BEING one of the largest chemical manufacturers in the world also makes DuPont one of the largest chemical shippers. In fact, the company spends around $1.6 billion a year on transportation and storage.
In the process of moving its products where they need to go, DuPont uses just about every means of transportation that is available. On the bulk side are tank trucks, tank containers, intermediate bulk containers (IBCs), rail tankcars, barges, and parcel tankers. Loads are moved out of 400 shipping points worldwide.
All of the activity is coordinated by a relatively small global logistics team that is directed by Gerard (Jerry) J Donnelly. Regional logistics managers are Joe Resendes, North America; Julian Richardson, Europe; Charles McLean, Asia-Pacific; and Cesar Garcia, South America.
"Our mission is to move anything from anywhere to any destination in the most cost-competitive, safest, and highest-quality manner," Donnelly says. "To do that, we believe it is crucial to centrally control as many factors of the process as possible, including bids, contracts, and carrier selection. We only outsource transactional aspects, such as freight forwarding.
"We recently reorganized the logistics operations to create more of a global team focus. In addition, we are aiming for more NAFTA (North American Free Trade Agreement) syn-ergies. We have a lot of shipments moving between the three NAFTA countries, and we want to create a more efficient program for dealing with that activity.
"Bulk chemicals are a very competitive part of the market. Many products are commodity items, and margins are tight. We have to carefully evaluate which transport mode will best meet our requirements. It varies from one customer to the next and from one geographic region to another."
Tight Control Tight control over logistics and distribution helps DuPont ensure its position as one of the 16 largest US corporations. The company reigns undisputed as the largest chemical manufacturer in the world. Revenues topped $27 billion in 1999.
The chemical company manufactures a wide range of products that are segregated under eight business units Agriculture & Nutrition, Nylon Enterprise, Performance Coatings & Polymers, Pharmaceuticals, Pigments & Chemicals, Polyester Enterprise, Specialty Polymers, and Specialty Fibers.
Products range from herbicides and a multitude of pharmaceuticals to resins and elastomers. DuPont manufactures refrigerants and highly engineered lubricants, as well as industrial chemicals such as acrylonitrile, aniline, dimethyl sulfate, hydrogen sulfide, methylamines, and sodium cyanide.
Each product is studied closely to determine the safest and most efficient transport mode. "We look at the way a product is sold, and we do rate studies," says John C McMillan, DuPont manager of outside logistics sales. "We look at what the customer can handle, and we determine a risk factor for each mode."
Risk Analysis The risk analyses and modal studies often are performed by the logistics managers at each business unit, but it's not unusual for the projects to include input from the global logistics team. "We do our best to eliminate risk, but it's a tough job," Donnelly says.
Zero incidents is the objective, and the chemical manufacturer has made significant progress. Worldwide, the company had no major distribution incidents in 1999. Minor incidents (weeping drums, for instance) totaled just 67.
"We're putting in a lot of time with our carriers to emphasize incident prevention," Donnelly says. "We had major transportation mode meetings last September. In addition, programs, such as TransCAER, are helping to build prevention awareness.
"We believe that a fair number of incidents are preventable. Container integrity is the biggest issue package punctures, leaking valves. We believe those problems can be stopped before they lead to an incident."
When incidents do occur, they are first reported to Chemtrec, a chemical emergency clearinghouse that was established by the Chemical Manufacturers Association. DuPont is next in line for notification, and each business unit has its own well-trained emergency response team that is on call at all times and can be dispatched to the scene of a serious incident.
The first line of defense against an incident is at the plant level. In most cases, DuPont plant personnel control the outbound shipments. Between 30% and 40% of those shipments are from one DuPont plantto another.
Plant personnel are responsible for inspecting tank trailers, tank containers, and rail tankcars prior to loading. Cleanliness and safety are the focus.
While most of the transport activity is managed inhouse, DuPont has been using Logistics Management Resources, Baton Rouge, Louisiana, to coordinate inbound collect shipments and outbound emergency movements for over 10 years.
Rail Use Within the North American logistics area, the chemical manufacturer relies as much on rail as on trucks. DuPont has a large fleet of rail tankcars, and it makes use of all the major rail carriers still in business.
"We have concerns about the rail industry," Donnelly says. "Rail mergers have been very disruptive for service consistency, and we're tired of it. Rail continues to be the most attractive land transport mode from an incident-risk-exposure standpoint for long distance shipments, but we're paying more attention to trucks now. Truck fleets have a much higher level of quality, and the railroads aren't even close."
Part of the effort to reduce reliance on the railroads includes searching out more opportunities for alternatives, such as transloading. "We don't want to be trapped without options," McMillan says. "Trucks can offer a good option when managed properly."
Truck Activity At one time or another, most of the chemicals are transported by truck. DuPont spends $110 million a year on truck shipments just in the United States. Worldwide, the budget for truck shipments is in the $125 million to $130 million range.
Approximately 35 tank truck carriers are on contract for US shipments. Topping the list are Quality Carriers Inc, TransPlastics, Central Transport, DSI Transports, Matlack, Miller Transporters, A&R Transport, Suttles Truck Leasing, and Rogers Cartage.
However, the most active tank truck carrier in the DuPont operation is Sentinel Transport LLC, which is jointly owned by DuPont and Conoco. DuPont provides about 60% of thecargo hauled by Sentinel Transport.
"In most respects, Sentinel is a private fleet," Donnelly says. "It gives us an important hedge in helping to control transportation costs."
More Carriers DuPont has little desire to reduce its carrier list below the current level, and the logistics team continues to evaluate additional carriers. One reason is to help ensure that the chemical manufacturer continues to have an adequate number of choices.
"We're a little concerned about the trucking industry mergers that have occurred," says Susan T Shustack, DuPont bulk truck procurement manager. "While we haven't seen any significant impact on transportation quality, we are worried about a loss of selection. Accordingly, we've added a few more fleets to our list of approved carriers.
"We try to be very loyal to our trucking carriers. Once we select a fleet, we stay with them as long as they continue to meet our criteria for safety, quality, and pricing."
Shustack adds that DuPont has begun looking for ways to develop more flexible arrangements for its carriers. DuPont has begun to utilize drop trailers at some locations to boost productivity, and the global logistics team is exploring ways to modify shipment patterns.
"We realize that driver supply is one of the key challenges facing our carriers," Shustack says. "We're trying to find ways that we can make life easier for the drivers. We even held a meeting with carriers to discuss driver issues. We know money is an issue, but we don't believe rates necessarily have to go up to cover higher pay for drivers. We believe much of the money can come through productivity improvements.
"For instance, DuPont is working to get away from the 8 am syndrome. Loading isn't so much the problem in this issue. Deliveries are the challenge, and we are working with our customer service groups to address delivery times and promote greater flexibility.
"Some of our plants are experimenting with driver loading, mostly for nonhazardous products. We're not ready to turn over control for loading of hazardous products. We believe that raises too many safety issues.
"Productivity improvement can only go so far, though. Backhauls are somewhat limited, and we haven't had a lot of success in finding backhauls for our carriers. Some equipment must be dedicated, which further limits backhaul potential. We tend to use trucks for relatively short hauls."
Selection Form Candidates must fill out the DuPont selection form, which closely follows the CMA's transportation protocol. An onsite audit is performed, and approved carriers must be reaudited at least every three years.
Performance is monitored continually by APL Business Logistics Services. Carriers send in monthly exception reports that track a variety of factors, including delivery delays. Deliveries are on time if they are made within one hour of the scheduled time.
"We want ontime pick-ups, and we expect notification in advance of delays," Shustack says. "We evaluate every delay to find the root cause. Recently, driver shortages and turnover have been among the biggest factors.
"We have much better reporting capabilities today through the Internet and other sources. A majority of our carriers have GPS (global positioning satellite) capabilities. We're not using GPS much right now for monitoring, but we may find opportunities in the future."
In most cases, DuPont provides product data for shipments, and carriers select the appropriate tank trailers. Most liquid chemicals are transported in MC307 and DOT407 stainless steel tanks. DuPont requires MC312 or DOT412 trailers for most acids and other corrosives.
Specialized Trailers Some of the DuPont business units do have their own specialized tank trailers. "DuPont has 350 to 400 highly specialized tank trailers," Shustack says. "For instance, we specify tanks with a thicker shell for inhalation hazard products."
DuPont also operates a substantial number of tank containers for international shipments. "We're seeing some growth in the tank container fleet right now," Shustack says. "We're up to about 1,800 tanks, both leased and owned. We don't anticipate expanding the tank container fleet much beyond this point."
The standard tank container for liquid chemicals is an IMO-1 unit with a 24,000-liter (6,300-gallon) capacity. Inhalation hazard products are shipped in DOT51 containers rated at 14-15 pounds per gallon. Capacity for these containers ranges from 12,000 to 14,000 liters (3,100 to 3,700 gallons).
Refrigerants are transported in DOT51/IMO-5 tank containers. DuPont is in the process of shifting to containers designed to Division II standards for the increased payload capacity. Rated for up to 400 psi, the Division II tanks can carry as much as 22,000 liters (5,800 gallons) of product.
Most of the tank containers are constructed with full frames. "We realize that fork lifts are used in many parts of the world for tank container handling," Shustack says. "We want to make sure our equipment can hold up in the field."
DuPont recommends the use of dropframe chassis for transporting tank containers over the road, but stops short of making it a requirement. "Dropframe chassis simply aren't available in all areas," Shustack says. "We have set minimum standards for now, and we hope to encourage our drayage carriers to adopt dropframe chassis in the future. This is a worldwide effort."