ful l -service providers

IX/HAT is a successful full-service lumber transportaV Y tion provider? What distinguishes it from a typical lumber reload?

Obviously, significant amounts of lumber are produced in remote regions of Canada and the U.S. Traditionally, mills are located close to timber supply. If the mill is not served directly by rail, production must be trucked to a rail head to ship to the marketplace. This is needed because lumber transportation is still cheapest by rail, particularly in specially designed "centerbeam" railcars or flatcars.

Basically, a reload unloads a truck and then reloads the lumber onto a railcar. This type of operation is typically called an "origin" reload. Once the railcar completes its journey, it is unloaded at a "destination" reload, where it then completes its journey to the customer by truck.

A reload may be little more than an unpaved yard accessed by a road and rail spur, manned by a small crew operating a couple of forklifts. Usually, these reloads operate on a fee-for-service basis charging per MFBM loaded or unloaded. They satisfy producers and buyers who arange their own truck transport to the reload, negotiate with rail lines for rates and car supply, prepare their own documentation, time the market appropriately, and arrange for additional services such as labeling and barcoding. However, producers and buyers who want to focus on their core competencies may look to full-service transportation providers.

Several factors distinguish the full-service provider from the typical reload, including freight booking and negotiating expertise, close relationships with core rail and trucking providers, control of railcar and truck supply, strategic locations accessible to road and rail, modern computer and inventory systems, and dedicated crews to load and unload.

The first step in building a successful lumber transportation operation is identifying strategic locations or reloads that offer the best combination of rail and road access to mills and rail access to the marketplace. An origin reload is based close to supply while a destination reload is near the market. Each type of reload operates in a similar, yet opposite fashion. The processes are the same, yet an origin reload generally unloads trucks and loads railcars while a destination reload unloads railcars and then loads trucks.

Designing either type of reload is relatively simple if there's an abundance of space. A rectangular yard would accommodate a rail spur running down the center of the yard, capable of spotting a number of railcars that can be loaded or unloaded from either side. Truck access lanes run the length of each side of the spur, crossing it at one end. Inbound trucks can be tallied immediately upon enter- ing the yard and then directed to specific inventory locations for unloading. It is critical at this stage to ensure all lumber packages are labeled for easy identification. If not, labels are produced and affixed to the packages during the manual tally process. Lumber is unloaded and stored around the perimeter of the spur, allowing easy access to forklifts and the rail spur itself. Unloaded trucks then cross the spur and exit the yard on the other side. Similarly, outbound trucks enter the yard empty and are directed to a specific location in the yard for loading. Loaded trucks then exit on the other side of the spur, subject to a final tally and documentation immediately prior to exit.

If the reload handles weather-sensitive products such as OSB or MDF, a portion of the rail spur should be aligned with a dock of appropriate height to permit boxcar loading. Today, moving lumber by boxcar is relatively inefficient since they carry less and are more difficult to load than custom-designed centerbeam railcars, so they are generally used only for weather-sensitive products. Shipping weather-sensitive product also requires covered warehouse space for pre-shipment storage. The warehouse should directly access the dock and provide sheltered inbound unloading.

The facility should be fenced and well lit for night-time operation. It is often necessary that truck unloading and railcar loading be scheduled to allow the most efficient use of manpower and forklift equipment thereby accommodating the timing of the railcar switch (when railcars are pulled into and out of the yard each day). Scheduling can be critical because long lines of trucks waiting to be unloaded can be disastrous for customer relations. Often it is necessary to unload trucks during one shift, then divert all resources to loading cars on another shift, prior to the railcar switch.

Paving the facility and installing adequate drainage is far more than a luxury. ln unpaved yards, product becomes dirty and lumber stacks must be lower and can topple on uneven ground. Uneven, wet ground is very hard on forklifts and trucks, both for traction and maintenance.

If designed to these basic specifications, the reload facility is well suited for handling lumber products. However, at this point the facility is only as good as its railcar supply. Usually, railcars are ordered by the reload and delivered on scheduled switches each day. Loaded cars are pulled from the yard, inspected by railway company crews for "railworthiness" in accordance with AAR standards, and empty cars are then switched into the yard for loading.

Railcar supply depends entirely upon lumber demand. At peak periods-and during merger-mania in the late '9Os-the railways frequently could not deliver sufficient railcars to meet demand, leaving shippers stranded and fiustrated. To mitigate this problem, many reloads own or lease their own private fleets, which they then rent back to the railways. The private fleets are reverse routed, leaving the reload loaded and returning empty several weeks later. Reloads with private fleets control a portion of their railcar supply, positioning them to provide more reliable service.

The most common types of specialized lumber-carrying railcars are 60', 73' and 8l' centerbeams with capacities of about 94 MFBM, I l2 N,tper4 and 125 MFBM respectively. Although less efficient, the railways also provide 50', 52' and 66' bulkheads and boxcars. These durable cars are more likely to become obsolete before wearing out. For instance, new prototype 73' centerbeams with dropped wells capable of carrying 130 NapsN,{ are currently being tested and may set the next standard for lumber carrying.

The transportation provider will work closely with the railways to market their rates and services. In many cases, the reloader is closer to the market and provides valuable information and access to existing and potential customers. Furthermore, the reloader can work with the railway and the customer to access new markets for their product. By providing volume-based freight rates or other incentives such as rebates and capital assistance, the reloader can pass these benefits on to customers.

The full-service transloader must also work closely with trucking companies. The keys of successful trucking are control over trucking supply to ensure that pick-ups and deliveries occur as scheduled and that rates are competitive.

Company-owned trucks can virtually guarantee reliable service to locations that may not be competitively serviced by independent contractors; however, the reloader does assume additional financial risk and administrative overhead by investing in and managing its own truck fleet.

Another valuable service is the ability to hold customer inventory and to ship as required. Maintaining inventory positions at reloads is increasing in popularity, to the point where shipping from inventory is surpassing the traditional business of "hot loading," "back-to-back," or "cross-dock" shipments, where product is loaded directly from truck to railcar and vice-versa.

Providing the inventory service does not stop at unloading and stacking product in the reload. Full-service providers may implement inventory systems to report detailed on-hand inventory statistics and provide customer access to this information via the Internet or by modem. Working with the customer, sales systems can be developed and integrated with inventory systems allowing the customer to book and track future deliveries and shipping commitments using the reload's software and databases.

Other value-added programs include wrapping, rewrapping, labeling, barcoding, resorting or pulling packages to length, half-packing, trimming product, and limited remanufacturing. It can be more economical for such services to occur at the reload, especially for wholesalers that do not own their own manufacturing facilities, or producers that are constrained by production limitations.

The typical reload is only one component of a successful ful l-service transportation operation.

Rnlrrms

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G e o rg ia- Pac ific' s consumer products business filed with the Securities & Exchange Commission to raise $1 billion in an initial public offering; separating it from its building products unit, which would continue to be run by G-P and would likely retain a$bestos liability...

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