New company offers optimized shipping rates service

By Kris Bevill | October 06, 2009
Report posted Oct. 27, 2009, at 1:07 p.m. CST

Aska Energy, an independent biofuels supply chain management firm, has launched a rail optimization clearinghouse geared toward the ethanol industry. Company President Dan Gordon said the service can benefit producers by lowering freight costs for shipping and reducing turn-around times.

"It's very similar to engaging in a trade, in that both parties will now be obligated to the other to perform," he said. The company facilitates a swap during which the overall cost is reduced, although many times it will require one party to pay the other to complete the transaction. For instance, the swap may result in one party paying 1 cent more for shipping, while the other party saves 5 cents. The party with the greater savings will pay the difference so that each of the shippers ends with the same cost savings. Aska Energy's participation includes navigating through rail data to identify the most cost-effective routes and fuel surcharges.

The idea of optimization swaps is not new. Gordon worked for years in the petroleum industry and said that industry often works together to facilitate distribution in an efficient manner. "In the refined products industry, exchanges and working together is common practice, but I didn't see that happening in the ethanol industry as much," he said. Gordon and his partner noticed this discrepancy between the two transportation fuel markets when they began trading ethanol for a petroleum company a few years ago. "We thought there was an opportunity to create a company to take out some of that inefficiency and create value for our customers," he added.

According to Gordon, since launching the clearinghouse shippers have saved up to 10 percent of their original freight costs. For more information on the service, visit www.askaenergy.com.