Fuel prices may be dropping, but fleet operators must still ensure they train their employees to drive as economically as possible.
The cost of wholesale fuel has fallen in the past few weeks and experts believe this will soon be reflected in prices at the pumps, but that certainly does not mean motorists can afford to be wasteful.
David Williams – chief executive officer at GEM Motoring Assist – said it is always practical to follow fuel-efficient driving tips.
In fact, the organisation said that by taking heed of certain tips, companies can cut their fuel wastage by up to 50 per cent.
Logistics firms should ensure the engines in their vehicles are as efficient as possible and that tyres are in good order.
Basic measures such as turning the air conditioning down and planning ahead to avoid road works can also save businesses a surprising amount of money.
Although UK-based logistics enterprises appear to be growing in confidence, they are still at a disadvantage against their foreign rivals, who benefit from far cheaper diesel prices. This is largely down to the high duty rates charged in Britain.
Anhydrous Ammonia Fertilizer Isn’t Normally Considered An Explosion Risk, So What Happened In West…?
The horrific explosion at a West, Texas fertilizer plant last Wednesday came from a more unlikely source than you might think. The chemical stored there is not generally considered as much of a fire or explosion risk as other nitrogen-based fertilizers. But under certain conditions, what’s been thought of as a safe chemical can turn deadly.
According to reports the fertilizer company had as much as 54,000 pounds (circa 24,500 Kilogrammes) of anhydrous ammonia at its facility. The company noted in an emergency planning report that this kind of fertilizer is not considered an explosion risk in its gaseous form, though it can sometimes explode if kept contained at certain concentrations.
Some news outlets covering the explosion have been conflating anhydrous ammonia with a different kind of fertilizer called ammonium nitrate. But they’re completely different chemicals.
Anhydrous ammonia is made from three parts hydrogen to one part nitrogen. The “anhydrous” part of the name refers to the fact that there’s no water involved in the reaction that makes it. Ammonia was initially produced to make explosives but was repurposed as a fertilizer after World War I. Adding it to soil contributes nitrogen, a vital component needed for plant growth.
As a fertilizer, anhydrous ammonia is stored in tanks as a liquid under pressure — without the added pressure, it would quickly boil into a gas — and transported via pipeline, truck, or rail.
Anhydrous ammonia is considered safer to store in large quantities, because it takes extremely high temperatures to set it off. But it’s not totally harmless. Direct exposure to anhydrous ammonia can be seriously harmful, causing eye and skin irritation, respiratory problems and, at the right concentrations, death.
Leaks of gaseous anhydrous ammonia are also dangerous. Because the vapours hug the ground initially, the chances for humans to be exposed are greater than with other gases.
Ammonium nitrate, a combination of nitrogen, hydrogen and oxygen, is a lot more volatile, prone to combustion and reaction, thanks to the fact that it is a strong oxidant. (Anhydrous ammonia can be converted to ammonium nitrate using nitric acid.)
So what caused the explosion at the West plant…? City University of New York physicist Michio Kaku told CBS News that the water firemen were using to fight a routine fire may have set off a chain reaction of explosions.
“The [US Environmental Protection Agency] regulations say it’s OK to have this amount of material, because nothing’s going to happen, but there’s a rare sequence of events, the right pressure, temperature and right amount of water will set off anhydrous ammonia,” Kaku told CBS.
There’s still the question of what set off the initial fire — whether the company also stored some ammonium nitrate or whether there was some other source of combustion. The next few weeks of investigation may provide answers.
More speculative warehouse building is required in the UK, especially in the south-east of England, it has been claimed.
Jones Lang LaSalle has completed its latest Industrial Property Trends report, which suggested that 744,000 square feet of logistics space is currently being erected by developers across the country, but this is not likely to be enough.
“With availability continuing on a downward trend, and much of the supply being in poorer quality units, there are shortages of good quality space in many locations,” commented Tim Johnson of Jones Lang LaSalle’s UK Industrial & Logistics team.
He added that there is particularly strong demand for large-scale units in and around London.
It is not just the UK-based firms that are struggling to find suitable distribution centres at the moment, as a previous report by Jones Lang LaSalle showed that European companies could require up to 25 million square metres of extra space over the next five years to cater for growing demand.
It may be obvious that companies with high levels of competency throughout their organisation are better performers in the medium to long term and deal more effectively with change.
The same observation applies to competency in both risk and safety management. Organisations that commit to understanding and managing the risk to their business, their employees and the public, are much better equipped to prevent unplanned events occurring and to recover from disruptions if something does go wrong.
Despite the relentless drive of new technology, all businesses are managed by people, and it is the competency of individuals to carry out their tasks and to act in unison with others, that provides inherent risk management and resilience for so many companies.
In successful companies, risk and safety management is a continuous process which is part of day-to-day management activities. But there is not a “one size fits all” solution. In implementing an effective approach to risk and safety management, organisational, industrial and national cultures also need to be taken into account.
Competency in risk analysis
At the heart of good safety and risk management is Risk Analysis – the process of identifying and assessing credible risks (to the business, its people, its processes, the environment, etc.). Without a clear understanding of the risks faced, the implementation of appropriate risk control measures is not possible.
Essential to all good quality risk analysis is competent people: people with specific knowledge of the business and its dependencies, and those with the skills to assimilate and analyse information and draw conclusions. It is important to appreciate that risk analysis provides a “snap-shot” and is constrained by the knowledge and experience of the participants and the availability of information.
Outputs from the risk analysis are the credible risks that the business faces, together with the required (existing or not) controls or safeguards that reduce risks to an acceptable level.
Competency in preventing loss of control
The business may decide that additional controls are warranted to reduce risk levels to meet company standards, industry best practice or legislative requirements. For ease of understanding, controls can be categorised into ‘operational’ or ‘engineered’. Operational controls are those which are directly operated by people, whereas engineered controls are active or passive systems which operate without direct intervention by people.
In order to ensure continuous risk management, it is of course vital that these controls are maintained. For operational controls this is achieved by ensuring that operators remain competent to carry out their tasks. Their competency will be supported by ongoing training and assessment and it is particularly important that new operational staff members are also competent.
Engineered controls require regular maintenance and it is essential that the maintenance is carried out by competent people. Where systems must be taken out of service for maintenance, it is critical that they are reinstated properly. Periodic checks of safeguards may be appropriate to ensure their ongoing availability.
Competency in recovering from unplanned events
The risk analysis provides a clear understanding of how events could, if not managed, develop into serious problems. The organisation has the opportunity to plan for these “nightmare” scenarios and ensure that competency requirements of personnel to respond to such scenarios are captured.
One of the more difficult challenges for organisations is to decide on how rigid their systems for managing risk should be. This will be influenced by the type of risks faced by the business and the culture of the organisation and the industry it operates in. Simplistically, for routine activities with high levels of maturity (i.e. changes are slow), operating procedures can be relatively prescriptive.
However, the tendency is for additional procedures or instructions to be added which, over time can result in bureaucratic systems. For non-routine or unplanned events, experience may be limited and there are dangers associated with introducing overly prescriptive controls which may not be adequate to deal with such events. In these circumstances, there is benefit in relying on competent people to manage the situation within a set of guidelines.
The benefits of competency
For organisations with a strong focus on competency there is a major benefit that is often not clearly recognised. Competent organisations are well equipped to deal with both routine and non-routine events which, if not managed properly, could escalate to become much more serious with significant detrimental impacts on the business.
In today’s highly competitive environment, where there is a constant pressure for businesses to become leaner, much of the traditional in-built redundancy and replication has been removed. Whilst this improves short-term business performance, the resistance to unplanned events can be compromised. By investing in their people, and focusing on the competency to carry out both routine and non-routine tasks, companies can build in considerable resilience to the risks they face and thus better prevent, deal with and recover from adversity.
Just as human error (lack of competence) is a major contributor to accidents, so too is human ingenuity (competence) a major contributor to loss prevention.
Rabobank has published a new research report looking at the current food and agriculture (F&A) supply chain, identifying flaws that leave the sector ill equipped to respond to new complexities, and calling on the industry to transform the way supply chains are organized. Specifically, Rabobank identifies a dedicated supply chain model as the best step for F&A companies to take, and recommends the adoption of longer-term supply agreements and cooperative relationships with upstream and downstream partners.
In the report authored by Rabobank’s global Food & Agribusiness Research and Advisory, the bank’s analysts look at how the operating environment for F&A companies is becoming increasingly complex, as new external influences compound traditional pressures such as rising agri commodity prices. Rabobank says that the dedicated supply chain model has potential to revolutionize the F&A industry, by making it more productive, innovative, safe and sustainable. The bank’s report stresses that all of these outcomes are vital if the sector is to deliver food security to a future global population of 9 billion.
Limitations of the current structure
Rabobank says that traditional pressures on the F&A industry (supply and demand dynamics, a burgeoning population, and rising agri commodity prices) are being compounded by a new set of external influences. The direct use of agri commodities for biofuel production and an increased awareness of the energy intensity of food production, for example, have embroiled F&A companies in an ongoing food vs. fuel debate. Similarly, speculation in agri commodity markets and the regulatory responses this has triggered from governments worldwide have added to the complexity of the environment in which the F&A sector operates.
These new pressures also serve to exacerbate the flaws in the current supply chain model, Rabobank says. The dominant supply chain model is currently structured in a linear fashion, in which suppliers, processors and retailers form short-term partnerships independent from the influence and interests of other members of the chain. This model is highly inefficient, restricting F&A companies’ ability to respond to changes in supply and demand dynamics, while fleeting partnerships limit productivity and restrict innovation. This system also results in wasteful processes that cause more environmental degradation than is necessary.
Adding value through closer cooperation
Rabobank believes that switching to a new supply chain model – the dedicated supply chain – has the potential to transform the F&A industry. In a dedicated supply chain structure, upstream suppliers and processors enter into long-term partnerships with each other and a downstream chain leader. Crucially, information and insights are shared along the chain’s length for the benefit of all members.
Justin Sherrard, Rabobank Global Strategist, says “Closer cooperation of this sort will transform the nature of F&A partnerships from transactional ones that are centered around chasing price, to a system focused on creating value.”
The advantages of dedicated supply chains over the current system are manifold. Companies embracing this thinking will benefit in the following ways:
Reduced risk
Longer term, more stable agreements reduce exposure to price volatility, whilst shared insights will enable players to better react to market risks
Improved productivity
Better insights into chain requirements improve process efficiency and partners can also work together to finds ways to limit or reuse waste
Access to new markets
Better insights into downstream needs and opportunities can better inform product innovation and help companies to grow footprints in new markets
Enhanced brand and reputation
Companies with ambitious CSR targets can help their partners on other product attributes, such as sustainability
Improved access to capital
In addition to better cash flows and stronger credit ratings, members can access new financing models that provide leverage from chain partners
Longer term, more stable agreements reduce exposure to price Rabobank says that adopting the dedicated supply chain model positions F&A companies for longer-term growth, as the sector rises to meet the over-arching challenge to feed the world in coming decades.
Making the change
Rabobank’s report encourages the industry to abandon its preoccupation with short-term price spikes. Rabobank believes that a model based on chasing price is a narrow approach that will restrict the ability of F&A companies to realize their growth objectives in this more complex and demanding environment.
The report calls for prominent F&A brands to show leadership, through creating initiatives that will lead to closer cooperation between their upstream partners. The report cites several examples of leading F&A companies that are already active in this space, such as Mars’ decision to release the cocoa genome sequence into the public domain as part of its broader commitment to sustainably sourcing all cocoa purchases by 2020.
Furthermore, Rabobank believes that sector leaders undertaking such initiatives must become advocates for dedicated supply chains, by sharing their experiences with the wider industry.
Barry Parkin, Mars Global Chocolate Procurement and Sustainability Head, says, “Mars believes that closer cooperation, both up the supply chain with suppliers, origin governments and NGO’s, and across the supply chain with other manufacturers, is critical to achieving the cocoa industry’s growth and sustainability goals. Through Mars’ Sustainable Cocoa Initiative, we are actively engaging with all parties in an effort to drive a step change in farmers’ cocoa yield, which is the key to driving economic, social and environmental sustainability. We have already demonstrated with our partners up the supply chain that a 3-fold increase in yield is realistic and the challenge now is to roll this out to hundreds of thousands if not millions of small-holder cocoa farmers by the whole industry getting behind the same initiatives in multiple origins.”
Gilles Boumeester, Rabobank’s Global Head of Food & Agri Coverage, comments, “F&A financing institutions also have a role to play in creating an environment that is conducive to adopting this new model. To this end, Rabobank is developing new financing solutions that support and encourage companies embracing dedicated supply chain thinking.”
The Rabobank report on the food and agribusiness supply chain model is available to media upon request.
Rabobank Group is a global financial services leader providing wholesale and retail banking, leasing, real estate services, and renewable energy project financing. Founded over a century ago, Rabobank is one of the largest banks in the world, with nearly $1 trillion in assets and operations in more than 40 countries. In North America, Rabobank is a premier bank to the food, beverage and agribusiness industry. Rabobank’s Food & Agribusiness Research and Advisory team is comprised of more than 80 analysts around the world who provide expert analysis, insight and counsel to Rabobank clients about trends, issues and developments in all sectors of agriculture.
For more information visit www.rabobank.com/f&a