Transportation and logistics management strategies and priorities for the oil and gas industry.
Transportation and logistics optimization is important in any industry. But in the oil and gas sector, unique financial pressures and logistical demands elevate this priority to a necessity.
In an industry where transporting massive and highly specialized pieces of extremely expensive equipment to remote and sometimes inaccessible extraction sites is a regular occurrence, and where an idle operation can incur enormous expenses for every hour it is not up and running, supply chain optimization and logistics efficiencies can literally make a million-dollar difference.
For oil and gas decision-makers, understanding the critical elements of a sound supply chain management strategy — including considerations for transporting heavy equipment in a timely manner, tracking and analyzing logistics data to make critical deadlines, and appreciating the value of a trusted logistics provider and a robust transportation management platform — is enormously important.
Those who understand the contours of the logistics landscape in their industry will be better able to translate those insights into real-world takeaways they can apply to their own operations, and ultimately ensure a smoother transportation management experience. In other words, not only does a keen understanding reflect on margins, but it also provides the opportunity to build leaner project models to ensure competitive bidding and secure more business on the front end.
In an industry where some operators are seeing revenue down 60 percent or more since last year, there is a renewed emphasis on cost controls. Historically, margins have been high enough to mask a certain level of inefficiency, but today industry professionals are looking for every possible competitive advantage. Oil and gas companies have to be both smarter and more efficient, and one of the best ways to do so is to identify opportunities to operate in a more cost-effective manner.
The best third-party logistics experts provide the kind of guidance and insights that can help oil and gas operators do just that. Access to powerful transportation management systems, capable of full integration with client enterprise resource planning (ERP), provides detailed information about routing, schedules, load requirements and more. This helps anticipate transport needs and facilitate strategic transportation planning weeks ahead of time. Those systems can then engage in dynamic routing and delivery possibilities, determining the most efficient routes and schedules, optimizing loads and potentially consolidating shipments for added efficiencies.
That level of sophisticated planning and integration helps to minimize the costs and inefficiencies associated with empty trips, bobtails (trucks running without a trailer) and dead heads (relocating a piece of equipment without any freight on it). For oil and gas companies that may be working on tight margins, trimming down the transportation burden can make a meaningful difference in the bottom line.
Opportunities for greater efficiency begin at home. In a project-based industry, increased communication between project groups can be the first step to realizing considerable savings.
Successful logistics providers are able to establish previously nonexistent intercompany dialogue. Increasing the flow of information between intercompany groups allows capacity and monies to be used more efficiently. Additionally, some logistics partners can help oil and gas companies conduct manufacturing and yard space studies to optimize the location of equipment and the flow of material.
The best logistics providers manufacturing and automotive best practices to this historically project-based industry, purchasing heavy equipment instead of renting (if the ROI makes sense), and helping oil and gas companies make more informed strategic decisions about storage and transportation — limiting the wasteful and costly practice of relying on a carrier to temporarily store freight and equipment when space is limited.
Oil and gas decision-makers looking to identify a transportation logistics expert with demonstrated oil and gas experience should pay close attention to credentials and proven experience, such as:
Make sure that your service carriers have proper insurance. The value of oil and gas equipment is often underestimated or underappreciated and can easily run into the millions. That level of insurance really thins the herd in terms of qualified carriers.
Track and trace
Because oil and gas transport often means delivering not to a street address but more off the beaten path, the delivery timing and freight monitoring can be tricky. Consequently, using the right track and trace technology is essential. Make sure your logistics partner has a system that uses geo-coordinates instead of a more dated GPS map overlay.
On the service side of the equation, the best providers will commit to delivering a swing engine or other large piece of equipment to any drill site in the world within 24 hours — a formidable challenge that may involve details like permitting, escorts, road closures and additional complications and considerations due to extreme size or weight. The unique challenges associated with international transport, from documentation to inspections and delays, make it essential that your partner has experience in this arena. Make certain your provider has the infrastructure — rigging, cranes and other specialized equipment — to securely and cost-effectively move large and ungainly equipment, and the personnel — qualified drivers who are highly skilled specialists with additional safety training.
By: Jeff Lau & Jason Higgins
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