Logistics: The shipping misforecast

16 June 2006
'The problem is not producing the product,' says Equate Petrochemical Company chief executive officer Hamad al-Terkait. 'It's getting the product to the customer on time.'
Al-Terkait has summed up one of the biggest issues facing the Gulf petrochemicals industry today logistics. The sector's rapid growth has left many unprepared, not just on the production side, but in the port and shipping sector too.

Producers complain of having to stop production because of a shortage of warehouse space after failing to shift product in time. Hold-ups are common at Jebel Ali port as shipping lines race to keep up with demand on their container services. Customers complain of late delivery.

Part of the problem is a lack of focus on the supply chain. For many years, little attention was paid to logistics, but with the massive expansion, and the sheer number of projects coming on stream, bottlenecks are appearing. 'Outsourcing as a concept is developing but long-term agreements still make manufacturers nervous,' says Richard Heath, managing director of the German/local Al-Jabr-Talke. 'Producers and logistics providers need to expand the total supply chain and think outside of the box together.'

To resolve some of these issues, the newly created Gulf Petrochemicals & Chemicals Association (GPCA) is setting up a committee so that its members companies involved in the industry can discuss and find ways of resolving these challenges. Part of the problem has been a lack of communication between the various petrochemicals producers and logistics providers and shipping firms, which are often caught unaware of producers' demands until late in the day.

If all goes to plan, the GPCA will act as a forum for companies involved at the various stages of the supply chain to exchange data, ideas and solutions to resolve outstanding issues. With so many projects being commissioned over the next three years, they will have to be dealt with quickly, if the problem is not to get worse.

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