When buying and selling used industrial machinery there is a great difference between the companies that simply intermediate and are commission agents, those that offer logistic services and those that excel in their logistic operations.
Logistics costs can affect the profitability of any machinery purchase, and can increase drastically if not managed properly.
Several tasks need to be addressed properly: good understanding of the dismantling, loading and transport project and its different phases, a correct definition of the milestones and the agenda, and the selection of adequate service companies. Industry experience and machinery knowledge is essential to project manage the logistics of industrial equipment.
Here is an example of an equipment disassembly, loading and transport managed by MachinePoint´s team
Everything starts with the sale of a compressor owned by a Swiss PET bottle manufacturing company for the beverages sector. The compressor was the last machine to be liquidated in order to close down the factory, most of which had been sold off to a larger plastics manufacturing group.
MachinePoint's sales team assessed the seller on the correct market price for its compressor. An initial excessive asking price from the seller meant the compressor didn’t sell for over 2 years. It was a BELLIS & MORCOM compressor, from year 2011, WH50 H3N model, in very good condition and with very few hours of use. MachinePoint always gives its customers market valuations trying to maximize their selling price, but at the same time keeping prices realistic to ensure a speedy sale of the machinery, since the more time passes, the more it is devalued.
The buyer was an American company and already a regular MachinePoint customer.
Sometimes customers arrange for themselves the dismantling and transporting of the machinery to their nearest port. From this point on, the purchasing company is in charge of processing the importation documentation, transporting the machinery to its plant and managing the assembly and start-up. Although in many cases, companies have no resources or experience and prefer to delegate all of this to a professional company.
MachinePoint has an in-house logistics team that serves those customers who need it. For this particular project, MachinePoint's logistics team was hired by the buyer to manage the disassembly, packaging, loading and transportation project.
Below is a breakdown of the different phases of the industrial logistics project.
1 Define well the project and its milestones
Defining an initial agenda with both parties is our first step. It is necessary to assess when the machinery can be dismantled and in what timeframe. When dealing with small machinery, as in this case, dismantling and loading usually takes only a day or so, but when dealing with complete plant projects it can take several weeks to dismantle and pack the equipment.
Adjusting the dates in detail with their different milestones, and managing well the changes of specialized teams and the transfer of tasks are the critical points.
2 Selecting the right suppliers
The selection of companies with the necessary knowledge, experience and insurance is another key point. Depending on the type, and even the brand of the machinery, certain dismantlers must be hired over others. A professional dismantling is essential to avoid problems when starting-up and commissioning the machinery at its destination.
For this project, a company was hired to extract the oil from the compressor, as machines have to travel liquid-free. This was a company specialized in oil recycling which guarantees its correct recycling and provides the necessary emptying and recycling certificates. It is an easy process of pumping the oil from the compressor into tanks.
Another company was then hired to dismantle and pack the compressor and fix it inside the container.
The chosen provider for this job needs to have well-qualified staff, with experience in this type of machinery, also operators with specialized knowledge in handling cranes, industrial removals, industrial relocations, and all equipment necessary to perform the job: forklifts, cranes and packaging material. This was a simple disassembly as it was a small machine.
Transport was subcontracted to a third company as their prices were more competitive. Transport prices can vary a lot. MachinePoint has volume contracts for transport at very competitive prices with transport companies with whom it has been working for many years. Hiring the logistics management of a specialized company such as MachinePoint has the advantage, in addition to the security and convenience that it offers, that its prices are in many cases more competitive.
3 Detailed monitoring of the marked agenda
The compressor traveled from Switzerland to the USA, leaving through the port of Amsterdam and entering through the port of Miami. From the port of Miami the buying company was taking care of the import process and transport to its final destination.
An open top container was contracted. Open top 40 ft containers are more convenient for cases like this, because it is easier to load the machinery from above rather than through the rear doors of standard containers where the machinery has to be rolled to load it, assuming more risk of knocks. When loading an open top container, it is also easier to place all the machinery well and make the most of the space.
Another important point is to check well all insurances and their contracts with the companies involved. MachinePoint logistics department has an insurance policy that is specially designed to cover used machinery operations where up to 75% of the value of the same machinery new is covered. It covers shipments from one or more trucks, intermediate warehouses and all risks from disassembly to delivery of the machine. It is not a traditional transport insurance as these only cover the "journey", and not the other risks of the operation. Most transport insurance excludes used equipment. The certificate issued by MachinePoint in conjunction with the insurer offers MachinePoint´s customers the certainty of being correctly insured and being the direct beneficiary of the insurance without intermediaries, but with the support of MachinePoint, while also avoiding fiscal risks. Even more important is to have a logistics team that advises the client in the event of a claim and an insurance company with specialization in used industrial machinery and a network of experts sufficient to respond anywhere in the world.
4 Project Challenges
When asking MachinePoint´s team about the challenges of this project, they tell us that firstly it is important to get a realistic initial price so the operation is viable, and not to give false expectations to sellers followed by drastic price reductions with respect to the initial offer.
The coordination of the different companies requires a definition of a detailed agenda, in days and hours. This is fundamental not to have delays and unplanned situations that will lead to delays and extra costs.
5 Examples of problems that can occur in industrial logistics projects
A delay in dismantling means you have to pay for truck stoppages. Depending on the delay, it may mean losing the cargo ship and having to re-manage the entire transport again.
If, on the other hand, the truck does not arrive at the agreed time, overtime has to be paid to the dismantling and loading company. The costs can be very high because it is not only the cost of overtime, but also the cost of orders that the company might not have fulfilled for having to extend their hours dedicated to the project. Or the whole loading process can be delayed, with the inconveniences and costs that this could mean. In some cases the issue can become very critical, when space has to be free on a certain date as a new machine is entering the plant.
Unforeseen disassembly situations may arise, and special interventions may be required. These situations are resolved more easily if you work with specialized service companies that have the experience to foresee incidents and have the necessary technical staff to address them.
Another typical example is when once the equipment is dismantled more cargo space than initially contracted is required. MachinePoint's logistics department has extensive experience in this type of situation and knows how to solve them quickly, thanks to its collaborations with logistics companies and its contracting capacity.
Logistics has already proven to be a competitive advantage to as multinationals such as Zara and Amazon. MachinePoint has opted to professionalize the services of buying and selling used machinery by creating a procedure and an in-house logistics department that provides quality industrial logistics services to its customers.
Loading and packaging process