KAG launches massive ethanol logistics effort
Apr 1, 2008 12:00 PM, By Charles E Wilson
Most of the renewable fuels activity will be coordinated by the KAG Logistics Group, but that is not its sole objective. Bruce Blaise, KAG vice-president of sales and marketing, makes it clear that the KAG Logistics Group will coordinate a broad spectrum of bulk liquid shipments.
“We want to provide the best supply-chain solution, and we want to help customers unbundle transportation from their overall distribution cost,” Blaise says. “Fuel was our initial focus for the logistics operation, but we'll include chemicals and foodgrade products in the future.
“Our logistics group is involved in most of the markets across the United States. However, the East and Southeast are the biggest target areas for our ethanol distribution services at this time. We see plenty of growth potential, and we will continue to add new services and expand into new areas in the coming years.”
Renewable fuels almost certainly will be a part of that expansion. When KAG management began developing the logistics group, they saw very quickly that ethanol, in particular, offered a great opportunity.
“We realized there would be a huge logistics logjam for ethanol,” Nash says. “Production was growing in the Midwest farm region, but the producers lacked a strategy for moving the ethanol to market in other parts of the country. They needed somebody to drive out excess distribution costs and eliminate inefficiencies.
“We were more than willing to take on that challenge as the overall coordinator of the process. We developed a three-phase program for the rollout of the ethanol logistics services. In Phase I, we provided an expanded trucking network. Phase II included establishing relationships with railroads and the development of a major ethanol consolidating facility. Phase III begins the process of providing total supply chain solutions from point of production to point of consumption.”
Fleet partners
KAG petroleum transports will play a big role in the trucking side of the logistics operation, but other fleets also will be used. KAG Logistics Group currently works with about 250 petroleum haulers nationwide.
“We're in good shape on the trucking side to handle ethanol distribution,” Nash says. “We've assembled a solid core group of tank truck carriers. This gives us the ability to provide our customers with the best trucking options to meet their needs.
“The trucking infrastructure we have assembled gives us the ability to provide a broad array of service to the entire renewable fuels sector. In addition to ethanol, we handle biodiesel shipments. The Transport Service acquisition increases our ability to handle inbound shipments of feedstocks and chemicals used in the production of biofuels.”
Phase II ranks as one of the biggest successes for the ethanol logistics program, but Nash gives much of the credit to KAG's partners in that part of the operation. KAG had begun building its rail and terminal contacts when Nash had a fortuitous meeting with Lee Kiewiet, an owner of the Minn Iowa Group, a renewable fuels trading and transport company.
“I met Lee while playing golf,” Nash says. “He told me about a project his company was developing with the Iowa Northern Railway. Their plan was to build a large ethanol consolidation terminal near Manly in north central Iowa. We were offered the opportunity to partner in the project as a financial sponsor and distribution specialist, and we jumped at the chance. It was clear this was a perfect fit for KAG and its ethanol logistics operation.”
Manly Terminal
The partners broke ground on what is now Manly Terminal LLC in October 2006, and the 100-acre facility opened for limited operations in September 2007. The location could not be better for a storage and transloading operation designed to serve as a consolidation point for unit train shipments of ethanol.
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