This article was published in Tank Storage Magazine, January 2022.
Odfjell Terminals owns five tank terminals at strategic locations in USA, Korea, Belgium and China: Houston, Charleston, Ulsan, Antwerp and Nangang. In total, these terminals offer a total 1.3. million m3 of storage. Odfjell Terminals is also part of a network with 11 terminals in South America, partly owned by related parties. Odfjell Terminals is part of the Odfjell Group, one of the world’s largest deep-sea chemical tanker operators, has its headquarters in Bergen, Norway, and is headed by Adrian Lenning.
As for everyone, Covid-19 has continued to be a challenge in 2021. Building on the experience gained during the first year of the pandemic, we have been quite successful in preventing Covid-19 from interfering with operations. We have had some more Covid cases within our organization, especially in the US, although mainly with employees being infected outside of the workplace. We have procedures in place that have proven to work well.
What used to be business continuity plans have become an integrated part of how we operate.
From a product flow perspective, the global supply chain disruptions seem to have been further exacerbated in 2021. On top of Covid, we had the extreme cold in Texas and the Ever Given grounding – both causing interruptions with direct and indirect impact on the petrochemical supply chain.
On the back of all of this, one key takeaway has been that our portfolio has proven extremely resilient.
Our people have worked tirelessly through the challenges and continued to deliver for our customers, and our assets have performed well.
2021 got off to a tough start, with a fire at our Houston terminal in December 2020 and the Texas freeze in February of 2021. Looking back at these events and how our people on the ground responded, it makes me truly proud to be part of this organization. The fire incident is a reminder of how critical safety, and investments in training, are to our business.
The quick and effective actions by the Houston organization ensured that no one was injured, that products were kept safe, and that the terminal was efficiently brought back to normal operations. Their handling of the situation was nothing short of impressive.
When the freeze shut down most of the Texas petrochemical complex a few weeks later, that same organization ensured that Odfjell was one of the first terminals in the Houston ship channel to resume regular operations.
The freeze has had major and prolonged effects in terms of product flows and market dynamics, well beyond the US market. During the first half of the year, inventory levels have been low and US production has largely gone to serve the domestic market. During the back half of the year, we are seeing signs of normalization and we see US exports are picking up again and expect this to continue as we enter 2022.
Despite the challenges, our terminal business overall has performed very well. We are pleased that we continue to maintain and improve our safety performance, and from a financial perspective, that we are in line with or above target in most regions.
2021 has also been a year for Odfjell to evaluate and reaffirm its commitment to the liquid bulk storage sector. After restructuring our terminal organization and portfolio, we are now in a position to look ahead. We already see the benefits of the new organization in the form of closer cooperation with the broader Odfjell group, more efficient governance, less overhead and more empowered local management teams.
The current platform establishes a healthy foundation for future growth. This will involve Odfjell continuing to invest in the development and grow our current terminals, but also to consider opportunities outside of our existing footprint.
In 2021, we started the construction of a new 35,000 m3 tank bay at our Antwerp terminal, which will be commissioned in 2022. At our Houston terminal, we have taken the final investment decision on a 32,000 m3 expansion, on which construction will commence in 2022. We’re also investing heavily in automation and digitalization at our terminals. This will allow us to make more data-driven decisions and realize operational improvements. We’ll reduce manual processes, become more efficient, increase earnings and better serve our customers.
Odfjell’s preparations in the energy transition
Odfjell received the EcoVadis Gold sustainability rating in 2021 and was ranked first among its industry peers by Sustainalytics. We were also awarded the 2021 GREEN4SEA Tanker Operator Award, which recognizes companies that demonstrate ‘outstanding performance’ in green and sustainable shipping. We’re using everything we’ve learned on the shipping side to bring terminals to the same level of maturity.
Following the COP26 announcements, we are closely monitoring the fuel and energy transition progress and we want to make sure that we are well prepared to meet all upcoming regulations. Odfjell has established clear climate goals that go beyond regulation, and considers the opportunities that the energy transition will present for our terminals.
“For Odfjell, 2022 will be dedicated to carrying out the initiatives that we have in place at our terminals in terms of digitalization, expansion, and continuous operational improvements. We will also launch more targeted ESG initiatives for Odfjell Terminals and continue laying the foundations for future growth.”
Adrian Lenning, Global Head of Terminals
Looking ahead into 2022
2021 has shown us how difficult and risky it can be to try predicting the future. At the same time, I am confident we are well prepared to take on the unforeseen. Fundamentally, though, I am optimistic for 2022. I think we will continue to see a normalization of global supply chains, which should translate into more demand for storage and increased activity levels.
On the back of Covid and the Texas freeze, we also see end-customers securing bulk storage of feedstock for greater certainty of supply. This is a very interesting trend, which ultimately could drive an absolute increase in demand for storage capacity throughout the value chain.
Growth and investments
Odfjell has a stated objective to grow its terminal business from where we are today. We have a quite unique platform for doing so, building on a portfolio of strong assets, more than half a century of track record and know-how, and the synergies of being both a shipping and terminal company.
First and foremost, we will focus on improving and growing our existing footprint. Beyond the ongoing investments in Antwerp and in Houston, all our terminals hold potential for further expansion. We intend to evaluate and develop these and other opportunities in a disciplined manner along with an improving market.
We will stick to our ‘bread and butter’: to be our customers’ trusted partner for the safe and efficient storage and handling of complex chemicals and other specialty bulk liquids.