Opportunities for cost mitigation and efficiency improvements through rationalization of small-diameter energy wood supply chains

Abstract

The production of energy wood from small-diameter (DBH < 9 cm) forests in Finland through separate energy wood and integrated energy wood and pulpwood production often face cost pressures that inhibit economic viability of many operations. Systemic factors, such as small stem sizes, limited removals, and high density of young forest stands limit the efficiency of many operations resulting in low productivity and high operating costs, particularly within cutting operations. Within the study, means to increase efficiency and mitigate costs of small-diameter energy wood and integrated energy wood and pulpwood operations by identifying optimal methods, technologies, and policy that may be applied were identified. Studies of integrated and delimbed stemwood cutting methods including the use of multi-tree handling and combined timber assortments in forest stands with stem size (DBH) of removals varying between 5-17 cm were investigated and compared against separate pulpwood production. Findings suggest that the methods provide increases in productivity and decreases in costs, particularly in < 11 cm DBH conditions. Crane scale measuring was investigated as a technical solution in timber logistics to be applied in energy wood and industrial roundwood procurement. The measuring method, used as a basis of payment, was found to provide a reliable, accurate, and cost effective method when compared with a manual timber pile measurement system. Policies, in the form of financial incentives were investigated to determine the effects of applicable subsidies on the profitability of energy wood production based on stem size of removal, finding possibilities for profitable operations with reduction in subsidies, however, with stem sizes (DBH) of removal 7 cm incentives played an important role in increasing profitability. Cost reductions were identified through: The utilization of integrated and delimbed stemwood harvesting methods with multi-tree handling, decreasing harvesting costs by 0.152.4% dependent on stem size (DBH) of removal between 7-17 cm when compared to a traditional pulpwood harvesting method; Combining timber assortments providing harvesting cost reductions between 1.5-8.0% between 5-17 cm; Crane scale measurement use provided increased accuracy and a 18.2-45.5% reduction in costs when compared to a manual timber pile measurement system when dependent on estimated working volumes between 20,000-30,000 m; Financial incentives under the PETU system were applied increasing profit margins of integrated supply chain operations by 3.8-19.9% dependent on stem size of removal, particularly with stem size of removals between 5-7 cm. Through rationalization of supply chains, harvesting methods, technologies, and policy which exhibit the ability to reduce costs and should be utilized throughout the whole supply chain where implementation is possible.