Optimizing chemicals-by-rail operations in an increasingly congested and constrained rail network
Nearly a quarter of US chemical products travel by rail. This means safe, reliable and affordable rail transportation is critical to the industry. Increasing congestion on the railroads, coupled with rising prices and poor levels of service, is having a negative impact on chemicals companies’ ability to get their products to market on time and in a cost-effective manner. To maintain competitiveness, chemical companies, as well as their carrier partners, need an innovative approach to market access and transportation operations.
Time for a new approach
The current shortfalls and imbalances to chemicals logistics optimization are forcing chemical companies to take a fresh look at how they manage and operate their supply chain. Each segment in the chemical industry value chain is looking for new strategic approaches to achieving greater reliability with minimal disruptions, lower costs, easier and more direct route utilization, intermodal optimization and increased optionality.
Achieving better collaboration with the railroads
Class One carriers have historically been challenged to develop strategic directions that are appropriate for their company and their customers. Too often they have taken advantage of their unique position to impose year-over-year rate increases. In addition, transactions have commonly taken place between managers within a shipping community and the marketing or sales manager at the carrier organization. This practice stands in the way of interactions at C-Suite level where win-win incentives for new behaviors capable of creating more sustainable value could be agreed.
Where do we go from here?
Maine Pointe’s chemicals-by-rail specialists have a wealth of experience helping clients transport their hazardous products by rail while delivering significant cost, cash and growth improvements to their bottom line. We’ve worked on major initiatives to enable clients to transform their rail and over-all transportation capabilities, orchestrating game-changing partnerships at CEO-to-CEO level that have produced far better results than the industry has traditionally achieved. Our team can work with you and your rail partners to eliminate bottlenecks, reduce constraints, and deliver an advanced rail logistics capability.
Maine Pointe offers its clients:
- Frontline logistics management expertise, including the reconstituting of fractured logistics organizations
- Trans-shipping experience for enhanced operations visibility across the rail-port-vessel interchanges
- Design and implementation of advanced railyard management systems
- Comprehensive understanding of transportation operating rules and regulations
- A best practices perspective gained from pioneering global rail and transportation engagement experience
- The right executive relationships to secure critical partnerships
- A commitment to integrating procurement, logistics, operations excellence and sustainability disciplines
What Maine Pointe Achieves
Redesigning the rail service and network optimization to support expansion for a global fertilizer and chemicals company.
What we did
- Used network optimization tools to identify optimal product distribution network and support expanded production
- Improved railcar cycle time and reduced number of railcars required to distribute product to US markets
- Identified where railcars were being delayed while in-transit by analyzing historical car location messages
- Positioned client to negotiate future rail contracts with railroad partners
- Identified annual savings potential of $28M to $35M
- Developed an optimized distribution network with five regional distribution centers resulting in increased rail fleet utilization, enhanced ability to profitably serve the North American marketplace and increased velocity through the rail network
- Reduced railcar cycle time from 43 to 22 days
- Generated an ROI of 6.5:1
Developing and implementing a strategic logistics plan for a producer of construction, transportation and chemical manufacturing materials.
What we did
- Screened and prequalified 3PL warehousing/packaging companies, railroads, barge lines, ocean shipping companies and international freight forwarders
- Developed a strategic plan to reduce costs and improve service both for our client and its 3PL/carrier partners
- Instituted improvements with rail providers that significantly reduced client’s cost and improved transit times from 8 days to 1
- Put in place 3PL firms that reduced client’s cost by over 10% while significantly improving service worldwide
Optimizing the distribution network for one of the world’s largest phosphate and potash producers using a 'client first' approach.
What we did
- Designed trains specifically “dimensioned” (sized and reserved) for client on a daily basis
- Focused on unit train movement, while maintaining flexibility to manage 25+ car blocks and carload traffic
- Provided stability, reliability and velocity by establishing a new hub and executing a strategic approach
- Optimized car velocity
- Provided market-competitive pricing, with further incentives to support a lower-cost supply chain model
- Created a contingent service strategy, leveraging hubs and gateways to maintain fluidity and efficiency
- Our client achieved annualized savings of $11.7M to $15.0M from a new seven-year freight contract with the Class 1
- Delivered $6.2M - $9.5M freight rate savings (based on planned volumes)
- Achieved a 7.3:1 ROI
Maine Pointe has been instrumental in helping guide PotashCorp with our long-term transportation and distribution strategy. With a tremendous team possessing expertise in many disciplines, they were able to communicate knowledge, and effectively transfer it, to our people. We have been extremely pleased with their performance.”
G. David Delaney Executive Vice President and Chief Operating Officer, PotashCorp