You are on page 1of 3

http://www.icis.com/Articles/2011/10/03/9496721/EPCA-Collaboration-is-key-inlogistics.

html Cooperation along the supply chain and in logistics provision is increasing as producers look to carry lower stocks and improve their supply efficiencies. Companies are collaborating on the design and implementation of supply chain services and infrastructure Collaboration in the logistics industry is gaining ground as the financial crisis spurs chemical producers to cope better with ongoing volatility and economic uncertainty. The amount of available storage and transport assets in Europe has been falling during the crisis and the traditional overhang of capacity has disappeared. There is a much stronger need now for producers and logistics providers to collaborate and plan together for future developments, with regard to demand and structural market changes. EPCA board member Hans-Jorg Bertschi, CEO of Swiss transport and logistics provider Bertschi, says that there is a much higher necessity to be agile and responsive to changes in the supply chain on a daily basis. The move within the chemical industry to operate on a low working capital basis and at minimal stock levels is leading to a different distribution model. The trend over the past 20 years to centralize distribution management is changing to decentralized structures which are more flexible and agile, Bertschi says. He has seen a big increase in terminal capacities related to contract business, as companies move larger volumes under contract rather than spot. "Companies are seeking longer term collaboration to secure capacities for future business in volatile markets, and not to lose customers because of missing logistics availability," he says. Jossi Landesman, director of Belgium-based BMS and EPCA board member, says that after 2008, buyers went into long-term contracts to avoid being caught short and also to head off speculation. He notes that, in general, the arbitrage has been reduced in the world with lower volumes on some trades, such as paraxylene (PX). "There will always be flows, but more and more is going to Asia than anywhere else." A growing number of producers are building logistics capabilities in developing countries, such as Russia, China and the Middle East, where new markets tend to outsource logistics facilities right at the start. Bertschi says this approach requires a close collaboration if it is to be developed successfully. Philip Browitt, EPCA treasurer and advisor to UK supply chain company Agility Logistics Solutions, says that the big tenders in the Middle East are starting to emerge now after a period of being delayed. The former CEO of Agility says that producers there are prepared to let the logistics suppliers design a greater part of the supply chain and be more innovative in the process. "Middle East producers recognize they need more than single linear supply chains designed to push commodities. Their businesses are more complex with longer chains and multiple products being delivered to customers who require flexible service as well as price. They are looking for something extra from bidders, allowing input to scope and flexibility, together with designing for future growth," he says. Browitt adds that logistics companies are contributing to the design of the full supply chain, site logistics and assets, providing input on matters such as capacity requirements, partnership development, the use of centralized or dispersed hubs, rail networks and capital injection. In Asia too there are plenty of opportunities for logistics providers because producers look for flexibility and growth in their supply chains, rather than just seeking the most cost-effective option. SUSTAINABILITY GROWS STRONGER

Sustainability and green logistics are also becoming priorities, but the customer pull that is being seen in the retail sector is not evident yet, says Browitt. He says that chemical and logistics companies have put methodologies in place and are measuring carbon footprints, but it is not a big factor in tenders yet. However, new regulation in Europe will drive change and start to have a significant impact on producers and shippers, says Bertschi. In March this year, the European Commission produced a White Paper on transport in the future. This lays out its plans, comprising 40 initiatives over the next decade to build a competitive transport system, dramatically reducing the region's dependence on imported oil and cutting carbon emissions in transport by 60% by 2050. Bertschi comments: "The Commission's road map will require a very significant modal shift from road to rail and intermodal over the next 20 years, which is a huge change and will require very significant investment in rail infrastructure and intermodal terminals." This shift is waiting to have an impact on strategic thinking and producers will have more focus on sustainability. Bertschi says that the chemical industry's major customers are developing totally new distribution concepts for Europe based on more sustainable modes of transport, and this will continue to grow. Moves to tax trucks and measures to push modal shift ahead aggressively to meet carbon goals, as well as reducing CO2 in shipping by regulating the type of fuel used, will feature highly during the next several years. The application of Internet of Things (IOT) technology can also drive sustainability initiatives, but it is likely to be some time before the chemical industry is in a position to progress to such a new innovation. IOT, already present in some industries, can upload masses of real-time data to the internet, usually automatically by sensors. At present, IOT is applied in energy, buildings and home automation, allowing remote control of specific devices. Using IOT will provide a tsunami of data that will require analysis, but Browitt says that the chemical industry must first remove "mind set" barriers on sharing information, to make its current technology effective. Many firms are capable of collecting and sharing data but there remains a widespread reluctance to share in-house information externally. Greater data transparency and more sharing of information between producers and logistic service providers, on forecasts and demand planning, will ultimately have a big affect on supply chain optimization and visibility. Browitt says this is a major trend for the chemical industry in the future. CDI PRODUCES PIONEERING TESST FOR OFFICERS One issue of growing concern, says Phil Browitt, particularly for chemical producers and shippers, is the operational knowledge of ships' officers on chemical and gas tankers. To address this, the Chemical Distribution Institute (CDI), an industry body based in the Netherlands, introduced a pioneering service for ship operators on July 1 this year. The Crew Knowledge and Proficiency (CKP) test has been developed to measure the operational knowledge of ships' officers. The tests are completely voluntary, says CDI's general manager Martin Whittle, and he confirms this will not change. The testing of Chief Officers, Second and Third Officers, and Second and Third Engineers, or equivalent ranks, is done randomly and results are confidential. The CDI's database selects two officers who take the tests on the inspector's laptop. The tests are uploaded to the CDI database and are only accessible by the ship operator, who can benchmark the CKP of its officers against the world fleet average.

Whittle says CDI provides the perfect international platform for delivering the CKP tests with a global consistency for the world fleet of chemical and gas tankers. The tests and results are reviewed every three months by a steering group, which will monitor performance as well as any arising issues. Whittle says that the take-up of the test has been quite outstanding, at over 90%, more than the CDI anticipated. Third party Videotel Marine International worked with CDI in developing the short tests, which are designed to complement existing training programs and provide a continuous assessment of officers. More information on the CDI and its activities in chemical shipping By: Elaine Burridge +44 20 8652 3214