Market Overview

Double Trouble: Cyclones Veronica And Trevor Menace Australia

Double Trouble: Cyclones Veronica And Trevor Menace Australia

T19_BannerAd.png Dry bulk shipping around the northern coasts of Australia has been suspended, ports have been cleared of ships and land-side operations have stopped due to highly unusual circumstances – two very large, very strong cyclones – Veronica and Trevor, are about to hit Australia nearly simultaneously.

From a maritime and shipping perspective, severe tropical cyclone Veronica is the more significant of the two cyclones. It is located off the northwest shelf of Australia and it is tracking toward the coast. Lying directly in the path of Veronica are the ports of Hedland and Dampier, which are the world's largest and second-largest bulk export ports. Operations at both ports have been suspended by the operator, Pilbara Ports, because of the advent of Veronica.

Port Hedland, which is about 1,650 kilometers (1,025 miles) north of the West Australian state capital of Perth, handled 519.4 million metric tons of exported bulk cargoes in the 2017-2018 financial year. As a metric ton is 2,204 U.S. pounds, Hedland's volume equates to 572.5 million U.S. tons (all further volumes will be given in metric tons). Just over 98 percent of Hedland's throughput is iron ore. Hedland also handles comparatively small volumes of import volumes. In the last financial year it handled 1.7 million metric tons of throughput, of which 90 percent was fuel oil. Hedland received 2,221 vessels in the 2017-2018 financial year.

Meanwhile the other port in Veronica's path is Dampier, which is 1,258 kilometers (782 miles) north of Perth. Dampier mostly exports iron ore, salt, liquefied natural gas and anhydrous ammonia. It also handles project cargo, break bulk and general cargo. In the 2017-2018 financial year, Dampier handled 177.3 million metric tons of cargo, of which 82.6 percent was iron ore for export. It received 9,538 vessels in the 2017-2018 financial year. Dampier handled 1.02 million tons of import cargoes, of which 80.4 percent was fuel oil (petroleum and diesel).

International dry bulk shipping is, and will be affected, because the cyclones are taking some demand out of an already over-supplied dry bulk market and will interfere with international shipping schedules. Getting back on schedule can be done at the cost of sailing faster, which burns disproportionately large volumes of fuel. There is also a very real possibility of damage to critical dry bulk and liquefied natural gas infrastructure on Australia's north west coast.

Also suspended is the Port of Ashburton, a liquefied natural gas export facility that handled 2.6 million metric export tons in 2017-2018, of which 94.1 percent was liquid natural gas (LNG), with the remainder being condensates. Ashburton handled 90 vessel visits. There is also a nearby magnetite iron ore export facility at Cape Preston, which is owned and operated by Citic Pacific Mining. The company's ore is a high purity product used for making steel pellets in China. The company operates a pipeline, barge and trans-shipment facility because of the coast's large tidal range. Export volumes by Citic Pacific are not known at the time of writing.

Veronica is forecast by the Australian Bureau of Meteorology to make landfall at 11:00 a.m. local time on Sunday, March 24 (11:00 p.m. on Friday, March 22 U.S. EDT).

Right now, Veronica is a category 4 severe tropical cyclone. Cyclones, typhoons and hurricanes are different names for fundamentally the same weather phenomenon. In Australia, particularly strong cyclones are given the tag "severe tropical."

And severe tropical cyclones are very powerful. An Australian category 4 severe tropical cyclone is roughly equivalent to a category 3 hurricane on the U.S. Saffir-Simpson category scale. Category 4 severe tropical cyclones are potentially very destructive with wind speeds of at least 160 kilometers per hour (km/h) or 99.5 mph. A cyclone is upgraded to a category 5 when wind speeds reach 200 km/h.

Increases in wind speed are particularly noteworthy as a small increase in wind speed may result in disproportionately greater damage. A severe tropical cyclone with wind gusts greater than 280 km/hour has the potential to do "around 250 times the damage" of a severe tropical cyclone with wind gusts of 165 km/h, according to the Bureau of Meteorology. A category 4 cyclone will cause significant roofing loss, structural damage, dangerous airborne debris and widespread power failures, the Bureau of Meteorology stated.

This graphic shows severe tropical cyclone Veronica which, at the time of writing, is off the coast of north west Australia (the beige, amber and orange areas in the lower part of the picture). The pink-red areas show where the cyclone is at marked dates/times. The fainter pinky/purplish lines show where the cyclone might go in the near future… cyclones are notoriously fickle in their routing habits and will often change path. The orange/amber areas show where the cyclone might go on land and how far the winds may reach. Areas within a red circle will be subject to very destructive winds. Two of the world's biggest dry bulk ports are on this graphic - they are, firstly, Port Hedland, and, secondly, Dampier. Both ports have been marked on the map by FreightWaves with blue stars and their names underlined in yellow. Graphic was originally created by the Australian Bureau of Meteorology and was edited by Jim Wilson of FreightWaves.

FreightWaves sought input from local maritime executives for insight into the impact of the cyclones on dry bulk shipping. One dry bulk executive commented that, apart from the four or five days that operations at the northwest ports are suspended, the industry won't really know what the impact is until the cyclone has passed and there has been a chance to carry out inspections.

The current prediction (see right) from the Bureau of Meteorology is for Veronica to pass through the middle of Hedland and Dampier; the two ports are about 204 km (127 miles) distant from each other.

The maritime executive argued that such a path is fortuitous, pointing out that if such a strong cyclone was to pass directly over one of the ports then various pieces of infrastructure, such as ship loaders, might be at risk.

However, the executive pointed out, the cyclone may move slowly over the western Australian landscape, dumping huge volumes of water. In the Outback there are many dry creeks, rivers, lake beds and even dry inland ‘seas' – dry, that is, until a cyclone fills them with water. Large volumes of suddenly deposited water could have a very adverse impact on the local dry bulk freight infrastructure. There are, for instance, many hundreds of kilometers of rail track in the northwest area from mines to ports that could be submerged and/or damaged.

"It's difficult to predict because we don't know what effect it will have on road and rail infrastructure. It could wash away roads and rail. We don't know what effect it will have, but we do know it will be a big one," the executive said.

And then there's the issue of soaked iron ore stockpiles at the ports of Hedland and Dampier. They will take quite a soaking from all the water that the cyclone dumps on it. A stockpile may look, and feel, dry. But if it is actually sodden with moisture then transport of it can be very dangerous.

In an iron ore stockpile, moisture and air can be held between the iron ore particles, which are in direct contact because they are jammed against each other. But, during sea transport, the various motions of the ship – rolling, pitching, surging and so on, will cause the particles to separate. The trapped air and moisture is then freed. The air escapes and the moisture remains. The particles become suspended in free water, which transforms an apparently dry cargo into liquid mud.

Dry bulk carriers are not designed to carry liquids and so their structures do not prevent the free-surface water effect. As the ship rolls, surges and pitches, the liquid mud sloshes from side to side in the ship's hold. It's a lot of mud, and therefore weight, that's moving around the ship. And if that happens for too long, and by too much, it will move the center of gravity in the ship.

And then the ship may capsize.

Because of this effect, many ships have been lost. And many people have died.

North of Australia, in the Gulf of Carpentaria, severe tropical Cyclone Trevor is menacing remote northern communities. Trevor is forecast to strengthen to a category 4 cyclone by the time it makes landfall at 10:00 a.m. local time on Saturday March 23. It will only be the second time in recorded Australian history that two category 4 cyclones make landfall within 24 hours, according to the Bureau of Meteorology, provided that both cyclones maintain or increase their strength.

However, from an international shipping and freight perspective, Trevor is far less significant than Veronica. While there are several ports in the Gulf of Carpentaria, there are no mega-ports as there are on the northwest coast of Australia. Ports around the Gulf include Thursday Island, Skardon River, Weipa, Karuma, Bing Bong, Milner Bay and Gove. Throughput typically includes groceries, hardware and retail goods consumed by remote communities, small volumes of various metals ores and minerals, live cattle, fuel, fisheries products, and several others. Apart from the international exports of small volumes of iron ore, zinc and live cattle, these are ports mostly of significance to regional Australia. At the time of writing, it is known that operations at the port of Karumba have been suspended during Cyclone Trevor.

International container shipping to and from Australia can also be affected, although, unlike the dry bulk and regional trades, it would be to a much lesser extent. Container shipping operators have more options to work around the cyclones.

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Australia's dry bulk trade is greatly affected by cyclones simply because there are several very large dry bulk export facilities in the cyclone zone.

However, box shipping terminals are typically located close to large cities and, in Australia, those are largely found around the southeast coast. That means Australian container terminals are generally not in the path of cyclones. However, container ships do have to pass through cyclone-susceptible areas.

"It would, of course, be foolish to put ships anywhere near them," one Australian master mariner told FreightWaves. But, he pointed out, ships' crews have access to detailed weather reports and telemetry. Experienced crews will be quite capable of working out from direct weather observations where a cyclone is, how fast it is moving and in what direction. The master mariner commented that it is possible for a ship's crew to follow a cyclone at a safe distance and generally navigate around it as required. That gives container shipping operators a few more options than dry bulk operators.

"Depending on their schedules, box ships may be re-routed to Sydney or Melbourne first," the master mariner said.

Image sourced from Pixabay



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