What the supply chain members think

users, such as manufacturers in the textiles, construction, retail and other sectors.

“We are still at the beginning of circularity,” Ambrosecchia says, noting that the journey towards that goal is moving faster downstream. But this workshop also illustrated EPCA’s vision of an expanded community, not just petrochemical producers and their logistics partners, but also downstream users and supporting sectors. “Collaboration is essential,” Ambrosecchia adds. “No one can solve this alone.” More detailed feedback from the two events will be provided during the Annual Meeting by Professor Ann Vereecke from Vlerick Business School, who is continuing to work with EPCA on its initiatives in these areas.

The aim of this work, Ambrosecchia says, is to find out what it takes to take the lead and how cross-sector collaboration can work in practice.

LINKS IN THE CHAIN Verstraeten agrees, saying “We have to connect all the dots.” EPCA is well placed to do just that, by linking the wider community of petrochemical producers, transport companies, downstream users and other interests.

As an example of how diverse those ‘dots’ are in the supply chain, Verstraeten reveals some details of a project in which Covestro is involved, to build a hydrogen-powered tank barge and operate it on the Rhine network. Covestro already has hydrogen in its chemical processes and, ideally, the barge will be run on hydrogen produced at its plants. To make this concept a reality will take the collaboration not just of Covestro, its vessel operator and shipbuilder, but also the terminals where the barge will call, marine architects and, perhaps most crucially, the regulatory authorities, who will have to decide on the necessary safety standards and vessel design concepts as well as the permits for storing hydrogen. Funding from national governments and even European institutions are a crucial element in this change process.

And there will be a lot of projects like this coming along. “There are going to be a lot of alternative fuels in the supply chain – and in just a few years,” Verstraeten says. “Legislation has to follow.”

The past year has also shown how vulnerable supply chains can be to disruptions, in Europe just as much as elsewhere. Road congestion, driver shortages, maintenance on the rail network and the variable water level on the Rhine have all caused problems. Shippers need to have alternatives as a back-up, Verstraeten notes. And, of course, it will all need paying for – another topic that will be examined during the Annual Meeting.

Looking ahead, Verstraeten will be giving up his role as SCPC chair in November and, as is the usual practice, handing it over to someone from the logistics sector. “But the journey will continue,” he says. “It is up to service providers to step up now.” SCPC has also been bringing in talent from a wider range of sources, including the IT sector and external experts who form the Digital Advisory Body. “SCPC needed to pick their brains,” Verstraeten observes.

The transformation that EPCA talks about may seem like a revolution but, Ambrosecchia insists, it is really just evolution: it’s not about doing different things but about doing the same things more efficiently. “Circularity and connecting all the dots are the big challenges,” he concludes. “This will be a big part of our work over the next few years.”

WE THE PEOPLE

HOW HAVE THE PETROCHEMICAL INDUSTRY AND ITS LOGISTICS PARTNERS FACED UP TO THE RECENT UNPRECEDENTED BUSINESS ENVIRONMENT? HCB ASKED FOUR MEMBERS OF EPCA’S SUPPLY CHAIN PROGRAMME COMMITTEE FOR THEIR OPINION

The past year has seen an unprecedented level of volatility and uncertainty in the petrochemical supply chain, in Europe as much as in the rest of the world. Fluctuations in the level and location of demand, resulting from Covid-related restrictions, port congestion, driver shortages (again, not just in Europe), rocketing ocean freight costs and political factors have all played a part.

The logistics sector is used to having to move swiftly to deal with changing circumstances but this past year has posed unimaginable challenges. Those challenges persist and continue to evolve rapidly, placing a day-to-day burden on the supply chain to respond.

Ahead of this year’s EPCA Annual Meeting, HCB spoke to a cross-section of the Association’s Supply Chain Programme Committee (SCPC) to gauge their opinions on how well the industry and its logistics partners have dealt with the challenges and what they need from governments and EPCA to help them navigate the coming years, with one eye firmly on the new imperative for sustainability and the decarbonisation of the transport sector.

PEOPLE FIRST While the past year has undoubtedly been a “tough time”, global chemical demand, overall, has not been bad, reports Jean-Marc Viallatte, vice-president of Arkema’s supply chain group. Margins have been decent, depending on the product, but supply has not been so easy.

There are problems, though. Ocean shipping is “a nightmare,” Viallatte says. It has a big cost impact on chemical producers, but also bookings are difficult. There is, though, no alternative. Arkema avoids airfreight wherever possible because of its environmental impact. But, he adds, maritime carriers have managed to make the most of the situation where demand and capacity are unbalanced and are making exceptional profits.

Jan Arnet, CEO of the Bertschi Group, notes that global demand for chemicals – and therefore for chemical transport – has risen over the past year, not least because of growing consumer activity. ‘Not going out’ has left more cash to spend on goods – although this is one reason for the problems in ocean freight, as demand for consumer goods (largely from China and elsewhere in Asia) has filled up containers and containerships.

But on a practical level, Arnet says that Bertschi managed very well, although the move from recession to boom in a few months in the second quarter of 2020 was “a major challenge

Jean-Marc Viallatte, Arkema Jan Arnet, Bertschi Guy Bessant, Stolthaven Terminals

for an asset-based company”. Fluctuations in demand and deployment patterns have placed a lot of stresses on personnel, he notes.

A major issue for Bertschi, as for many other operators, has been the safety of its employees. As Arnet explained in this issue a year ago, Bertschi moved swiftly to home working, bolstered by its investment in IT, and this has performed well. Bertschi also organised in-company vaccination programmes, which was much appreciated.

Going forward, Arnet expects, there will be a hybrid of in-office and home working. A lot of interaction is needed for people to work together as a team. But he is alert to the fact that employees will need time to adjust to the ‘new normal’, though he also says they are keen to get on with it. Bertschi has a large, multinational workforce and they do not want to feel isolated. TERMINAL ZONE For his part, Guy Bessant, president of Stolthaven Terminals, says that business has been fairly stable over the past year. Stolthaven has little exposure in the petroleum sector, which has been volatile, especially in terms of transport fuels, while the chemical market has been stable, along with more biofuels business. There is, too, “a lot of buzz around new energies”.

HCB also spoke to container liner company Hapag-Lloyd, whose managing director of global sales, Danny Smolders, is a member of EPCA’s SCPC. His colleague Sarah Schlueter, head of niche products development, says that 2020 was not an easy year for dangerous goods at the company; a new team for dangerous goods validation had been organised and, as with other staff, they had to work from home, which slowed down implementation.

While many in the supply chain suspect that the lines are happy at the moment, given the market situation, Schlueter says that operational disruptions are “costing a whole lot of money”. This is fine as long as rates are where they are but that may not last for long. Cost control is, therefore, a big topic internally at Hapag-Lloyd, which – like all players in the supply chain – needs to optimise its cost base.

Meanwhile, Schlueter adds, she hopes that the pandemic has triggered a change of mindset among shippers. It will be good all round if they can start looking for longer-term relations with carriers and move away from constant tendering.

Arnet had already raised the issue of digitisation, something that EPCA has been looking very hard at for some years now. Schlueter says Hapag-Lloyd is following suit, putting a lot of investment into IT, especially in the area of dangerous goods validations. That

delivers a better service to its customers and improves internal efficiencies. The structure of the container shipping business does mean, though, that more work is needed to solve inter-line communication and standards, where there is possibly a role for blockchain-based systems. A common validation tool would help, she says.

Arnet says the pandemic has “definitely accelerated the digitisation process”, which he sees as something that “helps our industry”. The proof of the value it provides has now been seen both by operators and customers. The next step, he says, is to extend digital systems to rail and shortsea operators, to “get everything lined up”.

STEPS ON THE ROAD ‘Getting everything lined up’ can be seen as a major stumbling block towards wider adoption of digitised systems, particularly on sector-wide platforms. A lot of work has been done in this area for land transport in recent years, not least by the European Chemical Transport Association (ECTA) and partner organisations. The development of standardised ‘milestones’ sets common markers and, Arnet says, “makes the whole system more visible and seamless”.

There are still questions: how can the system deal with gathering information from all vehicles, including those operated by contractors that may

not have the necessary communications onboard? Bertschi now has a portal that its customers can use to see the location and status of shipments – but did they want this? It has been well received, Arnet says, but while some customers want just an overall view of their loads, others want everything. Furthermore, he adds, the challenge now is to “stop people wanting to go back to the old days”.

For Arkema, though, digitisation is one of two main priorities, alongside corporate social responsibility (CSR), at present. “We are becoming more mature in digitisation, with lots of initiatives,” Viallatte says. Digitisation has focused on basic processes: track and trace, transport management systems, data management of the supply chain for the whole group, and the management of master data. Arkema is now working on digitising the sales and order processing (S&OP) system, with the aim of becoming more collaborative.

Viallatte agrees with Arnet that the pandemic has had an impact on the digitisation journey. “We found during Covid that we were not well equipped to deal with ‘what if’ scenarios,” he says, “because of a lack of visibility over what was about to happen. We had to be quickly reactive – and we found we didn’t have the ability to do that.”

As a result, as Viallatte puts it: “Everyone’s been juggling.” This has been a largely manual process, with an impact on working capital. “I would like to have a more dynamic system,” he adds.

Arkema is working on a customer portal to be able to provide track and trace information to its customers, as some other chemical suppliers are already doing. This will also be very useful for the company’s customer service department, Viallatte notes. Meanwhile, the internal monitoring of shipments has, he adds, “been a real eye-opener” and Arkema is now working with Nexxiot to allow the tracking of tank containers all around the world.

Arkema is also beginning to partner with its carriers and freight forwarders. “For us it’s very valuable,” Viallatte says. “It’s a way to enrich discussions with LSPs – we now have the data to see what’s happening.” But when it comes to providing information to its customers, Arkema realises that it has to go beyond ‘where’s my stuff?’ to providing actual value.

OFF THE RAILS One problem area for Arkema is rail transport. The company has been looking to partner with rail operators to share data, but they often simply don’t have it available. This is, he says, not helpful when it comes to shifting more cargo onto trains. “We would move more by rail if visibility were better and if the service were more productive and reliable,” Viallatte adds.

Rail leasing companies are better at supplying data, Viallatte remarks. In Europe, for instance, Arkema is tracking all railcars and gets consolidated information and reports through a control tower powered by Everysens. This helps a lot with maintenance planning. For Arkema, the modal shift is part of daily life – and it is not just rail, although not all locations have the option to use inland waterways because of their location. Water levels on the Rhine are also problematic and it is difficult to manage restrictions. “If you have to switch back to road, competition is a

problem,” he adds. “It’s hard to get the capacity you need.”

Digitisation can help deliver the necessary information more rapidly, widely and transparently to all players, Viallatte reckons. This would help to promote intermodal use, though other trends have also played a major part: single wagon offers, rail infrastructure investment, rising imports, lack of capacity and driver shortages in road transport. “Intermodal is now a crucial element in the transport mix,” he says.

Rail has the potential to take more volume off the roads but the industry can be slow to add capacity. On the other hand, Bertschi has seen an increase in rail volumes from Asia to Europe and it is discussing this option with some customers who are trying to avoid being exposed to ocean shipping.

Most – but not all – European governments are now investing in rail, Viallatte adds, and starting to implement actions. As a result, things are improving. “It’s the first time we’ve seen them get so serious about rail,” he says. But growth will not come from massive volumes – they are there already. “We need to be more serious about single-wagon moves,” he explains. This will require more commonality between countries to allow such movement. The European Commission will need to be involved in work to harmonise the overall European network, he reasons, as states may be somewhat reluctant to give up protection of their own volition.

Work to improve the reliability and availability of rail services has never been more urgent. Not only is the long-awaited modal shift from road to rail vital if Europe is to meet its self-set targets for reducing carbon emissions but it is also desperately needed by shippers struggling with a lack of capacity in road transport. As Arnet says, the problem of recruiting more drivers in the road haulage sector is crucial: unless that can be solved, industry will struggle. There are some obvious pointers – drivers want to drive and they want to be home on time; “we can’t have them waiting around at loading and unloading sites,” he observes. At the moment though, there are too many times when capacity is simply not available.

GOING GREEN Sustainability is not just about the modal shift and the route to decarbonisation involves a transition in the forms of energy employed in industry and in transport. Bessant looks at the current landscape: