Who Needs a Transportation Contingency Plan?
Executives in the chemical industry, especially in chemical transport and logistics, should prepare, review and periodically update transportation contingency plans in order to meet customer demand and keep products moving safely. This is particularly important when unexpected events occur in supply chain, transportation or distribution networks.
Having a current transportation contingency plan is critical for any business, especially for companies which move regulated and/or hazardous chemicals. A proactive contingency plan that details reasonable chemical transport alternatives for a variety of scenarios enables the business to realign assets smoothly and quickly. Thus minimizing financial losses and the stress associated with rapidly changing conditions.
The Time for a Transportation Contingency Plan is Now
Transportation industry and technology trends have resulted in an intermodal logistics industry that is extremely efficient, but also very specialized. This makes it difficult for companies to pivot to new transportation channels when disruptions occur. As a result, transportation contingency plans have become an integral part of forward thinking business operations.
The need for transportation and logistics contingency planning becomes more urgent in times of uncertainty and recent events have resulted in disruptions to the supply chain. Geopolitical events have interrupted access to markets and the sourcing of raw materials and equipment. Supply chains have been interrupted in the short term by weather events and for longer periods as was the case with the COVID-19 pandemic. Most recently the threat of a nationwide railroad labor strike prompted forward thinking companies to consider alternative chemical distribution channels.
Transportation Contingency Plans: The Importance of Communication
A strong contingency plan begins with the assimilation of data and frequent communication with internal collaborators and external suppliers. Establishing a network of advocates, vendors and suppliers is essential for securing accurate and timely information when developing the plan, and when rapid decision-making is needed to implement the plan and for risk mitigation. Ryan Burns, a supply chain expert and principal of RBB Management Consulting, stated, “Communication of your needs and communicating the suppliers’ ability to to meet your needs back to your operations team and other leadership is key. Outside logistics alone, think about local secondary sources where you may get materials quicker, even at a higher cost, to bridge any gaps.” Higher transportation costs are often justified when weighed against lost production time and/or disappointed customers.
Contingency Plans: The Importance of Establishing a Relationship with a Tank Trailer / Tank Chassis Leasing Agent
Disruptions to the supply chain will happen. Proactive contingency planning and establishing relationships with tank trailer leasing agents will make adapting and managing the necessary changes easier. Make sure your network includes reliable professional and dedicated equipment suppliers with decades of experience and insight into best practices during all economic conditions. They are an important resource for your business, especially during non-routine supply chain events. Relationships are essential for staying ahead of competitors and keeping your freight moving.
Lessons Learned from The Averted Railway Strike
With approximately 30 percent of our country’s freight being moved by rail, a rail stoppage was projected to result in economic losses estimated at $2 billion dollars per day. The federal government intervened and averted the threat of a widespread railroad labor strike in late 2022.
However, when the threat of the rail strike appeared possible, chemical distributors and chemical transport companies had to look at options well in advance. Here’s what we’ve learned and our suggestions on what to include in your transportation contingency plan. Of course, this is not a comprehensive list and every company should evaluate these recommendations and determine what is appropriate for their business.
- Lease Tank trailers and/or tank chassis: Leasing offers a flexible option for chemical transport when existing equipment is not available.
- Establish a relationship with a leasing company: Introducing yourself, complete credit applications, and review contract terms in advance to streamline equipment acquisition.
- Detail equipment specifications: If your product requires unique features for handling, these should be discussed upfront. For example, Is vapor recovery required? And, What tank liners are needed for your products?
- Be flexible: Equipment availability may be limited in your area and may need to be moved from another location.
Be Prepared with a Contingency Plan when and if Necessary
The transportation industry must have contingency plans that keep freight on the move no matter what challenges arise. For businesses in chemical transportation a current contingency plan and the right relationships will enable you to successfully navigate unexpected challenges when they occur. For chemical transport, a contingency plan will enable you to service your clients and your team in a manner that reduces disruptions.
Supply chains have demonstrated great volatility in recent years from a number of events and have made contingency plans a necessity for businesses to be proactive in navigating crises and to stay competitive in the chemical transport market. At Matlack Leasing, LLC we are a trusted member of the NACD and provide tank trailer and tank chassis leasing solutions for fleet expansion and contingency planning.
Contact us here or call 1-800-MATLACK to speak with a knowledgeable sales or operations team member.
Sources:
- “Contingency Planning Keeps Freight Moving.” Inbound Logistics, 11 May 2022, Accessed: 1 December 2022.
- “NACD Statement on Senate Action to Avert Rail Strike.” National Association of Chemical Distributors, Accessed: 1 December 2022.
- Segal, Edward. “Averted U.S. Railroad Strike Is Wake-Up Call for Company Executives.” Forbes, 15 Sept. 2022, Accessed: 1 December 2022.