Chemistry is life: many industrial sectors depend on products made by the chemical industry. Whether they are liquid or solid, chemical substances act as the essential basis for foodstuffs, pharmaceuticals and all kinds of everyday items. From lunch boxes to paint, shampoo to weed killer, even the food we buy, chemicals are part of nearly every product lining home and office shelves.
In their raw state, the chemicals used to make these everyday products include such diverse materials as corrosives, acids, pesticides, and plastic pellets. But how do we receive these products at the click of a button and how do ensure the safe, efficient and effective delivery from warehouse to warehouse and door to door all over the world? The answer is logistics.
Chemical logistics requires flexibility and adaptability, the chemical supply chain is long, unpredictable and complex. When the chemical industry and the logistics sectors meet, the potential for catastrophe is high, but experts in our fields quietly go about their business to ensure a seamless path from A to B for the most dangerous of goods.
I wonder: Is there a more important area of business in today’s world, that requires a faultless supply chain?
With a worldwide sales value of €3,000 billion, the chemical industry is one of the world’s largest and most important sectors, generating international trade volumes above 700 million tons of freight annually. The industry is exceptionally diverse with the supply chain challenged by the vast variety of products, the dependence on highly specialised transport and storage requirements and increasing safety issues.
The Chartered Institute of Logistics and Transport (CILT) is absolutely aware that safe, efficient and sustainable logistics are critical to the future of the chemical industry. Ensuring an effective handling of its products, with care for the environment and in full accordance with regulations, is of key importance for the image and reputation of both the logistics and chemical industries.
The chemical industry is an important driver of the global economy and the EU remains a leading chemicals production area and it is therefore fundamental that our supply chain runs effectively to match the high requirements put upon it. CILT is under no illusions that chemical manufacturers—and the third-party logistics partners that serve them — tackle enormous challenges day in and day out to keep the multi-billion-pound industry moving.
Many chemical products require special care in handling, transporting, and storing to prevent safety hazards such as combustion, impurity and decomposition. CILT is the membership body home to some of the most talented expert leaders in this field, and its members are regularly put to task about how better to iron out the creases, or challenges, in this very long and complex supply chain.
The Chemical Chain’s Challenges
Since chemical products are at the beginning of the value chain for many products in different industries, the demand is correspondingly high – and so are the volumes on roads, in containers on the sea or on board aircraft. As demand rises, capacity shrinks and so, the supply stretches.
Logistics professionals must ensure the safety of people, the environment and material goods with comprehensive protective measures throughout all phases of transporting dangerous goods. That means, that in addition to sound know-how, excellent knowledge of the industry is required for the transport and storage of chemical goods.
Management boards of chemical companies usually do not perceive supply chains and logistics as opportunities for their business. Logistics in the chemical industry is expected to run smoothly and reliably with senior executives usually only paying attention when something goes wrong and rarely regarding logistics as an opportunity. The consequences of a transport or storage accident are likely to be severe for the company and its public image, so it’s unsurprising that only when bad news hits, board executives are finally forced to turn their attention to logistics – sadly, for all the wrong reasons. But short of a major incident, logistics usually remains under the boardroom radar. Logistics and supply chain management should be key elements in a formula for success for global chemical companies in today’s complex interconnected marketplace where products are fast being commoditised.
Logistics is far more than a “necessary evil” and can, in fact, be a significant contributor to your company’s bottom-line results. With a more strategic approach to its supply chain management, chemical companies can and will establish a real competitive advantage.
The chemical supply chain comprises a myriad of products, many of which require special care in handling, transporting, and storing to prevent safety hazards such as combustion, contamination, and spoilage. The manufacturers, carriers, and third-party logistics (3PL) providers who store and transport these products must adhere to a complex web of ever-changing federal and state regulations aimed at minimizing the hazards for workers and the general public who might be affected if an accident occurs.
On paper, it’s the perfect relationship; chemical companies are adept at designing their products and manufacturing safely, while logistics companies offer the expertise required to safely navigate transporting and storing these potentially dangerous products. However, the array of safety considerations and regulatory follow-throughs needed to store and transport chemicals makes the logistics an increasingly complex challenge for operations managers.
Brexit and beyond
In the modern industrial world, the role of chemical industry is hard to overstate and is one of the most dynamic and powerful sectors of the domestic and global industry. With a worldwide sales value of Euro 3,000 billion, the chemical industry is one of the world’s largest and most important sectors, generating international trade volumes above 700 million tons of freight annually.
The industry is exceptionally diverse with complex supply chains challenged by the variety of products, highly specialised transport and storage requirements and growing safety issues. Logistics services companies can only handle chemicals carefully if they have the extensive specialist knowledge and the correct equipment.
As the chemical industry continues to grow, shippers and their service partners work hard to keep product moving, trouble-free. CILT advocates that the entire supply chain takes heed of becoming an Authorised Economic Operator to ensure that the Chemical Supply Chain maintains frictionless borders through Brexit and beyond.
AEO status is an internationally recognised quality mark and is open to any company directly or indirectly involved in the international supply chain, however large or small. This crucial ticket to negotiating Brexit indicates that your role in the international supply chain is secure, and that your customs controls and procedures are efficient and compliant.
Post-Brexit, an army of AEO-accredited operators will be crucial to achieving the smooth transition of borders to our markets. Created after 9/11, AEOs improve customs and security and ensure a delay free passage thereof. AEO certifies that a company meets the necessary standards in compliance, security and safety in the international supply chain.
This is a complex, formal accreditation to achieve with a very low pass rate so far. Very few UK companies have it, but very many will need it, and CILT is encouraging all organisations to get on with it now. This will truly be the club to be in to guarantee success through Brexit and beyond.
To ensure that your Institute is helping members in the best possible way, it is laying on specialist courses in partnership with experts at Morley Consulting to provide crucial insights and information to guide you through the process to booking your Brexit ticket. The application process takes months, not weeks, and companies need to prepare prior to submitting their applications. Now really is the time to get started.