Rudolf Hess
President and CEO
RH Shipping

Advantages of Shipbrokers for Reformed Mexican Market

Wed, 01/22/2014 - 16:51

A leader in the logistics sector for trade between Mexico and Asia, RH Shipping is diversifying its portfolio with exports to Central and South America. In addition, it is already actively transporting goods to Japan, Europe, and the US, among other worldwide destinations. RH Shipping provides shipbrokerage services, ocean and air freight transportation services, as well as land transportation by truck or rail, and multimodal transportation combining all of the above. It also offers customs clearance and cargo insurance services, among many others. Rudolf Hess, President and CEO of RH Shipping, says the company is approaching players in the oil and gas sector to offer its worldwide project cargo services. The firm has already transported around 18,000 CBM of dismantled LNG spheres for Zeta Gas from France to its Ensenada plant, and several oil rigs from the US to Mexico. Given the fact that the company is headquartered in Mexico, making this country its most valuable market, RH Shipping has opened an office in Houston to cater to the major players in the oil and gas industry hub. Even though RH Shipping has been focusing on increasing its participation in the oil and gas sector in the past years, Hess claims last year saw few opportunities. But now, the expectations created by the Energy Reform are slowly changing the landscape and RH Shipping is preparing by meeting with shipyards, offshore supply vessel owners and operators, and bankers as its needed offshore support vessel (OSV) equipment requires serious financing. “Our team has been attending expos and conferences to meet prospective clients and suppliers, and we have seen a lot of players who want to enter the Mexican market because of the new legislation,” says Hess.

Having been in the transportation industry for years, Hess is well acquainted with Mexico’s infrastructure shortcomings. In his opinion, the government should prioritize increasing the capacity of Mexico’s ports. “Ten years ago, when the market was not as big as it is today, a single terminal in Shenzhen, China, handled seven million containers per year. I imagine that the infrastructure in a single container terminal in China probably represents an investment equivalent to that of all the Mexican container ports combined. It is important to note that Mexico does not have as much cargo on the export side, though.” Regardless of the national import-export activity rate, Hess thinks there is definitely a need for more liquid storage infrastructure at Mexican ports. Because terminal capacity is insufficient arriving tanker vessels are sometimes detained for days. “A medium tanker can cost US$35,000 per day in demurrage. Having a ship like this detained for many days turns out to be more expensive than the actual cost of transportation.” Hess says existing roads should also be better kept, as some highways seem to be under perpetual repair. Even though the situation has not had a severe impact on RH Shipping’s operations, Hess believes transit times would improve if the quality of the roads was better.

The private sector comprises the entirety of RH Shipping’s client portfolio. As such, Hess has zeroed in on new companies that will enter the market, creating a greater demand for services such as rig transportation and PSVs and FSVs equipment needs. “A firm specialized in deepwater drilling will need long-term service agreements to provide fast crew boats and platform supply vessels to transport people and equipment to the platforms,” explains Hess. As a result of the Energy Reform, RH Shipping will probably be able to provide services to the Mexican public sector for the first time and Hess comments that he has been working on closing a deal with PEMEX. Should this go through, RH Shipping will be transporting merchandise for PEMEX from anywhere in the world to the US, and then to Mexico. Additionally, the company’s team recently made a proposition to PEMEX involving a new type of vessel to transport crews to platforms. These crafts stand out from other alternatives due to their catamaran-like parallel hulls that enable them to smoothly cruise through waves. Passengers are less likely to feel seasick and these vessels can navigate in weather conditions that would make other boats stay ashore.

The discovery of deepwater fields raised the bar for open-sourced vehicles, as distances become longer and security issues more pressing. “Suppose a company wants to transport its teams to Perdido. The easiest way would be to put them on a fast crew boat and drive to the platform. But there is a catch as the PEMEX trade union does not allow such long trips,” says Hess. RH Shipping proposed the alternative of transporting people to Perdido from Brownsville because the distance is shorter than from Tampico. The idea was to help PEMEX save money on transportation, while the shorter trip would also benefit passengers. However, Hess has heard rumors about terminals being built close to the border with the US to address the issues surrounding deepwater commutes, which have put his company’s idea on hold.

RH Shipping’s interest in working with PEMEX goes further, as the company has been offering its services as a shipbroker to bring some of PEMEX’s new jackups from Singapore to Mexico. “As a shipbroker, RH Shipping has plenty of experience dealing directly with ship owners. The contracts would only involve PEMEX and the ship owner directly, and my company would earn a commission on the freight.” Hess explains that PEMEX does not have a division in charge of this type of mega-transportation projects at the moment. “I think ship owners prefer dealing with shipbrokers, as they do not have the time to educate new clients. We could help PEMEX representatives learn about logistics and RH Shipping could deal directly with ship owners, saving valuable time for both sides.”