Improvements in Trucking Efficiency Provides Win-Win for Forest Owner and Contractors

Crown Forestry's and Maori land owners' forests in the Far North (such as Parengarenga, adjacent to 90 Mile Beach, face the "tyranny of distance" more than most forests. During the peak of the diesel price last year, the cost of transporting logs to Marsden Point rose to just under $50/tonne (a distance of 261km). This sort of cost means the forest owner is left with little in the form of net stumpage revenue.

Under PF Olsen's management of Crown Forestry's Parengarenga cutting rights Carter Holt Harvey Wood Products purchases the majority of the harvested volume for its Laminated Veneer Mill at Marsden Point. In addition, some logs are exported via North Port (at Marsden Point also). That means a lot of logs (some 80,000 tonnes per year from this forest alone) travel long distances at high cost.

To look for improvements, PF Olsen and Crown Forestry met with Toll New Zealand (owner of the local log freight operator Kaitaia Transport Ltd). The nature of the meeting was refreshingly open, with all parties signing a confidentiality agreement to enable the books to be opened and to gain an understanding of each other's position.

"Admittedly, we were a little bit wary when Toll New Zealand (a large Australian-based freight forwarder) purchased Kaitaia Transport", said Peter Weblin, PF Olsen's Marketing Manager. "We had a preconception that they may operate like a heavy-handed corporate. We were pleased to be proved wrong. We found them to be very personable, professional and open to new ideas".

At the meeting Toll shared their analysis that showed some of their older trucks were not economic to run and they had to either replace them, or charge higher freight rates to stay profitable. Their preference was to get better utilisation of the high-performing trucks in the fleet and retire the older vehicles, without having to purchase new ones. Further discussions revealed that higher utilisation was restricted by the hours during which trucks could be loaded in the forest and unloaded at Marsden Point.

Toll then calculated an alternative freight rate based on being able to achieve the higher utilisation through double-shifting trucks.

It was then up to PF Olsen to ascertain the feasibility and cost of providing the extended loading and unloading hours and prove a business case for the change.

The final agreed solution can be summarised as follows:

  • Double-shift five trucks per day to Marsden Point - total of 10 loads per day.
  • Load out from the forest from 5am each morning.
  • Drivers changed at Toll depot for an afternoon run.
  • Second shift trucks loaded in forest between 3:30pm and 5:30pm depending on what sort of a run the morning trucks had.
  • Unloading hours at Marsden Point extended until 11pm.
  • The double-shifted loads are isolated in PF Olsen's WoodTrack system and paid at a lower double-shifting rate (9.6% below the standard rate).

To extend the loading hours the logging contractor, Herb Adams, is paid an additional rate for the full month's volume.

To extend the unloading hours at Marsden Point there is an additional charge for longer attendance of a loader driver.

The net effect of this initiative is a net saving of around $12,000 per month. This is a welcome benefit for net stumpages that struggle with such long distances from forest to market. "As the forest owner, we commend the initiative that Bob Shirley, PF Olsen's Kaitaia Branch Manager has shown in sensing the opportunity and then leading the process and working with us and with Toll in bringing this prospect to fruition", said Warwick Foran, Crown Forestry's National Manager of Operations. "In these difficult times it is extra important that forest management companies are focused on forest owners' bottom lines."

This shows what can be achieved when parties are prepared to understand each other's situations and work openly and cooperatively together. PF Olsen would like to thank Adams Logging, Toll New Zealand, Crown Forestry and Carter Holt Harvey Wood Products for all working together to make this initiative become a reality.

One of Toll Kaitaia's trucks fully loaded and ready to take Parengarenga logs to market.