Logistics and Services
Almost three years since Covid started, are logistics disruptions the new normal?
Image courtesy of Port of Santos
Almost three years on since the first lockdowns in China took place, with delays still prevalent and containers still in short supply, is it fair to ask if such turbulence could be considered the new normal?
“This state of VUCA (volatility, uncertainty, complexity, and ambiguity) appears to be the new normal and we do not foresee things going back to as they were in the past,” stated Martin Sack, Leschaco’s regional head for the Americas, commenting that companies must adapt to this new environment and be pro-active in their interaction with all stakeholders throughout the supply chain. “Traditionally in Latin America there has been a focus on doing quick and spot business, which is not conducive to consistent volumes. Therefore, the region needs to focus on planning business better, meanwhile space allocation on the vessels remains tight,” added Sack, commenting that factors such as inflation, the Russia-Ukraine war and a possible global recession make it difficult to forecast for 2023.
As a counter point, Fabiano Machion, NewPort Tank’s general manager for South America, remarked: “I refuse to say that what we have experienced since the pandemic started could be the new normal, because it is simply impossible to work like this in the long term.”
Machion reflected on a context where significant effort is required just to put a tank on a vessel, rather than working on the logistics itself, but he observed that some improvements have been evident in 2022, especially in terms of space availability.
Helio Coelho, director of global solution sales – Latam at BDP International, commented that the logistics and supply chain scenario in 2022 has been very similar to 2021, with shippers and importers facing challenges due to the lack of space, equipment, and port congestion which dramatically impacts the flow of goods, creating backlogs. “Many companies in Latin America have been facing challenges, especially with their intra-regional supply chains […] It is very important that a common agenda between major economies in the region is established in order to improve rail and road infrastructure. I believe it is also key to reduce intra-country bureaucracy in order to attract private sector investment.”
Expanding on the specific issues facing Latin America’s logistics network, Héctor Midolo, Bolloré Logistics’ CEO for Latin America, noted that currently in Argentina approximately 95% of cargo is moved by trucks, 1.5% through fluvial modes, and the other 3.5% via train. “Latam countries have the opportunity to transport via rivers and trains, but the challenge is that some rail systems were built approximately 30 years ago and have not been upgraded and can thus not be utilized,” he said, reflecting that there is huge opportunity for the private sector to invest in the rail systems in countries such as Brazil and Mexico, which would reduce internal logistics costs within these countries as well as increasing sustainability.
“Many companies in Latin America have been facing challenges with their intra-regional supply chains due to constraints such as capacity and container availability. It is very important that a common agenda between major economies in the region is established in order to improve rail and road infrastructure.”
Helio Coelho, Director of Global Solution Sales – Latam, BDP International
Sustainable logistics: From hydrogen to ISO tanks
In 2022, the alignment between the whole supply chain to an increasingly green agenda has been apparent, with rhetoric backed up by investments in a variety of sustainability-related ventures, from green hydrogen to logistics solutions with less environmental impact.
In March 2022, a memorandum of understanding (MoU) was signed between Stolthaven Terminals and the Pecém Industrial and Port Complex in Brazil to explore a green hydrogen export hub in Ceará. Marcelo Schmitt, Stolthaven Terminals’ general manager for Brazil, revealed that the company had been tracking the possibilities for Brazil to become one of the sourcing countries for green hydrogen since 2021, and approached the Pecém Port in Ceará as they had already advanced green hydrogen initiatives. Schmitt praised the business-friendly approach of Pecém port complex, which is 30% owned by the Port of Rotterdam, and has a project to build an industrial zone for the production of green hydrogen. Furthermore, the state of Ceará in northeastern Brazil has tremendous renewable sources, such as sun and wind, to produce green electricity 24 hours a day.
In addition to the agreement with Pecém, Schmitt revealed that Stolthaven had signed NDAs with six potential energy companies for different stages of the project to produce green hydrogen by electrolysis, adding that these companies are in the process of securing the water and electricity required with the plan to build electrolysis plants of different sizes over the next three to four years. “They will produce the hydrogen then convert it to ammonia, as so far, green hydrogen is not viable for storage and shipping long distances. We are also working with the port to look at the possibility of developing a green terminal for storing the ammonia and transporting it from the port to its final destination.”
Heidi Herzog, director of commercial and business development – Americas at Vopak, elaborated on the company’s new strategic agenda, including an approach to new energies and sustainable feedstocks that focuses on four primary pillars – hydrogen and hydrogen carriers; CO2 infrastructure; low carbon and sustainable feedstocks; and long duration energy storage. “With regard to hydrogen and hydrogen carriers, we are focused on enabling the development of the hydrogen economy and new hydrogen supply chains, including hydrogen carriers such as ammonia. In the Americas we are actively working on developments to enable new hydrogen supply chains through infrastructure development,” she said.
On the topic of low carbon feedstocks, Herzog commented that Vopak has years of experience storing the feedstocks for both bio and renewable fuels in the US, Mexico, Colombia and Brazil, so it is a natural progression to add low carbon fuels such as renewable diesel and sustainable aviation fuel across the company’s portfolio as there is already significant demand for these new products.
While investments into new production chains take shape, the logistics industry has been investing in solutions that support carbon emission reduction. Christopher Sandler, managing director at Eurotainer, affirmed the company’s commitment to a sustainable low-carbon future as part of the Ermewa Group, noting that the company’s equipment, rail cars and tank containers fit into a green vision with minimal carbon impact, such as using containers that are 100% reusable.
On the equipment side, Sandler gave the example of Eurotainer’s investment into different types of lighter carbon fiber-type containers that provide customers with a more sustainable option. “Many of our containers are now fitted with telematics technologies not only for tracking the equipment, but also to enable customers to measure temperature, pressure, and impacts to the container during the supply chain,” he said, explaining that the aim of such initiatives is to connect what Eurotainer does into its customers’ full supply chains, enhancing the way in which information is shared with customers and suppliers.
Demonstrating how modern equipment can increase sustainability in the transportation and storage of goods, NewPort Tank’s Fabiano Machion detailed how an ISO tank can be used for approximately 20 years, and then be refurbished to use for another 20 years. “If you are using the right suppliers for the decontamination, cleaning, and testing, the process can be done fast, and an ISO tank can be used up to 10 times per year,” added Machion, underlining the importance of selecting the proper suppliers that comply with local and global regulations in terms of disposal and safety. “In terms of shipping bulk products, I do not see any better option than ISO tanks, from both a cost and sustainability standpoint.”
Port services and partnerships
The international network of ports that serve as hubs for products to be stored and pass through are the gatekeepers of the global chemical and petrochemical industry. As such, their efficiency is central to the competitive flow of industrial trade. From a port perspective, South American is not yet as advanced as North America, Europe or Southeast Asia, but a number of private investments and partnerships are demonstrating the benefits of modernizing infrastructure.
The Port of Santos in Brazil is particularly relevant for the petrochemical and chemical sectors, handling 16 million t/y of product and 40% of the petrochemical volume in the country, according to CEO of the Port, Fernando Biral.
In recent years the Port of Santos has been going through a privatization process that has centered around investments into brownfield areas that will expand capacity from 160 million t/y to 240 million t/y for all cargo by 2040. A number of private companies interviewed for this report mentioned the noticeable improvements at the port, particularly from a technology standpoint. Biral gave examples of the digital transformations at Port of Santos which have brought agility: “We developed partnerships with start-ups to design and implement new systems around our workflow. For example, in return cargo, we can make sure that trucks that leave the port to drop off goods do not return empty.”
Notable investments from private companies at the Port of Santos include Ageo developing a new berth for boats; Vopak working on an expansion plan for chemical product importation, including three new planned jet-lines to improve performance and reduce dock operations times; and Ultracargo doubling static capacity in five years, increasing from 152,000 m³ to 297,000 m³.
Collaboration between foreign and Latin American ports was one of the topics highlighted at APLA’s 24th annual logistics meeting in São Paulo, June 2022. Among the attendees were representatives from the Port of Antwerp-Bruges and Port of Houston to explain how partnerships are increasing trade between regions, and describing some of the operational improvements that have reduced bottlenecks in their jurisdictions.
Matheus Dolecki, Port of Antwerp-Bruges’ representative for Latin America, spoke to GBR about the partnership between Port of Antwerp-Bruges International (PoABI) and Prumo Logística at the Port of Açu, located in the north of Rio de Janeiro state in Brazil. “PoABI is not only a shareholder but also actively supports Açu in its development by sharing its expertise and global network,” he explained, reinforcing the PoABI’s long-term commitment to the Brazilian market as an important trading partner for a port with the largest integrated chemical cluster in Europe.
Expanding on PoABI’s partnerships in Latin America, Dolecki pointed to the MoU signed with the Chilean Ministry of Energy at COP26 in Glasgow: “The aim is also to collaborate on the important strategic issue of setting up a corridor between both countries to ship green hydrogen or derivatives produced in Chile and received at Port of Antwerp-Bruges for further distribution in Europe.”
Moacyr Pedro, Central and South America representative for the Port of Houston, outlined how the largest port on the Gulf Coast and the biggest port in Texas acts as a strategic gateway for cargo destined for Latin America, with the chemical and petrochemical sectors being the top markets for the port. He detailed how the port had been able to reduce the average waiting time for containerships to 2.9 days in June 2022, significantly under the global average of approximately 7 or 8 days at the time. “We are enlarging the channel (from 160 m to 240 m), developing the terminals, creating more berth for vessels, and reducing the time containers need to wait inside the terminal,” said Pedro, adding that optimizing the trucking routes inside the port has also helped significantly to avoid heavy traffic in the terminal.