Transportation & Logistics
Thursday | 18 December, 2014 | 11:14 am

Moving materials

Written by By Corinna Petry

By highway, railroad or water, managing obstacles is vital for metal suppliers because late deliveries are rarely acceptable

December 2014 - In light of a truck driver shortage, bottlenecks along railroads laden with other commodities and weather extremes, the metals supply chain is more focused on transportation solutions than ever.

“We’re concerned about logistics in the United States,” Commercial Metals Co. Chairman, President and CEO Joseph Alvarado said Oct. 29, citing recent laws that make it more difficult for CMC to secure trucks and trailers. In addition, “rails have been more dominated by energy shipments than by other commodities, and that puts pressure on the availability of railcars.” Those factors have “caused our costs to go up.”

U.S. Steel and a handful of others were caught short on iron ore last spring when Great Lakes shipping lanes froze so completely that even with U.S. and Canadian Coast Guard icebreaking ships leading the way, more than one ore carrier sustained damage from the ice. Blast furnaces were briefly idled as a result.


U.S. Steel President and CEO Mario Longhi was recently asked whether, in the event of another polar vortex-plagued winter, the producer would move more raw materials to its melt shops before the lakes freeze.

“Nobody knows whether this is going to be the norm but we are definitely preparing our operations for a longer shutdown of the locks. [We are] moving more pellets down south, but we’re also increasing our semi-finished product inventory,” Longhi replied.

Driver availability

Industry leaders call the transportation sector a re-regulated market as they comply with recently enacted rules.

“There are a lot of difficulties in the transportation market. The biggest one is the driver shortage,” says Brian Thigpen, director of Scarlett & Gray, a Dayton, Ohio-based metals carrier. “Right now there are more positions open than there are drivers so there is intense competition for drivers and especially qualified drivers.”

He cites the regulatory limit on how long drivers can work each day before taking a mandatory rest period. Plus, “the job itself has lost its appeal” as an expanding economy creates opportunities that perhaps aren’t as demanding yet may pay just as well.

As the recession receded, “no one foresaw the perfect storm of increased volume and fewer drivers,” Thigpen says. “We try to be aggressive in hiring. Our drivers are doing a lot of work and we try to compensate them but we also cannot raise our rates exponentially to customers.”

Craig Longardner, transportation manager for Steel Dynamics Inc.’s Structural and Rail Division and past president of the Midwest Association of Rail Shippers, says drivers have more options, preferring to drive during daylight hours and be home each night. 

“We try to schedule outbound shipments during off hours but it becomes more difficult to get willing drivers. So trucks bottleneck at the front gate all day and we cannot get any shipments out at night. What we want is a smoother flow of traffic over a 24-hour day,” he says.


Ryder Dedicated, based in Miami, Florida, has worked with metals distributors to supply dedicated fleets for over 25 years, Vice President Steve Martin says.

“Private fleet ownership is looking at opportunities to move to a dedicated model while retaining their service commitment,” he says of service centers that operate their own tractors and trailers. Outsourcing “divests risks as it relates to operating as a motor carrier,” and instead employs a provider for whom “this is 100 percent of their business: Recruiting drivers, maintaining equipment, investing in and using technologies to improve driving and routing efficiencies,” Martin says.

When a third-party provider “marries” a service center, the union “replicates a private fleet but you gain more. You improve your ability to run that fleet optimally by using routing software and tools, onboard computers, and by capturing data useful for continual improvement,” he says.

For example, Ryder will take the scheduled orders the evening before delivery, put the sequence of deliveries in the right order to optimize mileage, and help the shipper to load trailers in the sequence that’s most efficient. This also helps the customer, which may load received material directly onto a production line, according to Martin.

Ruan Transportation, Des Moines, Iowa, is a third-party logistics firm that has long-term contracts with Marmon/Keystone Corp., O’Neal Industries, Central Steel & Wire Co., A.M. Castle & Co., and others.

Ruan’s model of limiting routes to a 250- to 350-mile radius of each distributor’s main warehouse allows drivers to work their 14-hour day and go home. “As the economy picks up and demand increases, the driver market is actually shrinking,” says Joe Ulrich, vice president of sales.

“We deploy assets at night to run between hub and spokes, not only making outbound deliveries, but distributing material to regional locations. We tend to focus on three to 12 stops per truckload and come back and do it again. This is very conducive to driver hiring,” Ulrich says.


“One of the value adds we are working on with clients is that we will look at where they are purchasing raw materials, coordinate with the mills and schedule—in concert with outbound deliveries—to pick up that material. [It helps that] there seems to be more willingness by mills to accommodate a short window for pickup,” he adds.

Like Ryder, Ruan is maximizing load efficiencies in both directions and optimizing routes and lanes, while giving its client’s customers exactly what they want when they want it. 

Backed-up rails

There are gaps in railcar availability along the two main rail lines SDI uses for incoming raw materials, Longardner says, but overall, “the railroads are doing a good job of making cars available. The flow of cars through railroad networks seems to be slowing down. It’s affecting every Class I railroad moving east, west, to and from Canada and which have to touch Chicago,” he explains.

“There is still a fair amount of congestion and delays on the rail network,” agrees David Riddell, sales and marketing manager for RSI Logistics & Leasing, a third-party agency based in Okemos, Michigan. The tie-ups began even before last winter, during which extreme weather conditions exacerbated delays. 

The second issue affecting rail movement across the Midwest and Northeast is the commodity mix of shipments, “with more being crude oil and fracking sand—that is where the growth in volume has been.”

He cites one Class I railroad that reported a 17 percent increase in gross ton miles on its Northern lane from March through September. “So there are a lot of delays at their rail yards.” For virtually all the Class I operators, “there is so much traffic in and around Chicago that there are always delays of 30 or 40 hours. But we are seeing more delays in other metropolitan areas, too.”

 RSI Logistics monitors railcars in transit for its customers. “As cars enter a yard and a delay occurs, we call the railroad, ‘Hey, why is this car delayed?’ and ask them to get to it faster, expediting shipments,” Riddell says.

Another focus is on equipment. “A lot of metals—scrap or coils—move on railroad-owned equipment. We help customers secure dedicated cars. That means they will lease it and put it on their own siding,” and book the railroad to pick it up when ready for outbound shipment. “If it’s a railroad-owned car, when you keep it, you’re charged for that per day,’ Riddell explains.

Water routes

Members of the Lake Carriers Association, vessel owners that haul iron ore and metallurgical coal among other commodities, held an “ice conference with the Canadian and U.S. Coast Guard” early in November, Vice President Glen Nekvasil says.

“We expect a lot of carriers will operate until Jan. 15, but Escanaba, Michigan, iron ore shipments could proceed through January and sometimes into February.” When the locks reopen in March, “we expect ice breaking resources will be ready to do the job.” Nekvasil couldn’t say whether steelmakers are bulking up on iron ore these last few weeks of the season but notes that high water levels throughout the Great Lakes have helped shippers add tons to each cargo shipment. “Loads approached 70,000 tons per trip, which is fantastic compared with recent years. That helps us close the gap between last year and this year with all the horrible delays.”


Addressing Lake Michigan and the Ohio River, “I’ve never seen our ports so busy for metal cargoes,” says Jody Peacock, director of corporate affairs for the Ports of Indiana, based in Indianapolis. “Burns Harbor steel shipments are up 100 percent through the first three quarters and have already exceeded the annual total for last year.

“The river ports are also ahead of last year’s shipping totals,” such as Jeffersonville on the Ohio River, Peacock continues. The increase has been driven by metals companies expanding and locating at the ports. “We have prime industrial properties that offer a plug-and-play option. You can build a metal processing plant here and you don’t have to build a dock or rail siding. The port is already connected to rail, dock and highway.”

Of 60 companies operating at Ports of Indiana facilities, “30 or more do something related to the steel industry,” Peacock says. The Port at Mount Vernon just installed a craneway that extends out over the Ohio River and features dual lifts that can pick up two coils at once to place on the dock, in a truck, at a warehouse or onto a railcar.

Alternative thinking

Processor and distributor Olympic Steel Inc. has a plan to meet the transportation and logistics challenges that have developed via weather and regulations, Chairman and CEO Michael D. Siegal said on a Nov. 6 third-quarter earnings conference call.

During 2014, “freight [costs] got away from almost everybody and everybody had the same excuses: a shortage of truck drivers or this or that. We have enhanced coordination with our key vendors to better manage inbound freights. By better synchronizing deliveries from steel mills situated closest to our facilities, we will reduce delivery lead times,” Siegal said. Likewise, it makes sense to sell more tons to customers that are within a tighter proximity.

“To some degree you are mitigated by enhancing your sales efforts in a more local universe than going to the peripheries of your reach. So [Olympic will] partner with mills close to our locations and canvass to much closer [geographic] markets than we may have done in the past,” he said.

As a division of O’Neal Industries, TW Metals, Exton, Pennsylvania, is included in the Ruan-operated fleet network. Through that resource, “we have developed special delivery systems,” Sales and Marketing Vice President Bob Mraz says. For example, “we converted horse trailers from which we wheel ready-to-be-manufactured materials and put it right in front of our customer’s machine. They look at it, put it on, make a part.”

The metals supply chain is thinking clearly about ways to speed shipments while getting the most for its transportation dollars. MM

Editor’s note: Please revisit this topic in our March 2015 issue, where we shall describe in detail how the latest technologies and training programs help the industry to move more safely as well as efficiently. 


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