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Optimizing sales and growth with Market Intelligence

What is the key factor, the bottom-line that determines the success of a terminal operator? Of course it is the percentage of tanks that are rented out over a given period of time and the fee or rate that these tanks generate. The people realizing this bottom-line day in day out are your sales and account managers. What can Market Intelligence do to help them reach their targets? And what can Market Intelligence do to secure future growth?

Market Intelligence helps establish three pillars of your success, by:

1: Continuously investigating market trends and price movements

2: Investigating what mix of customer sizes and their desires and what mix of liquid bulk products will make the terminal operation run most smoothly over time

3: Via competitive intelligence giving each sales and account manager the right information at his or her fingertips when entering price negotiations

The first pillar lays the groundwork for all strategic decision making. It will guide your commercial team to where growth and value can be found. The second means that a company will not let sales managers just blindly hunt for any customer. It will guide them towards the right deals that will strengthen the terminal’s position and competitiveness and at the same time will guard against having a portfolio of clients that does not match with logistical capabilities and constraints. For instance part of the terminal can be reserved for customers who need strategic storage, like governments. The staff responsible for Market Intelligence can make calculations and show exactly why it could be beneficial to reserve a given percentage of the terminal for such a customer who pays a somewhat lower price but signs a long term contract and does not require a lot of throughput capacity.

Price negotiations

The third pillar with which Market Intelligence helps sales and account management is literally hands-on as a staff department giving the sales or account manager all key numbers, prices, competitor intelligence and other metrics needed to negotiate good contracts. A sales manager can only make good deals when they have superior market and customer information at their fingertips. A customer will notice when their negotiating partner is well informed and be more likely to accept an offer.

Logistics

When making such optimal sales strategy plans, a big consideration is the effective use of terminal installations like jetty’s and pipelines. It makes no sense to do a lot of sales for a certain product in certain volumes only then to note that logistically it’s impossible to service these customers without long and expensive waiting times. On the other hand with proper market intelligence it becomes possible to even plan investments in new installations when for instance it is known that a new customer, or a new product, will very likely grow strongly in the years to come.    

Avoid chaos

Market Intelligence can “design” an optimal mix of good (i.e. growing) customers where you have enough diversity to respond to short term demand fluctuations, but still create a stable business with a hub function for certain preferred liquid bulk products and a number of larger dedicated customers. In this way day to day chaos at the jetties, caused by a multitude of hyper-active customers, can be avoided. And the customer benefits too from this smart planning since they hate to pay demurrage. Market Intelligence is there to make sure that everything in the terminal operation happens in the smartest way possible with the largest economies of scale!

Counter-intuitive

Sometimes good market intelligence can help a business spot counter-intuitive opportunities. For instance when globally investments in oil facilities go down, at the terminal level the effect might be contrary. Decreasing funding may lead to the phasing out of local refineries which in turn increases global shipping of refined products. So less investment in fossil fuels can in certain cases lead to increased demand for tank capacity. Without good Market Intelligence it is practically impossible to instruct sales and account management to look into such changing opportunities.

Competitive edge

To conclude we can say that, starting from current awareness, through strategy and business development, it is crucial that Market Intelligence extends deeply into the sales and account management. Only then the benefits of all the labor in the prior stages can be reaped. Only in this way a terminal operator will get the competitive edge over the competition, that will lead to sustained excellence, growth and profitability.

Whitepaper: Market Intelligence for Tank Terminal Operators Explained

How to move from a strategy to business development using market intelligence?

Business development is what comes next in line from current awareness and strategic planning. It is basically the moment when a company says: “Let’s do it!” One would almost assume that all necessary research for this execution of the strategic plan has already been done and that now it’s just a matter pushing ahead come hell or high water. In reality Market Intelligence remains important in this phase too!

If we recap quickly we have seen that without market intelligence there can be no current awareness. Then we have seen that this current awareness can be expanded upon by applying further market intelligence to create well-founded scenarios and predictions. Only with those scenarios and predictions at hand strategic planning starts to make sense. In this blog post we will look at the next phase when the strategic plan needs to be decided upon and get executed.

Let’s look at an example. Currently, the terminal world experiences a shift towards sustainable fuel sources. Many terminal operators want to get clout in new fuels such as hydrogen (at minus 250 degrees Celsius), ammonia (transporting hydrogen chemically bound to nitrogen at temperatures and pressures comparable to LPG), and also SAF (sustainable aviation fuel). Lastly there is a growing demand for LNG due to the war in Ukraine and other geopolitical factors. Current awareness means to at least be aware of these trends and having current data at hand. Strategy means having a plan on how to capitalize on these trends under various scenarios. Business development then, is the stage where a desired position in these fuel supply chains is going to be built up.

In this new phase a good and constant intelligence flow remains critical for success. Market intelligence will now provide detailed knowledge and information about which concrete players would need what amounts of storage capacity. There can be absolutely no surprises regarding rules and regulations for these new fuels. Price movements need to be current at all times. These factors will then be taken into consideration when constructing of new tanks, jetties or pipelines. As in any construction project, these stages are feasibility study, design, licensing and permits and (preliminary) contract negotiations.

Investments in terminals are huge and therefore go hand in hand with long term contracts. Time spans of such contracts are usually between 5 and 15 years. So obviously most terminals and installations will not be built without a signed contract to cover a part of the lifespan of the asset. However, it is rarely the case that a client will be prepared to sign a deal for the whole lifespan of an asset. So there will always be a risk associated with such a project and market intelligence will enable you to estimate this risk and factor that into your decision. If the risk is acceptable you can go ahead, if too large then either you walk away from the deal or try to negotiate better terms. We can conclude that Market Intelligence continues to play a large role all the way into the  business development phase.

And as we will see in another blog post it remains important up until the final stage of the asset’s lifecycle: the operational phase. In this phase the objective is to get a good return on investment by attracting and retaining valuable customers that pay premium rates for your terminal. With excellent market intelligence for marketing, sales and account management you can achieve these results.

Gut feeling or a strategy aligned with market intelligence?

We don’t deny it: some entrepreneurs keep getting lucky just basing their decisions on gut feeling. At the same time we claim that even these entrepreneurs and their companies would fare even better if they had ongoing smart and structured intelligence gathering about all aspects of their market. Let’s take a look why market intelligence is an equally vital support activity within a company just as IT, human resource management or accounting are.

Tank terminals are capital goods. Strategic decisions in the terminal business often result in investments worth millions of dollars. And these investments determine to a large extent the capabilities of a terminal for years to come. So obviously any reduction of long-term investment risk is welcome. Market intelligence, the systematic gathering and analysis of information about all things concerning your current and future business, is the way to do this.

The important of current awareness before strategy

In a first blog on current awareness we have explained that a company simply must have sufficient understanding of what’s currently happening in your industry. What are clients looking for? What are competitors doing? Which tech trends influence the market? How is the pricing of services changing? Which mergers and acquisitions are taking place? Is there news on the regulation front in any of the relevant geographic areas? Are there important changes in the political landscape?

The current awareness can be structured using a PEST-factor (macro-level: political, economic, societal, technological) analysis, competitive environment (industry-level: customers and competitors) analysis and SWOT (segment-level: strengths, weaknesses, opportunities and threats) analysis.

The next stage should offer a clear view on various realistic future scenarios for industry and market developments. Most often there is one strong trend dominating the market, but it would be foolish to always just follow the pack jumping on such a new trend. If you come in early it could prove demand is not yet as predicted. If you come in late you can’t win either.

Market intelligence allows a business to stand on its own two feet and make specific decisions independently. Better decisions. Quicker decisions. Better timing. The right partners. That’s what makes the difference!

The consequences of strategic decisions and what to do with them

A helpful way to analyse consequences of strategic decisions is to always consciously run through three scenarios:

  • worst case
  • most likely
  • best case

If your market intelligence is capable of providing this kind of “three-stage” realistic prognosis for each possible expansion or change of a terminal operation, then it is also likely that the management will be able to recalibrate the long-term corporate strategy and pick the best choices. The fact that various levels of management are involved in the information gathering, also ensures that strategic decisions are well supported by the whole organisation.           

In the end what counts is to move away from the intuitive and short-term approach towards a systematically organized long-term form of Market Intelligence (MI) preferably with concrete roles for key staff members and with a proper embedding in the company culture.

The handbook of Market Intelligence (2009) offers a good example of world-class market intelligence as it relates to strategy:

“We are future-oriented in our approach and frequently use scenario analysis in combination with forecasting as methods to understand the future dynamics of our industry. One example is that we have a project focusing on as far as the year 2050. We have an intelligence network in place and are producing deliverables that have been tied into our strategic and operational business processes.”

In the end, world-class companies have proven that ongoing smart and structured intelligence gathering about all aspects of their market will enhance profitability and reduce risk. In the highly fragmented tank terminal business, servicing an ever-changing liquid bulk market, it is not possible to survive without a clear strategy. Market Intelligence (MI) ensures that this strategy is well founded and recalibrated frequently. In this way it is a vital internal support function.

Whitepaper: Market Intelligence for Tank Terminal Operators Explained

How good is your current awareness of market trends?

Current awareness is the starting point of good market intelligence for any company operating in a competitive market. Entrepreneurs often make intuitive decisions, but when they are supported by hard facts and good data entrepreneurial risk taking is no longer a game of roulette but the smart and successful way to take calculated risks.

Current awareness is the starting point of good market intelligence for any company operating in a competitive market. Entrepreneurs often make intuitive decisions, but when they are supported by hard facts and good data entrepreneurial risk taking is no longer a game of roulette but the smart and successful way to take calculated risks.

What do we mean by “current awareness”? Well, it simply means that as a company you have sufficient understanding of what’s happening in the terminal industry and the wider economy at this moment.

What are clients looking for? What are competitors doing? Which tech trends influence the market? How is the pricing of services changing? Which mergers and acquisitions are taking place? Is there news on the regulation front in any of the relevant geographic areas? Are there important changes in the political landscape?

Structure “current awareness” within your organization

In order to do this right “current awareness” shouldn’t remain a vague undefined asset floating around somewhere somehow in the organization, but it should be systematically structured to make sure that your organization is always up-to-date on what is happening in the terminal market and – importantly – where your company stands relative to that. Gathered information should be easily accessible to support each employee in their work and decision making.  

Setting this up could involve these measures:

  • allocating some work hours of certain employees to spend on research activities
  • structuring how employees write-up, report and store their findings
  • creating an internal market intelligence network connecting all management levels
  • subscribing to relevant periodical news sources
  • outsourcing part of the intelligence work to an external market researcher

In the end this should lead to a situation where each manager feels supported by the best possible information. A well-informed manager who enters a (price) negotiation for instance will always fare better than a manager who comes across as uninformed. A director or management team eyeing a take-over will not just make a better decision, but they will make it faster, before the competition snatches it away. Research has proven that companies with good systemic market intelligence outperform the competition on all levels.

An example of a market trend that requires current awareness

So can we give an example of a market trend in the terminal industry, that requires good current awareness to understand it fully, to anticipate well and to position your company accordingly?

The energy transition is definitely a good example. Oil and gas are no longer the prime areas of investment. Alternative fuels are being developed and are growing in market share. One product in particular is looking for terminal space across the world and that is ammonia. This liquid bulk substance has two uses:

1: Acting as an intermediary carrier of hydrogen that’s produced in sunny parts of the globe and that needs to be transported to areas with less sun but high energy demand. So hydrogen is chemically bound in ammonia and shipped around the world and in destination countries it is decomposed again to free the pure sustainable hydrogen fuel source.

2: Acting directly as an alternative sustainable fuel for ships and tankers currently burning dirty marine fuel oil as their fuel source.

Both applications have different implications for required terminal space in ports around the globe. This trend will lead to substantially less investment in oil and gas terminals and high interest in tanks that can hold ammonia.

It also warrants a reorientation of the commercial acquisition process: you may want to get acquainted with a new group of potential customers who are entering this market. And if you talk to them you will want to come across as knowledgeable. So if your company at the moment has no detailed information on ammonia requirements, then you may want to invest time to get this knowledge.

An important aspect of current awareness is also the ability to think in scenarios and structure your information gathering accordingly.

Let’s take the above example of ammonia. You would not want to forget about oil and gas completely of course. You would want to continue to gather information about all product groups and customers that use them. You might however assign the task of following these trends to different people inside your organization and maybe ask an external consultant to write up a report about an area that you are currently less aware of. In this way your knowledge base for whatever may happen in the market grows in all dimensions.

Thinking in possible scenarios as a model for your current awareness, then leads over to the next important application of market intelligence: strategy. In a subsequent blog post we will delve into that and learn how market intelligence will support laying out a strategy and wisely choosing how to devote your company’s resources to it.   

Whitepaper: Market Intelligence for Tank Terminal Operators Explained

Exxon to Partner With CF Industries to Capture Carbon and Make ‘Blue’ Ammonia

Houston-based Exxon Mobil and fertilizer-maker CF Industries are partnering to make “blue” ammonia, a product the companies said could play an important role in decarbonizing industrial facilities such as refineries, petrochemical plants and power generators.

CF Industries, headquartered in suburban Chicago, said it will develop a $200 million carbon capture unit at its nitrogen facility south of Baton Rouge. Exxon will then, through a deal with pipeline company EnLink, move the carbon dioxide to Exxon’s geologic storage facility in Western Louisiana. The project is expected to be operational in early 2025.

Exxon said carbon capture projects are gaining new momentum because of incentives included in the Inflation Reduction Act signed into law in August. The oil major aims to make a name for itself in the carbon capture and management space, offering the services to facilities in Texas and Louisiana that are looking to slash their emissions.

“Exxon Mobil is providing a critical and scalable solution to reduce CO2 emissions,” Exxon’s Low Carbon Solutions President Dan Ammann said, “and we’re ready to offer the same service to other large industrial customers in the state of Louisiana and around the world.”

Through its new partnership with Exxon, CF Industries will capture 2 million metric tons of carbon dioxide from its Donaldsonville, La., facility that would otherwise be released into the air around its facility, the company said. Exxon says the carbon reduction is equal to replacing 700,000 gasoline-powered cars with electric vehicles.

Capturing the carbon created in its manufacturing process will enable CF Industries to market nearly 2 million metric tons per year of “blue” ammonia, the term used for products made with carbon capture technology that catches and stashes away emissions made during manufacturing.

Carbon-neutral ammonia, in particular, could play an important role in decarbonizing industrial facilities such as refineries, petrochemical facilities and power generation plants, the companies said. It can be used both as a fuel itself or as a way to make hydrogen fuels.

“CF Industries will be first-to-market with a significant volume of blue ammonia,” said CF Industries CEO Tony Will. “This will enable us to supply this low-carbon energy source to hard-to-abate industries that increasingly view it as critical to their own decarbonization goals.”

By Houston, September 20, 2022

China’s “Zero-COVID” Policy Could Crush Its Energy Storage Ambitions

In such uncertain times, there are few economic sectors that are a 100% sure bet for investors – but energy storage certainly seems to be one of them. As the world leans more earnestly toward decarbonization and the United Nations and the Intergovernmental Panel on Climate Change sound a “code red for humanity” as the window of opportunity to avoid the worst impacts of global warming rapidly closes, energy storage has become one of the fastest-growing industries as demand for clean energy heats up.

The global energy storage market is on track to hit one terawatt hour by 2030, a quantity that would mark a more-than 20-fold increase over the already groundbreaking 17 gigawatts/34 gigawatt-hours that were online at the end of 2020. “Overall investment in battery storage increased by almost 40% in 2020, to USD 5.5 billion,” the International Energy Agency (IEA) reported at the end of last year.

“The global storage market is growing at an unprecedented pace. Falling battery costs and surging renewables penetration make energy storage a compelling flexible resource in many power systems,” says Yiyi Zhou, a clean power specialist at Bloomberg BNEF. “Energy storage projects are growing in scale, increasing in dispatch duration, and are increasingly paired with renewables.”

The breakneck increase in storage capacity is largely being driven by China and the United States, which are currently embroiled in a quietly simmering energy storage war. Each of these countries added gigawatt-scale additions of energy storage capacity in 2020. Together, China and the U.S. represent more than half of the global energy storage market projections for 2030.

China is currently winning the race, having more than doubled its energy storage capacity additions in 2020. What’s more, in July of last year, Beijing announced that it is planning to install 10 times more capacity than its 2020 levels by just 2025.

Now, a new plan released this year shows that China aims to achieve this breakneck pace for energy storage addition by butting the cost of electrochemical energy storage systems by 30% by 2025. The 5-year plan released by the National Development and Reform Commission and the National Energy Administration also outlines the complete commercialization of non-hydro energy storage systems by 2030. “The country will seek breakthroughs in long-duration storage technologies such as compressed air, hydrogen, and thermal energy, and aim for self-reliance in key fields,” Bloomberg reports.

“It will conduct pilot programs using various technologies to meet different storage duration requirements, lasting from minutes to months.”

The ramping up of non-hydro energy storage capacity installation will take place in tandem with the expansion of wind and solar capacity development, which is to be built out at a massive scale in China’s desert regions. This will help China achieve its goal of weaning itself off of foreign energy imports and shore up Beijing’s energy security and energy independence.

Long-term energy storage will allow energy produced in China’s sparsely populated deserts to be piped into the country’s massive and energy-hungry urban areas. “The country will also explore storage technologies for power produced by offshore wind farms, so as to reduce transmission capacity needs and improve the utilization rate of the electricity generated,” says Bloomberg.

As straightforward and promising as these plans may be, Beijing’s ambitious plans for clean energy development and increased investment in energy storage are coming at a time when China’s economy is in trouble.

Current Covid lockdowns in the affluent economic hub of Shanghai are costing the country a stunning $4.6 billion USD a month, amounting to about 3% of the nation’s GDP. The country’s “zero-Covid” approach is being derided as a “fiasco” as 62 million Shanghai-area residents (a group larger than the population of Italy) are being locked into their homes and locked out of the economy.

If President Xi Jinping continues to try to outgun the novel coronavirus instead of adapting to mitigate and coexist with Covid, many of China’s most ambitious plans may prove to be out of reach.

OILPRICE by Haley Zaremba, April 4, 2022