Terminal Outlook 2019

Terminal Outlook 2019

Looking to 2019 and beyond

Stolthaven Terminals President, Guy Bessant explains in his latest interview with Tank Storage Magazine his view on developments in 2018 and looking to 2019 and beyond.

Guy Bessant, President Stolthaven Terminals: "2018 has been a year of uncertainty for business in general. Around the world, political movements, whether based on economic nationalism or trade protectionism, are having a somewhat negative effect on open borders, trade and shared ventures. Yet there are opportunities for the brave, with the advancement of technologies that offer the possibility of increased automation, higher productivity and more innovation. The storage industry must operate in this dynamic world too. The year saw a strengthening of the global economy, especially in the US; this, coupled with investments in the oil, gas and petrochemical industries, has had a positive impact on the storage sector. However, continuing political and economic uncertainty, notably across Europe and South America.

2018: Another Year of Progress

For Stolthaven Terminals, our recent strategy has been to invest in the infrastructure we need to weather any economic storm. In Houston, for example, I have for a long time raised concerns about the inefficiency of the port due to underinvestment in logistics-related infrastructure. Indeed, the gap between investment and the growth in the production of oil, gas and chemicals is only widening and that makes one thing certain – the situation can only get worse. To combat this, in 2017 we announced our plans to build a new Houston jetty for $45 million. I am pleased to say that in the past couple of months we have started initial layby operations for Stolt Tankers and its customers. We expect the new jetty to be fully operational at the beginning of 2019 – right on schedule. The next 12 months will also see us invest in additional capacity in Santos, Brazil; New Orleans, US; Westport, Malaysia; and Ulsan, Korea, to meet the demands of continued growth in the chemical industry. Elsewhere in the world, we started operations on our new LR-capable berth in Newcastle, Australia, which will service the Stolthaven Newcastle terminal and the Port of Newcastle’s future bulk liquid precinct. Meanwhile, due to a request from the local authorities in New Zealand, who require waterfront land for the America’s Cup competition, we announced the closure of our Hamer Street terminal in Auckland harbour, transferring our customers into our adjacent Wynyard terminal. That terminal will itself be relocated within the next couple of years – new investments have been announced at our Mount Mauganui terminal in the Port of Tauranga, so that we can continue to service our customers and they can, in turn, keep local industries in operation. While investing in hard assets is important in order to maintain our position and service offering to customers, we have also focused on many ‘soft’ issues. For example, digitalisation – a highly talked-about topic – has been one focus area. In this, synergies have been gained thanks to the experience of and lessons learned by our sister company, Stolt Tank Containers, a market leader in some technologies. While some of these investments will not deliver immediate results, they will lead to longer-term benefits for employees, customers and shareholders.

LOOKING TO 2019 AND BEYOND

Looking ahead, there are four key issues with significant implications for the bulk storage industry that we are watching closely. Some of these issues were mentioned in last year’s Tank Storage Magazine outlook and, unfortunately, they remain a challenge to the industry.

> Sustainability
It is difficult to find a company’s annual report that does not include this word! However, while sustainability is an important topic which needs addressing, it is often not clearly defined. For Stolthaven, we know that there is room for us to improve. Some initiatives that we have developed, such as solar panels at Stolthaven Singapore, a first in that country for the storage industry, are beneficial for both the company and the environment. We are looking at waste reduction programmes and have committed significant investment in our wastewater treatment plant at Stolthaven Houston, which is also being used by thirdparty companies. Other projects are less tangible in terms of their financial benefits, but we know they are the right thing to do. The challenge is the additional pressure from customers to start being audited on this topic – that is yet another cost for the industry, when perhaps self-regulation would be just as appropriate. At the same time, as has been seen with safety, some customers insist that some companies operate at a certain level, while turning a blind eye to the operations of other suppliers. A true level playing field is needed.

> People
In certain locations, there is considerable pressure on competing industries. Ironically, it is often the success of the industries we serve, which leads to poaching of our talented operators – and what a storage company can afford in salaries is not comparable to for example a refinery. For existing employees, it is important that we are better engaged, that we identify the future skills required and that we develop the appropriate training programmes. In the long run, that will benefit both us and our people.

> Port inefficiency
In Houston, US and Santos, Brazil for example, port inefficiency is taking a significant toll by increasing the cost, to all parties, of doing business. Until everyone begins to work together to find solutions, I do not see much improvement. Stolt-Nielsen is continuously looking to develop integrated supply chain solutions for our customers so that we can help to reduce total supply chain costs. Customers which ship with Stolt Tankers, for example, benefit from enhanced ship-to-shore efficiency when our ships call at our terminals.


> ‘VUCA world’
In this Volatile, Uncertain, Complex and Ambiguous world, our industry is facing many challenges. In 2019 we will see the initial impact of the new low-sulphur bunker regulations that enter into force in 2020. While directed at the shipping industry, these regulations will have a significant impact on the storage industry. Geopolitical issues, including a swing towards a more nationalistic and protectionist agenda versus global cooperation, can lead – as we saw in 2018 – to sudden trade disputes, which impact the flows of products. On a regional level, the uncertainty of Brexit, and what impact it will have on our industry, remains. In the longer term, the decarbonisation of economies, initially in more developed markets such as Europe, will have a major impact on companies with significant petroleum capacity which cannot be modified for other uses. In this regard, Stolthaven’s exposure is less than some of our peers, but we are already evaluating alternative areas of focus. So, as you can see, 2019 will be a year with some continuing challenges, but I believe that we have set the right course and are in good shape to make the most of the opportunities."