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We join David Kehoe – Financial Director, to review the chemical logistics market in 2023 and what emerging trends and impacts we can expect in 2024.
What is your experience in the tank container industry?
While I am relatively new to the tank container industry, having only joined Suttons in November 2019, I have worked in product and chemical-based industries for many years prior to joining, and as such I have a deep awareness of Logistics and Supply Chains in general.
What trends did we see emerge in 2023 that had an impact on our industry?
The global shipping industry experienced a return to greater stability, although certain regions still grappled with disruptions, notably in Israel and the Red Sea toward the conclusion of 2023. Concerns loomed over the potential resurgence of significant and prolonged issues in these areas. Simultaneously, an energy crisis unfolded, characterized by production challenges in Europe and the restructuring of supply routes on a global scale. Another notable trend was the destocking of post-COVID supply chains, resulting in reduced disruptions in shipping and supply chains. This shift facilitated the smoother movement of production, raw materials, and refined products on a global scale, impacting global demand and economic outlook.
As a consequence of these developments, congestion became apparent in depots and support infrastructure, primarily attributed to reduced volumes and alterations in supply chain routings. Amid these challenges, there emerged a growing acknowledgment that customers require a robust and reliable ISOtank operator to effectively manage the intricate elements of the supply chain and enhance overall value. This recognition underscores the importance of strategic and dependable partners in navigating the evolving landscape of the global shipping and logistics industry.
How has Suttons responded to these trends?
We utilise data analytics to anticipate trends and market patterns to make sure we can align our infrastructure with our customers needs. We were able to use our market knowledge and data sets to position our tanks and balance our network. We also reviewed our pricing policies to make sure we were responding correctly to market conditions and providing our customers with competitive price points and were able to agree long term contracts with customers providing them with dedicated tanks that guaranteed them resilience in their logistics supply chain.
To provide pricing certainty and maintain competitiveness, we continued to build relationships across our own supply chain with key shipping lines. This has resulted in enhanced communication efficiency and favourable outcomes for our valued customers. This emphasis on building strong ties translates into not only better but also faster communication channels, affording us the flexibility to cater to the unique needs of our customers.
We also focused on developing our depot network to improve the efficiency of our tank management and to make sure we had tank availability in our customers’ key markets. This strategic networking has proven instrumental in securing crucial aspects of our operations, including storage solutions, optimizing asset turnaround times, and ensuring the availability of essential equipment.
Are there any upcoming events, market trends, or impacts to look out for in the next year and beyond?
The exciting thing about our sector is how dynamic it is, with changing trends, supply and demand issues and the impact of geopolitical events.
We have seen an immediate impact on shipping capacity due to the disruption in the Red Sea. Until the situation is resolved peacefully, there will be upwards pressure on shipping costs and tank availability. The unexpected does happen in our industry and we have to be agile enough to respond effectively.
We have seen growth within our intra-Asia and Middle Eastern markets that we expect to continue, and where Suttons is well placed to supply that demand. Similarly, we expect to see further growth within South America.
Growth within contracted tanks where customers are seeking dedicated tank containers and supply chain resilience is a further trend that we expect to see continue. Many of our customers are talking to us about contract and fleet management opportunities, and we expect our contracted fleet to growth over in each of the next few years.
How is Suttons preparing to offset these impacts / what resilience have we built into our operation to weather upcoming storms?
Suttons is actively preparing for potential challenges by establishing a strong global network of offices, joint ventures, and agents to foster agility and flexibility. The company is investing in its workforce through training and professional qualifications, ensuring a skilled and adaptable team.
Additionally, Suttons is staying ahead technologically by investing in new IT solutions such as ERP and automation of back-office functions. These measures, coupled with functional structures optimizing internal operations, reflect Suttons’ proactive approach to building resilience and weathering industry challenges.