Optimization of coal logistics for DTEK

Logistics is the lifeblood of the coal industry, ensuring the smooth transportation of coal from mines to power plants. That is why even minor deviations in coal quality (NCV, ash content, moisture content, sulfur content) from the technical requirements of power plants, as well as inefficient management of rolling stock (railcars), can lead to significant financial losses and reduced profitability. Traditional logistics models are often unable to take all these nuances into account, leading to suboptimal use of resources and increased costs.

For example, the available fleet of semi-cars is distributed among loading stations manually, based on data on the availability of empty rolling stock on specific days. The cost of transportation is partially taken into account when distributing cars, at the stage of agreeing on the terms of the contract. In the event of a deviation in coal quality from the operational plan, changes in the directions of coal shipment in terms of recipients are determined manually, and the factor of optimal logistics costs is partially taken into account.

Decision

To address this challenge, MODUS X developed and implemented an innovative coal supply process optimization model for the DTEK Group. This model takes into account coal quality and the distribution of rolling stock. It has become a true breakthrough, combining advanced technologies and analytical tools to maximize efficiency and ensure the stable operation of Ukraine’s energy system during wartime.

The model offers:

• An automated tool (advanced analytics algorithm) for selecting the most cost-effective railcar owner for each route in real time
• Daily transport planning/plan updates, based on sales forecasts and real-time coal quality predictions, including the optimal railcar owner by cost
• A user-friendly interface for generating dispatch orders (for both run-of-mine coal and concentrate), in line with the optimization model’s recommendations

In addition, the model automates the wagon allocation process, factoring in demand, availability, and transportation cost, while minimizing empty mileage.

“This model is not just a software product — it’s the result of deep business insight and cutting-edge technology. We’re proud that our team created a solution that helped DTEK save over UAH 21.3 million in the first 10 months of operation and significantly improve logistics efficiency,”
— said Valentyn Vyntu, Chief Data Officer at MODUS X.

To ensure accuracy and effective optimization, the tool uses a wide range of input data, such as:

• Wagon data: detailed records on loaded, empty, and available wagons; their types (open wagons, hoppers); current location; and technical condition
• Coal quality: comprehensive data from each mine, including key indicators such as ash content, moisture, sulfur levels, and calorific value. Forecasts of coal quality are also factored in to enable more accurate planning
• Mine throughput: data on coal production volumes at each mine, enabling optimal wagon loading and supply planning based on production capacity
• Unloading constraints: data on the capacity and operating schedules of unloading terminals at power plants to avoid congestion and ensure timely deliveries
• Other logistical constraints: including power plant storage capacity, routing regulations, train speed restrictions, and more — all of which help prevent unforeseen disruptions and ensure logistics efficiency

Optimization algorithm

The model is based on a powerful optimization algorithm that includes graph optimization algorithms and nonlinear optimization methods. This algorithm processes a huge array of input data and constraints to find the optimal solution for the distribution of coal and rolling stock. It takes into account many factors, such as the distance between mines and power plants, the cost of transportation by various modes of transport, the throughput capacity of railways, the technical requirements of power plants for coal quality, and other constraints.

Integration with other systems

The model is integrated with SAP and H-Trans accounting systems, allowing it to work with up-to-date data in real time and ensuring high accuracy of forecasts and optimization, as well as enabling quick response to changes in logistics conditions.

Model tools

“Green Schedule”

This tool allows you to create an operational schedule for shipments, taking into account the optimized distribution of railcars and coal. It ensures maximum efficiency and minimizes the risk of delays and downtime by visualizing the entire process of coal shipment and transportation.

Advanced interface

The solution interface is an important tool for analyzing and managing logistics processes. It allows you to visualize data, receive recommendations on the distribution of railcars and coal, and track the efficiency of logistics operations in real time.

Key outcomes and impacts of the project:

A modern interface has been developed and launched into industrial operation, allowing users to work with the optimization model, visualize data, and receive recommendations on coal and wagon distribution.

The effectiveness of the optimization model was validated using historical data from 2018 and 2019.

Key achievements:

• Achieved a 1.34% cost reduction in the run-of-mine coal transportation budget — totaling UAH 21.3 million in savings during the first 10 months of operation
• Optimized routing, leading to annual logistics cost savings of UAH 32 million
• Optimized coal quality, resulting in annual fuel cost reductions of UAH 64 million
• Automated wagon distribution processes, significantly increasing operational efficiency

The implementation of this coal supply process optimization model — which factors in both coal quality and rolling stock allocation — by the MODUS X data management team has become a strategic solution. It has enabled more efficient resource utilization and enhanced DTEK’s competitiveness. The tool accounts for coal quality variation and ensures efficient use of rolling stock in logistics planning.