Archive for June, 2012

Logistic Challenges Arise As Fracking Industry Monopolizes Diminishing Transportation Resources

Wednesday, June 13th, 2012

By Jim Suber, Sales Director, ChemLogix

Hydraulic fracturing – fracking – has become a booming business throughout the United States.  The process of extracting oil and natural gas from shale rock layers deep within the earth, fracking is forecast to contribute $118 billion toward U.S. economic growth over the next four years, reports IHS Global Insight.  And as the fracking business soars, so does its transportation requirements.

The thousands of gallons of water and chemicals necessary for fracking must be regularly trucked to and from sites in addition to the frac sand that is initially shipped by rail car to somewhat distant rail stops from fracking sites.  To ensure adequate transportation resources are available to support increasing operations, the fracking industry is paying top dollar to lure truckers from other industries.

As more drivers, trucks and rail cars are monopolized by fracking and energy production businesses, fewer and fewer resources will become available for shippers of all industries to transport their own goods, both by rail and over the road.

While equipment shortages may be short lived and cyclical, driver shortages will remain.  New driving restrictions issued by the Federal Motor Carrier Safety Administration that limit driving (and earning) time are motivating many truckers to leave the business. Those drivers who remain on the job, especially those with good Safety Stat Scores, are commanding higher compensation from carriers.  The average age of US truck drivers, particularly in bulk, continues to rise.   The trucking industry struggles to attract younger drivers.  Add to that the lure of higher wages and less stringent driving requirements associated with the fracking industry and you have fewer drivers available to transport your goods.

Mid and small-sized companies often do not have the clout to attract consistent capacity in this capacity constrained market.  Nor do they have the technology to track resource availability.  That’s where a third-party logistics provider (3PL) like ChemLogix offers the tools and market intelligence to maintain a competitive edge.  While logistics personnel at a smaller company might have to make several calls to several carriers each day to secure driver availability, a 3PL can electronically broadcast logistics requirements to the market, identifying available trucking assets in the network and quickly matching capacity to needs.  By gaining a granular view of the carrier market and the ability to quickly correspond with carriers, shippers gain a competitive edge against tough competition from other shippers.  3PLs also have the ability to contract carriers as they can offer more business over a longer time frame than individual companies.

If you have concerns regarding the availability of transportation resources now and into the future, contact ChemLogix at (215) 461-3805 or information@chemlogix.com to discuss your freight requirements and possible logistics strategies.