Logistics equipment shortages have
contributed to the challenge of moving metals, although relief
on this front is more evident.
The panic state that left some mills'
shippers and service centers wondering how they'd deliver
metals to customers a year or two ago no longer has a grip on
the rail and truck markets, with equipment now more readily
available, shipping executives say.
"The availability seems to be loosening up
significantly from, say, a year ago," said Roy Berlin,
president of Berlin Metals LLC, Hammond, Ind., a specialist in
the processing and distribution of tin mill products and
stainless steel strip.
Berlin recalled that supplies of
transportation equipment had been very tight a year ago, when
demand for trucks was stronger. "We're seeing a lot more
availability of trucks for our standard routing," he said.
"There's no question there is less demand. A year ago we would
schedule trucks and some wouldn't show up. That's not happening
However, he and other executives noted that
fuel surcharges remain high and are a challenge, particularly
for long-distance shipping since regional competition becomes
John R.S. Batiste, president of Klein Steel
Inc., Rochester, N.Y., said his company's fuel costs for a
fleet of 18 trucks increased 6 percent during the first half
compared with last year.
Klein Steel has shifted some plate transport
onto rail coming into its Buffalo service center to improve
efficiency, he said. But he described rail as being less
dependable than trucking, noting that a delivery window of
several days is required for trains while truck deliveries can
be scheduled much more punctually.
A dedicated fleet of torpedo cars for
carrying liquid metal between the Illinois and Indiana plants
of ArcelorMittal has forestalled equipment availability
problems for the steel producer, said Gregg Gholston, process
manager for transportation at the Mittal Steel USA Inc. plant
in Riverdale, Ill.
Punctual delivery of the rail cars, which
generally are moved by the Indiana Harbor Belt Rail Road Co.,
Hammond, Ind., is another challenge for the ArcelorMittal
plants since the trains, which need to arrive at their
destination before their loads cool, frequently cross several
other working freight lines.
"I think if you back up to about two years
ago, there was an extreme panic on the part of railroads and
shippers that there was going to be a railcar shortage," Craig
T. Longardner, manager of materials and transportation for
Steel Dynamics Inc., Butler, Ind., said. The result was that
railroads placed more orders for cars than might have been
necessary, and lengthy leases were entered into by
"Fast forward three years," he said, "and
today you have the situation where CSX (Corp.) is actually
parking railroad cars because their deliveries of cars came in
and they now have to store them."
Steel Dynamics has leased about 150 gondolas
for handling scrap to take some of the pressure off scrapyards,
but has refrained from leasing coil cars for shipping finished
products. "There seems to be a more free-flowing supply of coil
cars out there," Longardner said.
As has been the case in the past-and likely
will be again in the future-the pendulum in the equipment end
of the logistics sector has swung too far, Longardner said.
"People said there aren't enough rail cars and we all need to
do something, but everyone did too much."