The logistics chain from forest road to customer

A sawmill's logistics is not a single department. It is a chain of handovers: forest road to truck, truck to log yard, log yard to saw line, sawn timber to drying yard or kiln, kiln to packing, packing to carrier, carrier to customer. At each handover someone measures something, someone takes risk, and someone writes a document. Most disputes and most hidden costs sit in those handovers, not on the road itself.

Seven handovers

1. Purchase and measurement: what volume and quality was bought, and by which rule.
2. Haulage to the mill: who carries, who bears loss or mixing of lots.
3. Receiving and sorting: where the batch is measured, graded and given an identifier.
4. Log storage: dry, debarked, wet or sprinkled, each with a time limit.
5. Sawn timber yard: stacking, air drying, covering, waiting for the kiln.
6. Packing and dispatch: pack size, wrapping, pallets, marks, documents.
7. Delivery and acceptance: the Incoterm, the transit risk, inspection and claims.

Why logistics deserves its own cost line

In the portal's invented economics example (not data from any real mill), outbound logistics and packaging are 8 euro per m3 of sawn timber out of a total variable cost of 229 euro, and the result before tax is 2 euro per m3. Logistics is small beside the log cost of 200 euro per m3 sawn, but the margin is also small: a 4 euro rise in the logistics line (about 1.5% of the 260 euro sawn price) would turn the 2 euro profit into a 2 euro loss. Lesson 7 works this through.

Real data show the same proportions. A 2024 Polish study of pine pallet lumber reports transport costs of 28 to 38 PLN per m3 over 2019 to 2023, against average prices between 442.5 and 1,225.0 PLN per m3. Own calculation: 38 PLN is 3.1% of the 2022 price of 1,225 PLN, but 38 PLN would be 5.0% of the 2021 price of 757.5 PLN, and 28 PLN would be 6.3% of the 2019 price of 442.5 PLN. The share is not stable because the price moves, not the freight. The paper does not say what the transport cost covers (logs, lumber or both), so read the figures as an order of magnitude only.

A life-cycle study of two New Brunswick hardwood mills (reference year 2022) assumed logs travel on average 118 km one way by diesel truck, equal to 104 tonne-kilometres per cubic metre of lumber. In that study log transport was 9.8 kg CO2-equivalent of a total of about 41 kg per m3 of rough green lumber, and 18% of the primary energy demand of 736 MJ per m3. Own calculation: 9.8 / 41 is about 24%. The sample is small (one logging company, two mills), so treat it as an example of where the burden falls, not a benchmark for European mills.

Three kinds of risk in the chain

• Quantity risk: the volume paid for is not the volume received, usually because two parties measured differently. Lesson 2.
• Condition risk: the wood changes while waiting, through stain, decay, cracking or re-wetting. Lessons 4, 5 and 6.
• Paper risk: the goods are fine but a certificate, mark or number is wrong. Lessons 3 and 6.

Transport shocks move markets

A 2020 to 2022 study of Canadian lumber prices found that a November 2021 flood that disrupted rail and road links from British Columbia moved prices more than the pandemic in the authors' event regressions (the paper has date and sign inconsistencies, so check the original before quoting numbers). The mechanism matters: when a transport link breaks, supply is cut off from the market although the sawmills are running. Canadian pellet mills in the pandemic surveys reported more transport disruption in British Columbia than elsewhere. A second route, a second carrier or some flexible stock is part of commercial planning.

What the mill controls

A mill cannot set log prices, sawn prices or fuel prices. It can control the following, and these are the topics of the next six lessons:

• the measurement rule and place written into the log contract;
• the sorting and identification of every lot;
• how long wood waits, and in what condition;
• how a pack is built, wrapped and marked;
• which Incoterm and documents go with each sale;
• the stock held between steps, which ties up cash.

Key points

• Logistics is a chain of handovers; claims and hidden costs cluster there.
• Outbound logistics can be small per cubic metre and still decisive when margins are thin (invented example: 8 euro against a 2 euro result).
• Classify every problem as quantity, condition or paper risk.
• Transport shocks, such as the 2021 British Columbia floods, can move prices and justify backup routes and flexible stock.
• Treat figures from single studies as orders of magnitude, not benchmarks.