4C4Chem

The chemical industry is a major industry in the Netherlands, making a positive contribution of almost € 20 billion to the balance of trade in 2010, which was 51% of the total balance of trade (goods) in the Netherlands. The chemical supply chain accounts for about 10% of the transport performance (ton/km) in the Netherlands transport flows. The far majority of these flows are international; 19% of all exported goods by weight are chemicals.

Improve utilization

Current estimates of load carrying unit utilization are at about 60%. The causes for this less than full utilization lie in several factors, such as imbalance in location of production and consumption, empty returns, short-term focus in optimization, and limited flexibility for the carrier to plan shipments. While the first cause (imbalance) is hard to address from a supply chain and logistics perspective, the other three causes will be addressed in this project.

PLAN/COMBINE/BUNDLE

In this project, we will address this problem in 3 new and innovative ways along the supply chain planning process, namely in the improved forecasting and planning of transportation needs in the medium term and in better short term coordination between site logistics and off-site logistics (PLAN), in the sharing of inventory and railcar resources (COMBINE), and in the bundling of transportation flows (BUNDLE).

New Concepts

In this project, relevant decision support models and new operating concepts will be developed, evaluated and where applicable be tested:

• 1. A business model for a logistics service provider to extend services in this sector allowing the LSP to operate at a higher added value level if certain controls are transferred to the LSP, for instance in the operation of or coordination with site logistics.
• 2. In the framework of the competitive situation of the European chemical industry, we anticipate that the logistics capabilities and concepts are particularly relevant for the Netherlands chemical cluster due to the better opportunities to take advantage of this.
• 3. Building on the successful concept of pipeline management, we believe there is a basis for establishing a similar joint venture for inventory pooling related concepts.
• 4. An important general objective is to use this project to establish a supply chain innovation community in the Netherlands chemical industry and associated logistics services.

The project aims to realize a substantial increase in chemical bulk transport efficiency (5-10%), generate a competitive advantage for LSPs in the combination of site and offsite logistics, and provide the basis for a startup company for the management of shared inventories.

[Objectives]

• 1. A business model for a logistics service provider to extend services in this sector allowing the LSP to operate at a higher added value level if certain controls are transferred to the LSP, for instance in the operation of or coordination with site logistics. Since consolidation is taking place in bulk chemical shipments, this will enable those carriers to further strengthen their position in the European landscape. It is expected that the utilization of the LCUs of carriers operating in this way could be increased by 5%. Obviously, this would have similar impact on carbon emissions.
• 2. In the framework of the competitive situation of the European chemical industry, it is anticipated that the logistics capabilities and concepts are particularly relevant for the Netherlands chemical cluster due to the better opportunities to take advantage of this. Hence, there could be a direct impact on better utilization of resources, and better servicing of customers, and increased logistics efficiency (currently estimated at 10%). Since the cost of logistics as a percentage of the total operating costs in the chemical industry have increased over the past years, this could lead to an increase in market share for the plants in the Netherlands chemical cluster (which is closely linked to facilities in Flanders and Northrhine-Westphalia). Numbers are very hard to give, but even if the market share would increase by half a percent, the impact in terms of revenue can be measured in billions.
• 3. Building on the successful concept of ARG (a joint venture pipeline owner), we believe there is a basis for establishing a similar joint venture for inventory pooling related concepts. ARG has successfully enabled this by ensuring that commercial competition remains in place (so no anti-trust issues emerge), and this is a also a key functional requirement for any concept developed under the COMBINE subproject. A new startup like ARG would imply a high-added value 4C business (in the control tower concept), with high-level employment.
• 4. An important general objective is to use this project to establish a supply chain innovation community in the Netherlands chemical industry and associated logistics services. Therefore, the nature of this collaboration will be open, to provide a true basis for extensive collaboration.

For more information please contact Paul Huijbregts, Huijbregts@dinalog.nl