In an interview, Alok Gautam, Country Logistics and Supply Chain Leader, Dow Chemical International Pvt Ltd (Dow India) with Chemical Today magazine opines that the need of the hour for chemical companies is to identify the right balance between responsiveness and efficiency in supply chain operations. He delves into the various sustainable measures that can be taken to make chemical logistics a safer journey.
By Shivani Mody
What are some of the trends and best practices for transportation of Hazardous Bulk chemicals?
The Indian chemical industry has witnessed significant changes post-liberalization. Changing demand patterns and trade trends, increasing logistics costs, rising competitive intensity and focus on Environment, Health & Safety (EHS) and Quality standards are significant trends witnessed in chemical logistics. The need of the hour for chemical companies has been to identify the right balance between responsiveness and efficiency in supply chain operations. This has led to the changing scenarios in logistics and supply chain of chemical industry today.
With the origin of Indian imports for liquid chemicals gradually balancing from complete Middle East focus to South-East Asia, the chemical manufacturing and trade activities are more or less spread across the country today. This has given rise to the development of East Coast ports (Vizag, Paradip and Cuddalore). Ever-improving road infrastructure, use of railroads to transport chemicals and better awareness and safety standards in a movement of hazardous goods are all good signs. We also see in recent years a trend towards significant investments in high-end vehicles for road transportation by Logistics Service Partners (LSPs) to chemical companies. This is really helping in raising the bar on safety and sustainability of operations. Common practices include usage of ISO tanks that are extremely safe and feasible mode of transportation. Moreover, a shift to greener modes of transportation saves fuel and reduces CO2 emission as well.
How does Dow ensure proper logistics and transportation of Hazardous Bulk chemicals?
Safety is not just a matter of priority, it’s an inherent part of the Dow DNA. Environment, Health and Safety (EHS) is a critical part of every business decision we make and we would rather forgo a dollar than to risk the safety of our people and processes. This is the philosophy with which we operate at every level and the commitment to safety is paramount.
We are one of the first Indian chemical companies to propone the use of ISO tanks for local bulk chemical deliveries. We have consistently worked together with our LSPs to use state-of-the-art vehicles and technology to safeguard movement of hazardous chemicals.
All our manufacturing facilities are Responsible Care® certified. We have not only adhered to the highest standards of safety ourselves, we have always tried to enable other organisations, whether our partners, vendors or peers in the industry, to do the same. We evaluate all our partners on SQAS system, a standardised assessment to evaluate the quality, safety, security and environmental performance of logistics service providers. Though in an early phase, we have found the adaptation and response quite encouraging from our partners.
Dow India is a founding member of the Indian Chemical Council (ICC) initiatives Responsible Care® to ensure safe and sustainable practices in the industry as well as ‘Nicer Globe’, an online platform that tracks a vehicular movement of partner chemical companies and makes available critical information in case of accident or loss of containment.
Overview of the growth potential in chemical logistics for the Asia Pacific region.
In the past decade the major growth of global chemical industry (~ 3.4%) has been driven by Asia Pacific region (~7%), led by South-East Asia – naturally, the chemical logistics and supply chain operations in the region have come a long way. Particularly Singapore, China, South Korea, Japan and recently Thailand have emerged as key players, with global giants setting up manufacturing and supply chain capabilities there.
West Asia, a particularly Middle-East region has been favoured over the years due to its geological advantages as well as proximity to developed markets. These advantages still stand and we see the region making a concerted effort to modernise its infrastructure and expand capabilities across the value chain in chemical manufacturing. Dubai, Jebel Ali and other logistic hubs in the region serve them well and have kept up-to-date in terms of technology and processes.
At Dow India, we are poised to benefit from both sides of the regional growth – while we have Map Ta Phut in Thailand for polyols and other assets in South East Asia already providing certain raw materials, our vantage position will be considerably strengthened as SADARA, our joint venture with Saudi Aramco will start production full-steam this year.
Another boost for logistics and supply chain will come in form of Goods and Service Tax (GST) roll-out in India. It is expected to simplify the taxation and processes during goods transport considerably in India, which would be a feat. Currently, the resources consumed in coping with complexities of Indian taxes and duties as we transport goods across states are remarkably high. If implemented smoothly, GST will definitely bolster the growth of the sector in Asia Pacific, providing a good growth base for the chemical industry overall.
The idea about the regulations for Road, Rail, Ship and Air logistics for the chemical industry. Your suggestions for improvement.
In India internally, road logistics are used most widely so far – use of airways for goods transport has been increasing exponentially in the past few years, but it is still not as pervasive as developed economies. Another avenue for transport logistics is railways – in India the rail network is over 115,000 km wide, yet the storage and transfer capabilities are not fully developed, so the use of railways to transport chemicals is still very limited. The Recent introduction of RO-RO services in rail corridors with busy roads in Maharashtra and Gujarat are a welcome move to improve the use of the rail network.
So far as the regulations of the modes of transport go, the transport of hazardous materials by any mode are heavily regulated – there are national, state-wise regulations as well as rules and guidelines of transport authorities and governing bodies. The adherence to regulations in India has been a challenge before, but at an industry level, there is much better awareness now and we see a lot of improvement in safety standards and regulatory compliance.
As our infrastructure improves, so will the regulatory regime. I think immediate improvements would be rolled out of GST, making the Road Transport & Safety Bill of 2014 more inclusive to ease movement of freight, granting permissions for cold storage chains that follow global standards and improving the safety compliance of LSPs.
Compare the chemical logistics requirements of emerging markets with that of the developed markets.
It’s a difficult comparison because the nature of goods manufactured in emerging and developed markets still vary and the level of infrastructure and demands of the market are in precarious balance.
Having said that, there are lessons to be learnt on both sides.
In developed markets, the commitment to personal safety, regulatory compliance and quality standards is regarded highly. Emerging markets are getting there in terms of setting processes and achieving compliance standards needed. The developed markets are also focusing more on greener technologies that leave less of a carbon footprint.
On the other hand, emerging markets need logistical flexibility in supply, adaptability to different conditions and infrastructure to serve the customers. This has led to great innovation in supply chain and logistics. Today, emerging markets have developed completely new supply chain models that pair frugal innovation – use of low-cost technology for cold storage, optimal use of resources to reap maximum value in goods transport – with the availability of labour and use of digital technology. Some of these are easily adaptable in developed markets as well.
I do foresee emerging markets growing with increasing demand for chemicals and the logistics sector needs to be ready to respond – we need skilled and trained manpower to handle hazardous and non-hazardous goods transport. Take, for example, the drivers of the vehicles for goods transport. Right at the bottom of the pyramid, they are many times the first responders in case of an accident or emergency. They need to not only know emergency response steps, they need to be trained about the materials they are handling and how to ensure they keep themselves and others safe while handling. At our end, we have some initiatives aimed at improving awareness.
Globally chemical companies are focusing on sustainability in their supply chain. Your views as to how chemical companies can achieve sustainability in their supply chain and how does Dow implement the same.
Sustainability in operations, not limiting only to supply chain, is high on priority for organisations globally. The world needs solutions for big challenges like energy, climate change, water, food, nature and social issues. We, at Dow India, are committed to minimising our footprint and to delivering solutions that help our customers and rest of the society. We have made significant advances in our sustainability journey since launching our first set of decade-long sustainability goals in 1995. Now we are on a journey to fulfil the third generation of sustainability goals for 2025.
As for sustainable supply chain and logistics operations, in India, our focus has been on compliance with the global Dow standards of EHS and elevating the conversation in the industry about sustainability in a supply chain. Of course, in operations, the effort is to minimise the footprint and use sustainable fuels, less road and more rails or road-rail-road approach wherever possible.
As for elevating the conversation, let me give you an example. In Dow India, we have S4TAR program for our LSPs to ensure Safety, Service, Sustainability and Social Responsibility aspects of a supply chain are addressed. Initially, the compliance levels we set were considered too high, but today, most of our LSPs not only comply but have outdone themselves and won the S4TAR awards years in a row. The aim of these initiatives is to bring about a cultural change and make sure that our LSPs see long-term value in investing to ensure safety and sustainability, not just environmental, but also at a community level.
At an organisational level, we have a number of sustainability initiatives that encourage the use of waste management, recycle-ready material development and use, circular economy where sustainable practices lead to an entire ecosystem of sustainability – there are many examples. As supply chain and logistics form an integral part of all our processes, we contribute and support each and every initiative the best way we can.
What are the best practices in managing safety aspects in the supply chain, storage and warehousing?
As I have said earlier, we are a Responsible Care® company and we already have partnered for initiatives like Nicer Globe. Our supply chain operations are mapped end-to-end (up to the delivery to the customer) and we monitor every step. Some of the best practices we adhere to are a use of a safest available mode of transport including GPS-enabled ISO tanks, regular training and awareness sessions on safety and compliance, regular assessments on SQAS standards to identify areas of improvement, no exceptions on certain rules like no night-time driving and so on. We use secure surveillance methods and conduct periodic inspections and reviews of all our storage facilities and the effort is to improve constantly. We work together with our partners to push the envelope on safety in our partners’ operations as well. Dow India also has Terminal Operations in India - our partner was one of the first terminals to be assessed on CDI-T (Chemical Distribution Institute – Terminals) in India.
Our overall approach has been to go above and beyond mere regulatory compliance and set an industry standard in maintaining EHS standards throughout a supply chain.
How do you manage the safety of the materials from point to point during transportation?
Customers in India are spread across the length and breadth of the country, this brings in the challenge of distribution for long distances primarily by road. We have rolled out SOPs right from loading points, en-route transportation to unloading at customer locations. For hazardous goods being transported to the new location, we conduct Distribution Risk Review (DRR) and the entire route is mapped by experts. It also includes assessment of unloading facility and, if required, includes training to personnel at different nodes.
We have imposed restrictions on night driving and work with our partners to ensure drivers are adequately rested on long journeys. GPS tracking of the vehicles is done by LSPs and reports are shared on daily basis to ensure their safe movement on the road.
To counter the menace of pilferage on bulk movement, we are taking steps to share properties of chemicals being transported at loading stations, ensuring the info sheets are with drivers.
Today, Dow India transports all our hazardous material in ISO tanks, reducing safety risk on the road considerably.
In terms of transportation of hazardous bulk chemicals by Road, how can the industry ensure maximum safety for the public and environment? Is India ready to cope up with the problems arising during transportation?
While we must take all precautions necessary, accidents may happen at some point. There needs to be a nation-wide effective Emergency Response System to overcome a threat to life and damage to the environment. Public safety is of prime importance and we as an industry have to join hands together to create this infrastructure.
‘Nicer Globe’ is the first such concrete effort in this direction. Along with the Central and State Government’s Disaster Management Authorities, we, as an industry, must fast-track management of such emergencies.
As the logistics industry becomes organised and less fragmented, we will see this change more prominently. Chemical organisations have already started prioritising safety and compliance in their strategy.
How do the international policies and different country regulations affect the chemical industry logistics? Your suggestions for improvement.
Globalisation has immensely benefitted not only emerging markets but the developed markets as well if you look at manufacturing and movement of goods. Global sourcing policies and supply chain solutions are at the foundation of many successful multinational conglomerates.
The Free Trade Agreements (FTAs), regional and geographic alliances and treaties have played a huge part in facilitating easier movement of goods across countries. India, on its part, is a part of multiple FTAs and regional alliances such as SAARC, BRICS and G20. While these agreements facilitate import-export, on-ground facilitation of supply chain and logistics is also possible through international rail freight and roadway corridors.
Many emerging economies have focused on improving their port and airways infrastructure to become logistics hubs for the region. Given India’s vantage position in South Asia, we can also do this – new policies to use river waterways for freight transport, ‘Free Trade Warehousing Zones’ along with building new ports and refurbishing old ones, deployment of advanced technology hand-in-hand with ‘Make in India’ and ‘Skill India’ need to be implemented effectively. This will undoubtedly unleash the potential of India’s logistics and supply chain sector.
Your thoughts on how GST implemented will impact the chemical industry related to logistics and the supply chain
Having a uniform GST instead of complex central and state taxation structure will definitely have a positive impact on India as a market. Implementation of GST could potentially change the distribution model for chemical industry – however, we cannot assess it in granularity till the details are finalised and declared ready for roll out. Till then, it’s difficult to assess on-ground impact.
© Chemical Today Magazine
Read More: Making safety a part of organisational DNA
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