The rack system envisions that the hauling contractor will invest in industrial equipment needed for year-round operation. Because the hauling contractor is hauling year-round, they can a) afford to invest in higher capacity industrial-grade equipment designed for up to 5,000 hour/year (or more) operation, and b) their labor force will develop expertise at the operations, and the Mg handled per unit of equipment investment will be a maximum. These two factors together create the potential to minimize hauling cost ($/Mg).

3.4.1. Storage

The logistics system has three storage features. Round bale packages act as self-storage and protect the biomass. Rounded top sheds water, so the round bale can be left in the field for a short time before in-field hauling. This provides the advantage of uncoupling the harvest and in-field hauling operations, and thus provides an opportunity for improving the cost efficiency of both operations. The farmgate contract holder has the opportunity to bale when the weather is right and haul later.

The second storage features are the SSLs. These locations provide the needed transition between in-field hauling and highway hauling. The SSLs will be located so that the Mg-km parameter for each SSL will be not more than 4 km. This means that, averaged across all Mgs stored at that SSL, each Mg will be hauled less than 4 km from the production field to the SSL. This constraint gives the producer an upper bound for calculating in-field hauling cost and all farmgate contractors are treated the same relative to in-field hauling cost.

The third storage feature is the inventory in at-plant storage, which provides the needed feedstock buffer at the plant. Those building a bioenergy plant would like to operate with just-in-time (JIT) delivery of feedstock as this gives them the lowest cost for receiving facility operation. If JIT is not possible, they want the smallest at-plant inventory for cost effective operation. There is obviously a trade-off in the logistics system design between the higher cost to purchase JIT delivery, and the cost of at-plant storage operations.