5 reasons why a blended transportation model could be the answer for you
Are higher freight costs squeezing your profit margins? Is a changing fuel landscape creating new logistics challenges? Are you looking to reduce risk and boost safety, efficiency, and control? Whether you’re a refiner, manufacturer, or distributor, challenges like structural changes, growing demand and tighter regulations are driving volatility.
Perfect storm of challenges
The challenges energy industry professionals face aren’t limited to exploring, drilling for and refining oil and gas products. Market trends, a tougher regulatory environment and the dynamic nature of the transportation landscape add to the complexity of moving oil and gas products and equipment. Transportation challenges include:
- Constantly changing demand levels and market conditions
- Exposure to risk and safety issues
- Freight capacity crunch that makes it hard to cover loads
- Ever-shrinking pool of qualified drivers
- Regulatory environment
- Rising fuel prices that consume more of the transportation budget
A blended solution: the key to securing capacity, minimizing risk and staying safe
For savvy oil and gas network managers, one way to overcome these challenges is by adopting a “blended solution”- a strategic mix of fleet and for-hire capacity. By considering all network lanes and freight models, these solutions improve transportation agility. That agility leads to greater reliability and predictability of capacity, service and costs. Fleet and for-hire carrier networks can complement one another effectively – if they’re designed, monitored and regularly adjusted to find the right balance as impacts to the network change.
5 reasons why blended may be the way to go
- Improved safety: safety is the #1 priority for every oil and gas company. Therefore, logistics providers must be keenly focused on safe operations. This is especially critical when it comes to recruiting, training and retaining drivers who’ve mastered rigorous oil & gas processes. For example, qualified drivers understand the importance of properly securing loads, pumping/filling tankers and preventing injuries and accidents.
A blended solution connects you to safety services and resources you might not have in-house: driver safety training, driver screening, compliance and risk management programs. Preventive maintenance routines and carrier management compliance programs keep minor issues from becoming safety risks on the road and in the field. In general, blended solutions minimize overall exposure to safety risks. - Flexibility and network control: an integrated for-hire carrier / dedicated fleet solution provides the balance required to address highly dynamic oil & gas network demands and risks. Knowing you have committed capacity (equipment and drivers) on priority segments or for high-volume regions that you can complement with common carriers enables greater control and flexibility in an evolving industry.
A blended solution also provides a holistic view of transportation network cost and service performance. With visibility that enables you to monitor safety, cost and service, you can better manage all three for continuous improvement. What’s more, you have the network data and business intelligence you need to boost efficiencies and reduce costs and risk. - Cost savings: for years, oil and gas companies had little visibility into transportation or any idea of the “cost to service” their operations. Historically, cost was secondary to safety and service. As demands on the industry grow and it becomes increasingly competitive, the focus on cost efficiencies is growing too. A transportation management system supported by a blended transportation network provides the transportation agility and discipline the industry needs to dynamically optimize fleet and for-hire solutions. The result: a more cost-effective solution. Instead of securing capacity on an ad hoc basis and paying steep premiums on the spot market or for expedited freight, costs are more predictable.
- Provide better service: with captive capacity and trained drivers, oil and gas companies experience fewer pickup and delivery delays and can realize more consistent service. Using properly maintained vehicles and equipment prevents problems that can delay deliveries and disrupt schedules.
- Guaranteed capacity: by working with qualified transportation partners, you don’t have to worry about the freight capacity crunch: dedicated fleets guarantee capacity is available. What’s more, transportation partners can help you become a “shipper of choice,” which leads to more favorable carrier relationships and rates on procured capacity.
Getting product out of the ground and to market takes a variety of specialized equipment (mini-floats, bulk, flatbeds) that can be tough to find. Case in point: flatbeds play a significant role in transporting pipe, drilling equipment and supplies to and from drilling or rig sites. And the flatbed shortage is more severe than any other. With a blended solution, you can greatly mitigate capacity challenges and prevent disruptions to rig site service and operations.
Start by optimizing your network
Say you’ve always used a for-hire carrier to move oil and gas equipment, products and materials. Or, you have your own fleet. In today’s environment, you may need to tap every resource at your disposal to get the capacity you need, improve network control and minimize risk.
Getting there …
A blended approach to transportation can be a smart way to solve driver, capacity, safety and regulatory challenges. Interested? Consider starting with a network analysis to identify your unique requirements. Then, team up with a qualified partner to optimize your network with transportation strategies focused on efficiency, safety, savings and predictable capacity.
Mr. Nemeth is Group Director of Transportation Management (TM) at Ryder. A logistics and operations professional with more than 20 years of experience in business development, implementation, product development and account relationship management, Scott has implemented and operated numerous TM solutions for customers across a variety of industries.
