Dec 1, 2000 12:00 PM, Charles E Wilson
ITT builds on initial tank container success in Colombia By merging with the Ermewa Group and moving its HQ to Atlanta
BENEATH a bright Caribbean sun and blue sky, a gantry crane at the Port of Cartagena, Colombia, begins lifting a tank container from a ship freshly arrived from Houston, Texas. In the distance, beyond the container ship, stands the old walled city dating back to the 1530s. The fortifications constructed during the Spanish colonial era are a prime tourist attraction today.
The tank container with its yellow frame, shiny aluminum jacketing, and red CCR logo stands out against the sky as the crane lowers it to a chassis on the dock. This container is one of approximately 50 a month shipped to Colombia by Intermodal Tank Transport Inc (ITT).
Colombia is where ITT got its start, and it remains a primary destination for the tank container operator, which moved its headquarters to Atlanta, Georgia, last year. The seven-year-old company markets its services throughout Latin America and has offices in Argentina, Brazil, Colombia, Mexico, and Venezuela. The company also works with agents in other South American countries, the Caribbean, Central America, and Europe.
"We've had to weather some difficult challenges recently, but we see a bright future for tank container activity throughout the Americas," says Janet Castaneda, ITT director. "We have plenty of room for expansion, and the company is positioned to move quickly to exploit growth opportunities.
"Our biggest challenge has come in the form of large marine shipping rate increases that were imposed over the last year. We've seen some recovery in the past several months, but high rates have hurt. We raised rates, but we weren't able to keep up. Our customers don't always understand why we have to raise rates.
"On the positive side, we haven't lost any customers due to the higher marine rates. Our volume of shipments hasn't declined. We continue to have good success in moving customers into tank containers. We point out that tank containers offer a good alternative to both drums and parcel tankers."
Latin America Success ITT has been successfully selling the tank container strategy for chemical shipments to and from Latin America since 1993. The company was established by several exBASF managers - Ernst Schuckmann, Ulrich Schoene, and Carlos Castaneda (Janet's father) - who were offered the opportunity to take over the BASF tank container operations in Colombia. Janet joined the company as a partner a short time later.
Operations focused initially on Colombia, and the new company was based in Medellin, Antioquia. The fleet started with about 35 tank containers but has since grown to approximately 830 tanks.
"Despite the political situation, Colombia remains a good market for ITT," says Maria Teresa de Safar, ITT general manager in Colombia. "Colombia is strategically located, and we have three primary shippers, all of them chemical companies. We continue to find new customers.
"More companies in Colombia and other Latin American countries see the advantages of bulk shipments and tank containers. The upfront cost is much lower, compared to parcel tankers. Customers can avoid storage terminal costs at the ports. Those are important considerations in Colombia, where money is tight.
"We are generating inbound and outbound traffic. Outbound shipments are to Brazil, Chile, Peru, Ecuador, Argentina, Central America, Mexico, and the United States. We did a lot of loads to Europe last year."
Chemical Cargoes A wide range of chemicals and chemical products and some edibles are transported in and out of Colombia. Among the chemicals handled systemwide by ITT are lube additives, agri chemicals, monomers, polyurethane, surfactants, coatings, solvents, and paper products. Edibles include rum, vegetable oils, and USP materials.
ITT handles those cargoes with a fleet of tank containers primarily consisting of 23,000- and 24,000-liter (6,000- and 6,300-gallon) IMO-1 units. The four-bar stainless steel tanks are insulated and steam heated. Hardware includes Fort Vale foot valves and Perolo manlids and pressure-relief vents. Also part of the fleet are a few IMO-2 units for edibles and some gas tanks.
Growth for ITT started almost immediately. Within the first three months, Exxon Chemical requested service. "We added more customers in the following months," Janet Castaneda says. "With the success in Colombia, we began to branch out. Venezuela was our next market. Little by little we grew. Today, we've moving tank containers throughout the region."
Mexico has become an important factor for ITT. "We're becoming very strong in Mexico, and it could easily total 50% of our overall business," Castaneda says. "We're handling primarily exports out of Mexico, and we work with companies throughout the country. One reason we're seeing so much growth in Mexico right now is that the country is in the midst of a major shift from drums to bulk."
The success achieved by ITT in its short seven years brought plenty of changes. The operational focus shifted from Medellin to the historic port city of Cartagena. By 1995, the company had established a dedicated depot with cleaning, repair, and inspection services.
"We set up the depot in Cartagena because that is where most of our import/export activity occurs in Colombia," Castaneda says. "We also move a few tank containers through the ports of Baranquilla (north of Cartagena) and Buenaventura (on the Pacific coast). Having the depot in Cartagena gives us more control over the tank containers, a key concern for our customers doing business in Colombia. We use third-party depot and drayage services in all other geographic areas."
Depot Infrastructure In the United States, for instance, depot services in Houston are provided by CBSL Transportation Services. Boasso America Corp is the depot of choice in New Orleans, Louisiana. Linden Bulk Transportation is the primary depot and drayage provider in the New York City area. In Mexico, Container-Care handles depot and drayage services at locations in Altamira and Vera Cruz.
Assembling a solid depot infrastructure in North and South America has given ITT a competitive edge, and that was one of the attributes recognized by the Ermewa Group, which owns CCR-Eurotainer. In 1999, Ermewa approached the ITT partners with a purchase offer. The deal gave Ermewa 90% control of ITT, with Janet Castaneda retaining 10%.
"We've had a long relationship with Ermewa, and this was a friendly agreement," Castaneda says. "They wanted to be involved in the Latin American market. We're now part of a very strong group with excellent financial backup. We've used CCR tank containers for much of the time ITT has been in existence. The new ownership arrangement does not lock us in with CCR, though. We can lease from anybody. We're still an independent operation, and we go wherever the rates are best."
While the overall focus of the company was unaffected by the acquisition, some major changes did occur. The headquarters and top level managers moved to Atlanta. De Safar, who joined ITT in 1997 after 21 years with ICI-Colombia, was named general manager of Colombian operations. Her office is in Bogota.
"We moved the headquarters to the United States because it gives us more flexibility and a broader focus," Castaneda says. "A significant percentage of our tank container movements originate or terminate in North America. We had to have a presence here."
Putting the headquarters in the United States provides a hedge against some of the political uncertainty that exists in Colombia. However, the company remains committed to the country where it got its start. "We have some key shippers there who account for a significant amount of our activity," Castaneda says.
Cartagena Traffic Tank container shipments bound for those customers follow a process that typically starts with arrival on a container ship at the Port of Cartagena. The 467-year-old port specializes in containerized cargo today and was privatized in 1993. Currently, the port handles around one million twenty-foot equivalent units (TEU) annually, and the goal is 1.2 million by 2005.
"Our port is becoming a logistics center for the entire Caribbean region," says Jorge W Cassalins, a market analyst for the Port of Cartagena. "Half of the containers that come through here now are in-transit, and we want more of that business. We want to be the premier container port in the Caribbean."
The port's container terminal is fully computerized, using some of the most up-to-date communications and data interchange systems. Capabilities include Internet reporting of berth status and shipping line itineraries. Customs clearance can be checked.
State-of-the-art systems are used to handle tank containers within the terminal. Equipment includes a wide variety of heavy lifts, yard tractors, and specially designed shuttle chassis.
Port Security Security is a key consideration, and US Customs recently recognized the port authority for having some of the best controls in place to prevent the shipment of illegal drugs. The terminal is fully fenced and the main gates are tightly controlled with video cameras to record all arrivals and departures. Well-trained security guards patrol the facility with dogs that are trained to detect drugs and explosives.
Safety measures include a dedicated area for containers carrying hazardous materials. Tank containers in this area can be stacked three high. An isolation area is available for highly toxic shipments. The container terminal also has hazardous materials warehousing.
From the port, ITT containers are transported a short distance to the company's depot. Operating as Industria de Procesos Ecologicos (IPE) Ltda, the two-acre leased facility can accommodate approximately 200 tank containers.
Storage services at the depot are dedicated to ITT. However, containers belonging to a few other operators are handled under contract. These include the specialized plastics containers operated by A&R Intermodal.
In addition to handling containers, the facility is increasingly busy with transloading activities. "We're doing a lot of transloading from tank containers or tank trailers into drums and IBCs (intermediate bulk containers)," says Hector Chiribon, IPE director. "We're handling around 2,000 tonnes (4.4 million pounds) a month of products such as styrene. Our workers are fully trained in handling dangerous goods, and we use independent surveyors to certify the quantities and sample the product."
Certified Repair Facility A wholly-owned ITT subsidiary, the depot is the only certified repair facility for CCR/Ermewa Group tank containers in South America. It also has one of the most sophisticated wash racks in the region.
"We provide tank container storage just for our parent company, but the repair and cleaning services are available to outside customers," says Chiribon, a mechanical engineer by training. "On the repair side, we do 2 11/42- and five-year inspections and hydrostatic tests. We have surveyors on call for Lloyds, Bureau Veritas, and ABS."
Tank container and tank trailer maintenance services include frame and barrel repairs, sandblasting and painting, valve repairs and calibration, and repair of heating pads. Inspection and testing capabilities include nondestructive systems.
Tank passivation with nitric acid is available at the wash rack. "We also use nitric acid when we are switching a tank container from chemical to foodgrade service," Chiribon says. "The process includes changing out all of the gaskets for all hardware."
The wash rack handles tank containers, tank trailers, and IBCs. More than 50 tanks a month are cleaned, with tank containers predominating. The rack can clean three tanks at a time.
Tanks to be cleaned at the wash rack must be accompanied by a current material safety data sheet (MSDS) and must be virtually free of heel. "It is our customer's responsibility to completely offload all product before sending a tank to us for cleaning," Chiribon says. "We want no heel."
Product characteristics are carefully noted before cleaning begins. Safety is a prime consideration, and all of the wash workers have been trained to review the MSDS. Each worker has a full set of protective clothing and equipment including a respirator, hardhat, rubber boots, and rubber gloves.
Designed by TEPSA, a Colombian company based in Medellin, the wash system at the rack uses a variety of cleaning materials - biodegradable detergent, caustic, mineral oil, and steam. Cleaning materials are circulated in the tank by a spray bar that looks like a long section of pipe with holes at set intervals.
Less Wastewater Cleaning with this system is somewhat slow, but only about 25 gallons of wastewater is generated by each tank that is washed. "We wanted an environmentally friendly system, but it can take two to three hours for the easier products," Chiribon says. "Some cleanings take as long as four hours, and a few very difficult products require up to a month."
Wastewater goes to an oil/water separator and then through a precipitation-style treatment process. Treatment plant operators check and adjust the pH level and test for heavy metals in the treated effluent stream. Oils are drummed and solids are bagged for disposal.
"We pay close attention to wastewater treatment, because the Colombian government is getting stricter about environmental enforcement," Chiribon says. "The Ministry of Environment investigates violations. Companies can be fined and even shut down. Colombian officials are working closely with US environmental officials based in Costa Rica.
"An ongoing goal at ITT is to continue raising the level of quality in our cleaning and wastewater treatment operations. We're working to achieve ISO 14000-level environmental quality performance. We probably won't apply for certification, but we want to meet the standard."
More Racks The wash rack in Cartagena is the only one operated by ITT at this time, but that could change. "We would like to open other tank wash racks around the country," he says. "We also want to certify other wash racks used by ITT. We want to ensure that tanks meet customer requirements for cleanness, because it's costly for us when tanks are rejected."
ITT doesn't actually handle tank containers in Colombia beyond the gates of the depot, but the company keeps track of them as much as possible. "We want to know that they are handled properly," De Safar says.
Customers have the primary responsibility for arranging drayage, but ITT helps out when requested. "We can help negotiate door-to-door rates and such," she says. "It's in our own interest to assist customers in all aspects of this business. This is what has made our company successful."
ITT was focused on the customer when it was established in Colombia seven years ago, and it remains just as focused today following the move of the corporate headquarters to the United States. Customer needs are the driving force behind ITT's future growth plans.
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