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Photo courtesy of Russell Skeet via Wikimedia Commons

The BNSF railroad will spend nearly $500 million next year expanding its operations in the Northern  region, the company announced.

The railroad — which is the second largest freight railway system in the US after the Union Pacific — currently is experiencing its fastest growth in the North, where it services the agriculture, coal, crude oil and materials related crude oil exploration and production industries.

Details about where and how that money will be invested are expected to be announced early next year, according to a BNSF news release.

$6 Billion Capital Investment

The announcement came as part of the unveiling of the BNSF’s $6 billion capital expenditure plan for next year. Most of that investment — about $2.9 billion — will be used to shore up the railroad’s existing infrastructure, including the replacement and upgrading of railroad ties, rails, and ballast throughout its three transcontinental routes.

Besides the $500 million the company will spend in the North, another $1 billion will be spent on other expansion projects.

Next years capital expenditures will be about $500 million higher than what the company spent on improvements and infrastructure this year. From 2000 through the end of 2015, BNSF will have spent more than $50 billion on equipment, infrastructure and maintenance.

Growing Demand for Rail Freight

BNSF President and CEO Carl Ice said the company’s goal was to maintain train traffic fluidity and to expand capacity to meet the growing demand for rail freight.

“BNSF’s capital investment program since the beginning of 2013 through the end of 2015 is unprecedented and is clear evidence of our confidence in a growing economy and our intention to meet the demand for service that comes from all our customers,” Ice said. “We have made great progress in expanding the segments of our railroad that have most constrained by rapidly increasing demand. Once these new capital programs are completed, we expect to further restore the capacity flexibility we have historically enjoyed to manage the periodic demand surges that come from a dynamic and fast-paced environment.”

Energy Efficient Locomotives

The railway also pans on buying 320 new energy- and fuel-efficient locomotives to add to its fleet of 7,500. These may include the GE’s new energy-efficient Evolution Series locomotives that can move one tone of freight more than 480 miles on a single gallon of diesel fuel.

The GE Evolution locomotives, known in the industry as GEVOs, feature a redesigned engine that are in compliance with new Tier 4 standards requiring particulate emissions to be reduced by 70% and carbon dioxide by 76%, the largest reductions in history.

Idle-Reduction Equipment

In related news, BNSF announced that it plans to retrofit 11 of its locomotives in Washington State with new idle-reducing technologies that reduce emissions and conserve fuel. The HOTSTART auxuiliary power units (APUs) reduce idling during cold weather by keeping the locomotives engine warm and ready to restart, eliminating the need for a total shut down and reducing fuel consumption, emissions, noise and engine wear.

The 11 locomotives also will be fitted with automatic engine start/stop systems (AESSs) that shut down the locomotive when not needed. Combined with the APUs, the AESSs can potentially eliminate nearly all locomotive engine idling.

BNSF already has equipped more than 90% of its more than 7,500 locomotives with AESS devices.

 

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A total of 108 older forklifts have been exchanged for newer ones as part of a Texas program that seeks to replace older diesel, gasoline and propane forklifts with newer, cleaner propane- and natural gas-fueled vehicles.

The Railroad Commission of Texas authorized incentive payments averaging $10,703 per replacement to about 38 companies doing business in Texas in order to meet new emissions requirements instituted by the US Environmental Protection Agency. So far, more than $1.16 million has been spent on the program.

The Texas Equipment Replacement Program (TERP) replaced 79 forklifts in Dallas/Fort Worth, 19 in Houston, 9 in San Antonio, and 1 in Austin.

The biggest users of the program included the Boise Cascade Co., of  Boise, Idaho, which received about $43,000 to replace two of its existing forklifts with newer, more environmentally friendlier models at its  Dallas building materials distribution facility.

The TERP program was launched in 2001 to help bring down the amount of smog and other pollutants in 39 Texas counties where air quality fell below federal standards.

In order to qualify for the program, businesses must commit to destroying the old forklift prior to receiving the propane initiative grant. Holes must be bored into the engine block and the frame must be cut to make sure the chassis can’t be reused. A scrap receipt must be submitted to TERP auditors.

Since payments began in 2004, the railroad commission has paid out more than $38 million to 891 companies. The average payment was $11,190.

 

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KersTech — a drive train technology firm based in Beaverton, Oregon — is developing a new type of forklift engine that is better suited to the vehicle’s frequent starts and stops.

The TwinTorq engine combines electric and hydraulic torque technologies to extend operational run time. It improves battery energy efficiently and significantly extends a forklift’s driving range because each stop and start is considered a separate recovery event.

Lester Erlston, KersTech’s CEO, said when the prototype engine is completed next year, it will be installed in a Hyster forklift and test driven at a research and test facility in Fairview, Oregon.

“Forklift warehouse drive cycles are ideal for TwinTorq motor systems,” Erlston said. “We see tremendous opportunities for that.”

Other possible uses include city buses, parcel delivery vans, and warehouse handling equipment.

The TwinTorq is being developed at the Oregon Institute of Technology, in Klamath Falls and the research is funded in part by public and private grants totaling $459,000. Contributors include the Transportation Research and Education Center at Portland State University, the trade association Drive Oregon of Portland, the independent Oregon Built Environment & Sustainable Technologies Cener, and the city of Portland development commission.

Hyster-Yale also is sponsoring the research and development with a $40,000 contribution of in-kind services.

 

 

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Here’s a special sneak preview of some of the articles you will find this week on the Bahrns blog:

  • The BNSF railway will make a huge investment in infrastructure and new capital next year … to the tune of $6 billion. We’ll tell you what they will spend it on and how it could especially impact businesses in the Northern states.
  • When most people think of Mozambique, they think of the civil war that ravaged the African nation for nearly a decade. But that war’s been over for at least that long and the country is quietly building its reputation as one of the world’s richest sources of natural gas, aluminum and other resources.
  • If you are digging a ditch or trench that’s five feet or deeper, you better provide protection against cave-ins. That’s not just a good idea … it’s also the law. We’ll tell you which Illinois firm found that out the hard way.

Plus, a revolutionary new type of forklift engine, why diesel prices are dropping, and why some Texas companies are getting free forklifts. All this and more can be found this week on the Bahrns blog … so stay tuned!

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Coal Mining in Mozambique (Photo courtesy Hajo42 vial Wikimedia Commons)

Mozambique — the relatively small East African nation of about 25 million people — is mostly known in the US and around the world for the bloody civil war that crippled the country for nearly two decades.

But that conflict ended 20 years ago. Today, after a return to peace and political stability, Mozambique is preparing to assume its role as one of the world’s leading providers of natural resources such as coal and natural gas.

Enormous Wealth of Natural Resources

In 2012, mining and quarrying in Mozambique accounted for more than 1.5% of the nation’s total gross domestic product, with energy accounting for another 5%. In the past two years, output of coal and gas has increased substantially and these sectors were expected to account for nearly 10% of GDP.

Mozambique has the fourth-largest gas reserves in the world, as well as one of the largest deposits of coal, much of whi

ch is export grade coking coal, the kind used to make steel. As a result, the world’s largest mining companies are flocking there, especially the mineral-rich Tete Province. Major sources of natural gas also have been discovered just offshore of Mozambique. 

Investment by Major Global Companies 

Rio Tinto, a major British/Australian mining company, owns about 2,500 square 1,500 square mile property that may contain up to 4 billion tons of coal. Another major mining firm — Vale, based in Brazil — holds the exclusive mining rights on a property believed to contain an estimated 6 billion tons of coal.

Up until 1974, Mozambique was a colony of Portugal. But just three years after it declared its independence, warring political factions became embroiled in a civil war that lasted until 1994. Since then, the country has been under the control of the Frelimo political part

LocationMozambique.svg

y, which has provided economic stability and has focused on growing key sectors such as resources and agriculture.

But while the country contains rich stores of the natural resources the rest of the world wants — not only coal and natural gas, but also aluminum, beryllium and tantalum — it lacks the infrastructure to get these resources out of its mines and to the rest of the world.

Infrastructure Needs to Be Improved

Rio Tinto, Vale and other international conglomerates are working with the government of newly elected President Felipe Nyusi and the nation’s Frelimo-ruled parliament to build and improve roads, railroads, ports and other infrastructure to support the nation’s growing role as a global provider of natural gas, coal and other natural resources.

Mozambique’s political leaders hope that the country’s growing role as a leading provider of natural resources for the rest of the world will lead to increased government revenues, which then can be reinvested into infrastructure. Building new roads, power generating stations, railroad lines and other major projects will create new jobs.

Objective: National Electrification

This, in turn, will help improve other key areas — such as education, public health, waste and water — which are still sorely lacking throughout much of the country. Another goal is to bring electricity to the entire nation by building two major new power stations and tapping into the estimated 5,000 megawatt hydroelectric potential of Mozambique’s Zambezi River.

Mozambique is one of the most politically stable countries in East Africa. If it stays that way, its wealth of natural resources will likely attract the attention and money of foreign investors for many years to come.

 

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Photo courtesy of Packsize International

At the end of this month, when FedEx and UPS begin charging delivery fees based on package dimensions, delivery costs for companies that use these carriers could increase up to 30%.

Since the 1930s, most carriers calculated shipping rates based on a carton’s weight vs. the distance it was being shipped. But FedEx, UPS and other carriers will begin charging based on a carton’s dimensions, or “dim pricing“, instead.

About 77.9% of businesses that ship products to consumers and 76.9% of businesses that ship to other businesses are expected to be effected by the change.

Packaging Inefficiencies

Many companies use between 5 to 12 sizes of shipping cartons to ship most of their products. But under this dim pricing, these companies may end up paying more because carton space not containing products are filled with air pillows, kraft paper, foam peanuts and other shipping materials that help protect the carton’s contents.

But some companies are responding to this new “dim pricing” model by turning to on demand packaging.

Custom-Made Cartons Per Package

On demand packaging involves using specialized machines that build a carton that closely matches the dimensions of the product or products to be shipped in it. This helps keep the box as small as possible, reducing its dimensions and saving on shipping costs under the new dim pricing model to be used by FedEx, UPS and other shippers.

Surge in Interest in On Demand Packaging

Packsize International is a Swedish company that specializes in on demand packaging. The company’s CEO, Hanko Kiessner, said his company has seen a huge increase in inquiries in the wake of the dim pricing announcements.

“Making the box on-demand as part of the packaging process eliminates guesswork,” Kiessner said. “There is almost no material handling other than replenishing the corrugated at the machine. Designing and implementing the system focuses on attention on the process details, wasted movement is stripped away, and best practices are identified and standardized.”

Benefits of On Demand Packaging

On demand packaging has many benefits besides lowering dim pricing shipping costs:

  • Eliminated box/packaging inventory
  • Reduces corrugated costs
  • Cuts or eliminates costs for packaging materials such as bubble wrap, paper and foam peanutes
  • Reduces waste
  • Helps reduce on-hand inventory
  • Minimizes damage due to shipping
  • Improves customer satisfaction
  • Speeds up productivity
  • Improves throughput

Brandon Brooks, VP of strategy and marketing at Packsize, said the company hopes to capitalize on the increased demand for on demand packaging by installing its machines in its client’s facilities for free.

“The user pays only for the corrugated material,” Brooks said. “It’s a low-risk way for users to try out on demand packaging, plus helps us better align with our customers’ needs.”

Dim Pricing Here to Stay

Dim pricing is partially the result of new technological breakthroughs. It uses three-dimensional scanners to measure the size and shape of a package, which is then used to calculate how much the shipper should charge based on how much space the package will take up in the vehicle. That allows shippers to charge more and still be able to maximize the space in cargo holds.

“Dim” machines will be used by FedEx and UPS beginning later this month, and other of the world’s biggest carriers — including YRC Worldwide, Old Dominion and Saia — may soon follow suit.

 

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Intelligrated, one of the leading manufacturers of automated materials handling equipment, has opened a new regional center in Irving, Texas, that will serve the Southwestern United States.

The company — which is headquartered in Mason, Ohio — hopes the center will provide access to specialized engineering, projects management, and sales support for companies in southwestern states such as Arizona, Texas and New Mexico, according to CEO Chris Cole.

“The southwest is a strategic priority for Intelligrated and the new regional operation will build long-term partnerships with customers to learn their business and enhance productivity,” Cole said in a company news release.

The new facility represents an expansion of the company’s scope and size, so Martin Augustyn has been appointed to the newly created position of vice president of southwest regional sales and operations. He will oversee the new regional center, according to Royal Smith, Intelligrate3d’s senior VP.

The southwest regional center will offer Intelligrated’s broad portfolio of solutions and products, including conveyor belts, sortation systems, fulfillment execution software, picking technologies, robotic systems, palletizers, and automated storage and retrieval systems. It also will include a 24 hour customer service and support center.

Intelligrated designs, manufactures, integrates and installs complete material handling automation systems to companies worldwide under a variety of brands, including Alvey, RTS, and IntelliSort equipment, and Knighted warehouse management, warehouse control and warehouse labor management software.

Earlier this year, the company announced that it is planning to open a sales and engineering office in Shanghai, China. The purpose of the new office is to “strengthen local partnerships and connect regional customers with best-of-breed automation and software solutions to increase operational efficiency,” according to a company news release. The company will continue its manufacturing in the US for now, with plans to expand Chinese operations to include manufacturing in the future.

 

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Norfolk Southern will purchase 282.55 mils of rail line between Sunbury, Pennsylvania, and Schenectady, New York, from the Canadian Pacific Railway for $217 million, the company announced recently.

The rail line currently is part of the Delaware & Hudson Railway, a subsidiary of the Canadian Pacific. The sale is subject to the approval of the US Surface Transportation Board.

The purchase will allow Norfolk Southern to connect its network at Sunbury and Binghamton, New York, and give the railway single-line routes between Chicago and Albany, as well as to the southeastern United States. Norfolk Southern currently has an intermodal terminal in Mechanicville, New York.

The move also allows the railway to gain enhanced connection to its joint venture subsidiary Pan Am Southern, which services New England cities. The purchase includes the Delaware & Hudson’s car shop in Binghamton and other facilities located along the rail line.

The deal also would allow Norfolk Southern to retain and modify overhead trackage rights on the line between Schenectady, Crescent, Mechanicville, and  Saratoga Springs. The D&H would retain local access to customers in Schenectady as well as  main access to shippers in Buffalo.

Wick Moorman, Norfolk Southern’s CEO, said the move helps consolidate the railroads freight capabilities.

“Acquiring this portion of the D&H provides for more efficient rail transportation system by consolidating freight operations with a single carrier,” Moorman said. “Aligning the D&H track with Norfolk Southern’s 22-state network allows us to connect businesses in central Pennsylvania, upstate New York and New England with domestic and international markets while enhancing the region’s competitive rail and surface transportation network.”

The railroad has submitted an application to the Surface Transportation board. Both parties hope to have the deal concluded by the second quarter of next year.

“This deal is really a strategic extension of our existing lines,” said Norfolk Southern spokeswoman Deborah Butler. “If you look at the traffic that is moving there right now, about 80% of it is Norfolk Southern traffic anyway. So it is really a strategic move to align our traffic with usage of the line.”

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Photo courtesy of Powhusku via Wikimedia Commons

Did it seem as if there were fewer shoppers busting doors and crowding aisles over the Thanksgiving weekend, the traditional start of the holiday shopping season?

That’s because there were — 11% fewer, according to data released by the National Retail Federation.

Sales in both stores and only totaled $50.9 billion between Thanksgiving Day and the following Sunday, down from $57.9 billion in 2013. The substantial sales drop came despite many stores opening earlier on Thanksgiving day than ever before.

Shoppers Spent Less

According the the NRF data, not only were there fewer shoppers, but those people who were out over the busiest shopping weekend of the year spent less money. From Thursday to Sunday, the average shopper spent $380.95, down from $407.02, or 6.4%, from the previous year.

Online shoppers also spent less on average — only $159.99, a drop of 10.2%.

Spending Down, Economy Up

All of this comes as the US economy is heating up, unemployment is dropping, and wages are increasing.

So what gives?

NRF President and CEO Matt Shay tried to put a positive spin on the news, stating that the startling numbers simply represent a shift in the way consumers are buying products they want today.

“A strengthening economy that changes consumers’ reliance on deep discounts, a highly competitive environment, early promotions and the ability to shop 24/7 online all contributed to the shift witnessed this weekend,” Shay said. “We are excited to be witnessing an evolutionary change in holiday shopping by both consumers and retailers, and expect this trend to continue in the years ahead.”

Black Friday Fatigue

Ken Perkins, founder of Retail Metricks, an industry research firm, agreed that deep Black Friday discounting isn’t as important to consumers as it once was in the past.

“The Black Friday hype has come and mostly gone,” Perkins said, thanks to “significant changes to the way consumers shopped, retailers promoted and the general importance of the day itself.”

Another possibility is that Black Friday sales have fallen victim to their own popularity. Some shoppers may have been concerned about a repeat of the violent pushing, trampling and even rioting that occurred on previous Black Fridays. This year, many retailers reassured shoppers that  they implemented new safety measures to prevent crowding and even rioting, including barricades and better crowd control protocols. But even that may not have been enough to allay some fears.

Extended Lower Prices One Possibility

One side effect of consumers spending less over the holiday weekend this year could be lower prices throughout the holiday shopping season, according to Perkins.

“The deeper discounts are an absolute entry cost to get consumers into stores and onto websites,” he said. “Deep discounts make it more difficult, however, to generate robust sales growth as more unit sales are required to make up for steep price cuts.”

Frank Badillo, chief economist for Kantar Retail, said retailers shouldn’t panic over the NRF’s gloomy numbers.

“We’re just seeing a shifting of sales,” he said. “In the end, it’s a zero-sum game overall.”

As for the NRF, it’s still sticking with its projection that overall holiday sales will grow 4.1% this year due to lower gas prices, a stronger economy and a longer holiday shopping season.

 

 

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The Chinese powdered milk company Synutra has hired a Michigan industrial equipment supplier to provide it with automated guided vehicles, conveyors and other automation to build what eventually will be the world’s largest powdered milk manufacturing facility.

The facility, which currently is under construction in Carhaix, Brittany, in northwestern France, will use automation provided by Egemin Automation, of Holland, Michigan, to control all flows of raw materials, finished products and consumables. It is scheduled to be online at the end of next year.

The demand for milk powder is on the rise globally and is fueled by a growing use of the product in Asian countries. Major powdered milk companies in Europe are involved in a production race to capture the largest possible share of this expanding market.

For this project, Synutra has partnered with Sodiaal, the third biggest milk cooperative in Europe that has more than 14,000 producers and provides milk powder for Yoplait, Candia and other companies.

Synutra France’s new facility will feature the latest technological advances provided by Egemin, including:

  • Conveyor loops in both the receiving and shipping areas
  • A fully automated warehouse with the capacity to handle 9,000 pallets with 5 robotic storage and retrieval units
  • 6 AGVs to distribute raw materials and consumables throughout the plant
  • WMS/WCS software to control and coordinate all transport and storage systems.

The facility is expected to cost an estimated $166 million. It wil be able to produce up to 300,000 tons of milk powder per year, all of which will go to the Chinese market, according to Liang Zhang, Synutra’s CEO. The plant will receive raw milk from 1,000 local dairy farmers.

The new plant will use infrared identification tags to track pallets as they move through the facility. Big bags for shipment to China will be prepared in the plant’s shipping area using a conveyor system. A pallet exchange system will then swap plastic pallets carrying the big bags for wooden pallets.

 

 

 

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