2018 Outlook – Grant Wattman

By Grant Wattman

President & CEO, Agility Project Logistics
www.agility.com

Agility Project Logistics is seeing good news for capital projects, with large capital expenditure commitments being made in 2017. This bodes well for the latter part of 2018 and beyond, but did little to help the Asia-Pacific, North America or European outlook in 2017.

Middle East/Africa has been performing well, primarily built upon projects receiving investment approval in the latter part of 2016. Anticipate seeing a drop in activity as this works through, with announcements expected soon on new investment by Abu Dhabi, Kuwait and Saudi Arabia. This will provide additional impetus for late 2018 and into 2019.

Overall, the slow roll to recovery is bumpy, not smooth. The industrial supply chain is bumping along the bottom and contraction in global spending in 2015 and 2016 was felt in 2017. While last year’s spending reflected a modest increase over 2016, it was not encouraging, given that it was from such a low base.

I see us continuing to move sideways until mid-2018, with tenders released in the fourth quarter of 2017 and first quarter of 2018 and cargo movement mid-2018 and beyond. I say this for the following reasons:

Oil was trading around US$50 a barrel at the end of last year; investment will be up for some, down for others.

Skilled trade labor availability is increasingly impacting project planning time lines, negatively. Look for this to exacerbate schedules more as increasingly more projects receive final investment decisions.

The U.S. Federal Energy Regulatory Commission, or FERC, was without a quorum from February to August 2017. An estimated US$50 billion in private capital had been awaiting FERC approval for projects in the U.S.

As at the end of last year, the U.S. Export-Import Bank board did not have a quorum and as such could not approve any loan exceeding US$10 million. This is not simply a U.S. issue, but impacts projects in Africa, Asia-Pacific, Middle East and North America. My hope is that by the time you are reading this article, the Senate Banking Committee will have nominated board members, put forward by President Trump, and give us that quorum. It is believed there is more than US$30 billion in projects poised to be brought to this board.

President Trump was considering increased tariffs or quotas on steel last year. This uncertainty placed a dampening effect on many multibillion-dollar projects, let alone the potential impact of retaliation by U.S. trading partners.

That said, there is also a significant amount of positive change and opportunity in our market to leverage and capitalize upon. Agility Project Logistics is looking forward to a strengthening market in capital projects, oil and gas, mining and marine services in 2018. A time to be bold, invest in new markets, strengthen your people and position for growth.

Photo credit: Shutterstock

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