Shipping challenges are anything but boring

by Array

Caterpillar Tunneling Canada Corporation is sending five over-dimensional loads and sixteen ocean containers to a customer in Sydney, Australia.

While that may seem like a fairly large order, it’s not. It’s only one piece of equipment: a tunnel-boring machine (TBM).

Caterpillar Tunneling (known as Lovat until 2008 when Caterpillar purchased it) makes the ground-devouring machines used to dig through the earth to create underground passages for sewers, utility lines and twin-track railways.

TBMs from Caterpillar Tunneling are in use across Europe and the UK, the US (one is boring under New York’s Hudson River), Canada (they’re currently being used to expand Toronto’s subway and next month one will be shipped to Vancouver) and in other locations around the world. They’re also being shipped into new markets such as Costa Rica and Turkey (which is taking delivery of two TBMs later this year and two more in 2013).

According to Caterpillar Tunneling’s logistics manager, Aldo Jakasa, a typical TBM is about 6m (20ft) in diameter, but they do get larger.

Designed for dismantling

“One machine can be anywhere from five loads to 40 loads depending on the size. Typically, with a machine that’s greater than nine metres in diameter, you can be north of 30 or 40 loads.”

Readying a TBM for shipment isn’t easy. It actually starts while the machine is still in the design stage, says Jakasa.

“I will typically get shipping drawings designed by our engineering department and I will make comments on them before the machine is built, noting if we can ship like that, or if dimensions have to be changed, or if shipping methods have to be changed prior to the build.

“That’s normally done on my own, unless it’s something of a size we have not really built before—something new to us—then I have to go out and source with local carriers and freight forwarders.”

Locational limitations

Besides calculating dimensions and shipping methods (it tries to ensure individual loads don’t weigh more than 90 tonnes), Caterpillar Tunneling works with the client to determine a shipping order, says says supply chain manager Avery Schick.

“It’s a process we go through each time we ship a machine. The project managers who work with the customer lay out the shipping sequence specifically based on the limitations of the site or the specific sequence of events. It can vary from a site where there is all kinds of space for them to build the whole machine, to the other extreme where we have a very small confined location in a very populated city area where you can only deliver one load at a time, and each load sequence has to be exact, with the right one showing up at the site to be unloaded and dropped down into the assembly shaft where the machine will begin to mine from.”

Other factors include transportation challenges (TBMs destined for Costa Rica have to travel over jungle roads) plus the availability of the cranes to handle the pieces and the crews to reassemble them.

It is the shipping sequence that determines just how the TBMs are disassembled and packed.

“If we know we need to start packing at the back of the machine, we’ll do that. Or it might be the client wants the front of the machine first, so we’ll start from the front. Sometimes they’ll have different launch modes. They might start off in a short launch mode with only part of the machine, so they’ll tell us what they need first. That gets communicated all the way down to the floor that that’s how we are to pack and ship,” explains Jakasa.

Disassembly and shipping plans are created manually. Individualized documents and packaging instructions are created for every TBM.

Transportation methods

The company uses all modes of transportation to move its products, but truck and ship are preferred.

“If we are making dimensions that are unable to be moved by truck then we have to get rail involved. There aren’t a lot of obstacles with trucking, provided that what you say you’re going to ship is what you ship. Same thing goes with vessel. Some of the problems you find with vessels are delays and vessels not arriving at port on time. We can’t control the weather,” says Jakasa.

If the weather holds out, the Australia-bound TBM should make pretty good time. The first shipments went out the third week in September. The last components went out on September 27. They were expected to arrive November 3.

The company’s preferred port is Baltimore, but it will use any number of east coast ports including Halifax, New York, and Philadelphia. Whenever possible, it also uses ports closer to home, says Jakasa.

“If we have the luxury of having large vessels in the Great Lakes in the summer months and we have a machine that is shipping in that time, we look for the opportunity to cut our inland costs, but that doesn’t happen very often.”

While Caterpillar Tunneling has used airfreight in the past, it tries to avoid shipping TBMs by air simply due to the cost. Airfreight is usually reserved for getting parts to sites quickly to repair the machines.

Not only does the company build TBMs, it also stocks spare parts to keep them running. There are about 12,000 SKUs in its parts warehouse.

If a tunneling machine breaks down, then the whole project tends to shut down, which means somebody winds up paying, says Nick Natale, parts, sales and marketing manager at Caterpillar Tunneling.

“Our end users—the final recipients of our goods—are usually governments with public money, and they are usually not the most forgiving. Neither are the contractors who are trying to hit their target dates. Usually, within their contracts, there are late penalties included in what they have to deliver, so there is a lot of time pressure and a lot of visibility, which you don’t always want.”

Supply chain quality control

To ensure the reliability of its TBMs and its stock of spare parts, Caterpillar Tunneling has placed strict quality control measures on its supply chain.

“A document set is created for every TBM we build. Those documents measure quality parameters of the various components as they go through the manufacturing process, or as we receive them or inspect them,” says Schick.

Engineered-to-order components are inspected at the supplier’s site before being shipped. There is no room for error in these custom orders.

“We can’t afford to have it come here and only find something wrong and have to send it back. It just doesn’t make any sense and costs too much time and money to do so,” says Schick.

Caterpillar Tunneling relies on suppliers both at home and abroad.

“We have numerous suppliers in Europe. We’ve always done a lot of business, historically, in Europe, so from a currency risk standpoint it has always been a good strategy to have a good amount of material supplied through Europe.

“We also source some materials from China. Also, depending on the ultimate location of the machine, we can build some of the larger equipment through some of our sub-suppliers to make it an easier logistics job to move the whole machine to site,” says Schick

Ease of transportation is one of the key reasons why the company maintains a strong circle of suppliers much closer to home.

“We manufacture and assemble the full tunnel boring machine here. The manufacturing involves all the structures required to build the machine. These are all-round structures that require a lot of heavy welding—I’m talking about plates that are two-inches in thickness or greater. Then there’s the machining of all those large fabrications. We do that work primarily in our facility—up to a certain capacity point. If we exceed that capacity at peak periods of time, we source through our network of fabricators within an eight hour travel distance because once you get past that it costs too much to ship the fabrications. There are too many transportation issues in getting them here.”