For American Carbonation Corporation Vice-President of Operations Daniel Koerner, each day presents a puzzle of how he will put the pieces of a broken supply chain together to keep customers provided with CO2. Amid increasing demand for CO2 and dry ice, Koerner and his American Carbonation colleagues have been contending with supply chain pains in the Northeast and CO2 shortages this year.
“Unfortunately, it’s [CO2 shortages] been the status quo since beginning of September,” Tim Koerner, Daniel’s brother and Owner of American Carbonation, told gasworld in the week leading up to Halloween, a busy time for dry ice demand. “We still have an allocation out to our customers, we are getting by but between the rail service and a lot of plants going up and down over the past few months it has just been really tough for supply for everyone. The problem is right now is supply. There’s no margin between supply and demand. If you have the supply go down, you’re looking for CO2 and you can’t get it anywhere, because there’s no where to go because there’s no back-up supply. Everything that is being produced is being sold. It’s been one of the worst supply shortages we have seen.”
Palmer, Massachusetts-based American Carbonation supplies liquid CO2, medical grade CO2 and related equipment and services to distributors as well as large industrial, chemical, beverage and food businesses. Its network of dry ice distributors stretches through Massachusetts, Connecticut, New York and New Jersey.
The family-run company is enjoying good business – that’s not the problem. The challenge is ensuring a regular, uninterrupted supply of product that is making Koerner’s job difficult as the Northeast has seen shortages in the availability of CO2 while demand from food home delivery has risen.
American Carbonation’s CO2 supply has been impacted by plants going down for maintenance as well as problems with the railroad in Canada.
“One of our supply plants that we buy from should be coming back in mid-November and we hope that will help us, and there’s another supply plant that should be coming back, so we hope those two plants coming back will make a difference,” Koerner said.
“But there’s still a big issue with the rail service up in Quebec, the Montreal corridor, it’s still ongoing and hasn’t changed much. It’s half our normal service we get there. I’m not sure when that’s going to change but at least if they are filling cars again, it might take longer but we will at least get our product again.”
Tim Koerner runs American Carbonation Corporation and American Dry Ice Corporation along with cousin Kerrie Dumont (President) and brother Daniel Koerner (VP of Operations), whose fathers (Robert and George) founded the company in 1984.
Through the company’s experience in the CO2 business down the decades, American Carbonation has kept customers happy by diversifying its sources.
“We’ve got a little bit of product from elsewhere,” Koerner said.
“We have a depot down in Pennsylvania, so we will go down there if we have to in order to deliver to our New England market. We are trying to get people by. We have told end users to slow down as much as they can during this time, especially the big producers. A lot of the end users have had to go out and get secure outside product just to get by. Some of the big guys have had to ship in product from elsewhere like Mississippi, Illinois and anywhere they can get it west of New York. It’s just a day-to-day thing, and it’s been a bit of a grind the last couple of months. I don’t know if the rail situation has anything to do with the labor shortage or the vaccine mandates, but it’s definitely not the normal service.”
Koerner says the Northeast has been contending with CO2 shortages since the first lockdown due to the coronavirus (Covid-19) pandemic. The US experienced CO2 shortages and concerns last year (May-October) after shutdowns to stop the spread of coronavirus resulted in a drop in ethanol production, and Koerner believes the CO2 is still being impacted by these shutdowns.
“You are always going to have shortages, the best way to plan is to diversify and pull supply from different sources,” Koerner said. “We have always tried to buy from as many partners as we can, so we do have a few different supply points and that helps us out when one or two plants go down. We pull from other sources and lean on them. But when it is the main suppliers up in Canada, that you are not getting the product from, it’s tough because that does supply a lot of the northeastern product.
“A lot of the shortage in the northeast goes back to March 2020 when the shutdowns first start happening with the pandemic. A lot of the ethanol plants across the country shut down straight away because the demand for gas and ethanol just went down. Of the ethanol plants that did come back, there was a big one in upstate New York, it supplied anything from 600-800 tons per day of CO2, and that has not ever come back since that shutdown. It’s been 20 months since that product has been gone. A major has had to rail in product from elsewhere and it has created a shortage overall in the market.”
The problem has been caused not only by plants going down, but by demand outpacing supply.
“Demand for dry ice and increase has been driven from vaccines, to home food delivery services likes Omaha Steaks, those went through the roof during that period as a lot of people were shipping with dry ice,” Koerner said. “Those are the two main drivers for demand. Pharmaceuticals are also using dry ice for other processes more and more. We haven’t really seen it drop off with food home delivery.”
American Carbonation, which along with American Dry Ice has 27 employees, has been built for a variety of customers then, serves a wide variety of customers in the food and beverage industry and beyond. As a bulk CO2 supplier, American Carbonation delivers into any tank size (four ton tank size up to 120 ton tank and any size in between. The family-owned company has always catered for small and medium sized customers, as well as large industrial, chemical, beverage and food businesses.
“We always pride ourselves on our customer service and our ability to communicate with the customer, to be pretty agile with them, and that’s one of our selling points over the majors that we offer that personal touch and customer service,” Koerner said.
“We have a mix of customers, from a little four ton guy that takes one or two deliveries a year, up to customers that have 100 ton tanks that take multiple loads per week for that tank.”
Tim, Daniel and Kerry took over the business in 2012 after working with their dads and learning about the industry.
In the last few years, electronic logging on the trucks has helped American Carbonation with deliveries and solar-powered telemetry units on customer tanks has also been a positive development especially with the bigger volume customers.
“During these shortage times when customers are running down low, we are constantly trying to spread out product to all customers, and telemetry does help us because we can see that they are down to 10% and we can set them up for deliveries and monitor it,” Koerner said.
“It has helped us a lot. Any new customers we pick up we just add it in as part of the tank lease if we are doing it. Right now we are at a pretty good point for volume, we are just looking to improve our supply chain and make sure we are not looking to add on too much more volume. We are trying to fine tune everything to make sure we are going to be a good supplier going forward for all of our customers.”