Sourcing Strategy for Asphalt Production Feedstock Considering Multimodal Transport Options

Abstract

This paper examines the logistics and distribution channels for importing heavy crude oil, which is a source of bitumen. The study conducts a sensitivity analysis to assess the suitability of existing or new distillery locations based on the available transportation modes and carrier options. The model accommodates rate changes based on multimodal shipping rates, import taxes, and other factors to assess the effects on total cost, schedule, and risks. Although a strategic location near direct pipeline options using existing facilities could yield the least transportation cost, the lack of pipeline capacity with increasing demand and delays in building additional capacity weighs heavily against pipeline options. The analysis points to multimodal shipments via ocean vessels and pipelines as the least-cost solution for a proposed strategic location for the distillery, but other factors such as strained international relationships make them less attractive. Depending on the selected refinery location, the analysis found that railroad options present a viable alternative and could potentially lead to the best overall logistical solution for obtaining asphalt production feedstock.