Still strong17 March 2021
Despite the impact of Covid-19 and fluctuating oil prices, big projects are keeping demand for mobile and tower crane in the Middle East strong. Julian Champkin reports.
“Some of the world’s biggest oil and gas refineries are in the Middle East. So too are some of the biggest construction and infrastructure projects. So there is clearly work for cranes, and the region has a well-known preference for mobile cranes,” says Kieve Pinto. He is executive director of Al Faris, the largest crane and transport vehicle rental company in the Middle East and one of the largest in the world. It has six branches in the United Arab Emirates (UAE), three sites in the Kingdom of Saudi Arabia (KSA), an office in Iraq and an outlet in Bahrain. For the largest jobs, he says, crawlers are of course the crane of choice, and the region has plenty of opportunity to use them.
“Crawler cranes have been for a very long time the most significant lifting equipment in the construction industry, due to their ability to lift very heavy loads along with the ability to travel. Many of the projects here are extreme, in scale, in design and in ambition: the architecture is sometimes simply astonishing. The engineering has to go ever higher, bigger, and faster; this typically requires crawler cranes that can be easily mobilized to lift a variety of heavy structures and loads. Lattice boom crawler cranes have the heaviest lifting capacities in the industry, which is one of the biggest reasons for the demand.” Al Faris boasts among its fleet the 1000t-capacity Liebherr LR 11000 as its flagship model, and its latest addition the 800t capacity Liebherr LR 1800.
“There is a steady demand for crawlers between 100-600t capacity to serve both civil and the oil and gas industries,” says Pinto.
“Heavier models above 600t are required in coal or gas-powered power plants, desalination, refineries and petrochemical projects. These are required to lift extremely heavy cargo, such as reactors and turbines, which need to be placed directly on the foundations of the plants.”
But a core business of the group is all-terrain rental. “The all terrain crane is the most versatile and economic machine that provides an economical lifting solution across various industry sectors with short mobilisation and quick assembly. It can be used across manufacturing for lifting steel structures and components, in maintenance for replacing and repair works, civil construction for lifting concrete slabs and structures, in logistics and shipping for lifting cargo and all other industries where lifting is required.
“And keeping in mind the region’s general landscape with rough and often extreme job-site conditions, coupled with the harsh climate, it is not difficult to see why the rough terrain crane is also high among the list of favourites for the local lifting sector. “
To meet the needs Al Faris has bought heavily in the equipment market. At the start of 2020, just before the pandemic, the company placed a major order with Liebherr worth around €80m. It included mobile cranes with lifting capacities from 50 to 650t, two LTC 1050-3.1 compact cranes, 12 LTM 1230-5.1 models and one LTM 1500-8.1. The latter is now the twelfth Liebherr 500t crane owned by the company. According to Hillary Pinto, managing director and founder of the company, it is his “absolute favourite crane”.
“Low oil prices have made the market rather uncertain over the last two years” says Kieve Pinto. “There has been a drop in investment in large scale oil and gas projects in the Kingdom of Saudi Arabia. Of course Covid did impact all of us; however we look forward to an improvement gradually.”
The sheer scale of these latest additions to the Al Faris fleet certainly suggests no lack of confidence in future work. “The construction market has picked up in the UAE as it gears up for Expo 2021, which is the postponed and re-designated Expo 2020. As well as that, the UAE is targeting a greener future and there has been an increasing trend of investment in the renewables sector; there is particular focus on solar projects.”
One major Al Faris project was the installation of the molten salt receiver on top of the world’s highest concentrated solar park tower in Dubai. “Apart from the country's constant investment in the utility and infrastructure sectors, there is renewed investment in the oil and gas sector in Abu Dhabi and Northern Emirates.”
And in January this year the company opened a new corporate office in Iraq, with a brand new fleet, including heavy lifting and heavy haulage equipment as well as SPTMs and low-bed trailers.
“We are now fully operational there,” says Alberto Pittaluga, who is heading the team there.
Aertssen Machinery Services is part of the major Belgian family business group. Around ten years ago, Aertssen decided to strengthen its presence in the UAE by creating a brand-new division. Now based in 30,000sqm of brand new premises in Abu Dhabi it has fifteen units of mobiles, of capacities from 30t to 700t available, for rental, as well as crawlers and heavy transport equipment. “We see plenty of projects in UAE, Oman and Qatar,” says their Harees Kumar.
“Oil and gas of course are major applications, as is marine; we have done projects at Djebel Ali port in UAE.”
Johnson Arabia is another important mobile crane company in the region. Mohammad Fareed Naser is executive manager of the cranes division for UAE and Oman.
“Demand over the past two years was within the middle range and was relatively acceptable,” he says, “as there were quite a few projects related to Expo 2020.
But 2019 was the worst year for the region’s construction industry for eight years. The value of construction and transport project contracts awarded in the Gulf was the lowest since 2012.
“Over the past five years, all oil producing countries have been affected negatively by the slump in oil process. Contractors, consultants and manufacturers have faced considerable pain and uncertainty as a result. Cuts to government spending, and a growing oversupply in the key real estate markets such as Dubai, reduced new project opportunities and increased competition for work. Not only that, but delayed payments hit cash flow. By the end of 2019 however, construction companies were looking forward optimistically to a long-awaited rebound in construction activity, led by the giant Saudi Arabian market. The stabilization of oil prices and the launch of the Kingdom’s megaprojects promised a new dawn for construction.
“Currently UAE has the highest demand, with Expo getting closer, followed by Qatar for the World Cup 2022. Covid has definitely affected demand, but the market started showing signs of recovery in January this year. However it will not be fast and we will still have to live with it throughout 2021.”
Nevertheless, Johnson Arabia also is in the market for more equipment. “We have been navigating through these unprecedented times and have successfully managed to retain our business as best as possible during 2020. We believe that in each crisis there are opportunities.
We are consciously monitoring the evolving markets and adapting: we have various expansion plans to grow our business across the region. We were and still are upgrading our fleet of cranes to meet all our customers’ requirements.
“The capacities required depend on the nature of the project but generally demand is higher in the range of 50t to 160t in mobile cranes and up to 250t in crawlers. There is also a noticeable demand for the small spider cranes which have recently had an impact here.”
And in sum, he is upbeat: “Despite the uncertainty of the future that the fluctuation of Covid-19 and vaccination has brought, we are optimistic that after this crisis there will be an upward trend. We believe especially that the planned mega-events will take place over the coming years, including the delayed Dubai Expo and the Qatar World Cup. These events have a direct impact on the construction industry. Huge government investments and competition among the countries of the region support the growth of this sector.”
For tower crane companies in the region, construction and infrastructure are mainstays. “The construction sector has played a significant role in the economic development of the region for many years now, with governments in the region committed to boosting infrastructure,” says Wael Hasan, Middle East commercial director of Italian manufacturer Raimondi, owned by Dubai-based KBW Investments.
“For that reason, much of the past two years have been brilliant for us. Raimondi Middle East were able to place many cranes in both Qatar and the UAE.” But in early 2020 Covid arrived. “Despite those achievements, 2020 was definitely one of the toughest years globally” he says. “The pandemic and the repeated lockdowns have had a huge impact in the construction sector. This is a time of unprecedented challenges for construction in the Middle East.
However, we are proud to see that all the projects we have been involved in were carried out as scheduled.”
“Covid has definitely impacted the market,” says Nagham Al Zahlawi, deputy general manager of NFT. “Government spending has been reserved for crisis prevention and for dealing with the pandemic.
Demand in Kuwait, UAE and Oman has been affected and the market is yet to recover. The Covid-19 pandemic has delayed a lot of projects and has put some major tenders on hold.” It was not all bad news: ”However demand in Qatar did not fall, and in KSA we see an increase in demand at the moment.”
Covid has also accelerated a worrying trend that has developed in recent years. “Most importantly, Covid-19 has delayed payments from clients,” says Al Zahlawi.
“Since April or May 2020, 90% of our clients have either stopped paying, have requested to renegotiate rates that were agreed upon and signed before the pandemic hit, or have asked us to disregard the months where there was a lockdown from the lease invoice.”
This was the case despite the fact that throughout the GCC construction is considered a vital sector and was therefore less impacted by the pandemic: “Sites continued to be operational – therefore so did we. At a time where there is already a lack of respect for contract terms and timely payments, the Covid-19 pandemic has made that situation even worse.”
Construction site workers are frequently housed in barracks for the duration of the project, and this exacerbated Covid-19 concerns.
“Living conditions of construction site workers put a lot of clients at risk, considering the way that the virus is spread. As a result, several job sites stopped for at least a month because of an outbreak.
“In reaction, contractors were forced to change the working and living conditions of their staff, to adhere to different standards. This led to an unforeseen increase in costs for contractors, who tried to find ways to mitigate this increase: clients re-negotiated contracts, sometimes doing so even towards the end of the project.”
Not everything, though, was negative: “In other instances, this provided unexpected business. For example sometimes the clients’ own tower crane team were affected and had to stop working, and as a result they subcontracted us for their operations.”
Conditions are now returning to the more familiar. “Covid has slightly affected demand, and a few projects have been put back, but we are seeing some projects come back online recently,” says Jeffrey Watson, operations director of Wolffkran Arabia. “Investment in oil and gas is returning, as it must since the Middle East has to be ahead of the game, as oil and gas drives the economy as well as large investment in facilities; and there is standard major planned maintenance shutdown work requiring large and small mobile cranes and tower cranes.”
And several major construction projects are coming on stream: “There are massive construction plans going on in the region across different sectors, with governments increasing spending on infrastructure development with the aim of becoming leading economic hubs,” says Raimondi’s Hasan.
“UAE’s postponed Expo 2020, now planned to take place in Dubai this coming fall, and the Qatar World Cup 2022 are two examples on how large-scale events are opening up massive opportunities for our industry.
The postponement of Expo due to the pandemic actually gave us the opportunity to support several developers in the construction of labour accommodations and other smaller projects.”
Watson of Wolffkran Arabia is also finding substantial infrastructure projects: “There are still large road bridge projects and waste-to-energy projects in Dubai and Abu Dhabi that we are involved in, and major new museums in current planning and construction phases in Abu Dhabi. We see a trend toward infrastructure and oil and gas projects rather than residential, although in the last two months there seems to be some revival in that sector.”
Ahmad Wraikat is regional manager for Kanoo Cranes. “Demand over the last two years was excellent,” he says, “especially in UAE. We had some slowdowns in the first quarter of 2020, but after that it gradually returned to normal. UAE showed the strongest demand, for urban projects and the Expo; the Expo postponement has allowed contractors and clients more time to finalise plans and construction. Infrastructure projects have also been strong, with roads and new tunnels as well as the Etihad railway.”
This latter is an important infrastructure project to connect the UAE with a rail system. “A portion of the Etihad Railway is progressing despite difficult circumstances,” says NFT’s Al Zahlawi. “However the Gulf Rail project, intended to connect all of the GCC countries, has been put on hold. NFT had tower cranes on the Doha and Riyadh metro projects, as well as on one of the metro stations being built for the Expo 2020 in Dubai. The main infrastructure for Expo and for the World Cup have now been built and the final touches are now taking place.
“More generally the UAE is proceeding with plans to expand its production capacity, and Abu Dhabi National Oil Company (ADNOC) has announced its five year investment plan worth US$122bn. This will provide impetus to the energy construction sector and attract more investment in the medium to longer term. Also in Abu Dhabi NFT is bidding for two prestigious projects both expected to be awarded before the summer.”
“In the Kingdom of Saudi Arabia, it is residential and commercial construction that is providing impetus as the country is investing to develop the Red Sea into a tourist destination.
There is news of a new eco-sustainable city to be run only on renewable energy. Qatar similarly has infrastructure as well as commercial and residential developments; NFT has had cranes working on these since 2020 despite transportation and labour challenges."
“Qatar and UAE are currently the two strongest countries in terms of demand for heavy lifting equipment,” says Raimondi’s Hasan. “In Qatar we are supplying cranes for the ongoing elaborate infrastructure works, as well as for several leisure and transportation developments. Qatar is proving to be among the fastest-growing global construction markets with several megaprojects. It is one of the key countries where we focus on high quality heavy lifters; we have more than 200 cranes placed in the country.
“In the UAE we are focusing more on port and residential developments. The biggest project we are currently involved in is in Sharjah, the third biggest emirate of the UAE. We successfully installed eight of the eleven cranes scheduled to be part of this jobsite and will continue to support the contractor for the entire duration of the project.
“In terms of crane type, we have seen the demand for luffing jib cranes increase over the past few years. They are now in high demand in Qatar and the UAE.
Larger capacity cranes, such as the topless tower MRT294 are also always welcomed in Qatar and can be seen on many jobsites there.”
“In our case medium to large capacity tower cranes for precast structures are in demand,” says Watson of Wolffkran Arabia, “although lately in Dubai we have seen a slight rise in demand for high rise mixed use developments, which is a good sign.”
Kanoo has found high demand for 16-25t tower cranes, says Wraikat. They have found demand trending to rental rather than purchase. “That was especially the case on delayed projects which found themselves running low on manpower,” he says.
NFT finds medium size luffing cranes (50-55m jib with 10-18t capacity) and big top-slewing tower cranes (either hammerhead or topless) with up to 70m radius and 2t to 3t at the tip are wanted.
“Occasionally gigantic tower cranes are required when heavy lifting is needed, such as precast or steel structure elements,” says Al Zahlawi. “NFT specializes in gigantic tower cranes; we have the big MD 2200 in stock along with the more than 20 MR 608s.”
“At present the low oil prices have humbled expenses and reduced the number of projects, but the UAE for example has been actively diversifying from its dependence on oil. In the longer term a stronger global economy will boost oil prices and encourage greater hydrocarbons development. It will also boost local bank liquidity, which in turn will boost key sectors such as construction.
“There is a general trend of uncertainty and lower confidence and liquidity which have pushed contractors to be more price sensitive. Contractors are now looking at lump sum deals or ‘all inclusive’ packages. For NFT this is not an issue as we consider ourselves to be a “one stop” shop catering to all lifting needs but we worry that there is more focus on price at the expense of quality.”
As with Kanoo, NFT are seeing a preference for rental over purchase and for second-hand machines as opposed to new. “For that reason, NFT has developed a reconditioning facility to refurbish used tower cranes to almost brand new. In the UAE, there is more emphasis on safety: Abu Dhabi Municipality has enforced its safety requirements in the capital by limiting the age of tower cranes to 13 years old.”
And for the future? “The Middle East has been affected by low oil prices as that is the backbone of the economy but as oil prices have steadily risen there are positive signs of recovery even with Covid-19 restrictions in place,” says Wolffkran’s Watson.
“We see markets opening up after restrictions are lifted, especially in Saudi Arabia. Already we have had a steadily increasing number of enquiries in the last month. We are involved in the construction of the first ever synagogue construction in the UAE in Abu Dhabi.”
Raimondi’s Hasan also is upbeat: “We see 2021 as the year of recovery. We are expecting a growth in the construction market especially in Saudi Arabia, UAE, and Qatar where the oil-based economy is rapidly moving to infrastructure development.”
“We are also working in some interesting projects in Algeria. In the coming months, a promising project in the Kingdom of Saudi Arabia will give us the opportunity to evaluate a stronger foothold there. In fact, despite the pandemic, KSA remains one of the most interesting markets for the construction sector as the megaprojects related to Vision 2030 are still one of the main priorities of the Kingdom.”
“2021 will be a great year,” says Wraikat of Kanoo. “Many projects have been announced, and stalled projects are resuming.”