The logistics difficulties of mining companies are complex and unique. In spite of this, investments in third-party logistics systems and processes, in many instances, take a back seat to core investments of searching, extracting and processing of minerals.
A percent of a mining company's total operating expenses may be even small. However, these companies can actually uncover literally millions of dollars in profits which are hidden. These mining companies can do this by reexamining how they can address the challenges of logistics and distribution.
In many instances, 3PLs (third-party logistics providers) who concentrate in industrial freight can offer targeted solutions which reduce operating expenses or costs. Also, the mining-specific logistics management solutions they provide improves service levels and free your own team to concentrate on the strategic initiatives. The following are some common challenges and solutions that logistics management can provide specifically for mining companies.
Mining sites are usually located in areas where there are minerals, mostly in remote areas. On the other hand, carrier pools are usually located in areas where businesses and the people are. It is not abnormal for the nearest carriers to remote sites to be two hundred (200) or even more miles away. This is so unless it is expressly formed to serve that particular mine. Some of the problems created by lack of a nearby carrier capacity include: insufficient capacity, inconsistent service and higher transportation costs.
Outsourcing freight management can help solve many of such challenges, especially if you consider partnering with third-party logistics providers that specializes or concentrates in industrial freight. The perfect 3PL companies have good working relationships with all major railroads and many trucking and logistics transportation companies, in addition to the distribution capacity to help mining companies thrive.
Right from extraction all the way to delivery, these companies usually use many distinct freight modes with requirements for specialized expertise and equipment. Outbound moves to ports and processing plants can use barge, rail, and trucks. Therefore, it requires special requirements such as HAZMAT certification and others. Inbound moves include a mix of full truckloads, LTL, multi-axle trailers, and flatbeds. Synchronizing and coordinating these moves is always difficult. Expertise is required across all freight modes.
The perfect 3PL company can help solve this to improve services levels and also drive dramatic reductions in inventory, time, and transportation costs. Some of the strategies employed include applying JIT (just-in-time) service, securing the lowest rates without necessarily compromising safety and quality, optimizing modes, and taking control of the inbound supply chain.
Rail equipment management is a hard and time consuming challenge. When railroads are used, `free running` does not mean zero cost. Generally, this is a challenge facing mining companies especially those who lack the processes and systems which are required.
3PLs can also help here. Their services include; improvement of asset utilization, tracking movement of goods and analyzing the decision to use or lease railroad assets.
Risk management is a difficult challenge facing mining companies as far as freight is concern. This is because of broker reliance, remote locations and lack of time to collect documents among other things.
A 3PL which specialize in industrial freight, like minerals, oil and gas, heavy equipment, and lumber, will have a well developed network of professional carriers which have been vetted and also approved based on their own safety record, performance history, levels of insurance coverage, and operating authority. They are able to analyze your freight profile and choose carriers with the suitable coverage.
Due to absence of dedicated systems and resources, a wide range of negative consequences arise.
Outsource freight management to a trusted 3PL and supply chain management company.
In general, the above are some of the common challenges and solutions that logistics management can provide specifically for mining companies.