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
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.
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
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