Transportation problems of the 198Os

By James G. Manning Director, Transportation Services Western Wood Products Association

THE TITLE given my address I for this conference was Transportation Problems of the '80s. That isn't a very positive title, but using the past as a roadmap to see into the future, this industry is gearing up for tougher times.

But I'm retitlins mv address to read Transportati6n Opportunities of the '80f. Being invbived in association work for the past 33 years, I've come to realize that the only way one can deal effectively with any problem is to approach it in a positive manner and then turn what appears to be a very negative situation into an opportunity. Believe me, we've a number of "big" opportunities ahead of us.

Let me start by briefly outlining the role the western lumber industry plays in the economy of the West.

Annual western softwood lumber production averages l8 to 19 billion b. f. Using 50,000 b. f. as an average carload volume, we produce and ship approximately 370,000 cars per year. These figures do not include the thousands of carloads of other forest products produced in the region such as plywood, particle board, shakes and shingles, posts, poles and piling. Although I'm discussing lumber production, these other forest products have similar transportation characteristics and face the same problems.

Markets for western lumber have undergone some significant changes in the past few years and much of the change can be attributed to transportation factors. In my years in the industry. I have witni:sied the decline iri our intercoastal water shipments from l7z billion b. f. annually in post-World War II years to nothing today. This was a direct result of the provisions of the Jones Act mandating U. S. products shipped by water to U. S. markets must go by American flag ships. That made it impossible for our mills to compete with British Columbia and their freight rate advantage.

From the U. S. West, we ship approximately 95Vo of our production within the 50 states. The other 5Vo is exported. I will be discussing primarily the domestic transporation srtuatlon.

In 1969, 8.9Vo of western lumber was shipped to the Northeast compared to 4.6Vo today. 35.67o went to the North Central states versus l8.5%o today. All of these markets have been cut in half. In the South we shipped lTVo in 1969 compared to l3.2Vo today.

Meanwhile,-shipments to the West have increased from 38Vo in 1969 to 64Vo today, almost 12 billion b. f.

Some interesting things have been taking place in the transportation mix during the past years. Let me illustrate:

In 1967 the railroads handled 74.87o of our business and trucks 2l .7Vo.

Today the rail's share has declined to 49.2Vo, trucks have increased to 48.6Vo. This diversion has been dramatic. Waterborne shipments, principally to California, have remained stable, about 2-3Vo cally a back-haul item for most of the motor carriers we utilize.

This,in effect, means that the railroads also suffered a comparable diversion of westbound steel and machinery hauls that comprise the principal items that our motor carriers bring West. In other words, they've been suffering a sort of selfinflicted double indemnity.

To be rather blunt ab<iut the situation, the nation's railroads have not been responding to the western lumber industry's needs which is leadine to their own demise. But the molor carriers have prospered.

The culprit: higher freight rates.

The railroads have continued to use the general percentage freight rate increase method to offset their increased costs due to inflation. This method of ratemaking is ruinous to the long haul shipper which includes those who ship western lumber. With each successive increase. and

Story at a Glance

Changes must come from within the transportation industry, legislation alone is a poor solution... how the transportation mix has changed in the West. the railroad's failure to respond to industry needs.

there have been at least 20 since Nov., 1970, accumulating a grand increase of 1507o, western lumber becomes less competitive with lumber moving from the southern U. S. and eastern Canada.

presented by Jim Manning at a Portland, Oregon Chamber of Commercc seminar on transportation problems held earlier this year-ed.

The l20%o increase in truck shipments is the equivalent of approximately 90- 100,000 carloads annually. Consequently, the revenue loss to the railroads from this diversion is stasgering. particularly when you realiie that our lumber shipments are basi-

For example, to Chicago, in 1967 the Oregon shipper had to absorb 80P per cwt or $16 per thousand b. f. in freight costs over a similar shipment from Mississippi. But now the same western shipper must absorb $37 per M. Rather than do this and lose monev. the western

(Please turn to page 56)

The recession is having its effect upon the tronsportation segment of the economy. the American Trucking Assn. reports that tonnage carried this year is off 2lo/a across the board. the railroads are also feeling the pinch.

The Columbia River was reopened for ship & barge traffic 21 days after being closed by the Mount St. Helens' eruption, but shipping is severely restricted as the river channel is still clogged. .some shippers avoid the river, fearing another eruption could trap their ships.

Despite a seeming consensus that the housing slump has bottomed, latest figs. (May) are grim. 920,000 on a seasonally adjusted annual basis, lowest in 5 years.. starts of single family homes were off 2.40ft, multiples sagged 25.50/o from the previous mo., almost 4Jo/o below a year ago. .

Permits were o bright spot, up 2.20/0, but still 51.10h below a year earlier: single family permits moved up 3.4010. sales of used homes sagged T.4o/o to a five year low. . for the lst 4 mos. of '80, new home starts declined 340lo from the vear earlier.

The prime lending rate, the banks' lowest for their best customers, has declined to llt/zo/o and home mortgages are as low as l2o/o at some western s&ls, yet builders note they have a record inventory, about equal to a year's production of homes. .

Forest Service estimates place the total amount of timber down fromthe Mount St. Hef ens eruption at I billion board feet. .

It now appears BEPS, the Dept. of Commerce's controversial Building Energy Performance Standards may be delayed until '82. LouisianaPacific has acquired 18,500 acres of timberland 15 mi. North of Pt. Arena, Ca., no price revealed.

Wickes Corp. has acquired Gamble-Skogmo in a complex financial transaction that also included creation ofa parent holding co. over both firms. Simpson Timber recently bought $54.4 million of Diamond International stock: Simpson says it "is for investment purposes only". Diamond is currently battling a hostile takeover attempt by Cavenham Development Inc.

Cali"fornia Sugar and Western Pine Agency now has a branch office in Sacramento, Ca., 2641 Cottage Wy... Peterman Lumber,Santa Ana, Ca., has opened a wholesale & retail outlet for hardwoods and exotic woods. 2901 S. Highland Dr,, Unit I.D., Las Vegas, Nv., Tom Field, mgr. . Forest Products Transportation, Ukiah, Ca., has a new Anderson (Redding) Ca., office, 6351 Eastside Rd.

Economy Lumber Co., Yuma, Az., is building new facilities. Hot Springs Lumber Co., Truth or Consequences, N.M., is closing after 51 years in business. . . Norco Lumber and Feed is new in Norco, Ca. . Dill Lumber Co., Redlands, Ca., is marking its 54th anniversary. At-The-Mill Wood Products. a lumber and plywood retailer has opened in Cloverdale. Ca. .

Only 129 of the West's 820 lumber mills aren't back to usual operations.

Floor Service Supply is opening new showrooms in San Jose, Ca., and a full service distribution branch in Sacramento. Ca.. 8660 23rd Ave. . . Mission Forest Products, Hollister, Ca., has opened a Fresno, Ca., office at 5717 E. Shields, Don Weld, mgr. Northern Lumber Sa/es has moved from Corona del Mar, Ca., to 39 Willow Grove, Irvine, Ca.

New $1.5 million complex for Sunrise Lumber, Jackson, Wy., is scheduled for completion in 1981. Coast to Coast has planning commission approval for a new storein the same city. . . Dixieline Lumber, San Diego, Ca., plans to open a 22,000 sq. ft. (15,000 sq. ft. sales f'loor) retail store at Miramar Rd. and Carroll Rd., Jan. 30.'8r...

Cali.fornio Forest Products, Oakland, Ca., is celebrating one year in business. . . Dave LeBeck has opened LeBeck Forest Products, 66 Dorchester Dr., Santa Rosa, Ca. . . John Hull Lumber Co., Anderson (Redding). Ca., is a new wholesale. lemanufacturing and consulting lrrm.

Arrow Lumber. Anchorage, Ak., is now known as Spenard Builrlers Supply Med.ford Lumber Co.. Medford, Or., is celebrating its Tlst anniversary in rebuilt new quarters. . 84 Lumber is opening a unit in El Centro, Ca. . Diamond Internqtional has purchased Orchards Hardware and Lumber Co., Yancouver, Wa.

Pacific States Transport has moved to 10244 Arrow Highway, Rancho Cucamonga, Ca. .. Mallory-Weeks, Inc., is a new Eugene, Or., wholesaler. . . States Veneer Co., Eugene, Or., is now States Industries Inc. Just-Woods Forest Products Co. built a new office bldg. in Portland. Hieh Sierra Lumber Sales, Inc., has moved its offices from Arcadia to Monrovia, Ca. .

Announcing the establishment of a new service-oriented wholesaler .

IeBech Forest Products

LeBeck Forest Products is a specialist in redwood.

Our contacts and sources can get you the redwood items and products you need. Our experience in redwood is a plus for you in finding those hard-to-get items.

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