MEETING SUPPLY CHAIN CHALLENGES…to move that lumber

Some forest companies are successfully addressing supply chain challenges with transportation management system technology.

By Tony Kryzanowski

North American forest companies saw a strange occurrence during the recent two-year, COVID-19 pandemic.

At the start of the pandemic, many major forest companies readily admit that they were expecting a severe downturn in lumber demand. But the exact opposite unexpectedly occurred.

With more people stuck at home, home building product suppliers suddenly experienced a spike in demand because consumers had time to consider and execute home renovation projects.

Since forest companies were allowed to continue to operate their sawmills—under strict internal COVID protocols—and ship product both across the Canadian border and all around North America, complemented by big box stores like Home Depot and Lowe’s being designated as essential, the remodeling and renovation side of lumber demand took off. Housing construction also increased, right across North America.

Hampton Lumber, with two sawmills in British Columbia, is one of the top 10 lumber producers in North America. As such, lumber transportation is a primary concern. The company is finding that its new IntelliTrans Transportation Management System has significantly streamlined shipping by truck.

At the same time, lumber prices spiked to near record highs. High lumber prices and greater demand were the upside of the pandemic for the forestry sector. The downside was the strains and disruptions to the supply chain between sawmills and their customers.

Disruptions in containerized traffic on the ocean, by rail and by truck, have been the result—all were severely impacted during and since the end of the pandemic. It exacerbated challenges that already existed, such as truck transportation issues due to a shortage of drivers. The Forest Products Association of Canada (FPAC) estimated in March that there were nearly 23,000 trucking job vacancies across Canada.

Lumber producers like Hampton Lumber and Interfor, both with operations in Canada, realized that their old transportation management systems (TMS) weren’t nimble enough to function well in this volatile transportation environment. Their shipping systems were still manual, extremely time consuming, reactive and stressful. So they began to investigate systems that were more automated, more agile to be able to respond to transportation opportunities as they arose, more integrated throughout their entire companies, able to reduce wait times for arrivals and deliveries, and fundamentally deliver transportation efficiencies that in some cases also delivered significant financial returns.

After reviewing their options, both settled on IntelliTrans TMS products.

Hampton Lumber implemented the IntelliTrans Carrierpoint TMS program specifically to manage their truck transportation system.

The company has nine sawmills in British Columbia, Oregon and Washington, producing more than two billion board feet of lumber annually for domestic and international markets. It is one of the top 10 lumber producers in North America. Their Canadian sawmills are the Decker and Babine sawmills in Burns Lake. Most truck transportation from these sawmills serves the regional market while the majority of lumber they produce is shipped to U.S. markets by rail.

With sawmill production at full throttle, companies like Hampton Lumber and Interfor have also modernized their shipping methods to both expand the number of carriers they use and also to plan shipping more strategically to take advantage of lower shipping rates or to delay shipping till rates come down.

Dan Weaver, Trucking and Strategic Manager for Hampton Lumber, says that prior to the pandemic, they were already challenged, from a truck transportation management perspective, both coming and going. Company-wide, they were feeling the effects of a shortage of truck drivers as well as equipment delivery disruptions to their sawmills because of such barriers as U.S. tariffs on products shipped from China. These challenges only became worse during and after the pandemic.

Before installation of the IntelliTrans Carrierpoint TMS, Hampton Lumber operated their shipping similar to many other forest companies, with a load board on their website that truckers and trucking companies used to access and bid on deliveries.

“A lot of it was push dispatching,” he says. “So we were making a lot of phone calls, sending lists out and doing everything pretty much manually through email. We just couldn’t do that anymore … we were really hand-holding every transaction. We couldn’t come up with enough bodies to handle everything.”

The company realized that it needed to start leveraging the advantages of technology offered by the variety of TMS programs available and evaluated as many as four different options.

Once they chose IntelliTrans Carrierpoint, it was rolled out to all operations at the same time. It took just over a year for it to be implemented as their truck transportation system and a little longer for both the company and their shippers to understand its full capabilities while they became comfortable with it.

Now, about 90 percent of Hampton Lumber’s truck loads are handled through Carrierpoint.

Weaver says that one advantage that Carrierpoint has delivered is providing immediate feedback when transportation costs have ‘corrected’, meaning that through quick action, Hampton could ship lumber loads by truck more cheaply. Conversely, it also allows the company to time its shipping better, waiting for cheaper options when shipping prices are high because of tight demand.

Implementing the system has also allowed Hampton Lumber to implement an auto-pay system with trucking companies. Essentially, once the system receives delivery confirmation, payment is automatic. This has been a motivating factor to encourage their regular carriers to participate in Carrierpoint.

Weaver says that Hampton Lumber has realized many other benefits as well.

First, every delivery order posted by Hampton on its Carrierpoint TMS portal is available for review by hundreds of carriers, providing the company with many more shipping options. They have been able to add many new carriers because of the system, which has become critical in today’s truck transportation market.

Second, the system is transparent so that when Hampton selects a bid, the carrier books a pick-up appointment, and it is clear to everyone exactly when that load will be picked up.

“Before Carrierpoint, tracking pick-ups used to be much more manual,” Weaver says, typically handled on spreadsheets at the individual mill level.

However, Hampton Lumber has not taken an ‘all or nothing’ approach to working with its carriers, some of whom have indicated that they don’t have the time or ability to hook into Carrierpoint. So the company has been flexible, realizing that they need all carriers on board to make its deliveries. While they use all sorts of incentives for carriers to link into Carrierpoint, such as the auto-pay benefit, they continue to use alternative methods to work with all carriers. The delivery information is still generated within the Carrierpoint TMS, but it is just shared with carriers not on the system differently, perhaps through an email.

Carrierpoint TMS also helps Hampton Lumber plan shipments more strategically in response to consumption trends, such as the typical lumber treater demand uptick in the spring or something like supplying a large apartment complex construction project.

“That’s also one of the benefits of the system. That surge of lumber demand all comes into the system, it’s sortable, it’s easy to review what transportation rates we’ve experienced in the past, and who made the deliveries,” says Weaver. “You just have a lot of history right there to review.”

In terms of capital outlay, he says that most of their investment to implement the system was in human capital, to train employees on how to get the most out of Carrierpoint. Overall, he estimates the system itself cost the company probably under a million dollars. It’s also an investment in the future, as it complements the tech savvy skills of the next wave of truckers and truck companies entering the industry.

Major North American lumber producer Interfor, based in Vancouver, also incorporated IntelliTrans products into their transportation system. At the time of implementation, the lumber producer had 16 sawmills in Canada and the United States. They exported 25 per cent of their products worldwide and counted both Home Depot and Lowe’s as customers. Since this implementation, the company has expanded significantly, with the purchase of sawmills owned by EACOM in Eastern Canada.

Interfor implemented the IntelliTrans Carrierpoint TMS as well as the IntelliTrans supply chain visibility platform.

Like many forest companies, Hampton Lumber and Interfor were surprised by the uptick in lumber demand during the pandemic. They ramped up production but also invested in IntelliTrans transportation management products to replace their manual transportation management systems.

For Interfor, the IntelliTrans technology proved especially vital during the early stages of the global pandemic when uncertainty was roiling the various transportation modes that the company depended on to get its products to market.

“We were very pleased to have the TMS in place when COVID-19 hit,” said Craig Dohm, Vice-President of Logistics for Interfor. He oversees a team that manages all of the organization’s supply chain and transportation needs.

“It (TMS) definitely helped us manage the situation more proactively and efficiently,” he added. “Using our TMS, we were able to find some additional capacity that would have taken us quite a bit more time and effort to find with our previous manual systems.”

Furthermore, with its new supply chain management platform in place, Interfor has been able to gain efficiencies and give its logistics team members more time back in their busy work days.

“We’re always asking more of our associates, so the less time they have to spend cutting and pasting out of Excel spreadsheets, the better,” Dohm said. “Now, they can focus on the strategic side of the business.”

In terms of savings by implementing the IntelliTrans TMS, a case study revealed that one company saved $3.65 million annually. Its supply chain visibility platform saved them $5 million. Implementing bill audit and pay services as part of the IntelliTrans system has provided savings of another $4.8 million and reduced demurrage costs by 23 per cent.

In addition to the solutions mentioned above, IntelliTrans TMS covers rail, truck, and ocean containerized freight, and its Visibility offering covers rail, truck, ocean containerized freight, and barge shipments.