INSIDE VIEW '10: Distribution industry to face challenges

28 December 2009 20:30  [Source: ICIS news]

By Christopher Jahn
President
National Association of Chemical Distributors (NACD)

Editor’s note: US chemical industry association leaders were given the opportunity to express their views on the challenges and opportunities for 2010

WASHINGTON--When I gave you my “outlook” last year, I predicted a year with unprecedented challenges for the chemical distribution industry - an economic downturn that would impact chemical distributors and all players in the supply chain and a new administration with eager plans to pass new legislation that would threaten our businesses. These predications are now realities.

But like good Boy Scouts, we are prepared. Nimble and flexible and armed with the foresight to practice the attributes of the Responsible Distribution Process (RDP), our members are prepared for whatever looms ahead. They have been operating lean and stand committed to weathering the storm, while not sacrificing quality or safety. They continue to provide a vital service to US commerce and are conscientious toward their responsibilities concerning stewardship and performance.

The data presented in NACD’s current Membership and Performance Data Report reflects that our industry is strong. The typical NACD member is a small business with $26m (€18m) in revenue, 28 employees, and three sites. The typical member has over 306,000 miles driven, 6,900 shipments, and moves 36m lbs of product. The report also illustrates our excellent safety record. The amount of miles driven and volumes have increased over the past few years while incidents and spills have declined dramatically. Where there are areas for improvement, it is clear that our industry addresses them quickly and has made significant progress in the recent years.

There is no “typical” anymore.  Markets that used to have a pattern, like automotives, and price fluctuations that typically came quarterly don’t anymore.  Each of our members is learning how to operate in a world where the known is uncertain. 

Our members are very savvy business people, always watching the markets. While focusing on their core expertise, they are always open to new opportunities. Perhaps the secret to their success is that they continuously foster their relationships with their supply chain partners.  In doing so, they are very aware of the needs and future expectations of their suppliers and customers.  Through RDP, NACD member companies have business models in place that allow them to operate efficiently and offer flexibility to their customers.

2010 priority issues

(The year) 2010 will pose new legislative and regulatory threats that could potentially reshape the industry. We face challenges and threats from a wide variety of areas, from changes in chemical facility security and “climate change” legislation, to rail competition and the “Employee Free Choice Act.” We remain steadfast in our commitment to educate lawmakers and guide them toward policies that will allow our industry to prosper, remain in business AND protect our local communities, economy and environment. But we are concerned by some of the proposed legislation currently under consideration. We will continue to reach out to government agencies and our stakeholders to engage in the dialogue. By planning ahead and working together, we can reach our destination of a stronger, healthier, safer, more secure and profitable chemical distribution industry.

NACD member companies have and continue to implement various security measures to enhance existing safety protocols and are vigilant in regards to the protection of our products and facilities.

Despite the recent House passage of House Resolution 2868, NACD will continue to urge the Senate to reconsider the changes made to the CFATS (Chemical Facility Anti-Terrorism Standards) programme in this legislation and to simply reauthorise the current programme for a minimum of two years. CFATS is a landmark new security programme that has been in effect for a short while. The Senate should allow these regulations to be fully implemented and evaluated before changing the requirements.

TSCA (Toxic Substances Control Act) will be next big hurdle for EPA (Environmental Protection Agency) to tackle and one to which we will pay close attention. In September of last year, California became the first state to enact a comprehensive chemicals management programme. As individual states take action, a major concern is that federal and state programmes may be duplicative or conflicting. This could make chemical distribution across state lines extremely difficult. If action is to be taken, there should be one federal uniform standard, not the potential for 50 different state standards.

Last year, several key members of the Senate and House introduced “Kids Safe Chemicals Act,” which would have amended the TSCA to shift the burden of proof that chemicals are safe from the EPA to the chemical industry. These members of Congress plan on introducing similar legislation early in 2010.

We are, however, pleased that the principles outlined by EPA Administrator Lisa Jackson talk about the use of risk-based standards and sound science. NACD looks forward to working with EPA, Congress and other stakeholders on the details of TSCA modernisation legislation that will result in greater protection of human health and the environment while allowing for continued chemical industry innovation.

Since the enactment of the Hazardous Materials Transportation Act (HMTA) in 1975, those engaged in hazardous materials transportation have operated under the national uniform regulations established by this law, the Hazardous Materials Regulations (HMR). The HMTA and HMR have resulted in a commendable hazardous materials safety record. NACD members are strongly committed to the safe and secure transportation of hazardous materials.  In fact, NACD member companies make a delivery every 6 seconds with a fatality rate twice as low as DOT’s (Department of Transportation’s) target goal .

In recent years, many new regulations have been implemented to ensure the security of hazardous materials in transportation. As a result, the industry is currently faced with multiple sets of regulations and requirements from various agencies. This duplication creates confusion and wastes valuable resources.

In 2010 we will continue to urge Congress and the federal agencies with jurisdiction over hazardous materials transportation safety and security to adopt reasonable, non-duplicative laws and regulations.

Our goal is to see a strong national regulation of hazardous materials in transportation established. Uniform regulation is essential for protecting the public, facilitating compliance and providing for efficient movement of essential materials in intrastate, interstate, and foreign commerce.

Educational Efforts

NACD continues to support the Chemical Educational Foundation (CEF) and its successful programmes – most notably the You Be the Chemist (YBTC) Challenge programme. The YBTC Challenge is a fun, educational competition that aims to engage grade 5-8 students in the study of science. The Challenge is rapidly growing with 2010 competitions taking place in 18 states, approximately 14,000 student participants, over 50 industry and educational institution sponsors, and thousands of volunteers.

The Challenge, and CEF’s other YBTC programmes, provide an avenue by which members of the chemical industry can actively engage in community partnerships to enhance science education. The YBTC programmes aim to spark students’ interest in the study of science at a younger age; leading to the next generation of chemists, scientists, and engineers  - a welcome benefit to distributors and manufacturers alike.

Looking Ahead

As we enter 2010, the landscape has changed and many questions still remain: Will economic recovery take hold? Will new legislation be enacted and what impact will it have on the industry?

Here is what I know: We can now see the light at the end of the tunnel to the worst recession in our lifetime; our member companies have remained steadfast in your commitment to quality and safety through RDP;  they have remained dedicated to the constituents to whom they serve; they have remained unfaltering in the pursuit of excellence…. and regardless of what other hurdles remain on the horizon, this commitment and perseverance  will enable our Industry to remain strong now and in the future.

($1 = €0.69)

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