elsewhere, thus the need for transportation.
According to Market Watch, the forecasted prognosis for the large-capacity power transformer market is "poised for significant growth." This is also the case for the US market. The average time for obtaining new transformers in the US has increased from two months period in 2021 to 12 months in 2022, according to News Scientist in an article published in March this year.
Another reason why the North American market is particularly hot is the long-time under-investment in the aging grid. It leads to a growing demand for new transformers, another reason for the high demand for shipments of transformers from Europe," Wendt says.
Wendt says that there are three important factors to think about:
- Secure transport capacity, not only short-term but also long-term
- Timely delivery of the transformers is key, as usually there are penalties for every transformer delivered on-site too late, so the frequency of sailings and transit time matters a lot. However, Carsten emphasizes that this isn’t always unavoidable. 2022 has been a challenging year also for Wallenius Wilhelmsen to keep a reliable schedule due to disruptions in the ports.
- Make sure you pick a partner that has the technical capabilities (vessels and equipment) as well as the technical knowledge (engineering competence) to perform adequate transformer transportation
What should you consider?
With the rising demand for transformers, there are three types of vessels that compete in the transshipment space:
1) Multi-purpose heavy lift carriers, 2) container vessels, and 3) roll-on/roll-off vessels.
The multi-purpose heavy lift carriers can take all kinds of weights, but they struggle to meet the demand in transit times and sailing frequency. The container vessels have the frequency and the transit times, but they struggle with access to the right equipment for the weight and the dimensions of the transformers.
Wendt says: "At Wallenius Wilhelmsen, we have combined the benefits of our roll-on roll-off vessels and equipment specifically designed for high and heavy cargo. We have hoistable, flexible decks that can be accommodated many cargo sizes, we have extensive ramp capacity up to 500 tones, and have a fleet of over 5,000 trailers that are perfectly suited for transformers up to 220 tones providing safe and efficient loading and unloading."
He continues: "In addition, we have a team of experts who have experiences and the ingenuity to ensure that transformers are delivered safely and are stowed safely during ocean voyages. In fact, it is as if our vessels were designed specifically to ship transformers - the physical dimensions fit like a hand in a glove."
Last year was super challenging for the industry, but we are glad that we could help our customers get their transformers to where they needed to go.
We've had a long-term relationship with Wallenius Wilhelmsen over many years. Their capacity and flexibility in terms of number of vessels and equipment along with frequency and transit voyage times proved invaluable when we, along with others, faced unparalleled disruptions during the pandemic.
Siemens Transformer Austria