FEATURE: SA Talke on petrochem logistics challenges
SEE ALSO: ANALYSIS: GCC chemical logistics
SA Talke is one of the most well-known logistics brands in Saudi Arabia, and is globally respected for its highly efficient logistics services for the oil and gas sector. But, the company faces a challenge, while it is famous for oil and gas logistics, it fortunes rest to a large extent on the economic performance of that sector. For this reason, SA Talke wants to diversify, and it plans to do so by leveraging the world-class reputation it has developed in the oil and gas sector.
“We’re looking to diversify our business. Our core business will always be petrochemical, but we also have a strong network that can be adapted for other sectors, the ability to package and transport petrochemicals in an efficient, safe and environmentally friendly way will enable us to be more flexible and bring in additional business in healthcare, food logistics and so on,” says Oliver Klingbeil, managing director of SA Talke. “It’s about combining our core competencies with other market niches.”
SA Talke’s core competence is in on-site logistics operations. It was recently awarded an on-site logistics contract for National Petrochemical Industrial Company (NATPET) in Yanbu, province of Medina, Saudi Arabia. SA Talke will operate on-site logistics for NATPET in Medina´s Yanbu industrial city for an initial period of three years. The contract encompasses product handling and warehouse management.
“We are very pleased we could secure SA Talke´s support to this production entity," says Jamal Malaikah, president and COO of NATPET. “By this move we will further enhance our supply chain efficiency and thus our customers´ experience of our product and service quality,” he added.
With this contract, S.A. TALKE extended the geographical availability of its services from its traditional core area Al-Jubail industrial city, on Saudi´s east coast, to the western province. Speaking about on-site logistics operations broadly, Klingbeil says that it is just one of the services in the company’s portfolio.
“In on-site operation we manage the plant for the client with our own manpower and equipment, that’s usually a 24/7 operation throughout the year. Then we have our own off-site logistics operations of course, we have a silo farm and also dedicated warehousing where we handle the product,” he explains. “We also do consultancy, because we’ve seen a lot of these big players deciding to build a major new plant, but building the facility is just one aspect of the business, operating it and getting all the logistics right can be tricky if it’s not your core competency.”
For some clients, such as Saudi Chevron Phillips Company, SA Talke was also involved in the actual design and development of the refinery. “Clients come to us because sometimes a plant may look good on paper but safety and security issues come into play that they hadn’t expected. So we help the client to refine the plans and make it so that they can go live without any last minute issues,” says Klingbeil.
SA Talke likes to be involved right from the start in this way, because it ensures the most efficient relationship between itself and the client. “We share our success with our client and we’re highly integrated with our customers, they’re a part of our operation, it’s not just a business arrangement, it’s a true partnership,” he says. For the same reason, efficiency, a word that came up dozens of times during our interview, SA Talke also does most operations in-house. “In addition to storage and handling we have a dedicated transport division, because the product has to be temperate controlled throughout the supply chain and transported very carefully,” says Klingbeil. “If we do use sub-contractors we remain the single point of contact for the client.”
As a company with a 70-year history in oil and gas logistics, and a 5-million man hours without LTI, SA Talke is a company in high demand, especially since the oil price pulled the rug out from beneath the sector. “There are always pros and cons to this. For us we have regular KPI meetings where we show very clear productivity and efficiency for the client, this includes reduced damages, reduced overtime, reduced downtime, it shows the client that working with us was the right decision,” says Klingbeil.
SEE ALSO: INTERVIEW: Abhishek Shah, RSA-TALKE, MD,
Uptime is extremely important to NOCs and SA Talke is now offering maintenance contracts to improve plant efficiency. “New in our portfolio is the provision of maintenance contracts, so spare parts handling for the customers equipment, and of course monitoring all equipment on the facility. We’re doing this to help ensure the client has an uptime of at least 98%,” explains Klingbeil.
“We’re the experts in this business and what we have seen is that customers in the past have done this job in-house and have faced difficulties because they don’t have the same logistics and supply chain expertise as us. We’ve been doing this for 70 years in this sector, so we have all the resources and the knowledge in various departments to make things happen efficiently and safely. So we save the customer money,” he adds.
Savings in the day-to-day operation is extremely important to NOCs in the current market. “We’re looking more to automation now to combine it with control tower management where we as a logistics service provider offer an additional service to manage their entire supply chain from A to Z,” says Klingbeil. It goes back to core competencies, with low oil prices, the oil majors need to focus on selling the product, while SA Talke can leverage its experience to manage the entire supply chain, from transport, storage and shipping to procurement. “We can do this with our own resources with our SAP application that can be linked to all the different parts of the supply chain and the client can focus on selling the product, while we’ll be the single point of contact,” says Klingbeil.
Another factor that leads oil companies to turn to SA Talke is the unique business environment in the country. “We’ve become bigger and bigger and acquired a vast amount of experience, especially as Saudi is an emerging market, this can make the logistics and regulatory environment challenging, so we’ve learnt how to navigate this because of the team we have. The teams know how to ensure that the job gets done, whatever the job may be,” adds Klingbeil.