Are Bulk Transfer Yards becoming a factor in today's RR Operations?

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 private cars.  Often these are company owned but more often are long term leased.  There are a number of reasons to consider ownership vs leasing and I will not get into that.

The point I am making here in a long winded manner is that the petrochemicals and railroads have worked out a system that provides flexibility for the shippers and allows railroads to move very large volumes of highly profitable business. 

As mentioned in the thread, I have a customer in the Chicago area who has embraced this in a big manner. The customer owns a very successful pneumatic tank trucking company with a primary service being the delivery of plastic granuals.  Further the customer has built his own railyard.  Perhaps 200-250 hopper cars are stored in his yard and instructions are received daily to deliver the product by truck within a 300 mile radius.  They are expanding the yard from 18 to 20 tracks.

For the most part, these movements are controlled by the large industrial companies in the US, companies like Exxon Mobil, Phillips, and others Ed has mentioned. 

There has been considerable chatter lately regarding the reregulation of railroads.  My guess, and it is only a guess is that a number of these large industrial shippers realize the position they are in.  They are captive in  a huge way to the infrastructure they have encouraged.  Meanwhile the railroads are in a great situation.  Large volumes with very high profit margins.

I read the PTRA tariff and got an idea of costs involved with these types of local movements and storage.  Big $$$$, as Paul North indicated.  One wonders....what is the value of all these products?

Ed

MP173

...

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.

...

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.

edblysard

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 really is long term storage in rail cars, maybe there is some other reason we have not considered.

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 shipment to the grocery bag maker, the product was most likely bought and paid for before it ever was loaded into the hopper.

Take a good look at the yards around Houston, not just the SIT yards, but the switching yards, and you will find the majority of the cars here are either tank cars or hoppers.

Now, you could construct a silo type building to store the plastic, and use pneumatics to load it out, just like the plants load the product into the hoppers, but you would need silos the size of the Empire State building just to hold a few weeks production run.

The building would have to be structurally massive to withstand the weight...while most of us think of plastic as light weight, in pellet and powder form this stuff is very very heavy.

End products like plastic bags, the case around your cell phone, your computers keys, all are very thin, the pellets are 3 to 4 millimeters long and 2 millimeters thick.

Again, as most of what is in a SIT yard is already sold, the product has to be able to move on a moment's notice, the instant the arrival time and date of, say the ship to China is known, the cars are pulled and sent on their way, timed to arrive at the load out the same time as the ship.

I was a little misleading in my example of the guy in NJ needing 40 tons of plastic, the single or few car load purchase is the rarity, this stuff is literally purchased by the trainload.

I was using that as an easy to understand example of how the system works, and while there are places where buying a few car loads of plastic and having them delivered to a team track for casual unloading exist, that is only a small portion of the business.

I cannot impress upon you the sheer volume of this stuff produced and moved daily.

Part of why SIT yards came into being are because in the early days of the industry, the manufactures did just what you suggested, they stored their product on site, but within a few years they realized they didn't have enough real estate to store the volume demanded, and the road way system couldn't physically handle the volume of trucks needed to move the product.

If you took the product out of the hoppers and loaded it into trucks, each hopper is about 4 tanker trucks worth...next time a train with a bunch of hoppers goes by you, count the cars, multiply by four and you have the number of trucks needed to move the product.

Now, can you really imaging that many trucks on your freeway/highway daily, each truck requiring a paid driver, fuel cost, insurance and the destructive force on the roadway?

Storage is the little part of a SIT yard, the "in transit" part is what counts...most of the cars in Dayton SIT won't be there by the time this tread runs its course, they will either be on the way to the receiver, or already cycling back for another load.

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 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 

- Paul North. 

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.

.

Refineries buy their feedstock and fuel way in advance of a production run...and if the run is canceled or modified, they already have paid for the natural gas to be delivered, they can't send it back, the pipeline is a one way deal, they can't store it on site, so they flash it off.

The excess feedstock is stored in those great big tank farms, or loaded into tank cars, and sold off to other refineries.

As was pointed out, these guys are pretty good at anticipating the demand a year or two into the future...if they realize 2014 will have a bumper crop of say, wheat, they may call the people who make the plastic wrapper for bread, and offer a deal on that type of plastic for 2014.

If the buyer agrees, they bump up production of that particular type and off we go!

Keep in mind the guy making the wrappers is also anticipating the next year or two, and the stuff he is making right now is for 2014 or beyond...they too don't work on an as ordered basis, they keep an inventory of wrappers on hand in their warehouse to cover orders next year and enough to satisfy this year's demand.

The refineries do the same, but use railcars instead, and right now, the demand is almost close to the production level, which is exactly what both sides of the equation want, no shortages, and just enough excess to cover any un-anticipated demand.

Count on this, all the plastic products, from toys to plastic dinnerware to food wrap to computers that will be sold this Thanksgiving and Black Friday, through Christmas, is either already in Wal-Mart's and K-Marts warehouses waiting to be distributed to the stores, or it's on the way here.

Odds are the plastic used was produced and shipped to Taiwan or China, Japan or the Philippines  last year or the year before, the supply chain for this stuff runs all the time, always in anticipation of the next years demand, if not father out than that.

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.

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 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

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. 

That's the place.

There is Dayton yard proper, a conventional switching yard, on the UP Lafayette sub, and Dayton SIT on the Baytown branch,

A look at an overhead photograph is a little confusing, as BNSF also has a SIT, on the west side of the Baytown sub directly across for the Dayton SIT...it is one big complex.

300 cars a day it about right.

jeaton

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. 

Excluding unit coal, coke and grain moves, and the ethanol unit train, it would be Phillips, 100 plus twice every 24 hours, Dow, Solvay, Arkimia, and Oxy Pasadena, each 60 to 70 cars a day (plastic and PVC),  Hotfoot, (Houston Fuel Oil Transport) who supplies BNSF with a diesel fuel train, up to 100 cars daily, and Vantage/Kinder Morgan, who is a user of the plastic, they are one of the folks who make the shopping bags...average near 50 cars daily.

The rest of the numbers can jump dramatically, we handle everything from molasses, used in cattle and livestock feed, which depending on the weather and the agriculture predictions, can go from a few cars a day to 100 split into two moves, and animal tallow shipped overseas and returned as soap, cosmetics, rendered lard, it list goes on and on.

Pick it, and odds are we have a customer that either uses it or makes it, everything from boxcars of bagged grain for export, (USDA stuff) to ABB power transformers, to steel in all forms, sheet, coil, mill ball and scrap.

Every plastic you can think of, chlorine, benzene, lots and lots of methyl ether awful stuff, we even handle a cyanide move.

Wind turbines, auto racks for the joint Volkswagens/Volvo distribution center, Murphy's product, lumber, heavy equipment for export, Cats, dozers, dump trucks the size of most folks homes, all kinds of stuff, we even handle locomotives being loaded into ships for export.

We even handle the last leg of a BNSF stack train to Barbour's Cut, and will have almost all the Bayport container traffic once it is completed.

Shell Deer Park can generate a 70 car gas trains daily, and again depending on the time of year and the economy, that can double.

If I had to narrow it down to two, I would guess Phillips followed by Solvay, both make plastic and ship everywhere...Total/Auto Fina would be a close third, all thee often get switched every shift, or 3 times a day.

Last time I asked the PTRA handles 450,000 cars annually give or take.

Again excluding the unit train moves, petrochemical accounts for up to ¾ of our business.

PTRA North Yard handles inbound UP, BNSF and KCS road traffic which I switch into trains for our customers, unit coal, coke and grain trains, and my counter point on the othr side of the yard assembles outbound trains for our member lines.

http://www.ptra.com/index.php/about-us/ptra-yards.html

should show you a photo of North yard, according to our out of date web page, north yard takes in 54 trans a week, and departs 34 trains to our member lines...although that figure only includes inbound/ outbound trains from and to our member lines, not the traffic generated on line by our customers, so a rough guess is closer to 80 trains a week inbound, and 50 or so outbound to our customers total.

I switch on average 120 to 200 cars on my 8 hour shift, and there are 3 shifts working on my side of the yard, a morning shift, (my crew) afternoon and night shift.

In the photo, you see the receiving yard to the far left, and I pull from there and switch into the left side of the yard proper, the side with the buildings, tracks 48 through track 18.

The photo is taken from the north end, I work on the south end where the long hopper train is.

Again, according to our web page, we handle 2500 cars daily, with 5000 car capacity in all our yards, with an average of 10,000 cars on property in the industries we serve.

Our GM and Superintendent say our business has increased this year, but they didn't provide a percentile amount...I can confirm the increase; it has been a busy year so far, I get overtime ever day of the week..

  The railroad I work for opened a new bulk transfer facility to handle Ethanol in Pottstown, Pa. One thing I like about this project is that it brought traffic back to an almost dead industrial track. I know of many bulk transfer operations throughout the Northeast, they handle everything from plastics, lumber, garbage/waste, fuels, flour, steel, you name it. They are located on both short lines and class ones. So the answer would be, yes to the original question.

Jim

Ed,

A photo of the south end of North Yard, my work area so to speak.

I kick cars from the lead where the train is doubling up, into all the tracks shown....lucky me, I even have my own bench to sit on, cooler included.

Blow up the photo a little and look at the variety of cars we handle...basically, I classify cars by either final customer destination, or yard transfer block.

The tracks with a mix of car types are blocks or cars headed to our other yards for further switching, the tracks with single type cars are bound for specific customers.

MP173

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

edblysard

Ed,

A photo of the south end of North Yard, my work area so to speak.

I kick cars from the lead where the train is doubling up, into all the tracks shown....lucky me, I even have my own bench to sit on, cooler included.

Blow up the photo a little and look at the variety of cars we handle...basically, I classify cars by either final customer destination, or yard transfer block.

The tracks with a mix of car types are blocks or cars headed to our other yards for further switching, the tracks with single type cars are bound for specific customers.

MP173:

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

 

That was this morning; most of what you see will be set out in the middle of the yard to depart on the afternoon shift, which is what I do before we start switching, some of the tracks have switch cuts already shoved in waiting to be worked.

There are 3 shifts on my side of the yard, 7:59am to 3:59 pm, 3:59 pm to 11:59pm, and 11:59 pm to 7:59 am, so by the time I get in tomorrow, it will be full again, just a normal day...that's the night shift doubling up the train heading to our American yard with a couple of blocks for switching, overtime is a wonderful thing when your just riding..

And this morning's work waiting...as soon as BN 183 gets off my lead.

Yesterday morning...