With a plethora of rules, regulations and safety considerations, and since so much of their product moves by rail, it’s small wonder that many chemical companies opt to let a third party manage their rail logistics. And the benefits for the chemical industry go well beyond the increased capacity.
“Our primary product is a short- to medium-term operating lease of modern equipment, generally coupled with maintenance service — so it’s a full-service lease,” explains Jim Earl, executive vice president, commercial, with GATX Rail.
A lease works well when shippers are not sure product demand is going to last for 20 or 30 years. Because railcars are long-lived, Earl explains, the ability to add or shed assets as market conditions change is important.
1. “We are obligated to maintain the equipment in a compliant state,” says Earl. Keeping railcars compliant involves an active, ongoing effort by the GATX customer service, engineering and technical groups. The equipment has to be made available to GATX, but that’s part and parcel of a full-service lease. “We work hand-in-hand with regulators and safety personnel within the Federal Railway Administration and Association of American Railroads to make sure that we are providing as safe a product as possible,” he says.
2. The railcar supplier has a maintenance network spread throughout North America, made up of mobile and stationary maintenance units. Included are trucks able to service railcars in the field, and a network of contract shops.
3. Using its e-commerce capabilities allows its customers to customize reports. “Not surprisingly, a lot of railcars we lease are tank cars that tend to be very regulatory and safety intensive,” says Earl. Working over the Internet, the company is able to provide customers the information they need to remain compliant — an especially key consideration for a regulation-intensive business like the chemical industry. “We take on the burden of compliance, which allows customers to focus on what they do best.”
Aimed at the chemical industry but available to other companies is a program GATX is working on with Class I railroad CSX (www.csx.com) called Ready Tank. GATX collaborates with the CSX commercial group to find customers new to rail, to give what Earl refers to as a taste of rail.
“Generally it works with a product customers are currently moving by truck,” he explains. “Working with the CSX sales group, we identify shippers whose volumes and distribution patterns seem suitable for rail. We make railcars available and go through the leasing process in a way that is painless, and try to convert a shipment by some other mode into a rail move.” LT