Tank tracking

Tank tracking Chemical shippers challenged to keep specialized equipment in sight.

By Chris Gillis

   On the surface, it may be difficult to imagine how anyone could lose sight of a 20-foot ISO tank, but this happens to chemical shippers more often than you think.
   BDP International, a Philadelphia-based freight forwarder and long-time logistics services provider to the chemical industry, was recently tasked with solving this costly problem for some of its chemical shippers. The result was the development of an information technology tool that helps these companies better manage the outbound and return of tanks and cylinders.
   Many chemical shippers deploy fleets of owned and leased transportation assets, which they attempt to manage either on paper or with rudimentary automated systems. Along the supply chain, however, there are blind spots where these shippers may easily lose track of their equipment.
   'The problem is what happens to the tanks when they reach the customer,' said Andrew Piazza, director of BDP's Centrx supply chain consulting unit. 'The trail will often go dark at that time.'
   While conducting its analysis of the problem, Centrx found the underuse of tanks occurs because no single source in the supply chain is responsible for tracking and controlling tanks, particularly during destination dwell time and the return leg.
   'As a result, these assets often sit idle for weeks if not months awaiting their next move,' Piazza said. 'In one case, an ISO tank was discovered sitting at a customers' site for 14 years.'
   Of the estimated 250,000 tanks globally, about 100,000 are believed to be owned or long-term leased by chemical, petrochemical and oil and gas companies. The cost of these assets aren't cheap, ranging from $150,000 to $300,000 apiece.
   Centrx's research was conducted in August 2010 via an online questionnaire sent to a sample population of 297 chemical and oil and gas logistics and supply chain executives, 37 of whom responded for a statistically valid 12 percent response rate. Respondents were located in the Americas, Europe and Asia-Pacific. Most of the respondents were in their companies' logistics (38 percent) or supply chain (21 percent) departments, with 14 percent of respondents in procurement.

Andrew Piazza director, Centrx supply chain consulting unit, BDP International
'The profit on each tank's content is conservatively estimated to be about $15,000 per trip. So getting just one additional trip a year from each tank could earn the industry a projected $1.5 billion annually'

   The study results found the biggest challenge for these executives is obtaining timely information from the individual parties in possession of tank assets, followed by insufficient data for quick decision-making and tanks lying idle at destination locations. 'Without data, you can't hold consignees accountable to return these units expeditiously,' Piazza said.
   The downside from this inefficiency, Piazza explained, is that many shippers resort to leasing or acquiring more equipment to move their products, when what they need is to have their units returned in a timely manner to increase the number of annual turns in the supply chain.
   'The profit on each tank's contents is conservatively estimated to be about $15,000 per trip,' he said. 'So getting just one additional trip a year from each tank could earn the industry a projected $1.5 billion annually.'
   Companies also pay the 'hidden' costs of extended idle time when customers hold tanks to use them as a form of free storage, as well as port charges associated with delays in moving the tank back to its owner. Piazza said one shipper surveyed was assessed $25,000 in demurrage charges because unbeknownst to it a tank sat in the Houston port area for two months.
   BDP responded to the survey late last year by developing an automated service dubbed BDPSmart Tower, which provides the chemical shipper with both improved visibility and optimizes use of its tank assets.
   The four components of BDPSmart Tower are:
   ' End-to-end outbound and inbound logistics in addition to proactive planning and management for the reverse logistics of empty tanks to ensure they are returned on schedule.
   ' Proactive exception management based on predetermined lead times for issuing pre-alerts and alerts for 'foreseeable near-miss events.'
   ' Centralized management, monitoring and global visibility of the equipment including daily movements and asset availability.
   ' Management and coordination of preventive maintenance and repair to reduce equipment downtime.
   'Until now, there has never been a comprehensive way to centralize the visibility of ISO tanks and other specialized container assets in the reverse logistics phase of the supply chain,' Piazza said. 'This lack of visibility, together with a lack of ownership of the reverse logistics process, has resulted in wasted time, inefficient use, added expense and unrealized profits for shippers.'
   Other benefits to BDPSmart Tower is that it doesn't require the addition of staff or significant changes to a company's IT infrastructure to implement, especially if it's already a BDPSmart user. 'It allows shippers to stick to their knitting,' said Arnie Bornstein, BDP's executive director of marketing.
   While the asset visibility problem has been known for years, it has risen to the surface in recent years as a priority for chemical shippers to correct. 'Supply chain managers are in the spotlight of their organizations to squeeze out inefficiencies and reduce their logistics spend,' Bornstein added.

Chinn

   John Chinn, founder and now consultant to the U.S. Shippers Association, agrees that chemical shippers must make it a priority to know where their transportation assets are in the supply chain.
   'There's absolutely no question that the quality of work that you do to track and trace containers helps to keep the cost of the leasing and ownership down,' Chinn said. 'It's a matter of setting up a systematic way of doing this so it doesn't get out of hand.'
   'We have internal processes and technology in place to track our assets globally, but ensuring the timely return and movement of those assets can be a challenge,' said David Pearlman, special area main buyer of sea containers in North America for AkzoNobel Services.
   'Relationships differ from region to region, so often times the main challenge is deciphering who it is within a global network of providers and stakeholders who have the responsibility and accountability to ensure the assets are kept moving per business requirements,' he said.
   'For our tank containers we qualify the consignee before shipping to make sure they know how to unload and properly handle the equipment,' said Gregory Nikiper, export logistics manager for FMC Corp.'s Chemical Products Group, which also tracks its own equipment. 'We also check to make sure they have adequate storage facilities or will use the product quickly.'
   FMC normally develops a new shipment plan based on customer expected volume, transit time from export port to destination port and the reverse. 'On a ship service with weekly sailings we estimate a turn time at this end of one week and one or two weeks at destination, depending on customer ability to take the tank off the pier, empty it and get it back for the next sailing,' Nikiper said.
   'All these factors determine the basis of a roundtrip move and combined with customer volume determine how many tanks we need to support that level of business,' he said.
   'Not managing your assets effectively leads to further downstream problems in an international supply chain, including manufacturing, scheduling and planning issues at site level, space restrictions on board ocean vessels because you are rushing to get the unit back out the door once it's returned, and ultimately customer service most often depends on timely, prompt shipment to meet increasing customer demands,' Pearlman said.
   'I think most shippers who manage these types of assets hope to turn them more times per year and manage their fleets more optimally,' he added. 'In doing so, it helps to provide the transport infrastructure necessary to capture growth opportunities when they happen in real-time, and without the need for excessive investment on a repeated basis.'