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Chemical Logistics: the Price of Success These Are Good Times for Chemical Manufacturing in the United States

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Chemical Logistics: the Price of Success These Are Good Times for Chemical Manufacturing in the United States —JOINT SPONSORED CONTENT FROM— Chemical Week Chemical Logistics: The Price of Success These are good times for chemical manufacturing in the United States. But an active market creates special challenges for companies that need to transport chemical products. 66 Inbound Logistics • June 2018 Chemical Logistics: The Price of Success he U.S. chemical industry is going strong, according to American Chemistry Council (ACC) figures released in late 2017. U.S. chemical president, chemical and oil and gas production volume for 2017, excluding pharmaceuticals, would be at Boston-based consulting firm 0.8 percent higher than in 2016, finds the ACC’s annual industry Maine Pointe. Tstudy. ACC predicts further growth of 3.7 percent in 2018, 3.9 percent in Companies that transport 2019, and 3 percent in 2020. chemicals, or manage chemicals transportation, saw a spike in Continued access to inexpensive creating a $32-billion trade business in 2017 in the wake of shale gas, used for feedstock in surplus for chemicals, excluding several major hurricanes, including the manufacturing process and pharmaceuticals, in 2017. Chemical Harvey, which ravaged southern for energy, gives U.S. chemical exports totaled $127 billion, and Texas in August of that year. “Some manufacturers an advantage over imports rose by 2.8 percent over of the production facilities we were competitors in other locations, 2017, reaching $96 billion. working with sustained damage,” says the ACC. Companies have Along with low-cost feedstock, recalls Adam Kroupa, general announced nearly 320 new the U.S. chemical industry manager of the ChemSolutions chemical production projects in benefits from the strength of the business at third-party logistics the United States, with a total general economy, which is driving (3PL) provider C.H. Robinson in value of more than $185 billion, greater demand for plastics and Eden Prairie, Minnesota. the organization says. Foreign many other products made from As companies transferred investment accounts for 62 percent chemicals. “We’ve seen a sustained production to alternate facilities, of that value. upward trend that has continued they needed to move component The ACC also notes an increase to build steadily and progressively,” chemicals or arrange for suppliers in exports from the United States, says Mark Montanari, vice to deliver to the new locations. “We June 2018 • Inbound Logistics 67 Chemical Logistics: The Price of Success Miller Intermodal Logistics Services provides well-maintained, efficiently priced equipment, and responds quickly to shippers who need to lease bulk tank trailer storage and equipment. were able to help those companies boutique manufacturing that’s hours of service (HOS) regulations with their supply chain, and close to customers,” says Chuck with electronic logging devices adjust their transportation needs,” Breinholt, president of Rinchem, (ELDs), and a healthy economy, Kroupa says. an asset-based 3PL in Albuquerque companies shipping all kinds of On top of those temporary that specializes in chemical and gas products find it hard these days changes, the chemical industry supply chains. to secure transportation capacity has seen some longer-term Like companies that supply in popular lanes. For chemical adjustments to shipping strategies components to auto manufacturers, shippers, the challenge is even since the Panama Canal reopened these chemical firms try to locate greater. in 2016. plants in the same cities as some That’s partly because so “Imports from China that used of their large customers, vastly many chemicals are classified as to hit the West Coast are being reducing the need for outbound hazardous materials (hazmat). In a delivered to Texas, where a lot of transportation. tight market for drivers in general, refining and chemical production “This move doesn’t necessarily the subset of drivers with hazmat facilities are located,” Kroupa says. benefit us as a 3PL,” says Breinholt. certification is even tighter. “Many shipments are going to the “It is smart business, however, if “The driver shortage is more East Coast as well.” Those changes manufacturers can figure it out and acute because of the additional mean less demand for over-the- can comply with and control safety training that’s required to road or intermodal transportation and quality issues.” haul chemicals,” says Michael for chemicals from California, but Notarangeli, executive vice more for tanker truck capacity near president, logistics, at Maine the ports of Texas, Georgia, and The Big Squeeze Pointe. “Usually drivers in the the Northeast. While greater demand for chemical industry have more Another trend is a move among chemicals is good news for tenure, because they have more some chemical manufacturers to companies that sell and use those training and a good safety record.” develop a more distributed supply products, and for their logistics Such requirements make it chain. “Instead of operating major partners, the strong market also tough to find new drivers for plants that produce and source creates a big challenge—a serious chemical loads when demand from one or two locations globally, capacity crunch. surges. some companies are trying to Thanks to the ongoing driver Making the situation tougher figure out how to create smaller, shortage, tighter enforcement of still, a federal regulation 68 Inbound Logistics • June 2018 rinchem_placed_ad0115.indd 1 1/23/15 12:21 PM Chemical Logistics: The Price of Success established several years ago those containers exceeds 1,000 The ELD mandate, which took requires some drivers who haul gallons, you’re required to get effect in December 2017 and came hazardous chemicals in van trailers a tanker endorsement,” says under full enforcement in April to add tanker endorsements to Greg Umstead, vice president of 2018, has not only tightened up the their commercial drivers’ licenses transportation management at 3PL hours when drivers are available to (CDLs). Transplace in Frisco, Texas. “A lot of work, but has also knocked some “If a shipment includes liquid chemical shippers move large totes. capacity directly out of the market. or gaseous containers larger than If more than two of those totes are While many carriers adopted 119-gallon capacity, and the on the trailer, you need a tanker ELDs years ago, the industry as a aggregate combined volume in endorsement.” whole did not fully embrace the Regulatory Relief hile some regulations make life harder for help shippers eliminate the ‘lumpiness’ over a delivery chemical companies, several recent moves by week,” Forbes says. “We need to consider programs that W the federal government could give the industry influence end users to accept loads on broader time a boost, according to Adam Kroupa, general manager tables, versus an ‘8 a.m. Monday’ standard.” of the ChemSolutions business at third-party logistics In the ongoing quest for greater logistics efficiency, provider C.H. Robinson in Eden Prairie, Minnesota. information technology continually offers new One helpful development is the Ozone Standards capabilities, such as “being able to anticipate and better Implementation Act of 2017, which modifies the provide predictability,” Forbes says. “More and more, National Ambient Air Quality (NAAQS) standards in the predictive analytics are becoming a component of Clean Air Act. decision making. “If shippers in the marketplace don’t collaborate “In the past, what we called ‘real-time data’ wasn’t quickly and efficiently with service providers, we actually real time; it had a lag to it in most situations,” will only run into other problems, especially in a Forbes says. “Now, some of the applications collect and contracting driver market,” notes Mike Forbes, vice share data in actual real time. You can make predictions president of logistics solutions at Kenan Advantage from that data, to change and anticipate different Group (KAG) in North Canton, Ohio. KAG provides tank scenarios, which makes all parts of the supply chain truck transportation and logistics management services more efficient and lean.” for companies that ship fuel, chemicals, industrial gases, New mobile apps for operations, sales, and customer and food-grade products. service also deliver benefits for chemical shippers and Collaboration can take many forms. At industry their transportation partners. meetings, shippers and service providers have been “For example, the apps let drivers provide more timely sharing ideas about how to improve efficiency. Those information about shipments or unplanned events that discussions lead to specific initiatives that might involve could impact cost and service,” Forbes says. “Mobility several shippers or even several carriers. also extends sales and customer service activity any For instance, in some cases, KAG and other bulk liquid time, anywhere.” carriers can establish programs to use each other’s facilities to wash out their tanks after deliveries. “Not all carriers have wash stations at every location or key market,” Forbes says. Such cooperation helps carriers bring greater value to their customers. In other cases, a carrier and shipper might join forces to eliminate empty miles in the supply chain by tying outbound finished product shipments to inbound raw materials. “A lot of best-practice sharing and problem solving goes on through these collaborations,” Forbes says. Chemical shippers and their partners also need to think more broadly about their transportation options. “Everyone should continue to look for situations that 70 Inbound Logistics
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