COVID19 has affected businesses all over the world, especially in energy where a combination of a drive to transition to cleaner, renewable sources along with the negative economic effects of the pandemic left the industry in a volatile state.
In Trinidad and Tobago (TT), energy companies continue to enhance and streamline their production of oil and gas to ensure that the commodities are gathered in the most efficient ways.
In order to do this, companies need a steady supply of moving parts – turbines, pipelines, valves and even PPE – that come from a reliable source and can be delivered at a reasonable time and for reasonable price.
This is where parts independent distributors Buttenberg & MP come in. TT territory manager Andrew Rattan told Business Day that while the freight industry has seen severe shocks that caused the prices of freight to sky-rocket, it has a developed network of industry suppliers and shipping companies that allows them to provide stock for companies in TT easily and cheaply.
What is a parts independent distributor?
If someone is looking for a house or a car, they will look for some kind of consultation that would seek to provide them with solutions to their needs while ensuring they can get the best deals in the shortest amount of time.
In the case of a house, people may consult a real estate agent. In the case of a car, people would consult a car dealer.
But who do energy companies turn to when they need to replace one of the many moving parts of their refineries, oil rigs and pipelines? That job is the responsibility of parts distributors and brokers.
Parts distributors and brokers seek out parts and devices on behalf of companies to replace, enhance and streamline operations for the companies they represent. A parts distributor, such as Buttenberg & MP, procures the most important parts so clients can maintain their operations.
Rattan has 35 years of experience in ensuring the smooth running of systems in businesses as an applications specialist for Massy Technologies, and has experience in assessing the wants and needs of clients. He told Business Day Buttenberg & MP is one of the best in enhancing and streamlining businesses and business operations.
“Buttenberg & MP is the global leader in offering operations solutions. We can source any item in the world,” Rattan said.
Buttenberg & MP, industry leaders in consulting and procurement, has offices in Paris, Hong Kong and Miami, with warehouses strategically located in Texas, Florida and France. Thanks to these warehouses and business relationships with more than 50 suppliers of industrial parts and equipment, Buttenberg & MP has the ability to provide a solution to each client’s needs.
The company started its operations locally in 2017 when it acquired a US company that had client accounts the energy industry in TT. It is not a brick-and-mortar operation, and Rattan manages the local office virtually.
Rattan said some of the faster moving items include pipe valves, turbine spears and fittings. He added that because of its extensive relationships with multiple suppliers the firm sources viable alternatives to whatever item is needed.
“If you cannot find it we can, and we can deliver it to you,” Rattan said. “Because of our outlets we have access to areas all over the world. It makes things easier for us because if we cannot find it in the US, we can find it in Europe, where most of the manufacturing plants are. If you need it we can find it within a day. Buttenberg and MP wants to be the preferred supplier of manufacturing products in TT.”
The company offers one-year contracts with customers with a settled price for freight and shipping and offers a buying advantage for clients with a credit line of up to US$500,000. The company boasts that some of the best advantages of its services is the guarantee of quick quotations, on-time shipping and delivery and most of all, reliability.
Freight rates and its effects
A UNCTAD review of maritime transport published on November 18 indicated that the recovery of economies globally is heavily dependent on freight rates, which are, at the moment, skyrocketing and is expected to continue in the coming months of 2022.
The report said demand for goods spiked in the second half of 2020 and into 2021, as consumers spent on goods, rather than services during the pandemic.
The high demand for goods pushed the need for containerised trade flows to increase but that clashed with constraints in the ability for companies to supply goods to fill the containers. These constraints included container ship carrying capacity, container shortages and labour shortages caused by on-and-off covid19 restrictions and public health regulations.
The combination of a higher demand and the difficulty of procuring a supply led to record highs in freight rates.
The Shanghai Containerised Freight Index (SCFI) rates on the Shanghai-Europe route was less than US$1,000 per one 20-foot container in June 2020. The price jumped to US$4,000 by the end of that year and by the end of July, this year, the price was US$7,395 for freight for a 20-foot container.
The impact of high freight charges could see import prices in small island developing states (SIDS) such as TT, increase by 24 per cent and consumer prices by 7.5 per cent, according to the UNCTAD report.
The report indicated that freight and supply chains will continue to be affected, doing damage to smaller economies. The analysis further predicted a 9.4 per cent increase in rubber and plastic products, a 7.5 per cent increase for pharmaceutical products and electrical equipment, a 6.9 per cent increase for motor vehicles and a 6.4 per cent increase for machinery and equipment.
The effect of the higher freight costs also affected Buttenberg & MP, Rattan said.
“It was a challenge getting things out as fast as we wanted to and there is a tremendous increase in delivery prices. But we have many freight forwarders and companies that we deal with, so if we cannot get something done for us at a good price with one company we move on to another supplier to ensure we give our customers the best prices possible.”
The PPE pivot
Rattan said Buttenberg & MP faced its own challenges with a slowing down of sales and issues with bringing in freight at the speed it wanted. However, the company’s foresight gave it an opportunity that would see it first in line with another product to supply – personal protective equipment (PPE).
Rattan said as covid19 became prevalent the company sought stock that could be used for personal protection against the spread of viruses.
“We took a proactive approach in securing PPE like disposable cover-alls, N95 masks, gloves and so on,” Rattan said. “We knew that companies would need safety items so we went and purchased them. Then we informed our customers to let them know that we have shifted some focus in our stock and we now have a lot of PPE so people could get business started again.”
The decision was a good one as on April 5, 2020, a Ministry of Health release suggested that masks be worn in public. Shortly after, it was required in several business places and workplaces that people wear masks along with social distancing as a measure to combat the spread of the virus. Now, it is a requirement by law that masks be worn in public on pain of a $1,000 fine.
Again demand pushed the supply, and more businesses got into the PPE industry. Rattan said the market is now flooded with sources for PPE, but because of its worldwide network with access to multiple manufacturers, it is still able to compete.
“There is a lot of competition now, especially in the PPE industry. But we are able to access stock from sources around the world. A lot of companies have this equipment because Buttenberg & MP supplied them.”
Outside of the PPE industry, the company continues to supply materials and equipment to the energy industry.
Looking forward to 2022
The company is now looking to establish a physical office in TT, with more staff who will be able to assist Rattan with spreading the word of the benefits of a relationship with Buttenberg & MP.
He said although the business has been serving customers for the past four years, it has been operating in a virtual space – making calls to customers, having virtual meetings and communicating online. He said executives hoping to set up an office locally in the first or second quarter of 2022.
The company is also seeking to use its TT office to access the South American market. It already has connections with businesses doing projects in Suriname, Guyana and Peru.