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This is the best way to remain resilient in a world of uncertainty. Globalisation has worked well for many and industry should not go backwards by reshoring, he said.

The crisis has also been a test of leadership and, Pinatel stressed, communication is key. What would have happened if the crisis had come along 10 or 15 years ago? IT and digital communications have come a long way since then and have enabled organisations to move rapidly to remote working – and not just for office staff.

The climate crisis is also still there; during the pandemic, carbon emissions have fallen but not far enough to meet the targets set by the UN. Emissions reduction has to be a priority, both internally and within the industry’s customers.

Some solutions were offered during the panel discussion following the presentations, with Jim Fitterling expressing the strong view that decarbonisation will not happen without the contribution of nuclear power.

THE STRESS TEST Presentations during the second day of the EPCA Annual Meeting were, as ever, devoted to supply chain and logistics issues. Introducing the day, Caroline Ciuciu noted that there were around 1,000 delegates registered for the first day, showing, she said, that “our network is vibrant and engaged”. Helmstaedt summarised the first day’s discussions, with the overriding message that Covid-19 has intensified the challenges facing the petrochemical industry but that leadership has stepped up to meet those challenges. It is clear that collaboration is increasing – and will stay that way – she said, and that the petrochemical industry has a pivotal role to play in re-emergence from the pandemic.

Dirk Verstraeten, director of global logistics procurement at Covestro Deutschland and chair of EPCA’s Supply Chain Programme Committee (SCPC), introduced the session, noting that there is action on sustainability and the circular economy within the logistics sector, which is aware that it will have a big role to play. It is fortunate, therefore, that supply chains are more agile and innovative than ever before, he said.

With the aim of opening up discussion, Peter Hinssen, author, speaker and co-founder of nexxworks, described 2020 as “the year the earth stood still” and said it has been “a great stress test”, both at work and at home. But he challenged the idea of the ‘new normal’, suggesting that we now find ourselves in a ‘never normal’ world. It is just as well that industry has invested heavily in IT in recent years; digital used to be the cherry on the cake but now it’s the cake. But in a ‘never normal’ world, the process of digitisation will never be over.

There have been fast changes in IT, climate and global politics, with each seismic shock triggering opportunities. The Covid-19 crisis has also accelerated changes in consumer and business behaviour, with a huge impact on finances. Hinssen’s message was that we had all better get used to such volatility as it will be norm going forward. “The comfort zone of the ‘old normal’ may be gone forever,” he cautioned.

In a world of constant flux, businesses need a vaccine or, as Hinssen had it, a ‘VACINE’. He preached Velocity (if everything is under control, you’re not going fast enough), Agility (learn to read the changes), Creativity (tap into the potential of your employees), Innovation (in products, services, technology and so on), Networking (“connectivity is everything”) and Experimentation (don’t be afraid of risk, lower the cost of failure). For the petrochemical industry in particular, Hinssen urged it to leverage the power of its networks.

“Think about the day after tomorrow,” Hinssen concluded. “Sense what’s going on, try new stuff, scale up and run with it. Move the dial up to 11!”

THE PEOPLE PEOPLE Coming back to earth, Gina Fyffe, CEO of Integra Petrochemicals, said her company saw the pandemic coming, operating as it does with a major focus on Asia. Integra introduced new protocols in February and, she said, “rolled with the punches”, with relatively few outages. She said she found that the company’s systems were only as good as the personnel using them. “It was humans, working from home, that kept stuff moving,” she said. “It’s all still about people.” »

THE PETROCHEMICAL INDUSTRY IS ALREADY DOING

PETER HINSSEN: “SCALE UP AND RUN WITH IT -

TURN THE DIAL UP TO 11!”

At the start of the year, Fyffe said, she anticipated global overcapacity in many areas. But no one could have predicted the pandemic, which has changed the conversation and challenged industry’s ingenuity. So far things have gone reasonably well but failure is not an option. Companies need to consider their employees’ health as, she said, “our people are our greatest assets”. For a trading company like Integra, that duty of care extends to crews on ships, an issue of considerable concern due problems in effecting crew changes in many parts of the world.

“Maybe we’re at the end of the beginning,” Fyffe continued, predicting that 2021 will be “a long year”. Operators should look now at supply diversification and inventory levels (“Just in Time may be Just Too Late”), as well as issues relating to ageing infrastructure. She also noted that supply chains are global in nature and national political agendas, trade sanctions and tariffs can backfire.

But we all now have the opportunity to review matters and adapt. After all, as Darwin noted, adaption is crucial for survival. Having young people in the team can help with that and, Fyffe concluded, “We need to keep recruiting, keep planning.”

Bertschi too had been alerted by its Chinese operation to the coming pandemic and, CEO Jan Arnet reported, the organisation in Europe went immediately to home working. But, like at Integra, Bertschi had to protect its workers out on the road or in depots. Overall, Bertschi switched rapidly to online systems, adopting changes that would normally have taken 18 months or more. The company established a task force to find answers to questions that had not yet been asked, and had to skip the planning and piloting stages for new systems and go straight to implementation. “That needed trust and communication,” Arnet said.

That process, though, revealed an innovative spirit that can now be leveraged to take the digitisation process even further. Bertschi is looking at estimated time of arrival (ETA) visibility for consignees, with logistics service providers linking data from various shippers; at the automisation of business planning and analytics; at diversified sourcing, greater flexibility and a reduction in working capital, and greater sustainability. This will involve bundling volumes to reduce part loadings, greater use of intermodal transport, clustering trucking operations, and avoiding the use of flexitanks.

“We have to take a long-term view,” Arnet said. “Think in generations, not in quarters.”

DEALING WITH UNCERTAINTY The third speaker was Christian Kohlpaintner, CEO of Brenntag, who took office at the start of the year. “It’s been an interesting ride since,” he began. For him, the key learnings from the Covid-19 pandemic have been the ability of the industry to “keep the shop open”. Safety was obviously a priority, especially for its drivers. And the company had to deal with massive swings in demand from both customers and suppliers. There were new border controls and a great deal of financial uncertainty. On the other hand, the crisis focused minds and, he reported, Brenntag has enjoyed its best safety performance on record, partly due to quieter roads.

As a result of his experience so far, Kohlpaintner described three hypotheses, the first being a move from ‘Just in Time’ to ‘Just in Case’. Global networks and interconnected supply chains allowed uninterrupted supplies during the pandemic. Reshoring and nationalism are not the right answers to tackling the ‘new normal’, he insisted. Rather, things need to become even more diversified, with products having to switch between supply chains to keep moving. “We have to be smart and create a stable network of supply chains,” he said. “There will be other, unknown challenges coming and we need to be set up to deal with them.”

Kohlpaintner termed his second hypothesis ‘From Segregation to Integration’. Interfaces between people, and between suppliers and customers are becoming more integrated, driven by digitisation. Collaboration between all parties will ensure this journey will continue. Having personnel working from home challenged the idea of greater integration but, he reported, internal communications worked well and customer interaction stayed good. It did, though, raise concerns about the ability of sales teams to do their job as effectively as they would if they were out on the road seeing customers, suggesting that different ways of selling might be needed.

Finally, Kohlpaintner turned to sustainability which, he said, is turning from a fringe concern to a core element of business strategy. Companies should be aware of the short-term responses to the crisis and their potential impact on an organisation’s overall sustainability. In the medium term, the sector should look at the end-to-end supply chain and how it can be made more sustainable.

Challenged by Helmstaedt as to whether the pandemic has been a challenge or a crisis, Kohlpaintner said it was a big challenge – but that responding to challenges is what logistics providers do all the time. There was a lot of improvisation, a lot of communication and some luck. But with all players in the supply chain, from producers to end users, all in the same boat, they had to work and act together, responsibly. That is an important lesson for all.

QUESTIONS AND ANSWERS Kohlpaintner also reasoned that work practices will have to change in the future; the set of capabilities in the organisation

need to change; new skill sets will be needed. Just what are those skill sets? Hinssen urged companies to hire now for flexibility to cope with the coming changes. Fyffe agreed: while the older generation still has a lot to offer, young people are being hired for their potential. “We should be looking for people with plasticity of thought,” she said. They will need to be able to work across the organisation and not be kept to a well defined position. Arnet observed that, during the crisis, everyone felt more important – they were part of something bigger. It would be good to keep that feeling and take it forward.

Conversation continued with discussions on innovation, where Arnet said there is still plenty of room for work, especially in respect of reducing the environmental impact of transport by road. On-site operations can be more automated, he added, and there is still the opportunity to automate work processes; interactions need to be less transactional and more integrated through the supply chain.

There does seem, though, that there is still a reluctance in some quarters to integrate data sources and share information. Fyffe said that there is a lot going on but it is making things more cumbersome: there is a need for common platforms. Arnet responded that customers fear that standardisation will reduce flexibility and are wary of becoming locked into a particular system. The work that the European Chemical Transport Association (ECTA) is doing on standardising milestone information may help but, he admitted, connectivity has to remain agile.

The panellists also looked at the economic situation. Kohlpaintner said the chemical industry has not done too badly during the pandemic, forecasting that output might drop by around 5 per cent this year compared to 2019; Covid-19 has certainly been a shock but its impact will likely be less than the 2008/09 financial crisis. It has not been the same in other sectors, he admitted, and the petrochemical sector needs to prepare itself for the next shock and think about the day after tomorrow. Hinssen said that there is likely to be a long-term financial impact; Arnet agreed, saying that once central banks remove support we could be in for a very different environment.

Wrapping up the discussion, Verstraeten thanked the speakers for their inspirational words. The supply chain is more important than ever, he said: it’s been a lifeline during the crisis. But logistics remains about people. “Perhaps we will need different people - but people still matter,” he said.

EPCA is all about connecting, he concluded. “Let’s all reinvent the supply chain for the day after tomorrow.”

CHINA’S CHALLENGE Another regular feature of the EPCA Annual Meeting is that the final lunch is accompanied by a closing speech from someone outside the industry. This year delegates had to make their own lunch arrangements but they still had the chance to hear from Professor Lin Boqiang, director of the China Centre for Energy Economic Research. Introducing »

BERTSCHI HAS PLACED GREAT STRESS ON

PROTECTING ITS WORKERS OUT ON THE ROAD

him, Marc Schuller said that the stringent targets that China has recently put in place – to become net-zero by 2060 – will provide a challenge across industries.

Lin explained that China is spending a lot on emissions prevention and control but its ability to fund this work will be impacted by the impact of the Covid-19 crisis on economic growth, which was only 1.6 per cent in the first half of 2020. The fall in international trade volumes and changes in supply chains have increased unemployment and there has been a small decline in total energy consumption in the first half.

Looking more globally, there is a risk that the pandemic will support an antiglobalisation agenda. If this happens, national energy policies will focus more on domestic resources in the face of supply security issues; this will make it hard to allocate resources for clean energy and could also harm global cooperation in addressing climate change. It would also create difficulties for China in meeting its carbon neutrality target, which is already a major task.

One of China’s main problems is its reliance on coal, which accounted for some 58 per cent of 2019 energy consumption. Non-fossil fuels supplied around 15 per cent, which is well below the level of 26 per cent in the EU. In the short term, China will look to use more natural gas and less coal and oil but the transition is moving slowly. And, Lin said, it is hard to address coal consumption without looking at overall energy demand.

Lin said that China’s energy policy objectives for the next 10 to 20 years will need to focus on the development of ‘clean coal’ and growth in renewables; the 14th five-year plan, currently in development, will need to look at both. But clean coal is constrained by high costs and the potential to add to CO² emissions; coal-to-oil and coal-to-gas are both limited by capacity. Policy support for carbon capture and storage or use will be needed, along with greater efficiency in the end-to-end energy chain. Energy storage will be vital too and, now that costs for solar power and other renewables have fallen dramatically, the focus is shifting from technology to developing the necessary infrastructure.

China’s petrochemical industry is also facing great challenges, Lin continued, with over-capacity in many areas. It will have to plan to develop renewable energy sources to meet the decarbonisation targets. Carbon asset management will maximise the value of carbon and drive emission reduction, he said.

Are the 2030 and 2060 targets for emissions reduction viable? Lin said that the government in Beijing would not have put them in place without thinking hard beforehand. It is, though, uncertain whether the plans in place will deliver the savings. The largest uncertainty, though, is US-China relations. And given the US position on climate change, China and the EU need to get together to form a consensus and continue to support action in this area.

Closing the conference, Marc Schuller handed the reins over to Hartwig Michels, president of petrochemicals at BASF, who has assumed the position of president of EPCA. The three days of the virtual Annual Meeting had been “very inspiring”, Michels said. “The sector has suffered but is playing a central role in people’s lives.” He praised the EPCA community for its commitment and energy as industry moves forward in the new normal.

Michels will certainly face a challenging period as EPCA president; one outstanding item to be decided is the nature of the 55th Annual Meeting, due to take place in October 2021. EPCA will take a view on how that event will look once it has had time to review the feedback from members on the virtual event.

More information will be made available in due course at https://epca.eu.

ABOVE: LIN BOQIANG, “CHINA AND THE EU NEED

TO GET TOGETHER”

RIGHT: NEW EPCA PRESIDENT, HARTWIG MICHELS,