Highs and lows8 April 2020
Countries in South East Asia have faced economic and political challenges in recent years, but things have started to change. Sotiris Kanaris talks to regional crane rental companies about the market and big projects.
The regional crane market in South East Asia is complex for various reasons. One is that it comprises countries with big disparities in terms of wealth and development. The main sectors contributing to each country’s gross domestic product also differ, creating variations in the types of cranes demanded.
Picking the most popular type of crane for the whole region is not easy, as there are not many similarities in terrain and road conditions from country to country.
Another characteristic of this market is that it is dominated by a small number of crane rental companies, mainly from Singapore, which have very large fleets and depots in various countries.
One of these companies is Singapore-headquartered integrated heavy lift specialist and service provider Tiong Woon.
Founded in 1978, it has grown into a company with a presence in Asia and the Middle East. The company owns more than 500 units of mobile, crawler cranes, and tower cranes, 150 axle lines of transporters and a sizeable fleet of tugs and barges.
Commenting on the South East Asia market performance, Michael Ang, deputy CEO at Tiong Woon Crane and Transport, says: “South East Asia as a whole is still looking positive in general, although we cannot ignore the political instability in some countries, which is affecting government spending, and hence growth in those countries. Malaysia has just appointed a new Prime Minister but nobody knows if this will still change in the short term. Thailand’s recent political landscape is also having its own challenges.
“Similarly, market forces that are affecting the bigger global economy are spilling into South East Asian countries. Most of the countries in the region are trade dependent. Geo-political tensions in other regions, as well as the unresolved Sino-US trade war, are affecting global, and hence, regional trade. On top of all these, the COVID-19 virus has already become a global pandemic which we cannot ignore. It is having an adverse impact on financial markets and businesses around the world. We are still unsure when this outbreak will peak or whether a vaccine will be available in the near future.”
The reasons above make Ang a bit cautious about the future rental rates: “We have seen signs of recovery in a few countries in SEA but we have to remain cautious. People used to say that the global economy goes through a ten-year cycle, but things are so dynamic these days that nobody can really be certain what goes beyond a three-five year period.”
Manfred Vosman, regional operations manager at Singapore headquartered Tat Hong Holdings, says the South East Asia market is still promising and that there are many business opportunities.
At Tat Hong they have also identified an improvement in rental rates, but they are pessimistic for the future. “The rates are still low, however, we see a small improvement at the moment due to demand; we trust this trend will continue. We also believe that the good old days will not return due to many factors in our industry,” he says.
He says one of the factors is that competition among engineering, procurement, and construction (EPC) firms and main contractors is higher. “They have to take work at low contract rates, which automatically reflects down the line to all tiers of sub-contractors.”
Another reason cited by him is that incoming Chinese contractors work at very low contract rates as well, and are subsequently looking for cheap local equipment to support their projects. He adds that the in-flow of Chinese cranes has also influenced the rates in the region, as they are cheaper and can therefore be rented out at cheaper rates.
He believes that another factor influencing the rates is that the number of cranes per company is increasing faster compared to the increase in projects. “The balance between overhead cost and revenue is getting slimmer and slimmer.”
Apart from its home market Singapore, Tat Hong also has depots in Malaysia, Vietnam, Myanmar, Indonesia, the Philippines and Hong Kong. It has 90 cranes in Singapore and more than 260 in these markets, with capacities ranging from 50t to 1,250t.
Tat Hong’s regional operations manager finds that the market in each country is changing every few years, but says it is not an issue for the company, as it is able to re-locate its equipment easily from country to country, following the market changes. This strategy assures a full utilisation of the company’s equipment.
“Our higher capacity cranes (600t and above) are ‘floating cranes’ for the whole region. Tat Hong’s strength is flexibility due to our extensive experience in the region, whereby shifting cranes between different countries is not an issue. It is the same for our specialised manpower and project teams.”
The oil and gas industry—and broader energy sector—is a key client of crane rental companies in the region, with a large number of mobile cranes currently working in related projects.
In Vietnam, Tat Hong is supplying cranes for the construction of the Long Son integrated petrochemicals complex in the Ba Ria-Vung Tau Province.
In Malaysia, among the projects the company is involved in is the construction of a crude oil refinery in Melaka, as well as the new Track 4A, a 1400MW combined-cycle power plant in Pasir Gudang.
For the construction of Track 4A, Tat Hong deployed its 1,250t capacity Demag CC6800 and a 600t Demag CC2800-1. The job requires the lifting and installing of heat recovery steam generator (HRSG) modules. The CC6800 was in SSL configuration with 84m boom, while the CC2800/1 in SSL, with main boom of 60m. The CC6800 was the main crane, while the 600t crane was tasked with tailing the HRSG modules.
The company’s cranes are also working at fabrication yards related to the offshore industry in Malaysia, Batam and Thailand.
Tat Hong also works with the oil and gas sector in Singapore. One of the projects it has supplied cranes to is Jurong Island’s Linde Gas Project.
Tiong Woon’s Ang says: “The oil and gas sector remains important to the Singapore economy. Our mobile and crawler cranes are actively engaged in this sector.”
In January the company had a major lifting project for the Singapore Refinery Company (SRC).
Tiong Woon was tasked to lift a 100m-long, 510t C3 splitter tower at SRC’s propylene manufacturing plant. Due to the nature of this enormous lifting operation, the company used its Demag CC 8800-1 crawler crane with a Boom Booster that enabled it to carry out a tandem lift together with a Demag CC 2800-1. A team of 25 people was deployed. “A total of five days was required to setup the crane at the work site and the entire project lift took 69 days to complete, which was earlier than the schedule completion date,” says Ang.
Tiong Woon recently added a 300t Grove GMK6300L-1 allterrain mobile telescopic crane to its fleet and has deployed it to lift replacement parts at One of the largest refineries in Singapore based in the Asia-Pacific region. On this project, the crane is configured with boom lengths between 40m and 60m, and handles loads at working radii between 20m and 30m. Typical loads for the crane are replacement parts at the industrial plant, with weights generally under 10t.
The sector will be an important driver for the economy and the demand for cranes in Singapore over the next few years, as major companies in the field are making significant investment.
ExxonMobil is expanding its integrated manufacturing complex in Singapore to convert fuel oil and other bottom-of-the-barrel crude products into higher-value lube base stocks and distillates.
The expansion project is part of the company’s plan to further enhance the competitiveness of the Singapore facility, which includes the world’s only steam cracker capable of cracking crude oil. Engineering, procurement and construction activities have begun, and start-up is anticipated in 2023. Industrial gases and engineering company Linde will invest $1.4bn to expand its existing gasification complex at Jurong Island, integrating it with ExxonMobil's project to produce and supply additional hydrogen and synthesis gas. The project will include building and operating four additional gasifiers, a 1,200t per day air separation plant, as well as Linde's proprietary downstream gas processing units and sulphur recovery plants. The company's gasification complex will produce and supply hydrogen and synthesis gas to ExxonMobil by upgrading the heavy residue feedstock from its new facilities. The project is estimated to be completed in 2023.
Apart from oil and gas, other energy sources are also creating demand for mobile cranes in the region. Tat Hong is providing cranes for wind turbine erection in Vietnam.
Outside the energy industry, the company is involved in a range of projects in the region like the construction of the Malaysia Marine and Heavy Engineering’s Dry Dock 3 and railway projects in Bangkok, Thailand.
Manfred Vosman says there are infrastructure projects under construction, which are also boosting demand for mobile cranes. One such project that Tat Hong is involved in is the North South Corridor (NSC) viaduct project in Singapore. The 21.5km NSC will better connect the Northern and Central parts of Singapore, serving motorists travelling between the city centre and a number of towns.
An infrastructure project for Tiong Woon involves beam-lift works and construction for the “North-South Bridge” at the Tun Razak Exchange (TRX) financial district in Kuala Lumpur, Malaysia, which will connect the North and South parcel of the financial district near Jalan Sultan Ismail.
For this project, the company is using a Demag CC8800-1 crawler crane with a boom length of 72m to lift and install four box trusses that weigh 200t each, with a span of 66m in length.
The tower crane market in Singapore has changed in recent years, as prefabricated prefinished volumetric construction (PPVC) has become more popular, helped by a government policy requiring the technique on many units built on government land.
“With the push by the Singapore authorities on the use of PPVC modules to increase productivity in building construction, the demand for bigger capacity tower cranes has also picked up. Tiong Woon Tower Crane Services is currently supplying 64t tower cranes for these lifting needs,” says Ang.
Tiong Woon is lifting PPVC modules for the construction of a mixed-use commercial and residential development that will integrate with a community club and the neighbourhood police centre in Upper Aljunied, Singapore. The company is using its 64t Yongmao STT1330 and STT1830 tower cranes for this project and the estimated completion date is January 2021.
PPVC has increased the demand for tower cranes between 32t and 64t, says June Koh Pey Pey, general manager of Singapore headquartered tower crane rental and sales company Crane World Asia (CWA). CWA has 235 cranes (as of February 2020) ranging between 10–64t crane capacity.
It has subsidiaries in Hong Kong, Taiwan and Malaysia.
To meet the increased demand for higher capacity cranes for PPVC applications, the company ordered four Jaso J1400 cranes last year. The J1400 is part of the H series, whose characteristic is the short tower top. It has a maximum lifting capacity of 64t, a tip load of 10.5t and a maximum jib length of 80m. “Currently, there is a total of four units of J1400 cranes erected and working at two jobsites in Singapore,” says CWA’s general manager.
Three J1400s are on rental to Straits Construction for the construction of public housing in the new town of Tengah, located within the West region of Singapore.
The other one is on rental alongside four luffers (two 45t, one 24t and one 18t) to Lumchang Contractors for the construction of an industrial building in Woodlands North Coast.
The trend is clearly towards higher capacities but at CWA they find that the most popular classes in their fleet remain are between 16t-24t. “As far as CWA is concerned, the most popular cranes in Singapore are the Terex CTL260 with 18t capacity and CTT541 with 24t capacity. These cranes are followed by the Terex CTT321 and CTT331 cranes with 16t capacity,” adds June Koh Pey Pey.
Among other projects that the company is currently supplying tower cranes for are a public housing project in the town of Choa Chu Kang, a data centre project in Loyang and a furniture hub in Sungei Kadut.