Solutions for storage

23 April 2001 00:00  [Source: ICB]

Simon Storage is the largest independent storage company in the UK. Monica Bianchi looks at the company's overall strategic plan and the services it provides to the industry

The year 2000 was a year of transition for UK logistics, storage and distribution company Simon Group. Michael Davies, chairman of the group, said that last year saw continued progress made towards the implementation of the group's strategy to develop an integrated logistics, storage and port services business.

The group owns and operates terminals at Immingham West and East, Seal Sands and Riverside in Middlesbrough and the Tyne, Shannon (Ireland) and Cumbria terminals.

Several changes took place at Simon during 2000 and these included acquisitions, divestments, and re-developments at the group's UK terminals.

The Ports Division saw the Humber Sea Terminal (HST) start its operations in October last year, after the construction of a two-berth deepwater terminal was completed at an overall cost of £25.4m ($35.5m) at Killingholme on the south bank of the River Humber.

Simon intends to construct further berths at HST to meet market demand and to exploit the development potential of its 260-acre brownfield freehold estate there.

In the logistics division, Seawheel Vessels' trading results for 2000 was an operating loss before goodwill of £0.1m, against a profit of £3.1m in 1999. This was mainly due to the closure of the Dublin terminal in Ireland following industrial action, fuel protests and the weakness of the euro. Although the terminal has now re-opened, it is only providing a restricted service.

The storage division saw steady profits of £10.9m in 2000 and completed the acquisition of Norman Lewis Tankers (NLT) in July last year. NLT complements Simon Storage's terminal-based bulk liquids and chemical handling services by adding the capability to handle distribution by road, rail or sea. NLT was awarded a three-year contract by German petroleum company Condea (now Sasol) to deliver the company's bulk liquid business in the UK.

The division also continued to upgrade its Riverside terminal at Billingham, which was acquired from ICI in 1999. Only three of the original 21 tanks have still to be repaired, and the terminal is expected to be fully operational by July-August this year.

The facility benefited from an immediate £2.5m investment in upgrades and improvements in both operations and infrastructure, including the installation of an automation system and new tanks and road loading gantries. Riverside adds a further 62 500m3 of tank capacity to Simon's existing Teesside storage facilities at Seal Sands, and includes around 90 acres of freehold land adjoining the River Tees, together with two jetties. Simon has the option to run pipelines between the Riverside and Seal Sands terminals.

As part of the agreement with ICI, Simon was awarded 10-year storage and handling contracts to service two former ICI plants at Riverside producing methanol and acrylics. Methanex, the new owners of the methanol plant, has announced its closure on 23 April. Simon is in discussions with Methanex.

The remaining tanks will be available for third-party liquid storage, and some speculative tanks are also under construction and expected to be completed later this year.

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Peter Rendall, marketing director of Simon Storage, says: 'Industry changes have caused many operators of bulk liquid chemicals to review the way they run their facilities, including the introduction of outsourced skills. We are bringing our design, construction and commercial expertise to Riverside to ensure the terminal runs efficiently and safely and we are investing in its development to meet the future needs of Teesside's chemical industry'.

Simon also invested in the construction of a tank container storage area at its Immingham East terminal, following the award of a new contract by chemical giant Lyondell. The contract involves transit storage of ISO tanks transporting toluene di-isocyanate (TDI) from mainland Europe. This is one of the UK's few specialist temporary storage areas.

In Immingham, Simon signed a long-term contract with Ineos Chlor for the receipt, storage and transfer of sulphuric acid via a new 8.6km pipeline built by Simon to link the Immingham storage facilities with one of its customer's plants in the area.

Seal Sands is equipped to accommodate both long and short-term chemicals storage, and has 206 000m3 of storage capacity and throughput in excess of 1m tonne/year, of which around 90% is accounted for by chemicals. The terminal operates both as an import gateway into the UK and as a storage site for UK exporters. Rex Bradshaw, commercial manager of the northern terminals, says around 50% of business is based on long-term supply-chain contracts with producers, with the other 50% on responding quickly to short-term handling and storage enquiries.

On the commercial front, Simon is trying to expand geographically and to overcome its UK/Irish dimension through plans for expansion into western Europe, and is concentrating on areas such as Benelux to complement its east-coast terminals in the UK, Peter Rendall told ECN.

Simon Storage also applied for planning consent for the construction of a new terminal at Grangemouth, Scotland, owned by Forth Ports. The development of a terminal in Grangemouth would complete the Storage Division's strategic plan to be present in each of the UK's key areas of concentration of chemical manufacture and oil refining business. If the results of the study and the planning consents are favourable, construction of the proposed terminal could start in 2001 and the terminal would become operational during 2002.

At the Cumbria terminal in Workington, Simon recently signed a contract with French multinational company Rhodia for the storage of phosphoric acid for use in their adjacent Whitehaven plant. This new contract is expected to double the current refined product capacity to 4500 tonne, once work on the tank is completed. Simon handled 220 000 tonne of phosphoric acid for Rhodia in 1999, including both raw and refined product.

The progress of all these projects and new initiatives is expected to open new opportunities for Simon, which is trying to grow the business through initiatives that exploit the group's existing assets and provide customers with value-added services.

Simon is doing this by applying the concept of 'innovative storage' to all its operations, and has already installed a computerised automation service at the newly-developed Riverside terminal to enable control over operations on site from a single room. Personnel are able to enter instructions for operations to take place anywhere on the site, and these operations will be performed automatically.

A new inventory system called TASCS, developed by Simon, will enable customers to access movements to and from the terminals and storage information through a computer, therefore simplifying communication and flows of information.

Simon stresses its commitment to safety, and is continuously involved in safety and environmental upgrades at its sites. On the engineering front, Simon's leading position allows the company to assist third parties and customers with distribution-based infrastructure and facilities management.

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