CHEMICAL LOGISTICS
The “bullwhip effect” has also upended chemical supply chains, says Matt Jensen, vice president, global warehousing, with Rinchem Company. The bullwhip effect describes how small changes in demand at the retail level are magnified as they move up the supply chain to the manufacturing sector. During COVID, companies scrambled to meet spiking demand. Then, even as demand leveled out, companies continued to produce, often at higher volumes, leading to an inventory glut. PIVOTING BECOMES CRUCIAL As demand has moderated, the ability to pivot has become key. “Instead of continuing to send shipments via a rail car with bulk tankers, when it’s not needed, why not do a different mode— say, tank truck transportation or in a tote or drum?” asks Curt Gonya, senior vice president of logistics with KAG Logistics. This would cut transportation costs and better align logistics operations with inventory and production levels. Along with a willingness to pivot, embracing advancing technology is crucial to streamlining operations and driving efficiency. Software solutions, like predictive analytics, help companies react more quickly to changes in their markets or transportation modes, and then to meet the evolving needs of their customers. At the same time, implementing new solutions, and overcoming any resistance, often requires an investment of time and resources. What’s more, some business customers expect suppliers to implement their proprietary systems and technology platforms. “If you want to remain a valued business partner, you need to learn, comply, and train your staff on myriad technology platforms,” Braun says. CHEMICAL TRANSPORT VIA RAIL About 19% of chemical shipments travel by rail. Yet rail transportation often remains a challenge, due to some rail lines’ inability to meet service expectations. “Our members want
to move more by rail, but reliability issues make that increasingly difficult,” says Scott Jensen, director of issue communications with the ACC. One potential solution would be to allow reciprocal switching, Jensen notes. Reciprocal switching would allow shippers to request that their cargo move from one rail line to another when it hits an interchange, instead of automatically continuing on the same line. OVERCOMING RAIL CHALLENGES Implementing reciprocal switching would force all the rail lines to earn shippers’ business, versus simply expecting it. The Surface Transportation Board, which regulates much of freight rail, has the issue on its to-do list, Jensen adds. The recent rail derailments brought attention to the challenges of moving hazardous materials and chemicals. While moving chemicals via train is generally safe and efficient, “the derailments were a huge black eye for the industry,” Buber says. The Railway Safety Act of 2023, introduced in the Senate in March 2023, may offer improvements. It addresses safety requirements for rail carriers and trains transporting hazardous materials. Among other actions, it increases the maximum fines the Department of Transportation may impose on rail carriers for violating safety regulations, and requires a minimum two-person
crew for certain freight trains. The bill has received bipartisan support. Until recently, logistics providers moving chemicals focused primarily on safety, cost, and service. “Sustainability typically wasn’t a decision factor,” Riggs says. That’s changing. SUSTAINABILITY GAINS GROUND The chemical industry has steadily improved its environmental footprint. The Responsible Care initiative has driven a 12% decrease in greenhouse gas emissions, an 18% decrease in sulfur oxide emissions, and a 39% drop in nitrogen oxide emissions, all since 2017, the ACC says. Responsible Care, the industry’s environmental, health, safety, and sustainability initiative, is practiced in nearly 70 countries. At the same time, the systems implemented to cut the environmental impact often add costs. “It’s worth doing, but it’s not free,” Braun says. For instance, some ports and shippers will only allow trucks that are within a certain age range. LOOKING AHEAD “This year, everyone is holding their breath, waiting to see what the economy is doing as their customers are drawing inventory down and also waiting to see what is going to happen,” says David R. Vieira, president and chief executive officer with CLX Logistics.
Around 19% of chemical shipments travel by rail. The Railway Safety Act of 2023 addresses safety requirements for rail carriers and trains carrying hazardous materials.
88 Inbound Logistics • June 2023
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