Dow Establishes New Transactional Service Standards For North American Chemicals Customers
"The chemical industry as a whole is facing a crisis due to the shrinking of shared transportation resources," said Tim King, Vice President of Sales for Dow's Chemicals & Intermediates and Performance Chemicals & Thermosets businesses in North America. "Dow is taking the lead in addressing this crisis by establishing consistent standards that will enable us to continue to provide valuable transportation logistics services for our customers."
King noted that a number of factors have contributed to the current transportation services crisis in the chemical industry, namely a shrinking of shared transportation resources due to an acute shortage of truck drivers, fewer transport carriers, and carrier industry consolidation. Transportation industry operating costs, especially for diesel fuel, also have increased dramatically over the past several years, impacting the industry's cost to serve. In addition, the strengthening economy in the U.S. and Canada has created an increase in volume demand, further depleting the already diminished pool of shared transportation resources.
The new policies set standards on a number of Dow's service offerings -- including lead times, full vehicle loading requirements, minimum order quantities, and detention policies. In the past, these service offerings could vary from business to business for the same Dow customer. A new less-than-truckload (LTL) offering and liquid drum price schedule also has been introduced to simplify Dow's price schedules and the order placement process. In addition, Dow is providing information on typical delivery window expectations and clarification on standard truck equipment.
Dow designed its transactional service standards to match current transportation industry norms. For example, the new transportation lead time for Dow-arranged bulk liquid truck and packaged truck will be two business days or 48 hours. There is additional flexibility for customer-arranged transportation for customers that have their own logistics capabilities.
"The new transactional service standards follow an extensive analysis that Dow conducted on the capabilities of the company's internal supply organization, as well as those of transportation carriers and distributors," said Rob Broomham, Dow's Director of Distribution Sales and project leader for Transactional Service Standards. "Based on this analysis, Dow has set standards designed to make the most efficient use of the shrinking shared transportation industry resources, while minimizing the impact of the crisis on our customers. Importantly, our new standards create consistency and offer customers choices in how they manage transportation costs."
Broomham noted that for customers whose orders fall within the standards, the impact will be minimal. He estimated that most customers will only be affected by one or a few of the new standards. Those customers whose orders fall below minimum standards will have a choice of how they want to handle their transportation services. For example, they can choose to increase their order size to the minimum, arrange transportation through a carrier of their choice, or they can order from a Dow pre-approved distributor.
"Dow distributors play a critical role in helping the industry face this crisis in chemical industry transportation services," Broomham stated. "We recently completed an extensive review and optimization of our distribution channel, including a thorough analysis of our distributors' capabilities, offerings and expertise. Our distributors understand the valuable role they play and we are confident that they are prepared to meet the needs of customers who choose that option."
Dow is the first company to publicly announce a comprehensive set of service standards across all its chemicals product lines in North America, although a number of chemical companies have announced changes in a smaller number of policies.
"Given that all chemical companies are facing the same transportation industry dynamics, such as shortage of trucking capacity and rising fuel costs, it's not surprising that changes are occurring across the industry," said King. "It is our belief that as the economy continues to recover and demand for chemicals increases, the crisis is only going to get worse. Since transportation resources in the chemical industry are shared, we are all affected by these industry dynamics," he added.
The new policies will apply to chemical products from Dow's Chemicals & Intermediates and Performance Chemicals & Thermosets portfolios sold to customers in the U.S. and Canada.
For details of each policy, visit the Transactional Service Standards webpage at www.dowtss.com.