July/August 2020
Tank Containers
COVID-19 and
supply chains
BULKDISTRIBUTOR
11
Keith Broom, finance director at Suttons Group, looks at the impact of the COVID-19
pandemic on supply chains and logistics businesses
The COVID-19 pandemic has had a significant impact on
supply chains across the globe, particularly the ISO-tank
market which uses specialist equipment and relies on a
balance of flows.
The impact of ‘lockdowns’ initially hit the manufacturers of
product at the beginning of the supply chain, starting in China and
then progressively impacting Europe and the Americas. A fall in
supply side demand came shortly after, again cycling from Asia to
the Americas. This disruption led to erratic volumes and delays in
discharging tanks, which in turn lead to tank shortages in some
areas.
The manufacture and usage of chemicals has not been impacted
as heavily as some other sectors: demand for some products has
increased, while others have remained stable and some have seen
significant reductions. At Suttons, we saw an initial surge in demand
for industrial alcohols and solvents, both used in cleaning and
sanitising products, which were in high demand at the beginning of
the outbreak to support with the immediate attempt to keep
economies operating and preventing the need to lockdown.
This initial rise in demand has abated somewhat, but it is likely that
demand for these products will remain higher than normal until a
vaccine is available, and may continue permanently with raised
awareness of the need for improved hygiene to reduce the spread
of other viruses.
Many sectors have seen a continuation of normal levels of
demand, for example, chemicals used in the water treatment
industry and foodstuffs. Other sectors have seen a severe decrease
in volume, many of which are related directly or indirectly with the
transport sectors and manufacturing. As the nation adapted to
working from home the demand for petrol, diesel and fuel additives
fell significantly in both the road and air markets. It is likely that
demand will be slow to recover and if working from home and a
reduction in long distance business travel continues in the long
term, these industries may never return to pre-coronavirus levels.
There was also a near instant shutdown of large scale
manufacturing such as car plants, white goods, aircraft, and parts,
many of which use chemicals directly, or use plastics which are made
from chemicals. Some of these plants have restarted limited
production, but again, recovery will be slow against a background
of increased unemployment and reduced economic activity, meaning
it could take years to recover to former levels of output.
During the outbreak of the pandemic, Suttons’ first priority was
the health and safety of our staff, both from a welfare perspective
and on business level because without healthy staff we would be
unable to meet our customers’ needs. As a global business we had
an early test of our business continuity plans with the lockdown in
China, which impacted us in late January.
This tested our ability to maintain our international operation with
remote working and allowed us to iron out any minor issues. As it
became clear that COVID-19 was going to spread globally we
introduced social distancing and hygiene measures, as well as
providing PPE to allow staff to continue to work safely, while
providing support for those who needed to shield due to age or for
medical reasons.
We quickly adapted our operations to ensure that we could
maintain the standards of safety and quality that our customers
expect from us and to respond to changing demand patterns for
certain products as already discussed. This included pro-actively
marketing our capability to sectors where demand was increasing,
or where new entrants were supporting the national effort to
combat the ever-evolving pandemic. An example of this was our
support to William Grant & Sons Distillery which switched from
producing whisky to distilling alcohol sanitising applications.
Like many businesses, unsurprisingly, we had to react quickly at a
corporate level to ensure that we had access to sufficient cash to
support the business and to fund any investment required to meet
our changing operational needs. The initial problem was trying to
model what the impact on the businesses turnover and cash flow
Keith Broom
might be, in a situation that no one had ever lived through before.
Our two biggest concerns were that we did not know how far
demand would fall and whether or not some of our customers
would be unable to pay us. We were also initially unaware of the
level of support that governments would provide.
We moved quickly to preserve cash. Capital expenditure plans
were reviewed and some projects deemed non-essential were
deferred or re-scheduled to ensure we balanced operational needs
with cash management.
As we navigate through the pandemic, we are constantly
reviewing the way in which we have managed the business and our
operation, as well as how we have supported our employees and
customers. Our existing business continuity plans worked well and
allowed us to operate safely and maintain an excellent level of
customer service, all while managing our cash flow. However, we
are noticing areas where we could have done better or where
additional investment in equipment, software, and training could
improve our reaction to either a second wave of COVID-19 or some
similar challenge in the future.
It is crucial for all businesses, including Suttons, to assess
constantly the medium to long-term impact of the pandemic on
customers and competitors in the post COVID-19 world. It is certain
that the economy will take a significant time to recover from the
shock of lockdown. Where coronavirus has had a negative impact,
companies like ours must respond quickly to reshape their business
processes, asset base and workforce to ensure that the are in the
best possible shape to survive and prosper in this economy. Equally,
where the pandemic generates opportunities businesses must react
swiftly to capitalise on them.
www.suttonsgroup.com
The pandemic had a significant impact on supply chains, particularly the ISO-tank market which uses specialist equipment and relies on a balance of flows
Tankcleaning manufacturer:
Silo / bulk cleaning
Chemicals cleaning
Food cleaning
Railway carriage cleaning
Container cleaning
Container heating
IBC cleaning
CIP / latex cleaning
Lanfer ships big tank
In co-operation with BASF and Kombiverkehr, Lanfer Logistik
recently completed an initial test transport of a special 75
ton BASF tank container from the chemical firm’s
Ludwigshafen base on Lanfer’s regular train connection to
Hamm, North Rhine-Westphalia.
At Hamm the tank was unloaded using a new dedicated working
platform. Lanfer said these increased capacities provided by the tank
container offer customers many new possibilities in combined
transport and intermodal.
www.lanfer-logistik.de
The reference in new tankcleaning projects and renovations!
CTW Cleaning Systems
Everdongenlaan 9/19 T. +32 (0) 14 27 00 80
2300 Turnhout [email protected]
Belgium
www.ctwcleaning.com