Logistics & Supply Chain

Sustainability as "License to Operate"

Sustainably Managed Supply Chains are Increasingly Important for Chemical Logistics

20.06.2013 -

Seen from a logistical perspective, there are sectors of industry that differ from most of the others by virtue of their specialized requirements. One of these sectors is the chemical industry in which the term "chemical logistics" was coined to reflect these specialized needs. Bundesvereinigung Logistik will be turning the spotlight on chemical logistics this year in a focused and differentiated way by staging the first Forum for Chemical Logistics. Dr. Sonja Andres spoke with Dr. Robert Blackburn, Board Member of BVL and President Information Services & Supply Chain Operations at BASF, regarding that which differentiates logistics in the chemical industry - and BASF in particular as a global player - from general logistics as well as about future trends in the field of chemical logistics.

Distribution & Logistics: Dr. Blackburn, in your opinion what distinguishes chemical logistics from logistics in other sectors?

Dr. Robert Blackburn: Chemical products require specific handling, tracking port and regional or national border clearing processes. This is for example valid for hazardous goods. Therefore, the benchmark for chemical logistics and providers in our space is simply higher. Whereas the capability and reliability of handling large volumes are paramount when it comes to delivering classic bulk chemicals to customers, additional complexity in customer-tailored services and support are required in the customized chemical products and functional materials and solutions segments.

What does the chemical industry expect from logistics and its logistics partners?

Dr. Robert Blackburn: It is critical to have committed partners who are familiar with the specific handling and tracking requirements in our industry, like temperature and moisture requirements, and associated classifications. In a highly competitive area like classic chemicals, we need standardized and highly efficient logistics services. In the customized chemical products and functional materials and solutions segments we require agile, flexible supply chain solutions tailored to meet our customers' specific needs. Logistics providers need to address all three segments and as such are more important value-adding partners in the supply network. They provide concepts and services extending beyond transport and storage - order picking, for instance. They also have the necessary equipment, such as heated tankers and special containers for maritime or inland waterway transport.

Do you see any need for action with regard to structures and processes on the two sides of this partnership?

Dr. Robert Blackburn: One of the major challenges ahead will be to find qualified personnel with suitable training in handling chemicals in an appropriate way. One example from the point of view of shipping companies in maritime chemical transport is that chemical product containers are tricky to handle. As I said before, chemicals tend to be goods requiring great care and attention in handling, which may result in delays that can impact delivery reliability if not performed with care and operationally excellent processes.

Chemical companies used to take an extremely skeptical view of the outsourcing of logistics services. Do you think this has changed now?

Dr. Robert Blackburn:
Global competition puts us under immense pressure to not only be the most effective and reliable supplier of highly innovative products; it also requires maximized efficiency and measurable productivity gains every year! As such, we want and need efficient solutions from professional partners on the logistics services provider front. An ongoing primary research study being performed by Bundesvereinigung Logistik indicates higher levels of outsourcing in chemical logistics than in the logistics sector overall, in particular for bulk logistics and freight transport.
Cooperation with external partners is accepted practice using standard procedures in virtually every area of logistics these days. In my experience, most chemical companies see little financial sense in maintaining all the special equipment they would need for a transport fleet of their own. The exception is warehousing, where outsourcing levels are only in the order of 25%, according to the BVL research study.
The simple fact is that everything that is not closely involved in the production and loading process can be out-tasked; provided that professional partners offer effective, efficient solutions and that the necessary infrastructure is in place.

The chemical sector's structure is highly globalized, with production locations in all corners of the globe. This naturally also calls for global logistics concepts. How does BASF handle this challenge?

Dr. Robert Blackburn: BASF is a company that believes deeply in doing its' homework on an evergreen basis and working with partners who do the same. Currently in my division, which includes our Supply Chain Operations, our team is in the process of taking the next step in our operational excellence program by repositioning ourselves to best serve our increasingly globalized customer base. BASF's global operations require an extensive intercontinental supply network, including specific supply chains, starting in Europe and extending to all parts of Asia Pacific, North and South America. These vast intra- and interregional supply and production volumes are handled through multi-mode transports based on experience built over time and highly sophisticated models.
We are where our customers are. We strive to be our customers most reliable and innovative local supplier, like next door if you will, wherever our customer needs us to be. That is our expectation of ourselves.
We will continue to increase the effectiveness and reliability whilst ensuring delivery efficiency and sustainability of product flows. As such, processes must deliver more transparency and be easier to manage. Leveraging our proactive risk management, we offer the ability to respond directly and effectively to disruptions in our supply network - our partners must do the same. Emerging markets such in Eastern Europe, ASEAN and Latin America, where product flows are set to increase, require a different focus and agility than more mature markets. The onus is also on logistics service providers to make the necessary investments for their chemical industry customers, and that includes investing in parts of the world that are lacking the infrastructure to handle our joint growth potential.

What are the most important current trends in chemical logistics?

Dr. Robert Blackburn:
Enhancing traceability and safety throughout the supply chain is about improving on an already strong performance and introducing consistently high standards on a global scale.
One clear trend is sustainability, which is firmly rooted in BASF's "We create chemistry" strategy. Sustainability ultimately is the basis for the chemical industry's "license to operate", and the industry has enhanced sustainability over the last 20 years by developing solutions to use natural resources more efficiently. Examples include better automotive catalysts, lighter-weight vehicles, more efficient insulation materials, and crop protection products that are even more effective and can thus be applied more sparingly.
Another aspect to sustainability is talent. As a key industry in Germany we must focus on attracting young talents who see sustainability as a basic value and primary decision-making criterion. We also need to invest in and retain existing mature talent to remain competitive - we simply do not have the luxury of losing excellent experience to retirement too soon.
We are also seeing a trend towards full service in chemical logistics, which involves extensive integration of logistics service providers in the value chain. Out-tasking is on the increase, as already mentioned, and service providers are increasingly investing in their customers and making required up-front investments in infrastructure. Out-tasking is also partly driven by the ‘war for talents' - and yes, that ‘war for talents' has long arrived right here in our home country Germany.
One of the biggest challenges in the logistics industry over the coming years, as has long been the case in the IT industry, will be to find qualified staff to stay ahead of the competition, and chemical logistics is no exception to that trend.