KAG Ethanol Logistics Enters Into Alliance With Manly Terminal LLC In Lowa
KAG Ethanol Logistics recently announced that it has joined efforts with LB Transport and Iowa Northern Railway Company, entering into an investment alliance with Manly Terminal, LLC, of Manly, Iowa, to streamline the nation's already constrained ethanol marketing and distribution process. Through this alliance, KAG Ethanol Logistics has strategically partnered with truck, rail and storage stakeholders to seamlessly bring ethanol from production point to final destination. Manly Terminal, a first of its kind facility, will feature over 20 million gallons of liquid storage capacity on a unique 100-acre reload facility that is strategically located within the largest growth area of ethanol production in North America.
Dennis Nash, President and Chief Executive Officer of Kenan Advantage Group stated, "By bringing all of the key players of the ethanol transportation industry together, we are able to provide a truly unique service to ethanol customers throughout the country. Our ability to package these services and manage the delivery process from beginning to end, will allow us to help solve many of the challenges facing this growing and exciting industry. At KAG, we have always taken great pride in being in the forefront of innovation and technology. This alliance with Manly Terminal, LLC puts us dead center in the ethanol logistics arena -- and that's exactly where we want to be."
As part of the Manly alliance, locally operated, LB Transport will join with KAG to provide the trucking arm that delivers ethanol from the production facilities to the Manly Terminal. Once the product has been brought to the terminal, it will be distributed across the country through rail interline agreements secured by the Iowa Northern Railway Company. Iowa Northern's line is adjacent to the Manly Terminal and connects with the entire North American rail network. Iowa Northern is offering direct tariff access to all major rail carriers. With multiple rail connections, the Manly Terminal can leverage the various combinations of freight routes to insure that ethanol customers are getting the lowest possible rate, to the best possible markets.
Unlike petroleum products such as oil and natural gas, ethanol cannot be distributed through pipelines due to its chemical makeup and attraction to water. As a result, ethanol moves from production to market by utilizing truck, rail and barge transportation services along with transload/storage facilities. The key to effectively manage the logistics of the ethanol industry is to coordinate this unique movement of product.
KAG Ethanol Logistics along with its partners in the Manly Terminal LLC have combined the synergies of multiple transportation services to enhance this infrastructure. As a starting point, the development or a common origin ethanol storage point began on October 27, 2006 with the ground breaking of a truck and rail transload, storage and trading terminal located in north- central Iowa.
"Today there are over twenty-five ethanol plants in operation or under construction with over two billion gallons of production that are less than one hundred miles from Manly, Iowa," stated Lee Kiewiet, President of Manly Terminal, LLC. "It is estimated that more than half of all ethanol production in the U.S. will be located within 300 miles of the Manly Terminal by end of 2009, making this location the ideal common origin point for the country's ethanol marketing and distribution," continued Mr. Kiewiet. Manly Terminal also provides sufficient storage that allows ethanol producers and marketers to consolidate volumes to capitalize on price fluctuations, and to trade and arbitrage ethanol, all contributing to improved margins. Other benefits will include rail car trip leasing, unit train economics and faster turn time on deployed rail assets.
"Visualize Manly Terminal as the 'hub' from which 'spokes' will run in every direction to supply the country's long-term ethanol needs," said Daniel Sabin, President of Iowa Northern Railway Company. "Our rail system of 'unit trains', consisting of 65 or more tank cars, is a faster, more efficient and economical way to ship ethanol than utilizing a few tank cars at a time. We want to remove every possible obstacle to fluid transportation of ethanol and related products," continued Mr. Sabin.
The federal government has mandated that by 2012, 7.5 billion gallons of ethanol must be blended with gasoline. The passage of the Energy Policy Act of 2005 and the continued commitment to ethanol by the Bush Administration and Congress are resulting in an unprecedented period of growth for the U.S. ethanol industry. With that growth come unique challenges such as the ability to quickly build the infrastructure needed to effectively and efficiently bring the product to market.
Finally, the overall logistics from ethanol production point to the final marketplace will be coordinated and managed by KAG Ethanol Logistics. The concept will provide the simplicity of a single invoice from producer to consumption point. By combining the various services of the partner companies, KAG Ethanol Logistics can provide the most cost effective, door-to- door delivery solution to the ethanol industry. KAG Ethanol Logistics is a division of KAG Logistics, a subsidiary of Kenan Advantage Group, Inc.
About KAG Logistics
KAG Logistics is the nation's first, fully- automated, end-to-end logistics services committed to the petroleum and related industries. The company focuses on optimal execution in the distribution supply chain for its customers. It utilizes latest technologies managed by highly trained personnel, fleet resources and advanced processes to provide premier value-added services.
SOURCE: KAG Logistics