<strong>WorldCargo</strong>newsTANK CONTAINERSConsolidation looms for tank operatorsDespite the lip service paidover the past decade tothe noble idea of longtermpartnerships between chemicalshippers and their logisticsservice providers (LSPs), not muchprogress has been made.This is especially true in thetank container sector. With upwardsof 100 different tank operatingcompanies offering transportservices, shippers find it advantageousto play the field. Businessstreams continue to be putout for tender on a regular basisand, with a large number of biddersfor each contract, logisticsactivities remain fragmented.Most chemical producers utilisea portfolio of tank container operatorsat any one time and preferto maintain the traditional“spot cargo,” cost-driven natureof the tank business.Cut-throat competitionThe end result of this scenario isthat freight rates remain depressed,even though the volume30Although most tank container operators are reporting increased levels ofbusiness and ordering new tanks, they are still unable to secure acceptablerates of return. Mergers and acquisitions may offer the best way forwardof product carried in tank containersis growing more stronglynow than at any other time in recentyears. An indicator of thestrength of US chemical exports,for example, is given by the factthat there is a shortage of emptytanks in the US Gulf. Elsewhere,intra-Asian use of tank containersis now approaching the samelevel of magnitude as transatlantictraffic - for many years themajor deepsea trade lane.Despite these positive signs,competition amongst tank operatorsoffering deepsea services remainsintense, not least in thecommodity chemical sector. Operatorswith specialist tanks fordifficult, sensitive and particularlyhazardous chemicals are faringsomewhat better.Europe, the other major tankSome 400 new tanks have been added to the Bertschi operation in 2003container operating arena, is alsothe subject of constant rate erosion,as typified by the very aggressivepricing now pertainingfor UK/continent business.And despite the growth in thenumber of European swap tanks,offering payloads similar to thoseof competing road tankers,intermodal routing opportunitiesare still being limited by lack ofinvestment in the railways.Intermodal tank operatorsalso point out that more shortsealinks are required, if road congestionin Europe is to be eased. Roroservices between Spain in thesouth and the UK and the Beneluxcountries in the north havebeen identified as being in needof strengthening, while tank operatorswould also like to seemore Baltic Sea services linked toRussia.Consolidation pressureConsolidation amongst the ranksof tank container operators todate has been relatively limited,and certainly to nothing like thescale within the chemical producercommunity. But the pastyear has shown operators thateven a pick-up in trade levels hasnot been enough to ensure adequatereturns on capital employed.Under such circumstancesfurther consolidation in the transportindustry will be necessary. Iffor no other reason, larger fleetsof tank containers are needed tomatch the expanded logistics requirementsof the newly mergedchemical majors.Of course, it takes two totango, and tank operators, fortheir part would like chemicalshippers to be more open to thecustomised, “global” logistics solutionsthey are able to offer.Tank operators complain thatthey must often deal with newlogistics officers at the chemicalproducing companies, who simplydo not have the same awarenessof the benefits offered bytank containers as their veteranpredecessors.Safety factorWhile cost may remain the primarydriver, safety is also a toppriority issue for the chemical industry.An examination of theEuropean chemical transportsafety record over the last decadeshows an overall positive trend,with the accident rate today wellbelow that of the early 1990s.However, in the past few years aworrying development has becomeapparent. Even though thenumbers of accidents are at historiclows, they have begun tocreep up again.Against this background, thechemical industry has identifiedtransport safety as the subject ofits latest initiative in ongoing effortsto continuously improvesafety performance.In recent months the EuropeanChemical Industries Council(CEFIC) and the EuropeanChemical Transport Association(ECTA) have been jointly developinga behaviour-based safety(BBS) programme for drivers ofvehicles operated by logisticsservice providers (LSPs) active inthe chemical sector.In addition to eight leadingchemical producers, the workinggroup compiling the BBS guidelinesincludes representatives ofeight LSPs - Bertschi, De Rijke,Dentressengle, Den Hartogh,Hoyer, Suttons, DFDS andHaesaerts.These LSPs will lead in theimplementation of the new drivertraining regime, but it is aimed atall European chemical transportcompanies. Industry-wide applicationwill be assisted by the decisionto assess BBS implementationwhen LSPs are checked fortheir compliance with the SQASRoad safety and quality scheme.Suttons specialisesLike many operators of small-tomedium-sizedfleets of tanks,UK-based Suttons Internationalis in the process of renewing andexpanding its fleet. The companyhas a business portfolio that involvesthe movement of specialistliquids and gases for its customerson both deepsea routesand in Europe. As a result, thenewbuilding programme includesboth ISO and swap tanks.Over the past two yearsSuttons has spent over £6 millon almost 500 new tanks. In thedeepsea sector the emphasis hasbeen on 26,000 litre units to replaceolder, smaller-capacitytanks, while the swap tanknewbuildings have been orderedLyondell Europe is revamping itsstyrene monomer distributionactivities, switching from a roadonlyoperation to intermodaltransport and outsourcing thebusiness to De Rijke VloeistoftransportBV and HaesaertsIntermodal BV, two specialistlogistics service providers for theEuropean chemical industry.Styrene will now be transportedfrom the company’smanufacturing plant at theMaasvlakte in Rotterdam, a jointventure with Bayer, to Europeancustomers using a network ofcontainer hubs and a fleet ofdedicated 30ft tank containersmanufactured by Van Hool ofBelgium. The use of dedicatedtanks will obviate the need toclean the units after each deliveryand the size of the sidebarprotectedtanks will enablemaximum payloads of 30 tonnesof styrene to be transported.“The key change in this newdedicated container hub-baseddistribution network is that wedisconnect our customer salesorders from the plant loadingorders,” states Marc Quintus,Lyondell’s supply chain Europedirector. “This allows us notonly to optimise our loading facilities,but also schedule our deliveriesin the most efficientto augment existing tanks in theEuropean fleet.During 2003, Suttons hastaken delivery of 152 ISO tanksfrom Consani and Welfit Oddy,50 swap tanks from UBH and anumber of specials, including gastanks, lined tanks and electricallyheated units. In addition, severalof the company’s oldest tankshave been rebuilt.“Our concentration on thespecialist end of the market hasstood us in good stead, becausethe commodity end of the businessremains cut-throat.” saidChris Trett, managing director ofSuttons International. “Eventhough rates overall are not great,profits over the past six monthshave been in line with expectationsand we are in healthy blacknumbers.”Suttons is continuing to expandits global coverage, and isseeing particular volume growthin China and India. In response,the company recently opened anoffice in Tianjin and strengthenedits agency position in India.“The shift of chemical productionto China and India thatis currently taking place will alterthe basic characteristics of globalsupply chain flows within afew years,” Trett added. “As such,it poses a major challenge for alltank container operators.”Subcontinent risesOne operator with a wide understandingof the potential fortank containers in trade with theIndian subcontinent is GoodrichMaritime Pvt Ltd of Mumbai. Althoughthe LSP has only beenactive in tank operations for oneyear, the company’s managershave extensive knowledge of thevarious relevant importers andexporters in the region.In 2003, Goodrich Maritime,has taken a total of 43 tanks onlease. “We are the only companyin India with tank containeragency, leasing, operations andLyondell styrenegoes intermodalmanner using other transportmodes, including inland bargingand rail.“In addition to being costcompetitivewith direct road deliveries,multimodal transport offersmany environmental andother commercial advantages. Byusing the container hubs as stagingposts close to our customers,we will be able to reduce theroad transport requirement by58 mill tonne-kilometres, or 70per cent,” Quintus adds.The tanks, which are currentlyunder construction, willbe outsourced to De Rijke undera long-term lease agreementwhile Haesaerts will operate thecontainer hub network. Eachyear several thousand containerloadswill be shuttled by inlandbarge from the Maasvlakte plantto a central container hub locatedon Zeekanaal, south of thecongested road network thatcovers the Rotterdam-Antwerpregion.From there the loaded tankswill be transported across mainlandEurope to a network of containerterminals situated close tothe styrene customers using overnightrail shuttles. Thereafter, thetanks can be delivered to thecustomers’ premises as product isrequired. ❏<strong>Dec</strong>ember 2003
TANK CONTAINERS<strong>WorldCargo</strong>newsmanagement under one roof,”explained M Gopal, one of company’smanaging officers.“We have expanded our tankoperations to encompass the ArabianGulf in the west and SouthEast Asia in the east, as well as thesubcontinent. Our Bulk LiquidsDivision also offers other transportoptions like flexitanks andintermediate bulk containers(IBCs). As a part of Goodrich’sforward integration, we have securedstorage tank space in theMiddle East to enable us to offerfull supply chain solutions to ourcustomers.”As India’s chemical industrydevelops, so does the potential fortwo-way trade in tank containers.In recent years the traditionalexport commodities of castor andlinseed oils have been augmentedby petrochemical products whichare being produced locally at lowcost and sold onto world markets.Imports, too, are rising to meetthe country’s growing demandfor industrial and foodgradechemicals and edible oils.“In addition to the developingtwo-way trade flows, there area number of other factors whichbode well for the future use oftanks in our region,” Gopal said.“Joint ventures and other collaborationsbetween local manufacturersand global chemical companiesare promoting increasingtraffic, much of which is moresuited to intermodal tanks thanchemical parcel tankers and tanksare also continuing to gain favourover smaller packages, such asdrums, due to the economies ofscale and the environmental constraintsplaced on disposal of usedpackaging. The strong economicgrowth in the Indian subcontinent,South East Asia and the ArabianGulf also reinforces our optimism,”Gopal said.Bertschi and EuropeCompared to other chemicalproducingregions around theworld, Europe faces a number ofserious disadvantages, not leastrelatively high feedstock and labourcosts, rigorous environmentaland other regulatory controlsand mature markets. In the yearsahead European chemical manufacturerswill face increasingcompetition from lower-cost producersabroad. A number ofsmaller chemical plants have alreadyclosed.In addition to a shrinking customerbase and low-growth productstreams, tank container operatorsserving Europe’s chemicalproducers must contend withcongested roads, archaic rail systemsand intense competitionfrom numerous other LSPs.In such a marketplace, it is theLSP that can think more quicklyand intelligently and move moreassertively than its many rivalsthat is the most likely to be successful.Bertschi AG of Dürrenäsch inSwitzerland keeps one step aheadby working with its customers onthe development of tailor-madecontract logistics arrangements.Bertschi, through its ContractLogistics Group, has worked witha number of chemical producersto develop bulk chemical logisticsprojects in which tank containersare integrated into thewhole supply chain.In this way tanks can be usedfor both product storage and distribution,resulting in considerablesavings in fixed storage tankinvestment. A number of solutionshave been developed, in tandemwith chemical producerpartners, in both the liquid andsolid bulk sectors of the business.“We have successfullylaunched two such contract logisticsprojects using tank containersrecently,” said BertschiCEO Hans-Jörg Bertschi. “Wehave also launched new subsidiarycompanies for intermodaltransport in Hungary, Poland andIreland in the last 12 months.Bertschi now has a presence, withtrained drivers and owned equipment,in 16 European countries.“The past year has been a particularlysuccessful one for us interms of tank container activities,especially during the second halfof 2003. The total Bertschi tankcontainer fleet has grown by approximately400 units in 2003,most of which are 31-35,000 litreswap tanks - sizes which allowus to maximise payloads. Inaddition, several hundred silocontainers have been added to thefleet,” Bertschi added.Bertschi is tackling the currentchallenges facing the industryboth through its own individualefforts and, for industrywideissues, through organisationslike ECTA. The company is introducingbehaviour-based safetytraining for all its drivers on apan-European basis in 2004,while its Contract LogisticsGroup continues to develop newsolutions for receptive customers.Strengthening the company’scommitment to Eastern Europehas also been identified as a priority.With the imminent enlargementof the European Union to25 nations, Bertschi has beenbuilding up its knowledge of thisnew regional market with a viewto establishing subsidiaries inEastern Europe in due course.Contank on the moveAnother part of Europe wherethe use of intermodal tanks hasbeen growing is the Iberian peninsula.Contank SA of Barcelonareports that its tank container activitiesin 2003 are 30 per centahead of those for 2002. Part ofthe growth stems from the roleplayed by Contank as the Iberianpartner in cooperative ventureswith LSPs in Northern Europe.The Spanish operator has purchased70 tank containers overthe last six months in response tothe specialist needs of its customers.The new units include tankscapable of carrying chemicalproducts at high temperatures andmulti-compartment tanks.“In addition, we have openeda new 25,000 m 2 tank depot onthe outskirts of Barcelona,” saidIsrael Lago, European logisticsmanager for Contank. “This facilityenables us not only to consolidateall our own vehicle andtank servicing activities at a singlesite, but also to offer thirdpartyservices at a strategic location.”The terminal offers storage,tank cleaning and intermediaterepair services as well as a fuel stationand parking for ADR andnon-ADR vehicles.Contank points out that theBarcelona location is good for railand shortsea connections, and hasassisted its own expansion effortsas more shippers in Spain wakeup to the multimodal advantagesoffered by the tank containercompared to a road barrel. “Weare able to offer a wider range oflogistics solutions to our clients,in terms of intermediate storage,just-in-time deliveries, and, insome cases, the carriage of greaterquantities of product than wouldbe possible with a truck,” Lagosaid.Meurer mergerTwo German intermodal tankcontainer operators that have recentlyexperienced, like the restof the industry, increased volumesand reduced margins are Lanferand Meurer. The two companiesdecided to do something aboutit and about 12 months agoagreed to merge their respectiveoperations under the MeurerIntermodal banner.“We expect rates to remainunder pressure in 2004,” said PeterDannewitz, a joint managingdirector of the merged operationalong with Hermann Lanfer. “Inour new alignment we will bebetter placed to serve the growingpan-European market and theincreasingly sophisticated demandsof our customers as a reliableand competent partner.”Meurer Intermodal has recentlytaken delivery of series ofswap body and 20ft ISO tankcontainers from Belgian manufacturerVan Hool and is proceedingwith further orders for similarunits over the next year. Themain emphasis has been on lightweightequipment, particularlyinsulated tanks to meet the requirementsof particular customers.“We see strict cost managementand control and good communicationswith our clients askey elements of the MeurerIntermodal service package goingforward,” explained Dannewitz.“The merged operationimproves our ability to tailortransport solutions to the preciseneeds of the shipper, whilst at thesame time also maintaining theflexibility needed to deal withunforeseen circumstances.” ❏The merged Meurer Intermodaloperation has facilitated a greater degreeof supply chain integrationBy working together with LSPs in northern Europe, Spain-based Contank hasseen a 30 per cent increase in its tank container activities this year<strong>Dec</strong>ember 2003 31