A new era for crude-by-rail
According to US government data, shipments of crude by rail averaged 130,000 barrels per day (bpd) in 2017. With Canadian crude shipments to the United States by rail, this could reach 350,000 (bpd) by year end and average some 400,000 bpd in 2019. This increase in shipments will be dependent on railroad operators' willingness to accept spot deliveries. Companies such as Canadian National Railway, have insisted on long-term crude-by-rail commitments before providing more rail capacity. Each segment in the oil and gas value chain will need to seek new strategic approaches to increasing capacity 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 crude-by-rail specialists have a wealth of experience helping clients transport their natural resource products by rail while delivering significant cost, cash and growth improvements to the bottom line. We’ve worked on major initiatives to help clients transform their rail and overall transportation capabilities – while orchestrating game-changing partnerships at CEO-to-CEO level that have produced far better results than what the industry has traditionally achieved.
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
Enhancing rail fleet efficiencies and safety procedures at a midstream facility
What we did
- Approached the rail partner in a spirit of partnership and negotiated a quid pro quo arrangement which gave our client 3 additional switches per week
- Established daily/weekly performance reviews with rail operating partners to address operating issues
- Designed and implemented daily/weekly operating reports to identify operational issues
- Installed management tools to streamline work processes and increase human resource utilization
- Engaged a third-party car location management system vendor to improve visibility of railcar movement
- 50% reduction in dwell time for outbound loads at the Class I service yard
- 43% increase in potential weekly shipment capacity
- 67% reduction in railcar yard dwell
- 18% decrease in empty transit miles
- Substantial annualized lease cost recovery achieved by subleasing surplus railcars
Re-engineering rail management to improve railcar utilization and developing intermodal routing alternatives for a major oil refinery.
What we did
- Developed and implemented a Management Operating System (MOS) for the railcar management function that provides a cyclical process covering forecasting, planning, control and reporting
- Developed a detailed railcar master schedule
- Re-engineered the rail management process, rail car cost accumulation mode
- Documented a methodology for setting target inventories in railcars
- Analyzed intermodal transportation options
- Developed a crude supply and pricing matrix for each refining center including their current transport modes
- Proposed 48 primary routing alternatives and carrier combinations by lane
- Achieved $5.5M in annualized savings
- Generated a 5.5:1 ROI
Maine Pointe's unique approach to a savings guarantee for clients, combined with their deep knowledge and practical work experience in supply chain management, sets them apart from others. Through an intense evaluation of existing practices and their focus on low capital investment solutions, sustainable process improvements are developed and implemented that yield real and measurable benefits for the long term."
Blaine Higgs, Former Director Logistics and Distribution, Irving Oil