A&R Intermodal Targets Growing Demand For International Bulk Plastics Shipments >By Charles E Wilson
Dec 1, 1999 12:00 PM
TIMING can be everything. A good case in point is in the plastics transportation market. Demand for dry bulk shipments of plastics of all types is beginning to soar worldwide, and A&R Intermodal was established to exploit that market shift on an international scale. The company operates some of the most specialized intermodal dry bulk equipment in the industry.
"We see tremendous potential in both the domestic and international markets for our systems," says Lonnie Jeffers, president of A&R Intermodal, Morris, Illinois. "Plastics (pellets and powders) are our primary focus, but we're also pursuing markets for other commodities, including catalyst, starches, sugar, and calcium carbonate.
"We have targeted the sort of dry bulk cargoes that are currently being shipped in box containers with disposable plastic liners, super sacks, bags, boxes, and bags on pallets. We don't intend to compete for shiphold type commodities like cement.
"We entered the market with the in- termodal service at a time when logistics managers were looking for something new. Traditional methods of dry bulk intermodal transportation and distribution have shortcomings. With our domestic storage system, shippers need fewer hopper cars, and congestion is relieved at rail storage yards.
"We believe our intermodal program will grow through its own momentum. We just have to do a good job of marketing and targeting the right traffic lanes. We will have reached initial expectations at the end of this year, and we expect an annual doubling of revenue over the next decade. By the end of next year, we will have operational bases in at least two European and three Latin American countries, and we will be penetrating the Pacific Rim. We've added management personnel, including Paul Garber (domestic rail operations and European marketing) and Walter Sanchez (Latin America marketing). We will have NVOCC (non-vessel-owning common carrier) status by the first quarter of 2000."
Five Divisions Established in 1995, A&R Intermodal is one of five divisions of A&R Distribution Inc, which is headquartered in Morris, Illinois. The division concentrates on dry bulk intermodal activities using customized containers.
"We believe we're years ahead with our approach to dry bulk intermodal," says Jeffers, who joined the intermodal division 18 months ago. "We do just dry bulk. We don't want to be a worldwide liquid tank container operator."
Tank containers are left in the hands of another A&R unit-A&R Transport-which concentrates on tank truck carriage throughout North America. The other divisions are A&R Packaging and Distribution (warehousing and packaging), Frontier Logistics (distribution operations in Mexico), and Alliance Logistics (a third-party logistics provider).
While the divisions operate independently, they do cooperate. For instance, A&R Intermodal leases dry bulk containers to Frontier Logistics for use in serving Mexican customers. As many as 140 of the A&R Intermodal containers are in Mexico on any given day.
"We're starting to see some of our containers moved by rail in Mexico," Jeffers says. "Rail service there is getting better by the day. Privatization was very beneficial. Improvements are being made by leaps and bounds."Hei l DryTainer A&R Intermodal was the first company to buy Heil's DryTainer dry bulk container, according to Jeffers, who participated in the development of the DryTainer while at Heil subsidiary J&L Tank Inc. Today, the operator has 150 DryTainers.
The 40-ft aluminum containers resemble a dry bulk trailer right down to the hoppers and bottom-discharge configuration. The five-hopper, 1,575-cu-ft containers used by A&R Intermodal are 96 inches wide and 9.5 feet high. Tank hardware includes Sure Seal butterfly valves and T-sections, and Knappco domelids. A few of the containers also have Sure Seal aerators.
The most specialized container in the A&R Intermodal inventory is the "Eliminator." Designed and patented by A&R Distribution CEO James Bedeker, the Eliminator is described as a container within a container. A&R Intermodal has 1,000 of these in service now, and they are promoted as a replacement for the box container with a liner. With the Eliminator, there is no liner disposal and less chance of contamination.
Outside is a standard 40-ft box container with corrugated steel sheet side panels. These are being supplied by Genstar and Textainer. Inside is a 1,550-cu-ft aluminum vessel fabricated by Heil's Trailmaster division in Ft Worth, Texas. Hardware includes a Salco vented rail hopper car hatch mounted vertically on a Knappco dome ring and Sure Seal six-inch butterfly valves.
The Eliminator is the preferred choice if the cargo will be stored for a time. In most cases, Eliminator cargo is transferred into a dry bulk trailer for final delivery. Cargo is loaded through the manhole or through the fill inlet. Discharge is through the bottom outlet and takes about an hour. The Eliminator is designed to be tilted during unloading.
DryTainers generally are selected when immediate delivery is expected. They can be pneumatically discharged at a customer location just like a dry bulk trailer. The unloading rate is 1,000 to 1,200 pounds per minute, which is comparable to a dry bulk trailer. DryTainer loading is through the manways on top.
A&R Intermodal also has about 180 chassis, most of them standard 40 footers. Twenty of the newest chassis are spread-axle units from Reinke that offer better weight distribution and a higher payload. They were developed just for the DryTainer.
"While we've been adding new equipment to meet increased customer demand, we had $30 million in infrastructure in place at the time of start up," Jeffers says. "We didn't start in a small way. We needed significant growth to justify all of the initial investment."
Market Growth Growth has come from two distinct markets-domestic and international. The containers work well in either application, giving A&R Intermodal the ability to offer long- and short-term storage, as well as immediate delivery. A&R Intermodal will provide door-to-door service or any variation of that to customers anywhere in the world.
Domestically, the containers are staged at rail storage yards. "We use our own yards, as well as those belonging to the railroads," Jeffers says. "The five yards in Laredo and Houston, Texas; San Bernardino, California; Parkersburg, West Virginia; and Morris, Illinois; are fully equipped for container operations and are our heaviest lanes for plastics distribution. We're planning two new container rail yards that should be up and running in 2000."
Besides container chassis, A&R Intermodal's storage yards have transfer machines, hydraulic tilt ramps and tractors, and Kalmar heavy-lift reach stackers. Over-the-road transportation is provided by A&R Transport.
A&R Intermodal uses COFC (container on flatcar) rail intermodal transport for long-distance movements in the United States, but the operator is exploring the potential for barge movements on rivers. The Eliminator and DryTainer containers can be carried on double-stack rail cars because they haul nonhazardous loads.
While plastics shippers have been quick to see the benefits of the A&R Intermodal operation, the railroads have been slow to come around. "We've had to work hard to show them that we are not in business to replace covered hopper cars," Jeffers says. "We couldn't do that if we wanted to. The economics don't work. Our program enhances distribution operations. We move small quantities much faster than a hopper car." Jeffers adds that CSX is one railroad that does see the potential benefits of the Eliminator.
"They are working well with us," he says. "They understand that we can increase the throughput of a rail distribution yard by three or four fold. The economics of the Eliminator can't be ignored."
International Shipments On the international front, A&R Intermodal has achieved its biggest successes to date in Latin America. "Young logistics managers at plants in the region are excited about new ideas," Jeffers says. "They are open to change whenever the economics are favorable." In addition, Latin America gives A&R Intermodal the turnaround times it needs to be competitive. The operator does best with a 30-day round-trip turn window when the containers are moving loaded only one way.
"We need two-way movements for longer trips," Jeffers says. "We have to be competitive with box-and-liner shipments. That's a driving factor in the way we run this operation."
Container Depots In Latin America, A&R Intermodal has opened container depots in San Juan, Puerto Rico, and Cartagena, Colombia. A&R Intermodal plans to open additional facilities in Latin America during the next year, and this likely will include one in Argentina.
"We started with Colombia and Puerto Rico because we have a number of customers in those locations," Jeffers says. "Several of our Puerto Rican customers began sourcing product from Colombia and asked us to serve that route. There are four plastics plants in Cartagena, and we are hauling loads out of all of them.
"We move about 120 containers a month through Cartagena, and the volume will increase during the next year. We're seeing a fast move from bagged to bulk plastics shipments in South America. That applies to both international and domestic shipments." Jeffers adds that A&R Intermodal plans to become a serious player in the South American domestic transport market for plastics in 2000. "Plastics consumption is growing so fast in the region that bags and super sacks no longer meet the market needs," he says. "Right now, 2% of total plastics shipments in South America are in bulk. We expect that to grow to at least 20% over the next decade."
Market Challenges Achieving that growth means overcoming some serious challenges, especially in infrastructure. Roads in many areas are inadequate for large volumes of truck traffic. Security is a concern, which means trucks often run only during daylight.
"These problems mean slow transit times for domestic shipments," Jeffers says. "For instance, Cartagena is about 800 miles from Bogota (Colombia), but the round trip takes three days. Over-the-road shipments into Venezuela take even longer." Local trucking companies often lack the right equipment to transport A&R Intermodal's containers. Chassis are in short supply, so the container operator is sending in its own chassis.
"We're going to station at least one tilt tractor in Colombia, which will enable us to make deliveries to Colombian customers with the Eliminator containers," Jeffers says. "Currently, we're using DryTainers for plastics shipments to receivers in Colombia."
A&R Intermodal is setting up blower transfer modules at customer locations. The units have Drum or Gardner Denver blowers and are assembled at the headquarters terminal in Morris. Vacuum transfer machines also are assembled at the Morris terminal. Some of the units for larger customers are installed in 20-ft box containers, while smaller machines are skid-mounted.
Still another challenge in the international market is tank cleaning. Quality wash racks are in short supply in many areas, but A&R Intermodal has found good partners in Puerto Rico and Colombia. For instance, ITT-Colombia Ltda subsidiary IPE provides tank cleaning and depot services in Cartagena.
Despite the challenges, A&R Intermodal is on track for expanding its overseas operations. Demand for the company's services seems certain to grow alongside worldwide demand for bulk plastics shipments.
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