There’s an old axiom in the logistics business: The shorter the distance, the lesser the cost.
However, things are not that cut and dry, especially when you’re dealing with such a weighty topic as heavy industrial and oversize equipment like wind farm components. Invariably, manufactured wind components – longer blades, heavier nacelles and growing tower sections – are coming to other states. And several factors, such as risk potential and distance – even police escorts – can quickly drive up costs.
Given how transportation expenses can quickly escalate, there’s a new movement from the American Wind Energy Association (AWEA) to “harmonize” permits and licenses across state lines.
According to AWEA, longer blades, heavier nacelles and tower sections of a greater diameter require advance planning on a project-by-project basis, and close cooperation among transportation and logistics providers, turbine manufacturers, and state and federal agencies is critical.
Noting the disparities in rules across regional and state lines, AWEA says that efficient transportation is hampered by differing state permitting rules for oversize, overweight loads. These differences may be as small as different-colored flagging required on loads. Harmonizing permit rules among key states can reduce the time and cost of highway transportation.
With that in mind, North American Windpower reached out to some of the leading logistics and transportation professionals to weigh in on the challenges impacting logistic costs – as well as how to keep the lid on expenses. The responders are the following:
Bill Rhodes, director of reload marketing at Cedar Rapids, Iowa-based Iowa Northern Railway Co.;
Jim Orr, president at Garden City, Kan.-based TP&L; and
Brandon Brown, general manager of wind operations at Fort Worth, Texas-based Lone Star Transportation.
NAW: How can wind developers save money on logistics and transportation?
Rhodes: One way is to make sure the distribution center is well served. Speaking as a shortline serving Manly Terminal, we make sure a switch crew is always available. Many things can affect the work schedule at a distribution center, such as weather, train delays and mechanical issues. We understand that we need to be flexible regarding when we are needed to switch trains for the rigging company to maintain its schedules. Without this additional attention to service, truck schedules and, therefore, construction schedules can be affected, causing delays and extensive retention fees.
Orr: One way to shorten last-mile trucking and take away some risk – and cost – would be to rail components to a central distribution yard.
Brown: As long as the components stay at the size and scale they are today, pre-planning and maximizing lead time become critical to organizing and streamlining the deliveries, which results in increased efficiency and cost savings. Increased coordination among the developer, manufacturer, crane companies and transportation providers is key to a cost-efficient project.
NAW: Logistics and transportation costs fluctuate between regions. Can you give an example?
Brown: Due to varying state regulations, third-party charges, such as pilot car and permitting, can be vastly different. For example, an overweight permit for a base section in one Midwestern state is $50; the same permit in an adjoining state is $1,780. One state may require two private pilot cars and no police escorts, while another state may require three private pilot cars and two police escorts. One state may require movement to occur during evening hours only, and another may require movement during the daytime. All of these items are subject to change, and cities, counties and states may enact additional requirements at any time.
Orr: Police escorts add significant costs to transportation. For example, a 56.9-meter blade would need police escorts in Missouri, whereas in Kansas and some surrounding states, it would not.[adright zone=’190′]
NAW: AWEA talks about harmonizing permit rules to reduce the time and cost of highway transportation for manufactured components. Do you see that happening in the wind industry? If not, what steps need to happen to bring this change?
Orr: I do not see this happening anytime soon. AWEA needs to team up with the Specialized Carriers & Riggers Association (SCRA) to try and get some traction on this. It also helps to meet ahead of time with the permit offices in states that will be seeing multiple loads running the same routes on a daily basis. It helps them get prepared to handle the permit-writing workload, as well as to inform the local municipalities of the influx of trucks headed their way.
Brown: There are several ongoing initiatives regarding permit harmonization, and Lone Star is actively involved in these discussions. There has been limited success in harmonization on certain weights and dimensions. However, with loads of this size, the dimensions all fall outside of those harmonized envelopes. These are legislative and regulatory restrictions, and further change will require participation by lead industry associations, such as the American Trucking Associations, the SCRA and AWEA.
NAW: How are transportation and third-party logistics providers looking to work more closely with manufacturers to ensure that efficient and cost-effective solutions are available?
Brown: Maximum utilization of the equipment is the key to minimizing the cost. We have always worked directly with the original equipment manufacturers (OEMs) to find the best possible solution to minimize the overall cost of transportation, as well as maintain a delivery schedule that aligns with the developers’ plans.
Rhodes: At Iowa Northern Railway and Manly Terminal, we are always working with the manufacturers and logistics companies to minimize costs without affecting service. There are many variables that have an effect on the cost of acreage or train service. As projects are under way, more land becoming necessary and additional train service being required are two examples. Planning requires foresight and an understanding that pricing these services properly can avoid additional fees when things are not going smoothly later.
Orr: OEMs and manufacturers are starting to engage in conversations with transportation providers to make sure they are staying within certain parameters when it comes to oversize loads. When you get outside certain dimensions and weights, it becomes very expensive to transport loads – in addition to the added risk.[adleft zone=’190′]
NAW: What is your outlook for 2017 with regard to transportation costs?
Orr: We don’t foresee much change in the transportation costs unless the fuel costs go up. I think the permit costs should be fairly stable.
Rhodes: Manufacturers seem very focused on lowering costs, so I am assuming costs will be lower than past years. Railroads have capacity, so rail shipments should be efficient. However, as busy as it will be, there are many variables that can wreak havoc on the best-laid plans and add unplanned costs. Distribution centers will need to be at their most efficient to handle the volume and keep schedules on track.
Brown: Due to the ever-increasing size of the components, regulatory requirements continue to have an upward impact on transportation costs. We don’t see this trend changing for 2017. Forward planning allows us to mitigate and manage those costs as much as possible.