How Lead Logistics can increase efficiency and reduce landed costs in the Chemical industry

The Chemical industry is one of the more complex and demanding sectors when it comes to supply chain management. Considering the nature of the industry and the focus on Cost of Goods Sold (COGS), chemical companies are bound to produce in bulk to keep costs low and enjoy economies of scale. With that in mind, many logistics challenges arise when transporting and procuring materials overseas:

• Handling hazardous goods that require special care and regulatory compliance.
• Multiple modes of transportation and intermediaries to reach the required markets.
• Managing inventory and demand fluctuations, given the ever-changing market conditions.
• Macroeconomic events causing market imbalance during the ‘post-Covid’ era.
• Optimising costs and service levels, ensuring the right quantity is delivered in full and on time at the right location.

One of the ways to reduce and optimise landed cost is by addressing efficiencies in both the physical supply chain as well as information flow. Outsourcing some (if not all) activities to an external yet experienced lead logistics providers offering integrated coordination or management services, such as Maersk, could lead to EBITDA improvement of 8.5 to 16 percentage points along the chemical value chain, according to McKinsey (2020). This type of service provides integrated logistics solutions with the right industry expertise, from the point of origin to the point of destination. It involves:

• Planning and executing the optimal transportation strategy for each shipment.
• Coordination with suppliers, carriers, brokers and other parties involved in the supply chain.
• Providing extensive visibility and tracking of shipment milestones throughout the journey.
• Ensuring compliance with safety and regulatory requirements.
• Resolving any exceptions, issues or delays that may arise along the way.

While the degree of outsourcing depends on the comfort of the customer, by using a lead logistics provider such as Maersk, chemical shippers can benefit from:

Dangerous Goods (DG) Assist – ensure efficiency through compliance

One of the more important aspects of using a lead logistics provider, specifically relevant for manufacturers or buyers of specialty chemicals, is dangerous goods (DG) cargo handling expertise and the additional care thereof.

At Maersk, we have proven expertise in handling dangerous goods . With our recent product launch Dangerous Goods (DG) Assist, we now offer additional care on top of our standard Lead Logistics offering. It is a managed service which specifically addresses the challenges which customers who operate with speciality chemicals face. They rely on a partner who can provide expert guidance and support for safe and compliant shipping of hazardous materials. DG cargo handling is a specialised process that requires global and local expertise to ensure compliance with all prevailing regulations for transporting hazardous goods. Hence, this can have a significant impact on the landed costs. If not done properly, it can affect both the physical supply chain and the financial and information flow. The repercussions include:

• Avoid unnecessary additional costs (impacting CoGS) and risks associated with DG cargo transportation
• Planning shipments in advance together with Maersk in-house DG experts
• Leveraging additional visibility of DG bookings to take the right and proactive actions
• Ensuring compliance with all relevant regulations and standards for DG cargo
• Optimising lead times by ensuring cargo gets loaded as booked
• Enhance safety and security of DG cargo shipments
• Improve customer satisfaction and reputation

Save money and improve supply chain performance

In conclusion, Maersk Lead Logistics with DG Assist helps chemical shippers reduce their landed costs by ensuring the proactive booking, coordination and facilitation of shipments. This maximises a first-time-right principle as well as reduces risks for additional costs.

Cost aside, the service also drives improvement of the customer’s critical supply chain performance metrics* and end-customer satisfaction by ensuring cargo gets loaded and shipped as expected. Get support from Maersk DG experts with the expertise and care to ensure compliance with safety and regulatory requirements when engaging in international trade via ocean container transportation.

*Metrics improved basis customers served today:

1. Average turnaround time (TAT) of booking confirmation for DG cargo within 4 hours improved from 70% to 91% over the last 3 months
2. Average turnaround time (TAT) of booking confirmation for DG cargo within 2 hours over 50% of the booking requests over the last 3 months
3. Reduced cancellation of bookings to zero