Discover the Hidden Rail Logistics Option

Transcription

1 Alaska Discover the Hidden Rail Logistics Option Retail Rail Shipments into the Alaska Market Must Supplement for Order Management, Load Planning, and Innovative Lower Cost Solutions DUNAVANT.COM

2 TABLE OF CONTENTS 02 Executive Overview 04 Bigger is Better 06 Long Lead Times & Final Considerations for the Perfect Delivery 07 Complex Customized Solutions Made SiMPLE 08 Alaska: The Last Logistics Frontier 09 The Service Providers

3 EXECUTIVE OVERVIEW The Alaska shipping destination seems straightforward at first: ocean containers ship out of the port of Tacoma either on an ocean vessel or barge (there are two carriers for each mode). Inland transits to move the containers from the lower-48 facility to port and then out of Anchorage are very standard and very expensive. Most goods in Alaska have been marked up to cover these market-driven high costs. There are no other routing options being offered by any of the freight forwarders or directly from the common carriers. This paper examines a practical solution for shipping large amounts of material in a controlled, cost-effective manner. We will be discussing a non-traditional logistics approach that can cut costs by more than 35 percent while reducing reorders due to damages or lost freight scenarios. This approach is a guide to using railroad boxcars. Not to be confused with intermodal rail cars, these are 60-feet to 86-feet long and can accommodate double-stacked 6-foot high pallets by two pallets - 48-feet wide. While the weight must be distributed equally, the limits are in the tonnage level. Imagine an air ride across the United States and Canada with seamless rails and industrial strength shocks/struts on the boxcar chassis. We will also discuss how picking the correct proven logistics service provider can deliver significant results in this closed market. Replenishment logic to take advantage of increased lead-time will be highlighted as the method to plan for increased transit/turn times. We will cover how to optimize the biggest boxcar payloads in North America. Collaborating with the key stakeholders of the company to include the vendors, distribution center, inventory planning, and logistics groups can achieve best in class performance while improving profit margins. 02

4 EXECUTIVE OVERVIEW Fig. 1 - CN Railway network The Challenge: New Store Set-Up with multiple shipments of fixtures and merchandise Multiple vendor shipments of all sizes: LTL and Truckload Shipment costs into Alaska were extremely high Traditional routing was ocean container through the port of Tacoma/Seattle Standard container usage was 40-foot container with its limitations on weight and cube Coordination for scheduling events and tracking multiple shipments was complex 03

5 Bigger is Better Only the Canadian National Railway (CN) connects directly to the Alaskan Railroad via a little known AquaTrain barge that runs from Prince Rupert, BC to Whittier, AK. The AquaTrain has a ten-day cycle to complete the full loop. This schedule can slip if there are delays or the load arrives late. Missing the barge cycle will delay the delivery a full ten days. Railroad cars are rolled on and off the barge using rail switches and engines. The AquaTrain has tracks on its floor. The primary commodities that use this routing are typically oil and gas, and construction and raw materials. CN rail business development worked with Dunavant Logistics to determine the size and frequency of the loads going into Alaska. The most significant advantage of using the rail is the size of the boxcars that can be used. In this case, 60-foot and 86-foot boxcars were considered. The 86-foot boxcar has the same height of 12-feet, 9-inches as the 60-foot boxcar. This additional length allows for 2.6 standard 53-foot conventional trailers to be consolidated into one 86-foot boxcar (Fig. 2). Dunavant worked directly with the CN rail operations and safety personnel and a rail-approved warehouse consolidator to properly stuff the boxcars for the extended rail travel. Dunavant coordinated a cross-functional collaboration, assessment, and planning meeting for all major vendors at an actual new store set-up that was in progress. Corrective actions were noted on the shipping durability for certain items. Recommendations included reinforcement of crates and pallet construction to exact size for oversized items to eliminate any overhang and prevent damages from occurring during the long travel to Alaska. Fig Boxcar 04

6 Bigger is Better Cube and Weight Load Plan Dunavant held process review meetings at the Merchandise Fig. 3 - Custom Shelving Unit for Pallet Stacking Distribution Center (DC). The management team was instructed to build the pallets 6-feet tall instead of the 7-foot height that is standard practice to optimize domestic trailers. The 6-foot pallet height would allow the pallets to be stacked on top of custom-built disposable shelving units. The eight pallets in front of the doors could be 7-feet to 10-feet tall as there was no double stacking, for safety reasons. The doors on the boxcar slide open on the sides of the cars. Fig. 4 - Double-stacked Pallets with Custom Shelving The loading plan was adjusted so that the DC loaded all pallet weights over 1,000 lbs. on the floor and those under 1,000 lbs. were stacked on a unique disposable shelving unit that the consolidator custom built for each load (Fig. 3). This assisted in the load balancing to prevent load shifting. Additional plywood, 2 x 4s, 4 x 4s, and air bags were on-hand for block and bracing the shipment (Fig. 6). Railroad safety personnel also consulted on the load build-out and approved the safety integrity for rail worthiness. Fig. 5 - Boxcar Load with Additional Plywood The warehouse consolidator/boxcar loader continued to note and take corrective action on vendor items that needed improvements to prevent damages during transit. This coordinated effort reduced expensive expedited replacement shipments to the Alaska market. The attention to loading detail and flawless execution provided the best opportunity for the shipments to arrive on time, damage-free, and with the expected cost savings. Fig. 6 - Boxcar Load with Material to Prevent Movement and Breakage 05

7 Long Lead Times & Final Considerations for the Perfect Delivery Lead times for the shipments by rail need to include an additional two weeks in the summer and up to four weeks in the winter to allow for any delays in the AquaTrain cycle. A replenishment cycle similar to the bi-weekly volume shipment in the lower 48 states should be utilized. This cycle should include the appropriate demand multiplier to anticipate the inventory level over this extended timeframe to reduce stock outages. Deconsolidation of the railcars into 53-foot trailers for trans-loading occurs in Anchorage, AK at the rail ramp. At this point the freight is safely loaded for the destination delivery. Careful instructions must be documented on the priority order of the unload as well as any unique handling requirements. For example, is there a pallet jack that must be unloaded first to facilitate the rest of the unloading process? Are there items that must be kept together or segregated for assembly at this time? What is the order of flow and placement for the rapid fulfillment at the final destination? Dunavant s compliance team worked with the customer to ensure all information was submitted for the required Importer Security Filings (ISF) to prevent delays. The Security Filings are required for shipments across Canada or another country. Information needs to be systematically collected and sent to the freight forwarder or custom broker for filling requirements timely. This information is best tracked on a per pallet basis and in compliance with the commodity compatibility requirements as it pertains to hazardous goods segregation. 06

8 Complex Customized Solutions Made Simple To generate the best results in this complex environment, you will need a logistics service provider that can leverage industry/partner relationships, experience, and knowledge. This provider must have the ability to capitalize on suppliers who specialize in unique operations and have the flexibility to think outside the standard box. This main service provider will need to be a true coach in pushing an overall collaborative approach, removing roadblocks in the path to success. In essence, your logistics service provider must also be able to act as a seasoned 4PL, coordinating multiple vendors for the optimal solution. When faced with this challenge, Dunavant s first step was to leverage their relationship with the CN railroad on import shipments from China into the United States. Although in this case, they wanted to ship on the reverse route out of the U.S. and then move the shipments out of Price Rupert, British Columbia into Alaska. When looking into options that are operationally and cost-effective, the AquaTrain was identified by the CN rail partner, who is already a business partner with the Alaska Railroad. Dunavant s network solutions software mapped over 50 vendors ship points for consolidation (Truckload, LTL and Parcel). Several rail-certified warehouse providers were vetted and Dunavant recommended a central location at the best CN rail hub location for the best induction point. This choice is important not only to be cost-effective but also for corrective actions and collaboration during the start-up of complex logistics programs. Dunavant not only customized the rail solution for large non-time-critical shipments but also demonstrated their extensive portfolio of options for the traditional routing optimizations. If final delivery locations in Alaska do not have loading docks or ramps, additional handling is needed. This requires deconsolidating the container and reloading into trailers with lift gates. Dunavant recommended and coordinated full container load shipments into the Anchorage area for next-day final delivery. In addition, they recommended and coordinated LCL shipments into rural areas with carriers who have local hubs for a reduced 1-2 transit days. Fig. 7 - CN AquaTrain Route Fig. 8 - AquaTrain Loaded 07

9 Alaska: The Last Logistics Frontier The client was particularly enthusiastic about Dunavant s ability to create a process that was unique to retail, reduced damages, improved visibility inbound and significantly reduced the cost of opening stores in a new market. Benefits of the AquaTrain transport solution: Set up crews received all shipments at once and did not have to chase missing shipments of critical items. Damage was insignificant and better than the lower-48 norm. Transportation costs were reduced by more than a third and fuel surcharges by half, delivering a significant payback for the operation. Dunavant took corrective actions with each shipment and facilitated continuous improvements across all stakeholders, creating a positive operational experience for all. Although the AquaTrain is predominately used for chemical and construction products, Dunavant worked to make it a viable option for retail as well. 08

10 The Service Providers Founded in 1928 and headquartered in Memphis, TN, Dunavant gained more than 50 years of experience in logistics and supply chain management as one of the largest global commodities traders/distributors in the world. In 2010, Dunavant Enterprises sold its cotton business and launched Dunavant Logistics Group, a full-service third party logistics provider. Today, Dunavant Logistics Group is recognized as a leader in providing transportation solutions within agriculture, chemical, automotive aftermarket, food and beverage, and retail products, among many others. With focus in four main verticals - global, freight, distribution, and consulting, Dunavant provides the knowledge, experience, and technology required to ensure efficiency and effectiveness for its customers. DUNAVANT LOGISTICS GROUP 959 Ridgeway Loop Road, Suite 205 Memphis, Tennessee Business Development: Operations: Info@Dunavant.com dunavant.com Canadian National Railway 09