Flexies Strut their Stuff

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In this era of base oil oversupply and cost sensitivity, one flexitank supplier says this relatively new shipping technology offers the low cost and flexibility that gobal base oil businesses need to stay competitive.

Rob Parrish, president and a founder of FGN Global Logistics of Charleston, S.C., gave this summers ICIS Asian Base Oils & Lubricants Conference in Singapore a primer on flexitanks.

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Flexitanks currently ship a half million units globally, Parrish said – defining a unit as a single 20 metric ton flexitank loaded into a 20-foot ocean container and shipped internationally. Its a $2 billion industry, currently about 40 percent in Asia, 30 percent in North and South America, and 30 percent in Europe, the Middle East and Africa.

The North American market is thought to be poised for outsized growth, due to slow uptake of technology in the past, said Parrish, who predicted the industry will ship nearly 700,000 units by 2015. Four firms account for 25 percent of global flexitank volume, and the remaining market is highly fragmented.

Base oils are the fastest growing segment using flexitanks today. Products using flexitanks are: vegetable oils, 27 percent of flexitank usage; naphthenic base oils, 13 percent; polyalphaolefins, 13 percent; paraffinic base oils, 11 percent; lubricant additives, 4 percent; ethylene glycols, 3 percent; aromatic base oils, 1 percent. Wine accounts for 20 percent of usage, and all other products for the remaining 8 percent. Only nonhazardous products can use flexies, he noted.

A flexitank, Parrish continued, is essentially a bag in a box. But, he cautioned, half the flexitanks on the market are to be avoided. He recommended using only a multi-ply bladder made with a high quality polyethylene film (this accounts for 65 percent of the cost of your flexitank) with an outer layer of polypropylene cloth. Parrish further recommended that every tank be pressure tested, and used only with high quality valves.

The flexitank industry was born in the 1970s with use of butyl rubber tanks, but they contaminated the contents, said Parrish. In the 1980s, PVC tanks were introduced, but they leaked. In the 1990s, polyethylene tanks were introduced, and industry volumes soared in the 2000s, with a large influx of manufacturers. By the 2010s, manufacturer shakeout had begun (25 percent of manufacturers have exited the market since 2010), and the integrator business model dominated.

FGN Global Logistics, like its key competitors JF Hillebrand, Hoyer Group and Braid Logistics, are integrators, Parrish explained. That means they are single-source providers for the entire shipping transaction, from fitting and filling the flexitank, to international shipping and delivery to the customers door, unloading and final flexitank disposal. Twenty-five percent of shipments today are handled by integrators, he noted.

The flexitank business faces the common perception of too much risk, but using an integrator can assure quality control, meet insurance requirements, and mitigate risk, Parrish contended. By contrast, a flexitank manufacturer sells the system, and thats it. Hes only involved in defending his product if theres a problem with the flexitank that can be proved. Big shippers who are regular flexitank base oil users, like Chevron, ExxonMobil, Nynas, Ashland, Infineum, Lubrizol and others, prefer integrators.

The proper insurance is important, Parrish continued. There are three key areas: manufacturers liability insurance, for a minimum of $5 million and up; shippers interest insurance, also called cargo insurance; and installation insurance, or packing insurance. Never ship uninsured, he warned.

A base oil companys bulk shipping options include parcel tanker, ISO tank, flexitank, and drums and totes. Across a broad spectrum of weights, said Parrish, the flexitank offers the lowest per unit cost. Across most common bulk liquid shipment volumes, flexitanks prove to be the low cost option.

But also be sure to use an integrated service provider, Parrish concluded. They have skin in the game due to their responsibilities to the ocean carriers, and they have a stronger business model which will survive the impending industry shakeout.

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