Prepared for a big year
TOGY talks to Markus Koepsel, general manager of RSA-TALKE. The company specialises in chemical logistics solutions, including liquid bulk services. In comparison to stagnating global economic activities for chemicals, petrochemicals, and oil and gas, the Middle East is trending towards growth.
Since its establishment in 2013 as a joint venture between RSA Logistics and Alfred Talke, RSA-TALKE has been providing chemical warehousing and ISO tank services, including storage, labelling, Customs clearance and freight forwarding by land, sea and air. The company is developing a chemicals hub at Jebel Ali.
• On Jebel Ali: “The whole platform at Jebel Ali will eventually become a completely closed loop for the liquid chemical supply chain. [It is] an ideal location for the distribution of chemicals in this region and the world.”
• On businesses joining forces: “In terms of growth, this will increase cost advantages and will secure additional capacity from the region. Oil and petrochemical production will benefit from the waste products produced by oil refineries. It is really going to bring the whole supply chain together.”
• On regional standards: “While there are certain standards pertaining to health and safety, they are not standardised across the region. One country might have very different regulations when compared to another. This is one area that could be improved on.”
Besides touching on these topics, TOGY spoke at length to Markus Koepsel about his company’s activities in Abu Dhabi, the development of its chemicals hub at Jebel Ali, regulatory and Customs regimes in the region, and the company’s plans in 2017. Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find the full interview with Markus Koepsel below.
How has your company developed over the past year?
In May 2016, our integrated chemical logistics hub in the Jebel Ali Free Zone was inaugurated. We completed phase one, which involves the storage of laden and empty ISO tank containers.
It is a noteworthy achievement because laden ISO tank containers, which include hazardous chemical products, could not be stored in Dubai outside the port prior to us bringing our infrastructure and health, safety, security, quality and environmental standards. With our European expertise, we designed a suitable facility with the highest operational standards to obtain permission from authorities in the UAE to create a solution that would allow the storage of these containers in Jebel Ali Free Zone. The facility we have built is able to clean and repair the empty ISO tanks so that they can be reused in the supply chain. Good cleaning is necessary in order to avoid tainting new products with traces from the old products. Also, since these ISO tanks risk being damaged when they are being shipped around the world, we decided to start providing repair services.
The whole platform at the port of Jebel Ali will become a completely closed loop for the liquid chemical supply chains. In 2017, we will build a facility, expected to be operational by 2018, that will empty containers, drum them into drums and IBCs (intermediate bulk containers) and perform refilling.
We are building a highly sophisticated chemical warehouse there too, which can store the drums after the drumming process. All of this will be part of our chemical hub situated in Jebel Ali, an ideal location for the distribution of chemicals in this region and the world.
You spoke of phase one earlier. What will phase two involve?
Phase one is the first part of a container storage yard, which can currently store up to 800 containers. This includes the cleaning station and repair station. Phase two includes the building of the aforementioned drumming facility and a 10,000-square-metre warehouse attached to it. Phase two is expected to be finalised by mid of 2018. Later on we will also finalise the container storage yard to accommodate a maximum capacity of around 1,800 ISO tanks.
What can you tell us about the infrastructure currently in place as of 2017?
Aside from the chemical logistics hub, our facilities include two warehouses. The first one is a state of the art chemical warehouse with about 19,000 pallet positions and is dedicated for the storage of chemicals. This includes all classes of dangerous goods except one, six point two and seven, which are explosives, infectious substances and radioactives respectively. We have separate chambers inside this warehouse specifically for aerosol gasses, class-two chemical and oxidising/peroxide products and for class five chemicals. The warehouse is up to North American and European safety and quality standards. There are containment systems and a state-of-the-art fire extinguishing system (foam and water based) that works so quickly that it greatly reduces the risk to the environment outside. The containment tanks are underground and we are positioned to handle any situation that might arise.
What does it take to make sure such a facility is safe?
The facility is constructed from special steel, which is coated for additional fire resistance. This paint has a special coating that makes it appear as though there is sand on all the steel. This particular coating gives additional fire resistance that lasts for more than two hours in the case of a fire. The warehouse is composed of eight different compartments. It is as though it is eight separate warehouses built under a single roof. There are fireproof doors in between each section. In case something happens in one compartment, the fire-fighting technology system activates and shuts down everything. Even if a fire manages to take down one compartment, none of the others will be affected. Furthermore, the fire alarm system with sensitive detection cameras and smoke detectors allows the system to react immediately in case of an incident.
What are you planning to do to grow your total turnover?
The UAE is an ideal location to do this. Big multinational companies are looking to increase the health and safety standards of chemical logistics, which is exactly what we are specialised in. In comparison to stagnating global economic activities for chemicals, petrochemicals, and oil and gas, the Middle East is trending towards growth. In fact, the majority of the industry growth worldwide will be created in the Middle East. We are continuously looking ahead, learning and developing our company to the next level by extending our existing service portfolio as well as thinking about new solutions for the industry.
How will the Gulf Petrochemicals and Chemicals Association Forum’s announcement that countries in this region are going to join forces affect business overall?
In terms of growth, this will increase cost advantages and will secure additional capacity from the region. Oil and petrochemical production will benefit from the waste products produced by oil refineries. It is really going to bring the whole supply chain together. The possible negative consequences for our industry due to its product’s nature are not the same as for manufacturing t-shirts or paper, for example. Therefore, it is very important for us to work together in order to raise and maintain a high quality and, most importantly, strengthen the health and safety culture. Along with the industry’s growth in this region, the supply chain and all its components, as well as risks, need to be considered to be ready to support this growth.
How is the downstream sector developing?
The downstream business is getting quite a push at the moment, especially because upstream is trending down in terms of development and margins. As the downstream increases in importance, the industry starts to focus on supply-chain engineering. It might not have been that way in the past, but in 2017 logistics is definitely becoming more important. Global revenue numbers suggest that the petrochemical market will double by 2025 as per certain research standards. The Middle East will certainly be an important part of this growth if this comes true. We ourselves are in the beginning stages of working with some key partnerships. At the moment those relationships are just starting to develop. We also work with a lot of multinational companies, which are predominantly coming from Europe and Americas. Then there are the lubricant companies, both US and Europe based.
Do you think results will be the same for logistics?
I am convinced that logistics will continue to grow, especially in this region since there is still a lot of potential to improve here. This is partly due to logistics being relatively new to the region. Logistics is one of the oldest industries in Europe and North America, but is only just emerging in the Middle East. The port at Jebel Ali is a big part of this development in the Middle East. As a global centre, the port is in the top ten in terms of volume. This is representative of what is happening in this region. In terms of cargo flow and operation, the UAE is one of the main hubs in the region while Saudi Arabia is the biggest market. The main flow of goods is between Saudi Arabia and the UAE, but there are also deliveries to Oman, Qatar, Bahrain and Kuwait. This basically covers the whole GCC area. The UAE is still relatively young but growing at a great pace.
How tight is the competition for logistics in the UAE?
It depends. There are big and established logistics companies with diversified service portfolios. We are a niche player here, with an expertise in chemicals, petrochemicals and oil and gas. Our shareholders are two family-owned companies, which allows us to be agile, flexible and quick to adapt. This means that sometimes we are competition for the bigger companies. Sometimes we partner with them if they have a need for the specialised services we provide. Perhaps because of this, we do not fear the competition from those companies. We consider it an opportunity to co-operate with them.
How could regional standards be improved?
While there are certain standards pertaining to health and safety, they are not standardised across the region. One country might have very different regulations when compared to another. This is one area that could be improved on. Then there is a lack of expertise and knowledge when compared to more established markets. We have had relatively little time to develop and mature those here. An example is the fact that the flatbed trucks here usually remain open. While we may not have the same weather concerns as the US or Europe, where rain can be a concern, we think regulations need to be developed to meet the same standards of those regions. The authorities and the industry as a whole need to realise that there are still gaps to be closed to be in line with what is necessary to support and leverage the mentioned growth and what is expected of the industry. Specifically for the chemicals industry, the CEOs of most major manufacturers in the GCC signed a declaration of support for Gulf SQAS (Sustainability & Quality Assessment System) in 2014. The system reviews companies like ours based on standardised assessments carried out by independent assessors using a standard questionnaire focused on quality, safety, security, health and environmental performance. Gulf SQAS should become a prerequisite to work as an LSP for the chemical industry and hence standards will be raised overall.
How do regulations concerning Customs measure up to Europe or the US?
Compared to Europe, where you can cross borders without any checks, Customs here are a very different story. Here in the UAE, Customs have gone down a really modern and technology-driven direction. It is not so complicated if there is knowledge of the rules and the way it has to be done. As long as the rules are followed and the services the GCC provides are used, then Customs here could be considered an opportunity rather than a challenge for logistics companies. We know how it needs to be done, which can get rid of a serious hassle for potential clients.
What does 2017 hold for RSA-TALKE?
There are three main steps we would like to take to further push and raise the standards for health and safety. First, through regular leadership and authority meetings, we are developing and streamlining standards for chemical logistics including storage, transportation and handling. Secondly, we are taking our company to the next level, a process that will almost double its size. The completion of the chemical hub is the major project for 2017. It is a 50,000-square-metre facility. We will start the second phase this year in order to get this integrated chemical logistics solution set-up and running. The third thing is to research where we can go next. We are looking at transportation in our industry and what current services exist in that market. We want to know what we could contribute to the environment through an initiative in emergency response as an example. We want to know how else we could use our expertise to make sure an emergency situation would be handled the right way.