Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
For building products manufacturer Owens Corning Corp., whose annual transportation fuel bill hits about
$100 million, $1.1 million in savings over the last year or so may seem like a drop in the bucket. Unless,
that is, the bucket is filled with found money.
Owens Corning gained these savings by doing nothing more than going about its business. One of its truckers,
Chicago-based Dillon Transport Inc., converted from diesel fuel to lower-cost, cleaner-burning liquefied natural
gas (LNG) on two lanes that it operates for the Toledo, Ohio-based company. The routes from Owens Corning's
suppliers to its factories in Texas and Ohio have stayed the same, as have the rates. Owens Corning's savings
come from lower energy surcharges imposed by Dillon.
Phil Crofts, Dillon's marketing director, reckons its natural gas surcharges are, on average, 30 percent below
those on traditional diesel fuel. Unlike with diesel, there is no industrywide template for determining natural
gas surcharges. However, natural gas prices are today about 90 cents to $1 a gallon cheaper than diesel prices.
In addition, natural gas' price fluctuations are less extreme. The combination of low prices and low volatility
has become a boon to truckers, which can pass on some of that bounty to their shippers.
The two companies have benefited from the steady and predictable velocity of goods flow on the two lanes—raw
materials moving from Owens Corning's suppliers to its factories. The transit is so predictable that Dillon buys natural
gas from one of its fueling partners, Seal Beach, Calif.-based Clean Energy Partners, on a guaranteed basis knowing it
has the loads to support the fuel consumption. The only change is that Owens Corning now commits to a three-to-five year
relationship with Dillon rather than a year-to-year agreement.
Dillon Transport and Owens Corning are not the only companies seeing savings from converting to natural gas. In Arizona,
Golden Eagle Distributors Inc., a Tucson-based beverage distributor whose largest customer is the beer titan Anheuser-Busch
InBev, put its first compressed natural gas (CNG) power unit on the road about 20 months ago. Today, Golden Eagle's CNG units,
which are leased from Ryder System Inc., comprise nearly half of its total rig count. Golden Eagle consumes 90,000 "gas gallon
equivalents" (GGE) of CNG a year and saves an estimated $142,020 annually over the cost of diesel. Those savings more than offset
the additional $81,600 annual costs of leasing the more expensive CNG trucks, according to Bill Osteen, senior vice president of
business operations.
Keeping those costs down is crucial because Golden Eagle does not pass on higher fuel charges to its end users—supermarkets,
convenience stores, restaurants, and bars. So it must stay on top of its fuel spending or pay the price. The switch to CNG has
been "vital to us in containing our fuel costs," Osteen said.
Golden Eagle also estimates it saves $12,500 in lower vehicle maintenance on CNG trucks, Osteen said. What's more, Golden
Eagle generates royalties by allowing public fill-ups at its CNG refueling facilities in Tucson and nearby Casa Grande. Under
an arrangement with Chicago-based Trillium CNG, a provider of CNG fueling services, Golden Eagle supplies the raw land to
Trillium, which then designs, builds, operates, and maintains the facilities, according to Osteen.
These stories illustrate the possible monetary benefits of using natural gas, either in compressed or liquefied forms. But
there are still obstacles to overcome before either form enters the mainstream.
CNG VS. LNG
Much of the uptake for CNG so far has come from delivery fleets such as garbage trucks, mass transit, and school buses
whose vehicles travel less than 250 miles per day and return to their bases after their shifts. CNG is a dense, heavy
substance. What's more, the nine-liter engines that are still the standard for natural gas transport lack the horsepower
and torque to haul heavy loads. As a result, it is virtually impossible to use CNG to transport 80,000 pounds of gross
vehicle weight—the maximum tonnage allowed by law—over any appreciable distance.
In addition, there aren't many CNG fueling stations that can accommodate a heavy-duty tractor-trailer; even if a site
could be accessed it would take as long as 30 minutes to top off a rig's tank because most compressor outputs are undersized
for that function, according to Clean Energy.
LNG is dispensed and stored as a "cryogenic" fuel at temperatures of -260 degrees. Unlike CNG engines, which can lose up to
one-fourth of their tank storage capabilities during fill-ups because of heat and temperature gain, LNG engines do not generate
heat, and their design allows all of the fuel to be used. This leads to fueling speeds comparable to that of diesel engines and
no loss of range. An LNG-powered truck can travel up to 750 miles on one tank, making them more suitable for regional or
longer-haul truck runs.
One big advantage of CNG is that it doesn't bear the liquefaction and delivery expenses of LNG, and is thus significantly
less costly to produce. It is also taxed at a lower rate than LNG.
FUTURE ADOPTION LEVELS
Industry experts expect adoption levels to rise significantly over the next several years. Natural gas will power about
17 percent of the nation's heavy-duty truck fleet by 2017, up from 4 percent today, according to estimates from Siemens,
the German industrial giant, which supplies LNG. Annual purchases for LNG-powered trucks, currently at less than 500, will
increase to about 4,000 by 2020, according to Dave Hurst, analyst for Boulder, Colo.-based Navigant Research, a consultancy.
LNG, however, will remain a niche market for heavy-duty trucks through the end of the decade, Hurst says.
The catalyst for increased use of CNG-powered vehicles will be the adoption by fleets of the more powerful 12-liter engines.
Scott Keeley, director of the Compressed Natural Gas Initiative for Siemens Infrastructure and Cities, said the move to the
12-liter engines will enable CNG-powered rigs to haul thousands of pounds of cargo on 300-mile treks, the typical truck
length-of-haul. Given that the interstate highway system stretches about 45,000 miles, Keeley said it would only require
about 165 or so CNG-refueling stations to cover the country's highway backbone.
The move to the 12-liter engine for LNG has already begun. In late April, Pittsburgh-based Modern Transportation became
the first trucker to operate LNG-powered vehicles with a 12-liter engine when it launched service for Owens Corning on a
dedicated route linking Sanford, N.C., and Owens Corning's roofing plant in Savannah, Ga. The engines are built by Cummins
Westport Inc., a joint venture between manufacturer Cummins Inc. and Westport Innovations Inc., which designs technologies
allowing engines to operate on natural gas and other alternate energy solutions.
OBSTACLES AHEAD
Like any major conversion, the jump from diesel to natural gas will not fully take hold until several
obstacles are surmounted. Today, a 9-liter LNG truck costs about $30,000, while a similar CNG-powered truck
costs about $60,000, according to Clean Energy Fuels estimates. What's more, a 12-liter truck would cost between
$55,000 and $80,000 than a comparable diesel truck, according to Siemens. That is currently too cost-prohibitive
for large-scale natural gas fleet utilization. Keeley said technological advancements and process improvements
should drive down the differential to $35,000 in two years.
There is also the cost of building out a refueling infrastructure. The number of CNG and LNG refueling stations will
approximately double by 2020, with the vast majority being for CNG fill-ups, according to Navigant estimates. LNG station growth
will increase from slightly more than 200 this year to 343 by 2015, and then slow after that, according to Navigant.
David Uncapher, transportation sourcing and logistics leader for Owens Corning, said the country's refueling infrastructure is
currently "inadequate everywhere for ease of growth." He added, though, that the two fueling stations used by Dillon to support
Owens Corning's business are fine for its needs.
Uncapher also worries about the availability of replacement vehicles in the event of equipment problems. "What happens if a
truck goes down," he asked. "Can [providers] still get capacity?"
Yet for the growing supporters of natural gas for transportation, these issues amount to little more than growing pains.
Keeley is convinced that the train (or truck) has left the yard, and that the public will catch on natural gas' enormous
potential once refueling stations start to become as visible as gas stations on the nation's roads.
"It's not often you can use this term without it being an overstatement, but this is truly a game changer," he said.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.