Øystein Drillestad, Logistics Manager Corporate of Borregaard, a major Norwegian industrial group, was one of the speakers at one of our regional shortsea conferences in Norway.
Drillestad explained the group's clear strategy of focusing on shortsea transport. The main objective has been to save money. However, even in cases where maritime transport is at the same price level as road transport, Borregaard now actively chooses the seaborne alternative.
What has Borregaard made to increase the share of transport by sea?
Borregaard is the world's most advanced bio refinery. They have an integrated production system for a range markets. A wood log of 1.000 kg produces 400 kg specialty pulp that is converted to many products - building materials, cosmetics, foods, tablets, textiles, paints and varnishes. Of the same log, Borregaard also produces 400 kg of lignin, which is used as an additive in feed stocks, dyes, batteries, pain and other. 50 kg is converted to bioethanol, which is used as biofuels, in the pharmaceutical industry, and in paints and varnishes and car care products. Finally, three kg is converted to vanillin, used in food, perfumes and medicines.
Across the globe
Borregaard is a major transport user within Europe and globally. 400,000 tons of liquid products is shipped annually. Of this outbound transport by sea represents 70 percent, the remaining is shipped by road. For export by container, overseas containers represents 50 percent, liquid bulk 35 percent and shortsea 15 percent.
More than doubled shortsea volumes
In 2012 85 percent of Borregaard transport in Europe was made by road and only 15 percent by short sea shipping in container. The short sea focus has changed this. From 2012 to 2014, road transport has decreased by 20 percent to 65 percent while shortsea shipping now accounts for 35 percent of Borregaard's European transport.
What has Borregaard done to transfer European cargo to the sea?
- Borregaard has recently including traditional land transport volumes in its annual shortsea tender. Borregaard receives support from Marco Polo and, the group has worked closely with the shortsea lines to make them more competitive. Borregaard has also shifted cargo to shortsea in cases where road transportation has been a little more competitive due to the environmental advantage of ships. - At the same price level, we always choose sea. We have also spent a lot of time with large volume customers to convince them to shift to maritime transport. Many customers have reception facilities for road transport only, and it takes some time to convince them, says Drilestad.
In many cases, the painstaking work of Borregaard's has been successful. Drillstad highlights the close cooperation with Samskip as a contributing factor to Borregaard's successfully bet on seaborne shipping.
Important factors for cargo owners
- Like a river, the cargo always chooses the path of least resistance!, says Øystein Drillstad. He points out five important factors for cargo owners related to shortsea shipping:
- Competitive pricing
- Limited extra transport lead time
- Competitive quality of delivery
- Same or better predictably in pick-up and delivery
- Cargo owners active participation in the change of transport habits at the receiving end of the transport
The biggest challenge for the future
As a representative of a major cargo owners, Øystein Drillstad is not in doubt about the biggest challenge of shortsea shipping. Like many others. And it will happen quickly and abruptly! In January 1st 2015, becomes the new sulfur directive will be enforced. The results will be increased cost of shortsea shipping. It has been predicted that the cost increase will be 10 percent.
- This reduces the competitiveness of maritime transport compared to road, says Drillstad, who wonders why there has been a lack of action to prevent the back shift from sea to road transport by the lines and the authorities.
Drillstad also points out two other factors that are negative. One is transport lead time, which is five to ten days for intermodal transport compared to just two to three days for trucks. Also, the cargo is handled four to six times at intermodal transport compared to only two to three by road. The more handling, the greater the risk of damage. - On the positive side, so far we have not had much damage to seaborne goods, Drillstad confirms.