Valued at US$ 253.7 million in 2019, the global chemical logistics market size is projected to reach US$ 323 billion by 2025. Yet despite being a lucrative opportunity, chemical logistics and supply chain space is fraught with tremendous challenges. 

 

The fluctuations in the cost and shipping complexities remains a huge roadblock for the chemical industry, says Seema Kapur, Director - Logistics, Jubilant Ingrevia.

 

“During the last two years, the chemical logistics industry has witnessed the scenarios which  were never experienced before.  We have seen 33% efficiency at 150% cost.  We have even paid the highest cost in certain sectors which is more than 200% yet the shipping line reliability is at the lowest. Ideally, the scenario should be that with high cost, one should be getting the best of the services, but that's not something which has happened. The efficiency of the shipping lines that took a beating during Covid-19 pandemic is still not up to the mark. Every time we see any improvement, something happens and again it is back to the same scenario. And logistics being a lifeline to the trade is impacting all of us. We have to strike a balance by exploring, keep innovating solutions and looking out for different modes of transportation like ISO tanks. While cost definitely is pinching us , the only silver lining is that this is a global phenomenon and not something which has impacted only India,” opines Kapur.

 

Kapur spoke at the E-conference on "Building Chemicals and Petrochemicals Logistics Ecosystem" organized by Indian Chemical News on April 12, 2022. The event was moderated by Pravin Prashant, Editor, Indian Chemical News.

 

“The geographical location of the big chemical and petrochemical companies in India is concentrated mostly in Gujarat and Maharashtra. In such a case scenario, we need an efficient, effective and sustainable supply chain without which it is not possible to serve the entire country. Currently 57% of chemical distribution happens via road transport and almost 35-37% happens through railways, 6 to 7% through sea water and less than 1% by air. Globally, it is just the opposite. Most of the transportation of chemicals happens by rail rather than by road. With roads, there are a number of challenges. Since the chemical exists in solid or gaseous form, transportation needs a different type of equipment and efficiency to carry across the country. Then there is the categorization into hazardous and non hazardous chemicals So all these things make the transportation or the supply chain of chemicals more complex,” says Vishal Sharma, Regional Supply Chain Manager - ISC, SEA & China, Indorama Ventures Oxides ANK.

 

Sharma feels that government’s approach should be to move away from road transport and go forward towards rail transport. 

 

“With challenges, there are a lot of opportunities for us to improve and make it more sustainable. The chemical clusters must have a wider range with proper storage system as well in line with the requirements of the chemicals. The road movement should be more than 200KM and then it should connect to a railway depot from where the chemicals can be moved across the country, reducing our dependence on road transport. Dashboard is really a good approach which will bring transparency. India needs to be doing more in terms of technology as we are still behind what the world is going through. There is a need for more investment in this space,” Sharma adds.

 

“Being a logistics player, we try to bring in efficiencies and that is to connect the goods from the place of manufacture to the place of destination in the most in the shortest transit time and the most economical cost”, says Rajnish Khandelwal, Senior Vice President, J. M. Baxi & Co.

 

Khandelwal elaborates his point: “In terms of imported bulk chemicals cargoes, I think the port efficiencies in India are at par with many of the best around the world. Comparatively, in the case of specialty chemicals which is roughly around 18 to 20% of the total chemical market, India is a net exporter. Now this is where there are logistics challenges across the country because these chemicals move to smaller parcel lots. This is the area where we need to put lots and lots of effort in improving efficiency. And when I say efficiency, there are many parameters, one is adequate availability of tanks and competitiveness of freight rate. Given the fact that the chemical industries are highly concentrated in two states of Gujarat and Maharashtra, the other states don’t have any facilities. It takes a lot of days which means time is lost. And second, it's a costly affair. Such areas present tremendous opportunities  for logistics players like us to set up facilities and improve the overall efficiency of the chemical transportation network.”

 

Capt. Inderveer Solanki, Consultant, Port Development, Inland Water Transportation is bullish about the potential of waterways for the transportation of chemicals while emphasizing growth of roughly 15% over the last five years.  

 

"The central government has cleared national water bill in 2016 whereby it declared an additional 106 national waterways. Although all of them are not viable at this point of time it gives the opportunity to the engineering institutes including shippers to actually see if these can be used for the purpose of transportation. As an example, way back in 2012, there were about 200 vessels for moving Fly Ash from Kolkata to Bangladesh and out of those vessels not even a single vessel was Indian. The complete movement was being done by Bangladeshi vessels. But today we have roughly about 544 vessels that are moving cargo to the tune of about 10 million metric tonnes. In another major change, the World Bank funded first waterway pilot project from Varanasi to Haldia is likely to be completely completed by 2023. Among the low hanging fruits there are about 23 waterways that have been already shortlisted and are likely to be developed for movement of cargo and passengers. A number of jetties will be developed along the waterway under the Earth Ganga project, initially on the Ganga and then subsequently in the other waterways. In 2014, when we had roughly about 50 million metric tonnes of cargo moving through the water. Today the figure is 110 million metric tonnes which is a quantum jump. The time is right to begin making domestic containers under Make in India project as that will help the overall logistics.”

 

Transportation is a lifeline for the chemical industry but it is important that transporters are able to provide the exact online information to both the supplier and receiver, says  Nivedan Sahani, IT Advisor who bats for the strong Information Technology infrastructure.

 

Pointing out the huge gap within chemical logistics IT and need to understand how it could be integrated, Sahani adds: “We might be having extremely good transport infrastructure over there but without IT infrastructure in place it will have efficiency issues. While we talk about being an IT superpower, the truth is that we are good only in software and the whole thing gets exposed the moment it comes to the hardware. As such, we should talk about manufacturing in IT, but we don't think so. If all the logistic companies would be in the same IT ecosystem, the chemical companies could plan for transportation in advance. Cost, material quality, expertise and manpower are critical factors here for effective management. I am advising a lot of making India companies who have been manufacturing here for the last 18 years and selling it in the US, UK. Unfortunately adaptability in India is an issue for them as the supplier and manufacturer marriage is not happening.  For example, If I need chips, I am going to give it to Intel. Yet it will not be able to tell me via whom I am going to receive it because I am not buying directly and there will be no idea when the material will land at my factory.”