Balancing transportation cost in the chemical sector
During the last decade, the transport sector has seen several changes in the market, which has had a serious effect on the chemical industry leading to increased prices. Rene Fleischer, Nordic Transportation Manager, addresses the major challenges and possible solutions of transportation within the chemical sector.
“The biggest challenges within the transport sector is a shortage in trucks and a shortage in drivers” begins Rene Fleischer, Transport Manager at Brenntag Nordic. “A lot of young people do not find a career as a driver attractive. Traditionally, truck drivers have been working under the same conditions as sailors with being on the road for a longer period and then returning home for a few weeks. However, this is being challenged by career opportunities within commercial delivery companies, who can offer traditional working hours from 8-17. This puts even further pressure on transporters to attract new drivers in a market that are no longer as appealing as it once was”.
Placing orders in good time
Rene explains that the shortage in drivers not only means an increase in transportation costs as less trucks are available, but it also influences some of the many services we are used to within the chemical sector. “Many of our customers are used to just-in-time deliveries or day-to-day deliveries, but with a shortage in drivers it is becoming more difficult to deliver these services, especially for tank transport. It takes time and planning to get trucks into position, and with a driver shortage this has not become easier. However, there are ways to come by this. In Brenntag Nordic, we are offering many of our customers free of charge equipment that can monitor the tank volume. In this way our customers can forecast their usage, better plan when they need a new delivery and avoid expensive surcharges for express deliveries. For us this means we can plan the delivery in good time and ensure trucks are available. Some of our customers receive their product from far away, which means that several unforeseen factors can play in such traffic jams or bad weather. If we know a customer need a product in good time, we can better cope with such factors”.
Strive for full trucks and joint loading
“Another aspect that drives prices up, is only partial loaded trucks”, Rene continues. “The prices on trucks are the same no matter if it partial of fully loaded. This means that the drop size, as well as the distance, is very decisive for how much we are paying in transportation costs per kilogram. A very effective way of reducing these costs is by ensuring trucks are fully loaded – either by buying larger quantities at a time or by combining loads. And this not only saves cost but also lowers the carbon footprint.
Trucks today are built to be as eco-friendly as possible and imposed European standards. However, if a customer orders 5 ton one week and 5 ton the next it does not matter much. If we could instead deliver 10 ton a time we would reduce the environmental impact and improve transportation costs. To encourage more customers to take larger drop sizes, we have introduced scaled prices on some of our products. Hopefully this can be a way of reducing costs for both our customers and transporters and at the same time reduce the carbon footprint”
Time is money
As in any other business, time is money, Rene points out. “Transporters need their trucks to make a specific number of deliveries per day to break even. Whenever a truck gets delayed at a customer or a customer asks for a delivery within a specific time frame it means that the transporter may not be able to make the number of deliveries they need to. And this means an increase in the price in the form of surcharges. One of the solutions is greater flexibility. A greater time span when it comes to time of delivery would save both time and money. Another aspect is being able to better inform customers about the time of arrival through track and trace technology. We can already see this in some trucks, where it is possible to track the truck and better tell exactly when it arrives at the customer. However, the technology is not fully there yet, but hopefully we will see more of these logistics solutions in the future”.
About Rene Fleischer
Rene Fleischer is Managing Director at Brenntag Nordic in Denmark and Manager of Nordic Customer Service, Purchase and Transport. He has been with Brenntag Nordic for 18 years and has a thorough knowledge of the transport sector within Denmark and the Nordic Region. He also has an active role as chairman in the Danish industry organization Kemi & Life Science.
August 27, 2019