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Schenker, Inc.
Environmental and Supply Chain Considerations in Planning Large Scale
Construction Projects
10 June 2008
The Integrated Logistics Group Slide 2
Structure of Today’s presentation
Drivers
Resistors
Supply Chain
Costs
Project Complexity
Fixed Schedule
Marine Rail Heavy Truck Air
Modal Environmental Impact
Geography
Technology
Drivers
Resistors
Supply Chain
CostsSupply Chain
Costs
Project ComplexityProject Complexity
Fixed ScheduleFixed Schedule
Marine Rail Heavy Truck Air
Modal Environmental Impact
Marine Rail Heavy Truck Air
Modal Environmental Impact
GeographyGeography
TechnologyTechnology
What’s driving the change agenda?
1. Improve logistics planning early in the project management cycle to reflect effect of environmental issues on mode choice decisions.
2. Increase use of the Athabaska Northern Railway Ltd. (CN Rail) line – use domestic containers operating in a closed loop between Edmonton and construction sites in Fort McMurray area.
3. Adapt carrier selection criteria to include environmental considerations on fuel management and GHG emission controls.
Watch use of bio-fuels (“good”and “bad”sources)
4. Go paperless – electronic invoices and EFT
5. Select terminal/warehouse operators considering their “green”programs. Facility design Energy management Water management Waste management
What can we do now?
“Competition”
“Conventional” “Proprietary!”
“Public Policy”
No. of Years of Project ActivityLearning curve, develop support infrastructure
No. of ProjectsUnderway in RegionCompetition for infrastructure
Few
Many
1-2 5-50
CONTEXT MAP
What’s the business context?
The Integrated Logistics Group Slide 3
What’s driving the change agenda?
Drivers
Considerations Project Complexity
Fixed ScheduleGeography
Technology
Supply Chain
CostsMarine Rail Truck Air
Modal Energy and GHG Impact
The Integrated Logistics Group Slide 4
But Large Scale Construction Projects Have a Life of Their Own
Time Definite economic value of coming on stream on schedule supply constraints – mix of long-lead items (ETO), JIT/off-the-shelf, opportunity cost of failing to meet schedule, which affects technology decisions (tried & true vs new, leading edge)
Processing Technology selection impacts construction strategy - whether constructed on site or
modularized off-site affects sourcing decisions, which affects transportation decisions
Geographic Specific – ie. Where resources are infrastructure access to site governs modal choice both for
finished/processed goods and inbound equipment and materials E.g. upgraders located in Fort McMurray area or in Edmonton area
The Integrated Logistics Group Slide 5
And Companies Have to Consider the Business Context
“Competition”
“Conventional” “Proprietary!”
“Public Policy”
No. of Years of Project ActivityLearning curve, develop support infrastructure
No. of ProjectsUnderway in RegionCompetition for infrastructure
Few
Many
1-2 5-50
CONTEXT MAP
The Integrated Logistics Group Slide 6
Then recognize that our transport mode choices affect the environment
Source: Energy Use Data Handbook, 1990-2005, Transportation Tables 8 and 9.
Relative Standing in Energy and GHG Emissions by Mode
1.0 1.5
7.5
16.1
1.01.6
7.6
15.3
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
Air Heavy Trucks Rail Marine
Tim
es (
x) b
ette
r th
an A
ir
Energy Efficiency
Improvement in GHG Emmissions
“Better”
The Integrated Logistics Group Slide 7
For the most part – projects are concerned with modal combinations
Road
Ocean-Rail-RoadVia west coast ports
Ocean-Rail-Road via Gulf Coast
Ocean-Rail-RoadVia east coast ports/St Lawrence Seaway
Air-Road
Rail-Road
Sourcing decisions:- AsiaPac- Europe and Baltic States- The Americas
The Integrated Logistics Group Slide 8
But it Does Boil Down to the Last Mile – Rail vs Road?
What strategies to employ?Consolidate loadsIncrease vehicle weights & dimensionsTwin Highway 63Pre-position inventory in advance of constructionMake better use of rail access
ANYLWRCNRCPR
The Integrated Logistics Group Slide 9
And, Road Infrastructure Needs Upgrading
Alberta Government will invest $530 million on road infrastructure in support of oil sands development Hwy 63
Twin Hwy 63 from Suncor Access north of Fort McMurray to Fort Mackay
Twin Hwy 63 from Fort McMurray south to junction with Hwy 881
Add 25 km of passing lanes between junction of Hwy 881 and Hwy 55 Build four interchanges within Fort McMurray on Hwy 63 Complete paving of Hwy 881 Build a commercial vehicle staging area on Hwy 881 near Conklin. Lac Laloche Road from Saskatchewan to Anzac AB
The Integrated Logistics Group Slide 10
We need to remember what costs we are talking about….
$ Cost
Volume/Shipment Size
Transportation
Warehousing & Handling
Air Truck Rail Marine Pipeline
Total Logistics Cost
Add in Environmental Costs
The Integrated Logistics Group Slide 11
Consider alternatives - direct delivery vs a staged delivery….
$ Cost
Volume/Shipment SizeAir Truck Rail
Add in Environmental Costs
Cost = either truck or rail+handling
Vs portfolio of direct and staged deliveries
The Integrated Logistics Group Slide 12
What can we do now?
1. Improve logistics planning early in the project management cycle to reflect effect of environmental issues on mode choice and direct delivery vs staged deliveries decisions.
2. Increase use of the Athabaska Northern Railway Ltd. (CN Rail) line – use domestic containers operating in a closed loop between Edmonton and construction sites in Fort McMurray area.
3. Adapt carrier selection criteria to include environmental considerations on fuel management and GHG emission controls.
Watch use of bio-fuels (“good” and “bad” sources)
4. Go paperless – electronic invoices and EFT
5. Select terminal/warehouse operators considering their “green” programs. Facility design Energy management Water management Waste management
