In almost every industry, supply chain management poses various challenges but none of them are as complex as the Oil and Gas Industry. These two, being highly inflammable material, require careful handling throughout. For a company dealing with transport of these materials, it is important to be careful in all respects so as to avoid incurring heavy damages. Apart from the safety issues, there are several other factors influencing the profit margins and efficiency of services for Oil and Gas Logistics Companies.
Here, we have mentioned some of the common mistakes committed by these companies that need to be avoided for enhancing the efficiency as well as profit margins:
- Choosing the right equipment: The volatile nature of oil and gas calls for the use of specialized equipment in their transportation. Many Oil and Gas Logistics Companies in Nigeria rely solely on the same set of carriers despite the availability of better and specialized equipment. Whether you are outsourcing this service to another company or have your own fleet, make sure that the vessels meet the safety standards.
- Reliance on industry outsiders: Often selection of the carrier company is left to non-logistics people who do not effectively arrange for the smartest and cheapest solutions. Therefore, Oil And Gas Logistics Companies should function under a central management system for utmost avoidance of ambiguity and further research analysis. Also, the shipment data should be instantly available about the costs incurred, carrier performance and volume of transport.
- Negotiating the freight rates: The freight rates are usually negotiated by non-transportation staff who are unaware of the available options. In fact, the companies should be open to new and improved transportation equipment, and compare freight rates being offered, before deciding upon the best carrier partners. This will not only cut down the operational costs, but also render quick results.
- Severe Weather: Weather conditions, especially on open waters, are a much greater risk factor for water transportation than for truck, rail or pipeline. changing weather and extreme weather events can increase the risk of an accident and should not be ignored.
- Human Error: human errors while operating loading equipment at a terminal. At transshipment sites, risks can also come from unmonitored docked cargos that can turn a small oil spill into a catastrophic event. Furthermore, unclear accountability for the docked cargo between docking and unloading can complicate or delay an oil spill response.
Oil And Gas Logistics Companies need to pay heed to the above mentioned suggestions for better and efficient functioning in the long run and for deriving maximum profits. Transportation is one important aspect of logistics that may require a large one-time investment but it will yield good returns.
