Like many entrepreneurs, Nathan Frankel sees money where others see nothing. In the last five years, he has built a $15-million-a-year business selling scrap metal from abandoned appliances, assembly line discards and used car parts.
So when Chinese companies offered to pay a 30% premium a few years ago for scrap to feed their booming factories, Frankel jumped at the opportunity. But loading bulky metal pieces into shipping containers was time-consuming and difficult to do without damaging the containers. So Frankel, the 31-year-old president of Fontana-based Advanced Steel Recovery, developed a machine that can fill a container with scrap metal in less than 15 minutes, compared with four hours with a backhoe. In addition to reducing labor costs, the machine significantly reduced potential container damage.
If successful, Frankel's machine could revolutionize the overseas transport of scrap metal. Scrap and other lower-value bulk products such as waste paper and farm products traditionally have been loaded directly into giant "break-bulk" ships that carry 40,000 tons of material. Containerized shipping offers the potential of significant cost savings.
Greater use of containers also would alleviate a big headache: the pileup of empty containers on U.S. shores, the result of China shipping more products here than the U.S. sends back.
Officials at the ports of Los Angeles and Long Beach estimate that they shipped more than 1.2 million empty containers to China last year.
By taking advantage of low U.S.-to-China container rates, Frankel said he could ship scrap to China for half the cost of traditional methods: $10 to $25 a metric ton, versus about $40 at the break-bulk rate.
"I'm getting to take advantage of economies of scale. The other guy who is loading manually can't do that," said Frankel, a classically trained violinist who followed his father into the scrap business five years ago.
He thinks his machine also could load other bulk commodities, such as agricultural goods and waste paper, into containers.
The Frankel Advanced Shipping Technologies machine, known as FASTek, isn't being sold commercially yet. Since Frankel began operating the device at his Fontana scrap yard, he has shipped 400 containers to South Korea and China. He hopes to have a second unit in place by September. Mechtronic Solutions Inc., an Albuquerque-based firm specializing in prototype development, manufactured the machine.
