Displaying items by tag: logistics

Russia: Kaliningrad region is redirecting cement deliveries to the region to sea transport following the implementation of trade sanctions by neighbouring Lithuania. The first consignment of cement redirected from the railroad, on the Kholmogory dry-cargo carrier, is scheduled to be transported on the Bronka - Kaliningrad shipping route by the end of June 2022, according to Interfax. The Ursa Major cargo ship will also be used on the Ust-Luga - Baltiisk shipping route. Additional ships will be used to increase transport capacity to supply the Russian enclave.

Deputy head of the regional government Alexander Rolbinov said, "Now, with the support of the Russian Transport Ministry, the logistics of supplying the region with essential cargos are changing. In particular, we are fully redirecting cement deliveries to sea transport. We have already worked out with Eurocement the required amount of material for the construction industry, which will be packed in 'big bags' and shipped by the fleet. The situation is under the constant control of the governor."

The Kaliningrad region needs about 600,000t/yr of cement. Previously cement was transported by rail through the European Union (EU). However, EU economic sanctions in response to the war in Ukraine started being implemented directly by Lithuania from 18 June 2022. The Russian government has threatened Lithuania with retaliatory sanctions.

Boral admitted this week that high energy costs in Australia had forced it to reduce production levels. Chief executive officer Zlatko Todorcevski revealed to Reuters that the company was temporarily cutting back some unspecified areas of its operations. He also said that it was going to have to pass on growing energy prices directly on its customers.

This has followed mounting alarm at fuel prices in successive financial reports by the building materials company leading to revised earnings guidance being issued in May 2022. Bad weather was responsible for the larger share of the expected additional adverse impact to underlying earnings in its 2022 financial year but around US$10m was anticipated from rising fuel prices. Growing coal and electricity prices were said to be impacting its production and logistics costs, with price rises in January and February 2022 having proved insufficient to keep up with inflation. In a trading update in March 2022 the company said that its exposure to coal prices was unhedged for the second half of its 2022 financial year, to June 2022.

An energy crisis in Australia may seem hard to understand given that the country is one of the world’s biggest exporters of coal and gas. Yet, the country has faced a number of problems with its electricity generation sector in 2022 with disruptions to coal supplies to power stations, outages, ongoing maintenance and a cold winter that adversely affected the market. This led the Australian Energy Market Operator to suspend the country’s main wholesale market on 15 June 2022 in an attempt to stabilise the supply of electricity. New South Wales has also reportedly forced coal mines to prioritise the local market over exports. Energy minister Chris Bowen even asked the residents of New South Wales to try and reduce electricity use in the evenings in an attempt to prevent blackouts. However, with the consumer electricity market now looking more stable, attention has turned to industrial users such as Boral.

Global Cement Weekly has covered energy costs for cement producers a couple of times in the last year. There has been plenty of angst about growing energy costs on cement company balance sheets since mid-2021 as the logistics problems following the lifting of the coronavirus-lockdowns became clear. The biggest story at this time was an energy crisis in China that caused supplies to be rationed to industrial users. This then intensified with the start of the war in Ukraine in February 2022 and energy prices went up everywhere as economic sanctions were imposed upon Russia. One standout was Turkey where cement producers publicly raised the alarm about jumps in coal prices.

Recently, some North American lime producers such as Lhoist North America and the Mississippi Lime Company have been notably bold in announcing price rises due to energy costs and other factors. This week, for example, Lhoist North America said it had raised the price of its lime products by up to 45%. It cited the ‘challenging circumstance’ for all parties at an ‘unprecedented’ time. One alternative to the direct approach of simply putting up prices has been the use of energy surcharges. Japan-based Taiheiyo Cement announced earlier in June 2022 that it was going to introduce a coal surcharge for its cementitious products in September 2022 due to rising energy prices. Its system is based on the coal price with revisions planned every two months. The scheme will run for one year in the first instance. How customers will react to this remains to be seen.

We have looked above at a few disparate examples of the problems that energy costs have been causing cement and lime producers over the last month. These issues look set to continue in an acute phase while the war in Ukraine rages on, but the longer term trends from the economic recovery from coronavirus will undoubtedly last for longer. As examples in Australia and China have shown, local energy crises can easily spill over into the industrial sector as domestic users are prioritised. So, even if cement companies source their supplies carefully, they may face issues if the wider market struggles. Meanwhile, cement producers face the dilemma of justifying price rises to customers adapting to mounting inflation. Taiheiyo Cement has shown one way of doing this. The problems caused by surging energy prices to other cement companies look set to become more apparent in the next few months as reporting of the first half of the year emerges.

Belgium/France: Ciments Calcia plans to transition 60% of its truck transport of cement in Belgium and France to rail. The company says that the shift will eliminate 5% of its CO₂ emissions. 400 rail cars currently distribute cement from Ciments Calcia’s 10 production sites. The producer said that the planned increase became possible due to logistics solutions developer Everysens’ transport digitisation software.

South Korea: Korea Cement Association (KCA) members’ cement shipments fell by 90% over two days to 13,000t on 8 June 2022 from 180,000t/day prior to a truck driver strike which began on 7 June 2022. The association claimed that producers lost US$23m-worth of sales in the first two days of the strike, which also affects other industries. 17 ready-mix concrete batching plants in the Seoul area have suspended operations. The Korea Herald newspaper has reported that the association representing the construction industry has also voiced concerns about the supply situation.

France: Logistics software provider Everysens says that its Transport & Visibility Management System (TVMS) product has helped Ciments Calcia to improve its use of railway transportation. Philippe Labbé, the logistics director for the subsidiary of Germany-based Heidelberg Cement, said that the company had been using the software for three years. During which time it increased its productivity and saved time on the operational management of rail logistics. Labbé added that he thought the product would help the company meet its decarbonisation commitments by switching more trucks to rail.

Ciments Calcia originally chose Everysens to digitise of use of railway transport, to bring all the relevant data on to one platform and to improve its management of it. The building materials manufacturer sells around 5.3Mt/yr of cement and it operates 10 production sites. It uses over 400 railway wagons in France and Belgium.

India: Bharathi Cement plans to build a US$17m automated terminal and packaging plant at Coimbatore, Tamil Nadu. United News of India has reported that the facility will package the company’s bagged and bulk cement and supply the South West Tamil Nadu and Kerala markets.

On 23 April 2022, the subsidiary of France-based Vicat despatched its first rake of cement aboard custom-built tank and box container cars to Coimbatore from its Kadapa, Andhra Pradesh, cement plant. Vicat’s India CEO Anoop Kumar Saxena said that the first-of-its method of bulk cement transportation will reduce the company’s logistics costs and carbon emission and increase the service level for customers.

India: ACC has launched its new Concrete Direct app for booking and live tracking concrete deliveries. The producer says that the app reduces operational follow-up calls.

Managing director and CEO Sridhar Balakrishnan said “At ACC, we recognise the need to improve and lead through digitalisation. We are happy to launch Concrete Direct, a premium digital tool that saves time and money for our customers. With such innovations, we want to enhance customer experience and build a strong ecosystem of partners to support them.”

India: The Indian cement industry's sales volumes will rise by 18 - 20% year-on-year in the 2022 financial year and surpass 2020 financial year pre-Covid-19 outbreak levels by 6%, according to ratings agency ICRA. The Press Trust of India has reported that, in the first nine months of the 2022 financial year, fuel and electricity costs rose by 31%, raw materials costs by 12% and logistics costs by 5%. This offset a 5% net sales rise to result in an operating profit before interest, taxes, depreciation and amortisation (OPBITDA) per tonne of cement of US$14.70/t, down by 10% year-on-year. ICRA forecast a further decline in full-year OPBITDA per tonne of 16 - 18% to US$13.50 - 13.80/t in the 2022 financial year.

China: Geely will include electric cement truck battery pack change facilities in its roll out of 5000 vehicle battery change stations across China. Carscoops News has reported that the stations will be able to remove vehicles’ 3.2t, 280kWh battery packs in five minutes and fully recharge them in an hour. Cement truck drivers will be able to access the service via a simple QR code scan.

New Zealand: Golden Bay Cement has obtained two hydrogen-fuelled cement trucks produced by Hyzon. TR Group leased the vehicles to the cement company.

Golden Bay Cement said “These two zero emission green trucks signal the future, and are just another step we take to a smaller carbon footprint across our business.”