Ashland Chemical Company, an international chemical distribution and processing business, has improved its shipping network by developing strategic relationships with contract carriers, says J Thomas King, vice-president of purchasing and logistics.
"As a shipper, Ashland is a global purchaser of transportation services," says King about the multi-faceted company headquartered in Dublin, Ohio.
The cooperative relationship between Ashland and for-hire carriers is a reflection of the specialty chemical manufacturer and distributor's evolution and the goal of its parent company, Ashland Inc of Ashland, Kentucky, to stress growth and performance, says King. Ashland Chemical owns and operates more than 100 manufacturing and distribution facilities in 10 states and 14 countries.
In addition to many specialty manufacturing operations, the company purchases bulk quantities of chemicals and plastics from leading manufacturers, blends or repackages them, and typically distributes them in smaller-sized lots to tens of thousands of businesses.
Products are associated with adhesives, automotive and boat building, the chemical process industries, chemical waste treatment, cosmetics, electronics, foods and beverages, nutritional products, metal working, paints and coatings, petrochemicals, pharmaceuticals, plastics processing, semiconductor production, and water treatment.
Ashland's relationship with carriers is part of a plan to reduce distribution costs by 10% while improving service to more than 100 Ashland sites and providing service to 60,000 customers. The company has budgeted $130 million for freight costs.
"Our relationship with our carriers is somewhat unusual," says King. "Usually, carriers are selected by bidding for short-term contracts, but we want a long-time relationship with our carriers."
King views Ashland's transportation system as one of its important purchases. By consolidating contract carriers, Ashland has seen significant rate reductions and additional savings resulting from improved service to customers and enhancement of the safe handling of hazardous materials.
One reason for establishing the strategic relationships, in addition to transportation efficiency, was to increase safety assurance in the handling of hazardous materials. "We are sensitive to our liability. That's why our carriers have to meet rigorous standards," says King. "In this Responsible Care culture, we expect our carriers to meet the challenge."
The Responsible Care initiative, sponsored by the Chemical Manufacturers Association, is a broad-based philosophy of commitment to environmental health and safety in managing the entire product cycle of chemicals. Participating companies pledge to manage their businesses according to comprehensive principles related to transportation and manufacturing, environmental concerns, community involvement, customer coordination, legislative interaction, and communication with other companies.
Ashland also adheres to the Responsible Distribution Code developed by the National Association of Chemical Distributors (NACD), which sponsors the Chemical Education Foundation (CEF). Ashland received the CEF 1998 Chemical Product Stewardship Award in the distributor category. The award honors companies that have exhibited excellence in fostering chemical product stewardship practices in their businesses and throughout the chain of commerce, according to CEF.
Because of Ashland's strong safety commitment, its carriers must follow stringent guidelines. The strategy is to identify the best in class, consolidate volume to benefit the chosen carrier, encourage partnering, and reward those who wish to grow together, says King.
"It's not enough to be a profitable carrier," he says. "They have to be profitable and growing. We give our carriers opportunities for growth. Consolidating our shipments with fewer carriers allows them to expand their sales. At the same time, we work with them to eliminate unnecessary cost and to increase output because carrier margins aren't especially high. Basically, they are operating on a modest profit margin."
The carrier relationship plan was initiated in 1995 after Ashland combined two departments - purchasing and logistics. "It was obvious that the two functions were complementary," says King. "It made no sense to operate the departments separately. Consolidating them created a huge opportunity for the company."
The contract carriers Ashland uses include Bork Transport Inc, CTL Distribution Inc, DSI Transport Inc, Fleet Transport Company Inc, Harmac Transportation Inc, Krajack Tank Lines Inc, Langer Transport Corp, Liquid Transport Corp, Manfredi Motor Transit, Matlack Inc, Miller Transporters Inc, Montgomery Tank Lines Inc, Rogers Cartage Co, and Usher Transport Inc.
An example of Ashland's strategic relationship with its carriers is the agreement with Fleet Transport of Brentwood, Tennessee. Fleet Transport was selected as the specified carrier for facilities at Philadelphia and Neville Island, Pennsylvania; Detroit, Michigan; and Plaquemine, Louisiana.
The relationship with Fleet Transport began at Ashland's Philadelphia Composite Polymers Division facility after Ashland managers determined that the in-house fleet was inadequate to handle the shipping demands for a plant of this size, says King.
"Our private fleet of trucks didn't serve all of our requirements," he says. "Longhaul transportation wasn't an Ashland core competency. We are very good at manufacturing, but having our own transportation fleet at that site was a distraction for us."
Edward C Schmidt, supply chain manager, points out that increased efficiency of supply chain management expands to contract carriers such as Fleet Transport. "We developed strategies based on the concept of running this as a complementary operation," he says. "The overall result was that we actually improved feedback of delivery performance, which enables us to enhance our customer service. The information sharing has increased enormously."
Ashland Chemical has a quality task force made up of representatives from Ashland and its carriers. The task force meets and reviews all data, including standards for quality and customer service.
What has made the contract carrier relationship successful is the initial understanding between the two companies regarding the carrier's ability to carry out Ashland's requirements and the subsequent trust that developed as a result. "Fleet placed its own people at our facilities," says King. "They see each other day in and day out. Our people have a better appreciation of Fleet Transport's capabilities, an understanding of fleet management issues, and the impact of last-minute changes by the customer."
When the Philadelphia project began, proposals were solicited and Fleet Transport followed up with not only the most attractive cost figure but the additional requirements that Ashland demanded, including a modern fleet, extensive driver training, company stability and reinvestment, growth, and a history of safety in handling hazardous products.
Today, Fleet Transport, a wholly owned subsidiary of Chemical Leaman Corporation, hauls about 120 loads per month from the Philadelphia plant. Nine tractors and 20 tank trailers are assigned to the site, according to Rick King (no relation to Thomas King) Fleet Transport director of dedicated operations. "The relationship between Ashland and Fleet was a new step for both companies," he says. "The key to success ispeople from both companies who know how to keep everything on track. Our intention is to serve as an extension of Ashland Chemical."
Shipping unsaturated polyester resins from the Philadelphia facility was so successful with Fleet Transport that Ashland chose the carrier for the Neville Island plant near Pittsburgh, Pennsylvania.
Fleet Transport has 20 tractors and 31 tank trailers dedicated for the Neville Island facility and hauls 230 loads per month from that location, almost double the volume of the Philadelphia plant.
The agreement with Fleet for Neville Island is typical of those with contract carriers, says David E Drummond, Neville Island plant manager. "It's a really close working relationship," he says. Drummond estimates that 90% of customer service feedback comes from Fleet Transport drivers. "They see customer problems and report them to us so that we can respond."
Fleet Transport bases three representatives at Neville Island, typical of their other arrangements with Ashland. Housed in an office with Ashland's coordinators, the Fleet Transport employees work with them to dispatch trucks and coordinate other aspects of shipment.
"After we developed this carrier strategy, numerous phone calls were eliminated. Now, one message is sent to the plant-based dispatchers who handle distribution," says Drummond. On-time delivery is achieved 98% of the time.
The sensitivity of many products and the urgency for prompt delivery make the coordination between shipper and carrier even more important, says Drummond. "Most customers have little storage space and rely on just-in-time shipments. At the same time, polyester resins have limited shelf life. The logistics can be difficult because of the different characteristics of various products. Having Ashland and Fleet employees working side by side at the plant expedites the transportation process."
Rick King points out that in many instances, customer plants have no parking space for trucks to wait to unload. "City regulations often prohibit us from parking on the streets," he says. "We have to have a team effort to avoid these problems."
While contract carriers handle the majority of the longhauls for Ashland, the company maintains a fleet for its shorthaul distribution business, which ships 3.5 billion pounds of smaller orders annually, says Schmidt. Inbound freight from major chemical producers arrives at Ashland's terminals and then is distributed via its short-haul fleet in 150- to 200-mile trips.
In Ashland's fleet, the majority of the 465 tractors are Mack with Mack engines and transmissions, and Freightliner with Cummins engines and Fuller transmissions. There are 285 MC306, MC307, and DOT407 stainless steel tank trailers, the majority manufactured by Polar, Fruehauf, Heil, and Stainless Tank & Equipment. Betts and Scully hardware predominates. "We also have a mix of tanks that vary in designation for a variety of uses," says James A Will, Ashland's fleet administrator.
All Ashland truck drivers receive training from the company. The training is based on a defensive driving concept promoted by Smith System, says Jim Mobberly, safety engineer in charge of Ashland's training. "We promote defensive driving and have tailored the Smith System to Ashland," he says.
At the same time, Ashland expects carriers such as Fleet Transport to train Fleet drivers to understand the needs of chemical distribution and provide appropriate equipment. In addition, Ashland expects carriers to meet schedules and adapt to processing routines.
To meet Ashland's requirements, Fleet Transport runs an extensive training program for more than 400 company and leased operators, says Rick King. In addition to over-the-road training and hazardous materials classes, Fleet Transport emphasizes customer service, which includes teaching drivers to interact with customers in order to underscore safety aspects surrounding hazardous materials handling. Fleet Transport drivers receive 40 hours of additional training every two years.
"Drivers are important to serving customers," says Rick King. "After they are on the road, we get a lot of feedback. It comes from the dispatchers, the drivers, and the customers. The communication flow is constant."
Fleet Transport uses lease operators exclusively at Neville Island and requires their tractors to have the capability to haul MC307 and DOT407 tank trailers. Tractors can be no older than seven years and must weigh under 19,000 pounds. They are required to have a three-inch Roper pump and Wilcox air compressor. All tractors receive regular Department of Transportation (DOT) inspections as part of the lease-operator agreement.
In a trial effort, Fleet Transport is installing Qualcomm satellite tracking devices in five tractors for Neville Island and eight for Philadelphia.
Non-insulated stainless steel tank trailers range in capacity from 7,500 to 8,000 gallons. "We are going to stainless steel more and more," says Rick King. Other chemical tanks are insulated and range from 6,800- to 7,000-gallon capacity.
New tank trailers ordered by Fleet Transport are manufactured by Polar Tank Trailer Inc and Brenner Tank.
Ashland's Thomas King believes in letting contract carriers manage what they know best. "Training, equipment specifications, maintenance, safety, and knowledge of regulations - they are awfully good at managing those," he says.
"At one time, we had 40 to 50 bulk carriers. Now, we have a few program carriers and we are helping them become an extension of Ashland. In retrospect, this partnering with our carriers has accomplished our goals to improve service and be more competitive. It also allows our carriers to grow their businesses and generate profits."