Cost sensitivity and mining downturn forces innovation in petrochemical supply chain. Falling oil prices, a crumbling mining sector and local economic uncertainty have created a volatile mix of forces that is putting immense pressure on the petrochemical sector. However, says Noddy Ramroop, Operations Executive: Petrochemical for Unitrans, this is not necessarily bad news for the supply chain.
“While market demands have shifted drastically toward cost-savings as the primary concern, the supply chain has to maintain extremely high safety and quality standards while reducing costs. Despite the challenges, it is not the first time we are facing this issue. Following the 2008 global economic downturn, we initiated the introduction of new innovations to extract additional value from the petrochemical supply chain – a process we continue to this day.”
Mining for value
South Africa’s mining sector, the country’s oldest and most established industry, shed 23 000 jobs in 2015 after falling commodity prices and subdued demand from China left the sector with massive financial losses and much lower production output. “The mining sector is the second largest consumer of petrochemical products after retail. The reduced demand from this critical sector – in addition to the historically low global oil prices that fell from $110 a barrel to just over $40 a barrel puts huge pressure on petrochemical companies.”
Unitrans is a wholly-owned subsidiary of KAP, a JSE-listed industrial holding company with a market cap of in excess of R18-billion. Unitrans operates 130 depots, employs 10 000 staff and its 3 000 vehicles travel more than 250-million kilometres per year. The petrochemicals business unit of Unitrans has a presence in all South Africa’s commercial centres. “We transport petrochemical products from our clients’ various coastal and inland terminals, including cross border facilities and offer an end-to-end solution encompassing primary and secondary transportation.”
Expanding into Africa
Over a number of decades, Unitrans has invested in Africa in petrochemicals, agriculture, mining and infrastructure. “Our petrochemical business unit traditionally operated in South Africa, BNLS (Botswana, Namibia, Lesotho, and Swaziland) and cross border transportation into Zimbabwe, Zambia and the Democratic Republic of Congo. With a concerted investment in safety and through resilience, we have persevered and positioned ourselves to leverage off our supply chain network across Africa to expand our petrochemical operations into Zambia and Mozambique. We continue to take great care to ensure there is no compromise on service or safety, as these are the fundamental values that have built Unitrans into a valuable supply chain partner over the years.”
Safety in innovation
With safety, quality and cost-savings topping the list of supply chain demands from the petrochemical sector, Unitrans introduced new innovations consistently to meet the needs of a dynamic and evolving market.
“We operate Performance Based Standards (PBS) vehicles that allow for safer and more productive vehicle combinations. For the petrochemical sector, our PBS -based petrochemical tanker combines a low centre of gravity with carefully balanced power-to-weight ratios to give clients optimum cost-effective performance while also reducing the wear on our public roads.”
According to Mr Ramroop, safety is the primary concern for the petrochemical sector. “We have ISO9000, ISO14000 and OHSAS18000 certification. Our petrochemical tanker fleet also require permits from provincial Departments of Transport, who require that our vehicles are reviewed by a panel of independent experts that include the CSIR’s Built Environment division and the Department of Transport. We invest heavily in ensuring compliance at all times. Meeting (and often exceeding) the safety requirements imposed by our clients and regulators within the market is part of our core company values,” explains Ramroop.
“Our philosophy is to never compromise on our safety standards or service quality. The experience we’ve earned in this sector allows us to offer a clear view on the bigger picture which, in an often siloed petrochemical supply chain, enables our clients to extract more value from their day-to-day operations.
“We believe that adhering to our core values will better position Unitrans in the medium to long term,” Mr Ramroop concludes.