Start with small investment to find big economic benefits of modal competition

Contact Greg Kelahan at gkelahan@hanson-inc.com to discover your opportunities for modal competition.

If you search the internet for “benefits of business competition,” the results will be plentiful. One commonly cited benefit is keeping prices low. This is particularly true as it relates to competing modes of transportation, referred to as “modal competition.” Whether it is the supply of raw materials or the distribution of finished goods, modal competition can lower transportation costs and provide an increased opportunity for profit .

If transportation is a major expenditure for your business, then lower transportation costs potentially can make a significant positive impact to the bottom line of your business and indirectly benefit your end users, consumers, or both . Does your port, waterfront terminal, or industrial facility have unused rail or waterfront infrastructure? Returning that unused infrastructure to service could result in decreased transportation costs.

For example, renovating an unused rail spur may allow your business to receive raw materials or send finished products via rail at a lower cost than your current transportation mode. Or, having a rail option might allow you to negotiate lower transportation rates with your current transportation provider.

The same applies to a waterfront facility that does not use waterborne transportation. Barge transportation might be cheaper than rail and trucking for your business, particularly for freight that is not time sensitive. A relatively small infrastructure investment now could lead to large transportation savings over time. Or, at a minimum, the modal competition created by having a barge transportation option could lead to lower costs from a trucking company or railroad.

Ports, port tenants, waterfront terminals, and industrial facilities often have unused or underused opportunities for modal competition. Bringing unused infrastructure “back to life” could generate modal competition. A near-term transportation infrastructure investment could lead to substantial long-term savings on transportation costs, yielding significant near- and long-term returns on a potentially small investment!

From roads to railroads to barge transportation, Hanson has the transportation infrastructure and operations analysis experience to guide you through that decision-making process, so you can make the right business decision for your situation.

Bigoness becomes secretary of American Railway Development Association committee

Chris Bigoness, an industry operational specialist at Hanson, has been elected secretary of the American Railway Development Association’s (ARDA) Economic Development Committee.

Chris will serve a one-year term as an officer of the committee, which promotes the growth of rail facilities to boost business in the industry.

ARDA, established in 1906, is a nonprofit educational trade organization.

Transportation essential to economy

Questions about transportation’s impacts on your work? Contact Dave Thomson at dthomson@hanson-inc.com.

We don’t think about it much — transportation, that is. Usually, if we do, it is because of a circumstance that interferes with our lives — trucks on the road that are slow to accelerate after a stop light; waiting at a railroad crossing for a slow train to clear; sitting in the cellphone lot at an airport, waiting to pick up someone whose flight is delayed. We have all been inconvenienced because of transportation realities.

Have you ever considered the value — and critical need — of transportation? Most of the time, people don’t give transportation a second thought, as it is a given in today’s economy. But why is transportation important to you, a freight shipper?

Transportation creates value for a product in a different location.

Imagine that you want to build a raised bed in the garden this spring. You think, “I will go get the materials.” Lumber, nails or screws, topsoil, etc., can all be picked up at the local lumber yard or big-box store, right?

It requires transportation to get everything you need. Mature trees on a tree farm must be TRANSPORTED to a sawmill. Once processed, they are TRANSPORTED to a distribution site. Stores order the lumber, and it is TRANSPORTED to the store. Then, you TRANSPORT yourself to the store and TRANSPORT the lumber home.

Some of us work at companies that supply these products. Many industrial firms produce raw products that are part of finished consumer goods. In all cases, transportation moves your company’s products to your customers. Even your order through Amazon wouldn’t work without transportation.

In the next few blog posts, we will explore how transportation affects you professionally and personally. We will focus on several topics and how they influence where we work, where we live and even which profession we choose.

We will review four general drivers for transportation and distribution:

  • large raw material production regions (mines, agricultural, forest products)
  • large manufacturing regions (Gulf Coast chemicals, auto industry, energy production)
  • large consumer consumption areas (metropolitan areas)
  • areas situated along established transportation routes (inland rivers, most efficient rail routes, interstates, natural harbors)

We will also discuss how transportation networks form and are later enhanced:

  • natural corridors (rivers, mountain passes, harbors)
  • human-derived (raw material production, rail routes, waterway improvements, population centers, manufacturing clusters)

Construction coordination, planning critical for plant expansion

Contact Dave Thomson at dthomson@hanson-inc.com to get help with your plant expansion.

Constructing a facility on a greenfield site is challenging enough to require construction firms skilled in the type of facility being built. You would not call a furniture manufacturer to order a new car, nor a car manufacturer to have a tailored suit made. The same is true of the special skills and experience required for different types of construction.

Constructing an industrial plant expansion is challenging, but ensuring that your operations are maintained and not adversely impacted during construction is very difficult. High levels of communication and coordination are required between many different parties to deliver a plant expansion during the plant’s ongoing production.

The process of achieving a low-impact expansion begins in the planning stages, long before any design work is done. An understanding the project’s objectives, project site’s constraints and needs of the ongoing production and operations must be fully defined. These range from contractor access points; the security of the contractor’s employees and material deliveries; the avoidance of employee, truck and rail traffic; the review and expansion of permits; tie-ins to the existing utilities; having contractors work in zones requiring higher levels of security and safety precautions; where and how material removed will be stored and disposed; environmental issues — the list goes on and on.

Hanson has helped many of our clients successfully expand their plants. Having an experienced team to guide you through this process will save money and aggravation for your employees. It is critical to develop a construction phasing plan, reviewed and modified based on the input from the designers, contractors, plant safety and plant operations, from the initial planning for the project until substantial completion by the contractor. These plans require constant review and revision as more details are known. A smooth turnover of these plans from the designer and plant personnel to a contractor is required, and including them in the contractor bid package can lead to better bids from contractors as many unknowns are removed from the project.

Transport carriers, plant can save money after upgrading operations, infrastructure

Contact Dave Thomson at dthomson@hanson-inc.com to learn more about our site logistics services.

Understanding a company’s requirements for transporting its products, at the lowest possible delivered cost, is an inexact science. Consideration must be given to the volumes to be shipped, distance to be shipped, service reliability, disruption coverage, etc. While it may seem simple to put a truck on the road or a railcar on a train, a lot of planning and analysis is required to arrive at the best value shipping options. Steel I-beams, powdered milk, plastic pellets, liquid fertilizer and other products require different handling, loading, unloading and storage requirements. The physical assets needed to support the different types of product, along with the different types of transport equipment used, often require highly customized solutions for a specific company.

Many companies continue to use the same modes of transportation, product handling methods and infrastructure that were put in place when the plant began operations. Most efforts at cost reductions are focused on getting the best rate possible from the trucking, barge and rail companies. What is not so obvious is there can be efficiency savings to the transport carriers and the plant if the internal plant operations and transportation assets are reviewed and upgraded.

Many times, the personnel at a site miss the forest for the trees. When you are responsible for getting everything shipped every day, and that takes eight to 10 hours per day, little time can be spent on rethinking and upgrading a facility. This is where our site logistics expertise has been very effective. We analyze, develop options and provide financially justifiable modifications to operations and infrastructure — we have provided 58 assessments that have delivered up to 60% savings in operational costs. These upgrades allow companies to negotiate for better rates with their truck, barge and rail carriers.

Early communication about project deliverables important to understanding and success

Find out what you’ll get from Hanson — contact Dave Thomson at dthomson@hanson-inc.com.

Understanding what you will receive for a price is always of interest for anyone purchasing a product or service. When buying a new appliance, you want to know its features and capabilities. The same applies to planning efforts, design development and final construction drawings.

A clear definition of what is expected to be delivered (the deliverable) is key to project success. Each project requires thinking about how much detail is needed to define what you will provide to the client. A deliverable is a defined scope of work that has a schedule and budget. The deliverable must be clear enough so the final product is fully understood by all project personnel.

Different clients have different levels of understanding for terms that might be common in the engineering arena. And even different engineering disciplines have different terms. A civil and land developer client may understand “60% site design,” but it has no meaning to a process engineer. “Front-end engineering and design” may accurately describe a deliverable for a mechanical engineer and industrial client, but a civil engineer may not know what it is.

A good deliverable requires that you understand your client, know the client’s expectations and define the intent and end-work product of the deliverable so that is clear to you and the client. Project challenges begin when one party or the other doesn’t fully understand the deliverable.

A misunderstanding early on in the project that changes the design midstream can potentially cost a lot of money. At Hanson, we strive to clearly communicate at the beginning of a project what our clients will receive for the money they spend. This leads to many upfront questions and clarifying discussions. We have found that these discussions have huge value to our clients, because we design only what is needed for a project, and we design to the level and expectation of the client.

Thorough analysis of rail infrastructure can help fully modernize industrial plant

For assistance with your plant’s rail infrastructure, contact Dave Thomson at dthomson@hanson-inc.com.

Industrial plant sites normally expand over time, with successive management pursuing the best business opportunities as they become available and as the plant can fulfill. What was a new facility designed to “state of the art” at the time of commissioning is now an aging facility that has undergone multiple additions and changes over the years.

Rail operations that were fluid become inefficient because of changes in what the plant produces, changing regulatory requirements, larger and more complex rail cars, the “in-fill” of vacant plant locations with support facilities, product volume and railcar growth to support these volumes, industrial process upgrades and myriad other items that occur over decades of small, incremental improvements.

Rail infrastructure can — and many times is — left behind in modernizing with these items. Many plants have experienced major shifts in their products and volumes. A full analysis of the rail infrastructure often is not done as these changes occur. Existing infrastructure is patched together to support the new shipping demands. These patches are patched again as the plant undergoes further improvements. What started out as a highly efficient operation becomes an underperforming process and causes additional costs to the plant and corporation.

Site rail and logistics optimization is a process in which the railcar’s safety and efficiency is reviewed in the full context of internal plant production; loading, unloading and storage of product; railcar cleaning, inspection and repair; and matching serving carrier capabilities and processes with the plant production, then identifying internal rail operational improvement opportunities and using financial measurements to develop a cost-benefit analysis to help identify the areas of largest financial and efficiency returns.

Supply chain challenges and silver linings

Dave Thomson, P.E., is Hanson’s industry market principal. This article was published in the October issue of BIC Magazine.

Current social and economic upheaval highlights the downside of a decades-long trend of U.S.-based industries outsourcing production to other countries.

Although the COVID-19 crisis has underscored the vulnerabilities in the U.S. medical supply chain, a review of the security of the entire production chain – from raw material sourcing and manufacturing to final distribution to the end consumer – is underway by many companies. Even before the current conditions, concerns with quality control, trans-Pacific shipping costs and market proximity were not only persuading American companies to bring their operations home, but convincing foreign companies to locate in mainland America.

There are predictions that between $800 billion and $2 trillion of investment in the U.S. industrial economy in the next decade will be needed to return security to manufacturing and distribution for U.S. consumers. These big numbers will not be invested by private industry alone. There will also be requirements to change regulations, tax structures and incentive programs within government. One example is the program in Alberta Province, Canada, which provides incentives to new petroleum chemical industrial plants, leading to economic and job growth.

It is also going to require changes in how the public perceives private industry and manufacturing. Let’s face it: Industry and manufacturing have been vilified for years. In almost every Hollywood plot, big companies are the bad guys and, like it or not, this has an effect on the psyche of the general public. Presenting a better narrative of the benefits of industrial growth is critical. It must be done in a manner that is responsible to local communities, with the knowledge that every project has both positive and negative impacts. Believe it or not, the impacts to communities must remain neutral at worst and positive at best. If all negative impacts are perceived to fall on the community, and all perceived benefits go to state governments and companies, there will be significant resistance. Presenting the benefits is not easy, especially for longer-term projects. It is easy to take a picture of a tree that will disappear with a project, but no one wants to wait 10 years to see a replanted tree grow.

It is in our best interest to be aware of and respond to issues raised by citizens that may be affected by our current or future projects. Yes, falsehoods are often spread to affect an industry’s ability to locate or expand a plant. All of us in private industry must work together to change the “not in my backyard” mindset.

For example, a mine fought for years to gain approval to begin operations. Company representatives attended meetings during which individuals claimed their children would be deformed because of pollution. Once the mine began operations, it was cited for releasing water that was too clean for the local watershed and had to dilute the water before releasing it into the environment. The mine has now been operating for years and provides hundreds of high-paying jobs to the local economy. This is an example of how to integrate local concerns into your project early and make them work for you in the permitting process.

Hanson led a project that drew huge concern over its impact to a migratory bird habitat. We reviewed alternatives and were able to reduce the cost of the project to the owner by over $4 million, while increasing the migratory bird habitat by 6.3 acres over the original amount. We won an environmental award for our ability to integrate a greenfield project into a site everyone thought could not be built on and made improvements for the owner and environment: win-win.

We must embrace a mindset that not only accounts for the realities, but creatively develops solutions to improve them. Will there be hurdles and setbacks? Of course. But is it possible? Yes.

Staying optimistic is difficult at times, but stay motivated to pursue new ideas. As my mother said to me many times, “There is a silver lining to every cloud; you just have to look hard sometimes to find it.”

Reflect on what you have and what is possible, and search for those silver linings.

Welcome to our new blog, Industrious Thinking! We look forward to sharing stories about our outside-the-box thinking that have helped streamline our client’s projects and accelerated project benefits. We bring a different approach to projects big and small, because no two are the same. You’ll also learn about the talented professionals on our team and what they’re up to. We hope you learn new insights while enjoying our blog. We look forward to our future discussions!

Dave Thomson, P.E., senior vice president and industry market principal

Clay Scott, vice president

Dave Thomson, P.E.
Clay Scott

Moving parts: Managing industrial site’s flow takes blend of analysis, insight

For more information about how Hanson’s analytical services can help your site, contact Dave Thomson at dthomson@hanson-inc.com.

Understanding how to efficiently handle the multitude of in-and-out traffic and products for an industrial site can be a challenge. There are many aspects to consider — employee access and security, inbound and outbound truck control, loading and unloading products from different transportation vehicles (truck, barge, railcar, etc.) and storing raw and finished products. And balancing all of this to ensure the industrial processes’ production capabilities are maintained can be difficult. This is true for greenfield sites, but doubly true for owners of industrial plants who are looking to expand.

Understanding the production volumes, buffer stock requirements, transportation and vendor service levels, regulatory criteria and safety considerations are all critical. A failure to properly balance these disparate items results in inefficiencies, added costs and bottlenecks to the industrial plant’s profitability. A failure to advance new knowledge in process flows and material handling can also create unintended costs and workarounds to existing conditions.

Hanson pursues a method of developing material handling, transportation and storage infrastructure arrangements that uses analysis techniques that include marrying Six Sigma, Lean, process, inventory control and transportation operational design parameters. We worked in a 75-year-old industrial plant that had expanded for decades. When we analyzed the inbound and outbound material volumes and internal movement of trucks and railcars, we developed new routing, minor modifications to the road and rail infrastructure and operational processes that reduced two switch crews per day and decreased truck dwell time to under an hour. These changes had a four-month payback and permanently reduced the plant’s ongoing operational costs.

The combination of these analytical tools, operational insights and adherence to stringent safety considerations are integrated in developing solutions for what can be highly complex situations.