Evaluating Profitability of Individual Timber Deliveries in the US South

Joseph L Conrad

doi:10.3390/f12040437

Abstract

Timber transportation is an essential and often unprofitable segment of the wood supply chain. This study evaluated the profitability of individual timber deliveries for log truck owners in the US South. Origin and destination data were collected from 909 deliveries from 257 harvest sites. Travel time and distance were estimated using ArcGIS and GPS tracking. Monte Carlo Simulation was used to calculate 1000 unique combinations of payload, harvest site turn-time, mill turn-time, and percent-loaded km, yielding a dataset of 909,000 deliveries. Hauling costs and revenues for each delivery were estimated using published estimates. Driver wages were estimated in two ways: an hourly wage of $30.60 (USD) and 30% of the gross revenue from the load being delivered. Logistic regression was used to evaluate the relationship between six dependent variables and profitability. Only 14% of deliveries were profitable when the driver was paid an hourly wage versus 42% when the driver was paid 30% of gross revenue. Deliveries with one-way haul distances between 49 and 113 km (31–70 mi) were least likely to be profitable. Many deliveries could be profitable if logging businesses and mills reduced turn-times to under 20 min at mills and 30 min at harvest sites.

Highlights

Forestry and the forest products industry are responsible for approximately 2% of gross regional product and over one million jobs in the US South [1]
This study demonstrated how difficult it is to deliver timber profitably under market haul rates, existing forest industry and logging industry practices, and current state gross vehicle weight limits
There are solutions that can improve the profitability of timber transportation over the short and long terms

Summary

Introduction

Forestry and the forest products industry are responsible for approximately 2% of gross regional product and over one million jobs in the US South [1]. The region’s wood supply chain consists of landowners, foresters, logging businesses, and mills. The movement of timber from forests to mills in the US South involves multiple independent businesses, each with the opportunity for profit or loss. The timber may be purchased by an independent timber buyer (most common), often referred to as a “wood dealer” or “supplier” [5]; a logging business; or purchased directly by a mill (least common) [6]. Mills pay the timber buyer a “delivered price” for timber that is harvested and delivered to a mill. The timber buyer generally negotiates the delivered price so that it covers the stumpage price paid to the landowner, the cost of harvesting the timber, the cost of transporting timber to the mill, and profit to the timber buyer. Transactions between landowners, timber buyers, logging businesses, and mills are heterogeneous and so other arrangements are possible

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