NEW YORK Transportation and logistics providers are working to develop cost-saving innovations for the metals industry, several executives said during a transportation and logistics workshop at the Steel Success Strategies XXVIII conference in New York June 17 sponsored by AMM and World Steel Dynamics Inc.
The steel market this year "feels like more of the same, so what will it take to make some money in this market?" asked Vee Kachroo, vice president of supply chain solutions at Canadian National Railway Co. (CN). The answer, he said, is "innovation"as well as a careful analysis of the supply chain.
CN has reduced the time it takes to deliver products, cutting dwell time in its railyards and taking other actions, and is now focused on the first and last mile at mining and drilling sites, warehouses and ports, Kachroo said.
The Montreal-based company is adding two new terminals along the old EJ&E (Elgin, Joliet & Eastern Railway Co.) line. CN purchased the 198-mile short line encircling Chicago in January 2008 and opened its Joliet, Ill., terminal June 16, Kachroo said.
"We are aligning our planning to help us and our customers to grow together," he said. "We are providing more visibility into the supply chain." For example, CN analyzed the ability of a particular railyard to move vehicles off trains onto trucks to ship to local auto dealerships. "We are analyzing every single piece (of the supply chain) to look for savings to bring to customers" and to better compete with other railroads, Kachroo said.
CN has added capacity to its North American rail system in the past two years and plans to invest an additional $100 million on new track, he said.
Gregory Burns, chairman, president and chief executive officer of Cranberry Township, Pa.-based PLS Logistics Services Inc., said that decentralized traffic departments for multi-location steel producers and distributors often mean that they overpay for transportationsometimes as much as 20 percent above market. "The days of beating down carriers (on freight rates) are over," he said. What shippers must do is leverage their loads to get the best deal from carriers.
Burns suggested that they meet changes in shipment volume by adjusting the number of people needed to manage freight. When there are too many people, "cyclical volume declines result in higher per-unit operating costs," he said. He also suggested outsourcing traffic departments to logistics companies that would take over management without having to own assets.
Echoing Kachroo, Burns said that when companies accurately measure their logistics costs, they gain visibility into what adds value and what does not.