Michiel van Dorst, Supply Chain Consultant, LHC Consulting
Gijs Hofman, Supply Chain Consultant, LHC Consulting
A 2012 Full Truck Load Chemical Liquid Bulk Benchmark study conducted by LHC Consulting (a CLX Logistics company) compared the contracted freight rates of chemical shippers for liquid bulk transport on a pan-European basis. The study accounted for differences in transport specifications including mode of transport, equipment type and product classification. Companies participating in the study collaboratively spend approximately €420 million ($560 million) annually on chemical liquid bulk freight.
Study results revealed that on an aggregate basis, freight rates for shipping chemical liquid bulk loads throughout Europe have decreased slightly between 2011 and 2012. At the same time, prices across different trade lanes often moved in opposite directions. For example, shipments originating from the Iberian Peninsula on average became 9% less expensive, caused, in part by the financial crisis in that part of Europe. During that same period, shipments out of Sweden became 5% more expensive.
While basic freight rates generally decreased from 2011 to 2012, increasing fuel prices (approximately 10%) propelled total costs for liquid bulk freight, indicating that fuel costs continue to account for an even larger part of total freight spend.
Outlook for 2013
Last year, 82% of shippers expected an average freight rate increase of up to 5%. This year, only 45% of surveyed shippers anticipate an increase, while that same percentage expects steady freight rates for the upcoming year.
While no shippers predicted a fall in freight rates last year, 10% of survey respondents expect chemical liquid bulk freight rates to decrease in 2013 by a maximum of 5%. The deteriorating macroeconomic situation in Europe may have stimulated this change of opinion among chemical shippers as an economic decline in chemicals demand will result in lower capacity requirements for shipping these products. As carriers typically try to maximize online casino fleet utilization, they may agree to be paid lower prices by customers. This, in turn, could lead to a drop in freight rates.
Trends in chemical liquid bulk shipping
Interesting trends in chemical liquid bulk shipping identified in the study:
- Most chemical shippers participating in the benchmark (86%) procure FTL chemical liquid bulk freight on a pan-European level. Only a small number of companies follows a more decentralized approach and procures liquid bulk freight on either a country or site level.
- The main focus during a tender for chemical liquid bulk freight is on cost (35%), followed by service (25%), security (21%) and sustainability (13%).
- Shippers have significantly increased their carrier base over the past year from an average of 19 to 29, perhaps as a way to safeguard capacity at a time when carriers frequently go out of business.
- Not all shippers measure “on time” delivery performance of their carriers. Companies that do measure carriers’ performance on average apply a target of close to 99%. In day-to-day practice, carriers deliver almost 97 out of every 100 shipments on time.
- Chemical shippers use a range of services provided by carriers including the shipment of dangerous goods under ADR regulations, EDI connectivity, temperature-controlled transport, loading and unloading, Track & Trace functionality and documents handling.
- Most corporate strategies on sustainability in transport are limited to increasing the share of intermodal transport through a combination of road and rail, barge and/or short sea transport. While the carbon reduction potential of intermodal transport as compared to road transport can be significant for specific trade lanes, various operational and financial constraints inhibit a full modal shift across all lanes.
The full publication on the results of the 2012 edition of the FTL Chemical Liquid Bulk Benchmark study can be downloaded here.
For more information or to participate in this year’s study, please contact us at firstname.lastname@example.org or 31 (0)40 293 86 16.
In September 2012, CLX Logistics LLC, parent company of ChemLogix LLC, established international operations with the acquisition of Netherlands-based LHC Consulting, a consultancy firm offering supply chain management and logistics services to multiple industries throughout Europe. With skill sets in logistics and technology implementation, in-depth knowledge of the European transportation market and a large European client base, LHC Consulting brings the essential resources necessary for CLX Logistics to expand its position in Europe while enhancing service to its current international customers.