In January this year, there was a major explosion with even more major consequences, east of Surabaya in Indonesia. The blast was in a transformer at a power station. Transformers are vital pieces of kit that increase, or ‘step up’, the electricity generated by a power station to the voltage of the grid – the infrastructure that supplies electricity to homes and businesses.
While an accident like this is not good news for consumers until the grid can be topped up by other power stations in the network, it’s very bad news for the generating company, which is losing out on big revenues set against significant investment.
While the company might be insured, the insurance company has its own vested interests in ensuring that things are put right as soon as possible. Tony Lavan owns and runs Lavan Disaster Management, a Singapore-based company that does just that. ‘We work predominately in the global insurance claims market, assisting businesses to mitigate their losses when they have exposure to large business interruptions,’ he says.
In this case, the transformer blew up in January and a replacement was initially not expected to be built, shipped, installed and running until December. Tony says: ‘The generating unit is the largest in Indonesia and the backbone of the Java power grid. The daily loss of income for the power plant was huge.’
So huge, that the insurers were prepared to eliminate all potential risks to get things working again and as soon as possible. ‘One of the considerations the insurers had during the period when the replacement transformer was being ordered was “what happens if something happens to it along the way?” or if the transformer blew up during testing, or was dropped during transport,’ says Tony. ‘If any of those things were to happen, the losses could potentially continue for another year.’
In order to mitigate against this, insurers agreed to purchase two transformers – one made by Hitachi in Japan and another by ABB in mainland China – ‘the first to arrive would be the one to be installed,’ says Tony.
The Chinese transformer was the second to be ordered, but had a shorter manufacturing lead-time, so it was a race to the finish line – but there were still options to cut down the time further.
Tony adds: ‘On projects like these where time is of the essence, we never leave the logistics to the manufacturer. They may be driven by different priorities whereas we are totally focused on how much time can be saved. While I have used the world’s largest aircraft, the Antonov 225, to carry a transformer from Zagreb to Cebu, this particular transformer was far too big to be carried by air.’
In the case of the ABB equipment, there would also be a long transit time from factory in Chongqing with the 377-tonne transformer travelling by barge 2,400km down the Yangtze River to Shanghai to be loaded on to a ship to Surabaya. The minimum total transfer time would be about three weeks.
Nonetheless, both transformers presented opportunities to use air freight to speed things up. Large power station transformers come with banks of radiators and other components that have to be fitted for testing in the factory, before being dismantled for shipping and then reassembled on site, a process that takes many days or even weeks.
Tony says: ‘I got the idea that if we dismantled the radiator banks for the ABB transformer in the factory and sent them directly to Surabaya by air, they could be preassembled before the transformer arrived, saving many days of installation work – and many millions of dollars. Similarly, we realised we could save several days on the departure of the Hitachi transformer if we didn’t load all the accessories on to the ship, but put them on an aircraft instead.’
Tony worked with DB Schenker, which handles Lavan’s logistics work on all of the company’s projects worldwide. It approached Cathay Pacific Cargo to arrange the charters. He adds: ‘We were able to reduce our requirement to three charters.’
Cathay Pacific operated a dedicated charter from Chonquing to Surabaya via Hong Kong. The outstanding balance of equipment was drip-fed into Hong Kong over a number of days and consolidated for a second charter from there.
There was a similar pattern from Japan, with smaller parts of the overall consignment flown to Hong Kong on regular freighter services before being consolidated into a third Hong Kong charter to Surabaya.
While everything from the air freight side went without a hitch, the main consignment from mainland China was running into problems not of their making.
Up until then, the ABB transformer had been looking as the likely winner in the race to reach the site first. It was completed on time in the factory, the accessories left on time for Cathay Pacific Cargo charters, but heavy rain the day before the transformer was due to be loaded on to the barge saw river levels rise by 14 metres. That shut the port for nearly 12 days. The barge then made fast passage down the Yangtze River, only to run into Typhoon Yagi in Shanghai, further delaying it by four more days.
Those delays cost the ABB transformer the race. Despite the shorter fabrication time, the weather won out and the Hitachi transformer was the one installed. The ABB transformer will now stay on site waiting for its ‘rainy day’.
Thanks to these efforts the station was back generating electricity to its full capacity in mid-September, some three months ahead of schedule.