Logistics to pose key challenge for Middle East petrochem sector

20-Dec-06

The petrochemical industry is increasingly looking at the Middle Region as the centre of gravity for the global industry. The GCC's prominence can be attributed to easy access to feedstock, access to the latest technology, and strategic location at the intersection of the Americas, Asia and the rest of the world. Chemical exports from the Middle East Gulf (MEG) will more than double to 37 million tons by 2009, but a tight transportation market will push up transportation costs, as per discussions at the first annual forum of the Gulf Petrochemicals and Chemicals Association (GPCA) in Dubai. Will the region be able to retain its cost competitiveness, especially with producers that may be closer to the market, if transportation costs rise? One solution for the regions logistics problems will be an efficient and cost effective supply chain, wherein it becomes more important to strategise at optimising the effectiveness of the fleet itself, rather than adding new ships to the fleet. As per the conventional approach, a deepsea parcel tanker makes a voyage from the region visiting several ports and terminals over the course of a single voyage. But a newer and more effective strategy will have to concentrate on an approach that dramatically reduces turnaround times and leverages local storage and distribution capabilities. This means that the efficiency of both the deepsea assets and the overall supply chain is substantially enhanced.