Usd Partners Lp's

The energy-related logistics infrastructure business is highly competitive. The ability to secure additional agreements for rail terminalling and railcar fleet services is primarily based on the reputation, efficiency, flexibility, location, market economics and reliability of the services provided and pricing for those services.

Our Hardisty and Casper terminals face competition from other logistics services providers, such as pipelines and other terminalling service providers. In addition, our customers may also choose to construct or acquire their own terminalling assets. If our customers choose to ship crude oil via alternative means, we may only receive the minimum monthly commitment fees at our Hardisty and Casper terminals. Our San Antonio and West Colton terminals face competition from other terminals and trucks that may be able to supply end-user markets with ethanol and other biofuels on a more competitive basis due to terminal location, price, versatility or services provided. Both of our ethanol terminals are served by the UP. In the Southern California market, we compete directly with ethanol facilities in the Fontana, Carson and San Diego areas, which are served by the BNSF. A combination of rail freight and trucking economics, which comprise the largest share of the value chain, make it very difficult to compete with other facilities in this market based on terminalling throughput fees alone. In the San Antonio market, we also compete with a facility served by the BNSF, although our facility, which is served by the UP, is closer to the San Antonio metro area, which typically results in advantaged trucking rates for certain end-user customers. Our San Antonio terminal may also face competition from a proposed new ethanol terminalling facility near Austin, Texas, by the current customer of our San Antonio terminal, which they expect will be operational by December 2016.

Our railcar fleet services face competition from other providers of railcars. This competition may limit our ability to increase the number of railcars under contract, and thus, limit our ability to increase our revenues. However, we believe our relationships with leaders in the railcar supply industry such as CIT Rail, Union Tank Car Company and Trinity Industries, will enable us to continue procuring railcars on advantageous terms.

We believe that we are favorably positioned to compete in our industry due to the strategic location of our terminals, quality of service provided at our terminals, independent strategy, our reputation and industry relationships, and the quality, versatility and complementary nature of our services. The competitiveness of our service offerings could be significantly impacted by the entry of new competitors into the markets in which we operate. However, we believe that significant barriers to entry exist in the energy-related logistics business. These barriers include significant costs and execution risk, a lengthy permitting and development cycle, financing challenges, shortage of personnel with the requisite expertise, and a finite number of sites suitable for development.