Oliver Oestreich has been a member of the Leschaco Group’s management team since 2003. As Chief Operating Officer (COO), he is responsible for the global sea freight forwarding business, sales in the chemical and automotive sectors and for quality management, environment, compliance and safety. He knows the challenges of dangerous goods logistics, their development over the past twenty years, but also the current trends like few others in the international logistics industry. In April 2024, he will retire after a long career. He has already been preparing his successor Nils Fahrenholz for his new tasks for several months. For the dangerous goods logistics blog, Oliver Oestreich took the time to talk to Michael Kausch in detail about the current challenges in dangerous goods logistics and the most important markets.
Mr. Oestreich, what is the mood in the chemical industry and therefore in the market for dangerous goods logistics? I have the feeling that there are currently two opposing trends: on the one hand, there is a sigh of relief because the coronavirus pandemic is finally over. The lockdown of the markets and the overstretching of the markets during the pandemic has significantly hampered the transportation of chemicals and other hazardous goods, thus slowing down the quantitative growth of the dangerous goods logistics market. This effect was barely able to offset the simultaneous increase in demand from the pharmaceutical sector during COVID-19. The pandemic now seems to be over. On the other hand, the war in Ukraine, the significant rise in energy costs and the economic deficits are hampering growth in the chemical industry and therefore growth in dangerous goods logistics. How do you assess the current situation?
In the short term, the chemical industry is suffering both from the effects of the war in Ukraine and from exorbitantly high energy costs. Of course, the two have something to do with each other. The chemical industry is very energy-intensive, the second most energy-intensive industry in Germany. We are also experiencing a certain amount of tension in the chemical industry due to the major challenges associated with digitalization. Chemistry 4.0 is about many things, such as decarbonization, resource efficiency, circular economy, waste disposal and much more. As a result, most areas of the chemical industry have developed more weakly than we expected over the last two years, and this applies to almost all major global markets.
Nevertheless, you have set yourself ambitious goals at Leschaco. Is there any hope of a turnaround?
Overall, we remain very confident that the market for dangerous goods logistics will develop significantly better than the average for the economy in the coming years. There are a number of reasons for this.
Even if we are now experiencing the limits of excessive globalization, the wheel cannot be turned back. The basis of our prosperity is a functioning global economy and fair global trade. At the same time, we need to become more efficient and resource-friendly with our logistics. Shipping logistics is often ahead of other transportation routes.
The share of dangerous goods in the total transport volume has been growing for years and will continue to do so. Around two thirds of carriers who transport dangerous goods also transport flammable petroleum liquids, including kerosene, petrol, liquid gas, naphtha, etc. And all market analysts agree that the transport volume of flammable liquids will continue to increase in the coming years.
I thought we were experiencing a shift away from oil?
Precisely because we are using less and less crude oil and burning it in our cars, the intelligent use of such raw materials and the transportation of intermediate products in the chemical and pharmaceutical industries is increasing.
However, the hazardous goods logistics market is experiencing far above-average growth due to the growing requirements in the field of battery logistics. According to analysts’ expectations, the global market for lithium batteries will grow from 48.6 billion US dollars in 2023 to 135.1 billion US dollars by 2031. This corresponds to annual growth of 13.1 percent. The electrification of the automotive industry is the strongest growth driver here.
Incidentally, market researchers at SPER expect annual growth rates in the field of dangerous goods logistics of 7.25 percent on average for the global market until 2032. By then, the total market is expected to grow to 431.92 billion US dollars. These are excellent prospects for us.
Leschaco is a globally active company. You always see yourself as a Hanseatic family business from Bremen with global aspirations. Where does this growth mainly take place? On the Weser or the Yellow River?
Markets around the world are currently undergoing significant change. The BRICS countries, i.e. Brazil, Russia, India, China and South Africa, have achieved strong growth in recent years. China is already by far the largest chemical producer in the world. In 2021, China’s market share of global chemical production was 43%. Most analysts expect that China will be able to roughly maintain this share. The role of Russia must be critically scrutinized against the backdrop of the war in Ukraine. However, South America, India and South Africa, as well as the smaller South Asian countries, are growing rapidly. This is also the reason why Leschaco has been significantly expanding its involvement in these regions for years. We are doing well there.
However, Europe naturally remains an exciting market for us. And in Germany, our home market, we are excellently positioned in the high-value hazardous goods market. The chemical and pharmaceutical industries will also remain strong here. The German chemical industry is the fourth largest in the world after the USA, China and Japan and the largest in Europe. Germany is the country with the strongest exports in the chemicals sector. The focus in Germany is on pharmaceuticals and innovative fine and specialty chemicals, which suits us very well as dangerous goods experts. The German market for dangerous goods logistics alone accounts for almost a fifth of the total European market.
With BASF, Evonik, Helm, Degussa, Lanxess, Wacker Chemie and Altana, some of the major specialty chemicals companies come from Germany. These include, for example, manufacturers of fine chemicals, crop protection, i.e. “green chemistry”, paints and coatings, intelligent surfaces, new materials, battery technology and preliminary products for the pharmaceutical industry. In recent years, this market has undergone a major upheaval. Some companies are growing rapidly, others are merging. Digitalization, but also the pressure to innovate, seem to be constantly shaking up the ranking of global players in the specialty chemicals industry. A market in upheaval. Does this have implications for Leschaco?
Of course. Leschaco has been working with the major chemical companies for decades. We know this market almost as well as these companies themselves. The specialty chemicals industry in particular is characterized by extreme competitive, cost and innovation pressure. Innovation cycles are getting shorter and shorter, and at the same time the legal requirements are becoming ever stricter. These requirements always relate to safety: safety for employees in production, safety for users, but also safety for the environment. In essence, this always involves the correct labeling of raw materials and finished chemical products.
Our supply chain solutions developed specifically for our chemical customers are therefore not only characterized by speed, but also by maximum reliability and flexibility. Our chemical teams know the specific requirements of the industry and the market. You coordinate the services and are the direct contact person for our customers. Our services for customers in the specialty chemicals industry include temperature-controlled means of transport, temperature-controlled storage areas, transportation of hazardous goods by air, water and land and, of course, worldwide customs clearance and documentation. Accurate and reliable documentation is vital, especially for chemical companies.
This brings us to the topic of regulation. Before I got to know Leschaco, I always thought that logistics was primarily about movement. In reality, I have the impression that logistics mainly consists of READING. And the most important department – without wishing to offend anyone at Leschaco – is the archive for laws and regulations. After all, the art of dangerous goods logistics is primarily about knowing the rules and regulations.
There is some truth in that. Dangerous goods logistics is extremely heavily regulated today, both nationally and internationally, and for good reason. We navigate our containers through a dense jungle of laws and regulations. And that’s a good thing. These regulations serve the safety of people and nature. For non-experts, however, this jungle is almost impossible to navigate. This requires proven experts with international expertise and many years of experience. At Leschaco, we specialize in the delicate subject of dangerous goods logistics. We have the necessary know-how.
Two things make us one of the internationally recognized experts for safe dangerous goods logistics today:
On the one hand, we have the necessary technologies for the safe transportation of dangerous goods. Today, Leschaco uses state-of-the-art logistics software that allows us and our customers to track the location and condition of each container in real time. In 2018, we founded Logward, a subsidiary in which we combine industry experience from logistics with IT expertise and develop and market state-of-the-art supply chain solutions for the entire logistics supply chain. And together with partners, we are working on exciting projects in the field of intelligent shipping containers. There will be interesting new products in the next few years that will make dangerous goods logistics a step safer again.
And secondly, we have excellent contacts with the relevant authorities and work actively with national and international associations. This means that we have experts on board – our “scribes” – who really know all the international and national specifications and regulations that need to be complied with in dangerous goods logistics. And because this is the case, we also have the trust of the relevant authorities and all the necessary approvals and certifications to ensure the smooth, cross-border transportation of the goods entrusted to us.
We have acquired all these things through many years of experience in the transportation of hazardous substances.
You talk about special approvals and certificates. Are you referring to the ISO certificates that you present on your website?
No. That is a different matter, if I may put it casually. This is about certificates that we have received from authorities and associations as a reliable partner for many years, and which make life considerably easier for us – and therefore for our customers.
One example is the Authorized Economic Operator (AEO) certificate from the World Customs Organization. It documents that Leschaco, like our subsidiary Anker Schifffahrtsgesellschaft, is particularly reliable and trustworthy as an Authorized Economic Operator (AEO). As a result, we are granted certain security benefits and we get some goods through customs faster than other logistics companies.
Another example is the C-TPAT certificate of the US customs authorities. C-TPAT stands for “Customs-Trade Partnership Against Terrorism”. It certifies that we are doing certain things to protect the U.S. from terrorist attacks in international supply chains. This also simplifies and accelerates logistics processes for our benefit and that of our customers. For example, we have to continuously monitor compliance with national and international sanctions lists and embargo regulations. This is where we assume a great deal of responsibility for our customers.
But this is not really about dangerous goods logistics, but …
Quite right, but such certificates are particularly important for a provider in the field of dangerous goods logistics. These are awards that express the authorities’ confidence in Leschaco. Let me put it this way: If these government agencies certify to us that Leschaco is a trustworthy logistics company where you can be sure that the goods we transport will not fall into the wrong hands, then dangerous goods are also in good hands with us. Dangerous goods logistics is a matter of trust. That’s what it’s all about in the end!
Part II of the interview with Oliver Oestreich covers topics including knowledge management, battery logistics and the future market of waste logistics.
In the seven years between 2015 and 2022, at least 68 fires were documented on ships that were caused by the transportation of charcoal. The International Maritime Organization IMO has now reacted and made important changes to the IMDG Code. In future, charcoal must be declared and transported as class 4.2 dangerous goods without exception.
Digitalization is progressing. In many ways, the dangerous goods logistics sector is following the trends already familiar from other industrial sectors. The focus is on electronic documentation, virtual training and paperless regulations. Sustainability and the avoidance of false declarations are important topics.
The global dangerous goods logistics market will grow by an average of 5.6% every year between 2024 and 2032. This is the result of a recent study by the experts at Global Market Insights. This would mean that global sales of dangerous goods in the logistics market would grow from USD 237.3 billion to USD 374 billion during this period.
The Leschaco Group is a global logistics service provider that combines Hanseatic tradition with cosmopolitanism and a spirit of innovation. “Experienced. Dedicated. Customized.” This is a fitting summary of the company’s philosophy: On the basis of decade-long experience teams of specialists set up customized solutions
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