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In response to the challenges ahead, chemical logistics providers are moving forward with innovative approaches and substantive solutions.
T he chemical industry, like many other sectors, faces a challenging economy. The softness in the market has prompted some chemical companies to “retool and rebuild for the future,” says Will Schweda, senior vice president, global sales and solutions with Odyssey Logistics, which provides multimodal supply chain solutions. “Companies are looking at their plants and systems and logistics capabilities, and asking: ‘Are we doing the right things? How can we get better for when the economy does pop?’” Some chemical companies, responding to the upheaval of the past few years, have become more open to new ideas and tactics. For example, they’re positioning their goods in different markets to be closer to customers, says Curt Gonya, senior vice president of KAG Logistics. As some transportation companies and logistics providers have exited the market over the past year or so, that has opened opportunities for providers that survived and have the scale needed to provide coverage, Gonya says. This shift has heightened the focus on logistics providers’ reliability and stability, given the significant costs customers incur if they need to switch providers. NAVIGATING THE DRIVER SHORTAGE “The driver shortage is still an issue for carriers, but they aren’t feeling the pinch as severely as they have in the past,” says James Cordock, president of Bulk Connection, a bulk freight third-party logistics provider. Some chemical manufacturers are working to become “shippers of choice” by helping carriers maximize capacity utilization and cut operating costs, says Rupal Deshmukh, partner in the strategic operations practice of Kearney. Among other benefits, shippers of choice often can secure capacity at more competitive rates. REGULATORY REQUIREMENTS ACCELERATE A portion of the disruptions in the chemical logistics sector come from increased regulatory scrutiny, mainly on safety and environmental concerns, says Scott Buber, director of operations, chemical division and regulatory compliance with WSI, a supply chain solutions provider. For instance, some states are enacting more requirements for cleaner vehicle air emissions. While understandable, particularly in areas with heavy traffic, these requirements can also increase transportation costs, Buber says. The growing volume of regulations limits flexibility across chemical manufacturers’ supply chain networks. “It’s hurdle
after hurdle,” Gonya says. “To address these obstacles, we put contingencies in place to make sure we can satisfy our customers’ requirements and deliver the goods on time.” New and changing regulations pose particular challenges for the 98% of chemical distributors that are small businesses, says Eric R. Byer, president and chief executive officer with the Alliance for Chemical Distribution (ACD). For example, changes to the Occupational Safety and Health Administration’s (OSHA) Worker Walkaround Representative Designation Process are prompting concerns, Byer says, referring to a final rule OSHA published in March 2024. Historically, both employers and employees had the right to authorize a representative to accompany OSHA officials during workplace inspections. Under the new rule, workers may authorize another employee or a non-employee to serve as their representative. Non-employee representatives must be reasonably necessary to conduct an effective and thorough inspection, based upon their skills, knowledge, or experience, OSHA says. The updated rule gives “unauthorized individuals sweeping access to facilities’ sensitive inner workings and chemical processes,” Byer says. OSHA hasn’t shown how the change improves safety, he adds. On a positive note, the chemical logistics sector is starting to gain more seats at the regulatory table, and regulators are more willing to listen and do site visits, Buber says. These visits offer logistics providers the opportunity to show how they’re meeting regulatory requirements. Continuing to show regulators that chemical logistics companies have prudent plans in place for handling products will enable them to continue to gain greater access to EPA representation, Buber says. SUSTAINABILITY INITIATIVES GAIN MOMENTUM “Until a few years ago, sustainability was just a buzzword,” Buber says. Now, the focus on sustainability has become more substantial and permanent. “There are a ton of changes, a ton of expectations, and a ton we don’t know yet,” he says. Among other shifts, companies are exploring more sustainable packaging materials. Many also are assessing their carbon footprints and identifying ways to be more energy efficient and greener in transporting products, Buber says. ACD’s Responsible Distribution program, a comprehensive set of environmental, health, safety,
June 2024 • Inbound Logistics 73
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