I am starting this Thread in order to keep from changing the topic on another current Thread here:
“….Hunter…so fa****r…” @ http://cs.trains.com/TRCCS/forums/t/208576.aspx
This comment Thread was posted by [Valpo] Ed to Ed Blysard [ Houston Ed]:
| [POSTED BY]: MP173 replied on 07-31-2012 7:33 AM |
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I know my Employeer has a Pair of SIT Yards they have setup and does Custom Blending for his Customers. One is on the BNSF the other is on the NS. The one on the NS is about 50 Cars in size the one on the BNSF is about 200 Cars in size and we also use a Wrecked ACF hopper to do out Custom Mixing as we do them in 100 ton lots.
My carrier has a entire network of such operations that they term Through Bulk Service. They service virtually the entire range of chemical and plastic products - Product comes to the facility in carload lots and is discharged to the ultimate customer in truckload lots. There are sites in virtually every metropolitan area my carrier serves…size of the facilities vary in accordance with the customer base at each facility.
Does anyone know what the per diem is on a covered hopper?
From my observations, almost all, if not all, plastic pellet covered hoppers are owned or leased by the plastic manufacturer.
I am transferring comments on the Hunter So Far thread to this one and hopefully it will continue. For those who havent read that thread, Ed has done an outstanding job of describing the Houston, Tx operations which is a very complex terminal operation involving numerous petrochemical and import/export facilities.
Ed very graciously provided maps, links, and descriptions as to how the SIT yards coordinate the chain supply flow of materials from Houston to points in North America. This type of logistics goes well beyond simply running trains from Houston, Tx to Chicago or New Jersey, but involves large batch manufacturing of product, inventory and storage of products in railcars, and the efficient movement of product to final destination.
There is a very interesting push pull in this concept and it makes considerable economic sense. Railroads, with considerable push by Hunter Harrison, have moved towards scheduled railroading, which not only offers better service to the customer, but vastly improves asset utilization. Scheduled efficient movements using algorythems (sp) for planning (each car has it’s own trip plan) increases overall speed (from origin to destination) and reduces the number of cars in the system that are needed. Scheduled railroading is probably as much about improving return on capital as it is providing improved service. The two concepts go hand in hand.
Now comes the other side. The petrochemical companies are not looking to vastly improve the velocity of individual cars, but are using these cars as storage facilities. Why? Large batch manufacturing (which may occur only a few times a year) trades manufacturing efficiencies for lower return on capital for rail equipment. Obviously the value of the product being stored in railcars allows for the costs involved for the storage.
Thus the petrochemical companies (and others such as agricultural firms) have moved from railroad owned equipment to pri
I have seen large A-frame buildings and other facilities for bulk storage of solids. This would seem to take up a smaller footprint than a SIT (storage in transit) yard and wouldn’t tie up a lot of rail cars. Sometimes in crowded industrial areas there might not be room for a lot of storage, and the SIT yard could be built on cheaper real estate. Other than that, I can see a SIT yard for storing empties and loads to build unit trains, but why would they use this system for long term bulk storage? What am I missing here?
Flexibility perhaps. Perhaps it was Murphy Siding who said that one of the commodities he dealt with was lumber, which was loaded in centerbeam (or other) cars. The cars would be loaded without being necessarily sold and moved in a loop between destinations until the car was sold and the lumber offloaded to repeat the cycle.
Around here, there is a place that (coincidentally) uses a CN yard as basically a SIT yard for products they use. I was told it was to ensure the right flow of product to meet production demands. If they’re willing to pay for it and CN has the space…why not?
Volume and variety and logistics, look at Dayton SIT yard…
http://maps.google.com/maps?hl=en&ll=30.008166,-94.905052&spn=0.013193,0.030212&t=h&z=15
Take a good look at the number of hoppers here, and realize they are not all full of the same product, some have PVC, others medical plastic, some polyethylene.
Ground storage for just these three would require separate building several stories tall, with acre sized foot prints.
There are dozens of plastics, so you would need dozens of buildings.
The plus to SIT is you can send the product to the customer’s location, store it close by in a yard like Dayton, and then deliver controlled quantity at the customer’s request.
If you’re a customer who needs, say, 40 tons volume of medical grade plastic…if you called Phillips and had them load it into trucks at Pasadena and ship it to you, you would have to have 3, maybe 4 trucks to move the stuff, it is tremendously heavy…the cost of moving 3 trucks of it from Houston to say, NY would be outrageous.
On the other hand, if you called Phillips and they told you CSX has two hoppers full of the product in a SIT yard just down the road, and could set the hopper in a team track for you to empty at your convenience, well then, all you need is one vacuum truck to bring the stuff to you in the quantities you need.
I understand about flexibility and I was not really talking about 2 or 3 cars, but rather large blocks of cars sitting between production runs of several months. The yard and it.s switch leads also takes up some acreage. Just as cars are cleaned for various products, a storage building could be cleaned for the next bulk production run. Maybe there is more storage at the plants than we realize, or if there
This is a comment on SIT yards.
One of the items that may or may not play into their use is this.
No inventory tax. By tax rules any inventory in transit at tax time is not subject to inventory tax.
When I was driving usually 1 quarter was pretty dead(Jan Feb March) this was for a variety of reasons. The pickup usually happened at the end of March, the 1st weeks of April. At lot of this movement was sparked by the above described.
Thx IGN
Maybe I was not as clear as I should have been…the cars in a SIT yard don’t stay there long unless they contain a specialty plastic.
If you were to stop by Phillips private plant yard in the early morning, it would be half to three quarters empty, by noon they are pestering us for a pull move because they have loaded all the cars in the plant proper and need us to bring them more empties and pull the loads.
Production at the plants here, (I can’t speak for other locations) runs 24/7, 365 days a year, these places are going full bore all year long,
Unlike coal or coke, you can’t store plastic on the ground in piles, or in a big building, because if you did, then you would have to load it into trucks with back hoes and such, the product would be contaminated.
While the hoppers may look and be dirty on the outside, the interiors are spotless clean.
The plastic goes directly from the hopper into the processing machines, it has to be clean from the moment it is produced to the moment it is made into the final product.
Keep in mind this stuff cannot be produced on and order to order basis, the demand is way too great, just look around your desk or office as count up the number of items with plastic in them.
The runs Phillips and Oxy Pasadena, Dow and Solvay are producing right now are in anticipation of next year or the year after’s demand.
They are not looking to supply this year’s plastic demand for Christmas, that was shipped out last year or the year before, what they are producing is the plastic needed for the billions of plastic shopping bags, Christmas toys, garbage bags and PVC pipe for 2014/2015.
Both Dayton and Casey turn their car inventory about twice to three times a month.
Most of the cars in a SIT yard are not waiting for someone to buy what is inside them, it was sold already, often months or years in advance, the cars are waiting for their slot in the logistics line to open up, be it shipment overseas to China or shipm
Ed,
Excellent explanation, except, these two statements are logically inconsistent. If producers were working with two years worth of inventory, the SIT yard could not be turning two or three times a month.
You know these plastics folks are smart guys and have thought out their distribution system. It looks to me like they are producing as close to real time demand as they can. That would minimize storage, and thus the number of cars in storage. There are costs in changing product so they prefer long runs to short, all else being the same. The SIT yards let them lengthen production runs, but they are constrained in that effort by the costs of the SIT yard system.
Some of these are commodity products. Do you see any trading of product back and forth like Dow product going to a Phillips customer?
Mac McCulloch
This is very similar to a conversation I had with a logistics company in Chicago that specializes in food grade warehousing and distribution. He indicated to me that the food industry works in a similar manner, with a production run of a certain product and then ship it to any and all warehouses available for drawdown. That is why there is often HUGE sale prices on grocery products, which are often thought of as “low margin” items in grocery chains. The food company will need to quickly move inventory to make space available and have an “everything must go” sale to the grocery chain.
If I were in my 20’s and wanting to specialize in some sort of business/manufacturing/etc I would definately get as much training in logistics as possible.
Fascinating discussion. Thanks again Ed for your contributions.
Ed
Link to a Lehigh Valley Rail Management - Bethlehem [PA] Division May 1, 2012 Freight Tariff for similar services (see: http://www.lehighvalleyrailmanagementllc.com/services.html ):
http://www.lehighvalleyrailmanagementllc.com/pdf/LVRB_Tariff%208500-H.pdf
Not quite catching what you mean, (sleep deprivation does that) but the product in a SIT like Dayton,well Dayton may not be the final SIT yard this stuff ends up at, they may move it north to a SIT outside Chicago or NJ, and then to a dock where it is loaded into ships or the plant where it is made into hefty bags.
Dayton may be the closest facility to place the car until there are enough aggregated to make the movement.
The cars may be at Dayton simply because the SIT where they will end up is full right now.
The best way it was explained to me was trying to look at a SIT yard as a really huge siding where cars are stashed, waiting for their final destination having room to take them.
Phillips holds empties at Casey, they gather up enough there, at our yards, and their own yard, and then have them staged so the movement is fluid, the BNSF brings in the cars to us, we combine those with what we already had in the yard, run them out to Phillips and spot them in Phillips yard.
Often the cars we pull out of Phillips head directly out to their final destination, sometimes they end up at Casey or Dayton waiting for the call to move, depends on how many at a time the final user can handle in their plant, the idea being to always have X number of the loads headed towards the user, and X number of empties headed back.
BNSF might pull 150 cars from PTRA, stop at Casey and leave 75 of them there, taking the rest to where they belong, the other 75 at Casey to follow in a few days, a week, or whatever the manufacture’s production schedule demands.
Have you ever gone past a refinery and seen the stacks running, maybe with, orange or red flames, sometimes a blue flame, the same color as you gas stove flame at home?
The orange and red are either goof ups getting flashed off, or excess/contaminated stuff going up in smoke or the system is being purged, and you’re looking at the “gunk” getting disposed of …the blue is natural gas.
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Refineries
Yes,
Lubrizol sends tank cars to several of the plants here…Rhoida sends sodium chloride to ICT, (I think it is used to clean the holding tanks) stuff like that.
In turn, the plants send it back, if I remember correctly, Rhoida “cleans” it somehow, and it goes back and forth.
As for the plastic guys, I don’t see them sending product to other customers on the PTRA, but they do receive product, certain chemicals needed in the production process.
All these plants are connected by pipelines so they may send different feed stocks to each other, I don’t know which one send what to who, but I do know they share a big crude pipe line.
[quote user=“PNWRMNM”]
edblysard:
The runs Phillips and Oxy Pasadena, Dow and Solvay are producing right now are in anticipation of next year or the year after’s demand.
They are not looking to supply this year’s plastic demand for Christmas, that was shipped out last year or the year before, what they are producing is the plastic needed for the billions of plastic shopping bags, Christmas toys, garbage bags and PVC pipe for 2014/2015.
Both Dayton and Casey turn their car inventory about twice to three times a month.
Ed,
Excellent explanation, except, these two statements are logically inconsistent. If producers were working with two years worth of inventory, the SIT yard could not be turning two or three times a month.
You know these plastics folks are smart guys and have thought out their distribution system. It looks to me like they are producing as close to real time demand as they can. That would minimize storage, and thus the number of cars in storage. There are costs in changing product so they prefer long runs to short, all else being the same. The SIT yards let them lengthen production runs, but they are con
The first link Paul provided, and the first paragraph says a lot…some of the cars there may have started out here, moved there in an organized movement designed to keep the customers supply line fed continuously.
Look at their tariffs, trust me, with charges like these, payroll/ train starts for the T&E folks are small potatoes!
Ed:
Just curious…who are the largest shippers on your railroad and about how many cars daily do they ship? You dont have to mention names…can refer as ABC or XOM, etc. How many cars a day does your yard handle?
Ed
Ed B
Looking for more info on Dayton SIT, I found this link http://www.anacostia.com/latestnews/gcs081117.html
Assuming I am in the right place, “Robinson Yard” , the storage capacity is 3000 cars. Based on your estimate of average turns that means 200-300 cars in and out each day. Lot’s of work.