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Logistics Empower the Energy Sector

When I glance around me, almost everything I see and rely on today requires energy to manufacture and to function – from the phones and computers in my office, to the lights and appliances at home, to the vehicles on the roads. The fact is we live in a world where a reliable supply of energy is critical to our daily lives and our entire socio-economic system. At the same time, living standards are rising around the world and a growing number of consumers are enjoying the fruits of economic progress. All of this means that demand for energy just keeps on going up – the most recent estimates I’ve seen indicate that energy demand will rise by more than 30% by 2035.

Now, put this in the context of a world where resources are becoming scarcer. To reliably meet this rising demand for energy, companies have to drill deeper, search in more remote regions, and come up with smarter answers. These include increased efficiency, innovative technologies, as well as diversified and alternative resources – including cleaner and renewable energies.

This shift in the energy landscape, in turn, is having important repercussions on the energy supply chain. This is why energy is one of our strategic focus sectors at DHL, and why we’ve organized Energy Sector Week, from September 24-30, 2012, to explore the trends and supply chain requirements of this highly-charged industry – go to www.dhl.com/energy-sector to find out more.

Challenges of Energy Logistics

Whether it’s fracking for shale gas in North America or China, drilling thousands of meters below the seabed off the coast of Brazil, or setting up a wind project in a rugged and remote area of Africa –energy logistics are demanding, to say the least. Just look at some of the hard-to-access, out-of-the-way locations where energy companies are operating today, like Alaska, West Africa or Papua New Guinea. The logistics infrastructure in these regions is generally poor or nonexistent, and would be very costly to establish.

Even relatively routine tasks like the resupply of materials, inbound logistics, and maintenance, repair & operations (MRO) may require special measures, such as unconventional transport, when executed in difficult terrain, like oil sands in Canada or petroleum fields in Central Asia. On top of that, government regulations are stricter than ever. Health, safety, security, and environmental (HSSE), and regulatory compliance are top priorities right across the industry.

Considering the fact that the energy sector spends upwards of €180 billion per year on logistics services globally, it is a part of the industry that cannot be ignored. But engineers are in short supply, so energy companies want to keep their skilled labor focused on core activities, which, quite frankly, do not include logistics.

This is why the sector is turning to outsourcing of the complex and costly supply chain business. And it is why DHL is working closely with energy companies to tackle these challenges. Our expertise along with our well-established transport and logistics network represent a great “alternative resource” for one of our planet’s most important industries.

Bright ideas

It all starts with ideas. The proverbial light bulb goes off and the future looks brighter. At DHL, we’ve been brainstorming, testing and putting our ideas for the energy sector into practice for some time now. We’ve developed some innovative tools for today’s energy supply chains and multi-modal transport models to meet the complex needs of the industry.

For example, say you want to set up a new wind farm in a remote part of Africa. We can map out the project in advance and detect any problems or gaps that may have been overlooked before you even begin to move goods. Our proprietary Material Management System (MMS) and simulation tool helps us do this. Advance planning with MMS ensures that we have access to the right equipment at the right moment and can operate in a safe and timely manner.

This tool works because of the networks that we already have in place. Across the globe we run supply chains, ship freight by air, land and sea, and of course offer express delivery services. For the energy sector, we harness these capabilities to support all facets of energy supply chains.

Take for example a large refinery in the Middle East, where DHL Supply Chain runs an MRO set-up, making sure the refinery has a complete inventory of critical spare parts to keep the facility running. It is an end-to-end solution that sees DHL Global Forwarding, Freight handling all the shipping, ensuring seamless operations, and DHL Express takes care of the most urgent shipments.

Energy logistics do not stop there. The energy supply chains of the future will require integration and collaboration, such as setting up control towers, sharing data, and differentiating the various flows in a customer’s supply chain. Then, of course, optimizing the supply chain itself. That’s a lot of light bulbs.

And let’s not forget that before the light bulb can go off, you have to the brains behind the whole process – the right people in place with the experience and know-how to add value. DHL has some 450 energy specialists with experience in heavy lifting, supply base management, rig move management, MRO, and load engineering, not to mention in the renewables, nuclear power and energy mining subsectors.

Logistics of renewable energy

Meeting tomorrow’s energy needs will require a combination of increased efficiency, smarter technologies, and a more diverse range of resources that includes cleaner, renewable energy. This is certainly no easy challenge, but through innovation, combined with collaborative partnerships, an integrated approach, and extensive transport and logistics networks, logistics providers like DHL can empower the energy sector and help work toward a better tomorrow for us all.

What do you think the biggest challenges are for the energy industry and how do you see the role of logistics in meeting them? Let me know your thoughts by leaving a comment below.

1 Comment

  • Chris

    Interesting post. Personally I feel that we are no longer moving forward, not saying we are moving back though, as it has become ever increasingly hard to extract natural resources such as gas and oil the cost of extracting them and transporting them has become very expensive and cost lives (which never makes the headlines)

    In 2035 I think logistics will be a whole new ballgame.

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