Shortly after coming to the United States in 1985 to work for ocean carrier Hapag-Lloyd, Klaus Schnede almost returned to his native Germany, frustrated by a language barrier.
Now, after nearly two decades with ocean carriers and 13 years with Eastman Chemical Co., Schnede couldn’t be happier he stuck it out, as he has become addicted to what he describes as “a really, really cool job.”
Schnede, who is manager of the North American marine category at the Kingsport, Tennessee-based, $9.5 billion-a-year-in-sales global specialty chemical firm, offers his thoughts in an exclusive interview with AJOT.
How has Eastman Chemical benefited from its bringing shipping and logistics functions in house?
In the late ’90s, the company partook in an outsourcing experiment, outsourcing all the procurement and operations to a third party, and this experiment lasted for the better part of five and a half years.
It turned out to be not very successful, and, in 2005, Eastman decided to bring things back in-house. I was one of six people who came over from the procurement side to Eastman and was brought in to be responsible for everything marine-related.
It was just a better fit for things to be back in the head office, centralizing the control here, with outposts in Rotterdam, Singapore and Miami at the time. The expertise that came with it was almost unprecedented at the time, with people with wonderful backgrounds in marine or trucking or warehousing or other perspectives. It’s still beneficial today, because there are a few of us left here.
There have, without getting into specifics, been rather large savings accomplished over the years associated with having the right expertise, knowing how to negotiate rates, looking at market insights, understanding what needs to be done and having the proper expertise to take advantage of certain situations.
What U.S. ports are part of Eastman Chemicals’ strategies, and why have you chosen to use these ports?
We are very export-centric. We ship about 47,000 to 48,000 TEUs [20-foot-equivalenht container units] of chemicals on an annual basis. That includes a product called Tritan, a copolyester product used in making blender housings, for example, or in making sports water bottles and other applications. We ship acetate tow, which is used in cigarette production. And we ship various liquids in drums or totes, ISO [International Organization for Standardization] tanks or in bulk tankers around the globe.
We use Houston for a lot of the liquids that we’re exporting, and, for the containerized piece, we’re using Savannah and Charleston and, to a lesser extent, Wilmington, North Carolina. And we use New York and Chester, Pennsylvania.
We use the West Coast when we have urgent shipments, however not necessarily throughout the year. To cut transit times, we might rail to the West Coast via Memphis or Atlanta, and then shipping out of L.A. or Long Beach to Asian destinations.
Charleston is our most-used port, with trucking [150 miles south from Kingsport] to the inland port at Greer, South Carolina, and on to Charleston by rail [for 240 miles]. It’s beneficial for various reasons, including a sustainability aspect, which is good for a chemical company to be green on the rail versus trucking entirely.
The truck market is quite different compared with even three or four months ago.
A booming economy, ELD implementation [electronic logging devices] and a driver shortage have created a quite unpleasant marketplace. We unfortunately see this situation to be an ongoing issue throughout 2018.
How have you applied your nearly 20 years of ocean carrier experience with CP Ships, “K” Line, Maersk and Hapag-Lloyd to your endeavors at Eastman? Am I right to assume that it has proven particularly beneficial in areas of pricing and contract negotiations?
I’ve worked the better part of 15 years in the pricing groups of these carriers, representing carriers at conference and discussion agreement meetings where, in those days, we were able to set freight rates. In the beginning, there were no individual contracts, so those were the days; conference contracts or tariff rates were the only options.
So, yes, I have certainly benefited from having been at those carriers and understanding how their pricing works, how their negotiation tactics work, what they’re looking for and so on. It’s good to have a solid understanding of how they do business.
Obviously, since I left [CP Ships as general manager for export pricing] 15 years ago, things have changed. Therefore, it’s rather important to stay up-to-date in the industry and utilize contacts from those days who are still in the industry.
One also needs a support cast – in the office and at home as well. I have a wife [Mary] who was in the industry, too, so she understands when I’m talking about demurrage, TEUs or transit times. And the staff here in the office know what they’re doing and how to negotiate or deal with certain situations. We also do marine planning and operations in my group. A good team [with four direct reports and a whole team of 27] makes a difference and allows me to sleep well at night.
How has your multilingual, multicultural background served you in your work?
I came over here from Germany in 1985. Prior to that, I learned the business hands-on from scratch as an apprentice at Hapag-Lloyd in Hamburg. Afterwards, I was assigned to operations, marketing, sales and pricing and ultimately sent to the U.S.
When I came to the United States, it was quite shocking. My English wasn’t as good as it is today, and I was ready to pack it in after about six weeks of being fed up with not understanding people as well as I should have. But I hung in there, and it all turned out to be great.
Growing up in Germany and traveling in Europe, from a cultural perspective, has served me well. German is not a very beneficial language here in the U.S. If I spoke Spanish, it would probably be more beneficial, but I do speak English and German.
My family back in Germany tells me I’m more American than German today. Am I correct that you’ve been involved with teaching the German language to local high school students?
For several years, though not currently, I’ve helped out about once a month for a couple of hours in assisting students at Dobyns-Bennett High School in Kingsport in learning the German language, talking with them face-to-face or playing games with them, basically giving them an opportunity to talk with someone who’s fluent in the language.
My three children have learned German through that [Kingsport] school system. My oldest [William, 24, an auditor with Ernst & Young in New York] did a double major in college in accounting and German. He’s the only one who’s fluent.
What other outside interests, including leisure activities, do you enjoy?
I do love golfing, although I’m not very good at it, unlike my daughter [Elizabeth, 17, a high school senior], who received scholarship offers to play golf in college. My wife showed me the game, and we enjoyed it when dating and for the past 27 years as a married couple.
The other passion that’s a family thing is international travel.
Any places you’ve been that stand out?
Capetown, St. Petersburg [Russia], Moscow, Athens, Rome, Dubrovnik and Istanbul.
My wife and I have said we’ll probably do some travel, just the two of us, after our youngest heads to college. Our son James  is studying supply chain at the University of Tennessee, where Elizabeth will be heading in the fall. James wants to follow his dad’s footsteps, because he thinks what I do is pretty cool.
For people who are interested in logistics, my thoughts are that once you’re in logistics – or procurement or whatever else you’re doing in transportation – and you like it, it’s almost a lifetime thing, because it is in your blood.
The job is just so fascinating. You pick up the phone and you don’t know if it’ll be good news or bad. It’s hard work, there’s no doubt about it. And it can be frustrating or highly rewarding. But, once you got it, logistics is a really, really cool job.