Colombian chemical companies and carriers work together to overcome mounting challenges that hamper distribution efforts
SURVIVING as a chemical hauler in Colombia takes hard work, patience, and a bit of luck. This land bearing the name of Columbus, discoverer of the Americas, offers some of the most spectacular vistas found anywhere in South America. Colombia's geography is one of the most diverse, ranging from soaring, snow-covered mountains to tropical rain forest to desert.
However, hidden behind the scenery are a multitude of challenges that must be overcome by the carriers serving the nation's chemical industry. Tank truck carriers in Colombia certainly are struggling these days.
Topping the list of challenges is the largest and longest-running guerrilla insurgency on the South American continent. The conflict has claimed tens of thousands of lives and has cost truck fleets millions of dollars in destroyed vehicles and lost cargoes.
Illegal drugs contribute to the turmoil. This Andean nation of 39 million people is harvesting bumper crops of coca leaves and opium poppies. US officials say Colombia supplies 90% of the cocaine and two-thirds of the heroin sold in the United States.
With the Colombian government sinking billions of dollars into efforts to fight both the guerrillas and the drug lords, the economy as a whole has suffered. Unemployment is around 20%, and some of the best-trained people are leaving the country. The chemical industry in Colombia is struggling, as are the trucking companies that serve it.
"Approximately 1,000 carriers of all sorts are registered with the transport ministry, but no one knows how many are actually active today," says Jaime Sorzano Serrano, president of Colfecar, the association that represents Colombian trucking companies. "I personally believe no more than about 300 are in operation today.
"The cost of doing business has simply overwhelmed many trucking company owners. Diesel prices increased 40% over the past year. Operating costs went up 22%. Economic conditions today are very serious."
Falling Cargo Cargo volumes fell 7 11/42% from 1998 to 1999, and the downward trend continued this year. The situation is complicated by an oversupply of transport capacity that has persisted in spite of the fall off in total number of fleet operators. A poll of billable invoicing showed a 7.6% decline, a clear indication that rates have been pushed downward.
Despite the problems, Sorzano wants to remain optimistic about the future. "This country of ours has great potential," he says. "We have so many natural resources, and we have a solid industrial base. For many years, Colombia had one of the strongest economies in South America.
"If peace can be achieved - if we can bring an end to the guerrilla conflict - there is so much that we could accomplish. The multinationals will return, and they will bring a new challenge in the form of sophisticated supply chain management techniques. Colombian fleets must be prepared for that."
Some chemical companies have pulled up stakes, but a significant number are working hard to overcome the difficulties and maintain a presence. Products include agricultural chemicals, resins, acrylics, lubricant and gasoline additives, oil production chemicals, glycol, and polystyrene.
BASF is one of the companies that made substantial cutbacks, closing its production plant in Cali in 1999. However, BASF's recent acquisition of American Home Products included an ag chemicals plant in Baranquilla, and that facility is still operating.
Other chemicals are imported. About 100 tonnes (110.2 US tons) a month of polyester resin is brought in from BASF plants in Germany and Chile. "The biggest volume comes from Chile," says Cesar Cadavid, sales and planning at BASF Quimica Colombiana SA. "We also import product from Brazil, Mexico, and the United States."
Some products are shipped in drums, sacks, or boxes, but bulk shipments are gaining popularity. "We were the first chemical company in Colombia to use tank containers, and we remain committed to them as one of the safest ways to transport liquid cargoes," Cadavid says.
BASF Quimica Colombiana receives bulk inbound shipments of butyl acrylate by parcel tanker, and the chemical is stored at the Algranel terminal in Cartagena. Customer deliveries inland are by road tanker.
Lubricant Imports Texaco receives all of the ingredients for its lubricant products from the United States. The nonhazardous materials are shipped in tank containers from Houston, Texas, to the Texaco plant in Puente Arandas, about 800 kilometers (490 miles) from Cartagena. Finished products are sold throughout the Andean region and Central America.
"We receive four tank containerloads each month," says Nora Moratto with Texaco. "Tank containers give us a safe and cost-effective method of transport. Transport cost is a key concern, because we are in a very competitive market. All of the major oil companies are here, and most have their own production."
Acrilicos Ltda imports five to six tank containerloads of acrylics every month from the United States. Product is transloaded into road tankers for final delivery to customers in Bogota and Medellin.
"Tank containers are an attractive alternative to parcel tankers for us," says Martha Isabel Umbarila, assistant director of Acrilicos Ltda. "We find it easier to manage inventories with tank containers. Bulk tanker shipments always took longer and were difficult to manage. We also had to pay for storage."
Dow Quimica de Colombia has three plants in Colombia that produce polystyrene, polyols, and ag chemicals. Sixty percent of the chemicals produced in Colombia are exported out of the region, while the remainder goes to customers in Colombia and Venezuela.
Dow has its own bulk terminal in Cartagena, and parcel tankers transport a majority of the import/export traffic. In addition to 15 storage tanks, the terminal has a tank trailer loading rack and a drumming station. Dow also has warehousing in Bogota and Medellin.
These distribution facilities handle a variety of chemicals that are imported into the country. Imports include phenol, methylene chloride, and propylene glycol.
In Colombia, Dow focuses most of its attention on bulk shipments of liquid chemicals. "Bulk shipments of plastic pellets are just beginning," says Andres Bedoya, logistics manager at Dow Quimica de Colombia. "It's just a small market at this time. Not many customers are big enough to install silos and the rest of the infrastructure."
Port System Cartagena has become a popular port on the Caribbean coast for chemical shipments, and it has the fastest-growing container terminal. Other Caribbean ports are at Baranquilla and Santa Marta. Buenaventura is the largest port on Colombia's Pacific coast.
Looking inland from the ports, chemical shippers have limited options for transportation. Road transport is the primary choice for 90% of the bulk chemical shipments. However, companies are beginning to explore fresh options.
"We are looking at more efficient and lower-cost ways of moving containers inland," says Andres Velasquez, commercial support and logistics group at the Port of Cartagena. "Inland logistics can be a real pain. Inland transportation costs can be higher than the rate to move a container from Miami (Florida) to Cartagena.
"Options include rail and river transport. We believe that developments are occurring in these modes that could begin to have an impact on the transport industry in the next year or so."
The railroad out of Santa Marta (northeast of Cartagena) is one of those that has been privatized, and the tracks are being extended to Bogota. There is talk about adding another rail line to connect Santa Marta and Cartagena.
Colombia has a number of navigable rivers that could be put to greater use moving cargoes inland. For instance, the Magdalena River was once the principal waterway of the central part of the country, and it is receiving renewed attention. Some bulk cargoes already are transported on the river, and plans are underway to add container service between Cartagena and Baranquilla.
While the rails and rivers show promise for the future, road is virtually the sole mode for now. Moving chemicals over the road can be challenging for a number of reasons.
Hostile Terrain Challenges start with the basic operating environment itself. The western part of the country is mostly mountainous, and this is where the largest cities and most of the industry are located. Main highways are paved and in generally good condition, but mountain grades are steep. During the rainy season, even the best highways can be flooded or washed out.
The guerrilla insurgency causes serious problems. In areas where guerrillas are active, trucks have been confiscated at gunpoint. Vehicles are burned occasionally, and tires are shot out. Drivers have been injured and killed.
Road blocks crop up, often without warning. Some are initiated by the guerrillas, while others are set up by local community groups protesting against various social or political issues.
"We had 40 days of blockade-related delays on Colombia's highways just through July of this year," Colfecar's Sorzano says. "For the entire trucking industry, road blocks delayed 230,000 loads equaling three million tonnes (3.3 million US tons) and valued at 125 billion pesos ($58.1 million)."
Carrier Selection In light of these challenges, most chemical companies in Colombia are careful when selecting tank truck carriers. The fleets that are most active in the transport of chemicals are acknowledged to be very good at what they do. Carriers in this select group include TDM Transportes Ltda, Transportes Inoxidables, Coltanques, Botero Soto, and M&S Transporte.
"There are a lot of small trucking companies in Colombia, but we prefer to work with the largest ones for safety," says BASF's Cadavid. "We want carriers that are experienced with chemicals.
"It's important that the vehicles be very well maintained. Tractors can't be more than five years old, which is a challenge because many trucks are privately owned and are contracted to the fleets."
Chemical companies want fleets to carry cargo insurance. State-backed insurance covers the tractor and trailer, but cargo isn't included. "We're working to include cargo in the program," says Colfecar's Sorzano.
Security is another concern in carrier selection. Good security doesn't come cheaply, though. Sorzano estimates that security adds 22% to the cost of moving a ton of freight. "Fleets are trying to improve security with satellite tracking, which is just entering this market," he says. "But what good does it do to know that a truck is under attack if you can't do anything about it. We need GPS in conjunction with a security reaction force."
Besides handling chemical cargoes throughout Colombia, the carriers also manage shipments for their customers into neighboring countries, especially Venezuela. Some Colombian carriers have established operations in Venezuela, but most work through Venezuelan agents and interline partners.
"We have a substantial number of shipments going from Cartagena to Valencia, which is the industrial center of Venezuela," says Bedoya, who is a member of Dow's Distribution Code Committee for the northern region of Latin America. "The 1,002-kilometer (622-mile) trip takes three days. That is two days of driving and one day to clear customs.
"We also have shipments coming into Colombia from a small latex plant in Venezuela. All of those shipments go to papermills in the Cali area."
Regardless of the chemical, shippers in Colombia exercise fairly tight control over their preferred carriers. For instance, BASF has its own driver training program, which lasts a week.
Drivers working for chemical carriers are skilled operators for the most part, but they haven't had any formal training. Colfecar has been working with a national service institute to develop a training program, and that effort continues.
Truck driving is a popular career in Colombia, and there is no shortage of drivers. Many drivers are members of the national drivers' union - Asociacion Colombiana de Camionaros. On average, drivers receive a base pay of around 260,000 pesos ($119) a month plus 8% of the monthly revenue generated by the truck.
Cargo Documents Documentation gets close scrutiny. Every shipment must be accompanied by a material safety data sheet, and this is a government requirement. Tanks must be correctly placarded. "Police at checkpoints will inspect all documentation, so it must be in order," Cadavid says.
For many products, tank trailers must be cleaned before being dispatched for the next load. With few commercial wash racks available, most cleaning is handled inhouse by the fleets or at chemical plants. Much of the cleaning is done by hand.
Tank trailers are inspected before loading. At Dow, inspectors follow a detailed checklist. Dow also requires hydrostatic testing every two years for tanks used to transport certain hazardous cargoes, such as phenol.
"There are no national standards in this country covering the design, construction, maintenance, and testing of cargo tanks used to transport chemical cargoes," Bedoya says. "Standards are in place for petroleum trailers, and chemical transport also needs to be covered. We have been working on a proposed standard for about a year and a half."
Tank trailers used in Colombia are built locally by a handful of manufacturers. Those turning stainless steel tank trailers include Dite SA and Romarco Ltda in Cali and Inca Fruehauf in Bogota.
The manufacturers produce robust tank trailers that are very damage resistant. Stainless steel tanks are offered in insulated and uninsulated versions. They are built to handle high payloads of around 30 tonnes (66,000 pounds). In contrast, payloads for tank containers are about 20 tonnes (44,000 pounds).
Umbarila with Acrilicos Ltda points out that the payload differential is the main reason her company prefers transloading cargoes from tank containers into tank trailers from deliveries to customers that are inland from the coast.
With the challenging political and economic conditions in Colombia, it's not surprising that chemical companies are looking for every possible way to boost transport efficiency. However, chemical company managers make it clear that safety never will be sacrificed, and that they are working closely with tank truck carriers to make the industry one of the best in the region.