Hidden Value in Logistics – Rail Optimization in Refinery and Petrochemical Operations

Client Context

A major petrochemical company with 14 U.S. plants sought to improve rail logistics performance at four of its most complex sites.

Rail operations were not a core competency for the company, leading to missed optimization opportunities. The company faced increasing pressure due to Precision Scheduled Railroading (PSR) and asset optimization trends, which demanded greater efficiency in fleet management, loading operations, and third-party logistics performance.

The company’s refineries struggled with rail yard congestion, inefficient switching and loading operations, and limited performance measurement, leading to:

• Unmet tank car loading targets, resulting in lost sales and margin erosion.
• Billing and documentation errors, delaying switch list creation.
• High freight and storage fees due to mismanaged Constructive Placement status.
• Missed offloads of critical feedstocks and blending products, affecting revenue and margins.

Key Challenges

• Inefficient first mile / last mile rail operations, impacting product availability.
• Lack of standard operating procedures for switching and loading.
• High storage and freight costs due to misaligned car inventory management.
• Limited data visibility, preventing proactive decision-making.

Approach & Key Success Factors

EFESO implemented structured rail logistics improvements, applying Lean methodologies and real-time performance tracking to optimize throughput and reduce costs.

1. Daily Rail Performance Tracking & KPI Monitoring

• Established a Daily Performance Dialogue (Pulse Process) for rail logistics and load rack operations.
• Implemented real-time KPI tracking, improving fact-based decision-making and accountability.

2. Standard Yard Operating System for Rail Operations

• Designed standard workflows for railcar movement using flow and pull Lean principles.
• Aligned switching vendor and Class 1 rail providers with refinery demand requirements.

3. Load Rack Optimization & Process Control

• Implemented a pull system to optimize product flow at load racks.
• Shifted control of load rack operations from switching vendors to refinery teams.

4. Digitalization of Load Rack Data Collection

• Designed and implemented a cloud-based data collection solution to track product loading and offloading times.
• Automated billing and product tracking, improving accuracy and efficiency.

5. Rail Fleet and Inventory Optimization

• Conducted dynamic fleet size analysis to right-size inventory and reduce storage costs.
• Improved Class 1 service tracking, achieving 100% compliance on weekly deliveries.

Results

15% increase in daily railcar throughput

At two sites, leading to $10M in additional annual margin.

Digitized KPI tracking via Power BI

Improving vendor performance by 10% and achieving 98% compliance in car inventory management.

$1.2M savings

In SIT yard storage and switching costs at one site.

Reduced CapEx spending

By improving capacity utilization, eliminating the need for additional transportation investments.