Evolving lumber business helps fuel growth of I transloadi

f\HANGES in the lumber and \-. building materials industry have fostered an increasing reliance on transloading. Transloads, as a result, are rapidly expanding in numbers, size and diversity of products and commodities handled in all geographic areas.

Transloading of commodities between modes of transportation is not new. It has been around since sailing ships first transloaded trade goods to horsedrawn vehicles for distribution to warehouses for ultimate dispersal to consumers. What is new is the volume, variety and value added by transloading. Transloads arise out of needs determined by consumers in supply chains for creation of time/ place/utility. This means putting goods where needed, in the form and quantity needed, when needed.

Manufacturers produce in large quantities to minimize costs. Shipping quantities are matched to the economic size of rail or truck equipment to "surge" storage facilities close to the market where goods are distributed to retailers in smaller quantities for sale and consumption. As our standards ol living increase with economic conditions, the desire and/or need for a greater variety of goods made available in a more personalized form, quantity and price increases.

As our economy migrated from agricultural to industrial, retailing migrated from a country general store or mail order catalogs having an assortment of different commodities but limited choices in categories to serve a broad geographic area. If the proprietor didn't have it, he would order it, sometimes taking weeks to deliver. People migrated to the city during the industrial revolution, and as their disposable personal income and their standard of living increased, they demanded a greater choice and selection of goods located closer. Hence, the "specialty store" was born (shoes, clothing, grocery, candy stores, etc.). The idea of the general store expanded into department stores, but served a clientele closer. As inner cities grew outward and workers commuted, parking problems grew and mass transit flourished. Consumers made a choice again for less variety and selection or availability of a given product in favor of proximity. This contributed to the rise in suburban shopping centers comprised of grocery stores that offered basic hardware and pharmaceuticals and large discount stores with departments having limited selections. Now consumers demand a broader variety of products made available instantly via the computer (e-tailing) with maximum personalized value which they can pay for instantly through credit cards and electronic fund transfers.

To supply them and remain competitive wholesale distributors must help retailers keep inventory to a minimum, and in some instances help their customers manage their real time inventory by replenishing stocks within hours in economic order quantities and mixes required by retailers and their customers.

Nowhere have these dynamic changes in supply chain management been more evident and pronounced than in building products.

Lumber merchandi sers now demand "super tallies" of mixes of a variety of products such as panels, dimension, boards and treated lumber delivered to them in hours in Less than Truckload (LTL) shipments. Retail lumber yards previously had to buy from mills or wholesalers in rail carload quantities (CL) or later, truckload quantities (TL) in product mixes related to the mix of products and quality of logs as they came from the woods. This sometimes took weeks to deliver from the time they were ordered.

Deregulation of transportation has caused railroads to rationalize and downsize their organizations and service to their customers and have turned their attention to large volume consignors. Growth of transloads in diversity and geographical dispersion has evolved as a direct result of a paradigm shift of these commercial economic forces.

Transloaders have grown in size and diversity in the number of commodities handled and customers served. Concurrent with this growth inwardly and outwardly has been their understandins of and service to cus- tomers' needs, together with a creative penchant (perhaps related to their size and maturity of their business) to creatively and innovatively package or bundle customer specific products and services to flexibly meet the needs of their customers.

Conversely, Class I railroads have become less flexible with their behemoth increases in size through mergers characterized by a proclivity to concentrate on the core cost-saving economics of lower-rated unit train movements of low value, semi-finished products between main line points. The spin-off of feeder branch lines created hundreds of shortline railroads and trucklines that have captured a large share of higher-rated, value-added merchandise traffic.

Shortline railroads use transloading and their individual customized service for their smaller customers to restore business lost by large Class I Railroads. A significant amount of the business growth and profitability of these shortlines has been not only from a return to responsiveness in meeting customers' needs, but by strategic selective engagement of locating transloads strategically on their lines to expand business and to draw business beyond the capacity of shippers or receivers on their lines.

Some transloads in the building products industry were spawned captively by the likes of Lowe's, which created its own destination reloads in the East where they were deemed adequate to serve their stores in the manner required. Manufacturers such as Boise Cascade and Georgia-Pacific set up captive reloads and distribution centers in destination markets to serve customers in mega markets. Other manufacturers utilized public reloads at origin and/or destination to get to or from a competitive railhead quicker and use the transloaders to add value by changing the mix delivered to their customers to super tallies, repackaging private label goods, and bar coding.

Other transloaders were truckers who integrated vertically from merely cross docking from car to truck at "team tracks" to providing warehouse or yard storage and other value-added services. Others were public warehousemen who vertically integrated into providing trucking through for hire or, in many instances, merged or acquired trucking of their own to bundle one-stop-shopping of custom tailored value-added services and oav- ment of bills for their customers. Railroads such as CN, CPR, BNSF, P, NS and CSX have in recent years attracted transloaders to their lines and have even invested capital to create large mega facilities. Most Class I railroads now have separate business units in their organizations to market transloading.

Some successful transloaders who began with one transload at one point on a railroad with a single commodity have expanded geographically to other points on other railroads, handling additional commodities. Notable examples of these transloads include Savage Industries, Bulkmatic, Matlack. Reload. Inc. Warehouse Specialists, National Distribution Services, Budway and Specialized Rail Services.

Other reloaders such as International Reload, Christina Lake, B.C., and Emons Logistics actually acquired their own railroads to provide modal integration of transloading services.

Other transloaders in the building products industry such as Mountain West, Missoula, Mt., and Orville Reman & Reload, Orville, Wa., work strictly for wholesalers. They bring in cars of lumber for cut-to-size (remanning), repacking, storage. prime-coating, bar coding and sending it out by

What is new is the volume, variety and value added by transloading.

rail or truck as required by customers.

Transloaders and manufacturers involved in value-added supply chains of products in transit were the last to feel the pinch of economic downturns. Closed were the cost-oriented supply chains that focused only on reducing costs or shipping direct from mill.

Several transloaders started out unloading rebar and grew in their ability, volume wise, to unload entire trainloads in 24 hours. Budway, Keep On Truckin', Transload Ltd. and Ancon have successfully expanded horizontally to handle other metal products as well as wood products.

Many transloaders of paper products have expanded their number of facilities, as well as commodities, to include wood pulp to be more responsive to a small core of customers already served. Not only have they expanded physical facilities to meet a growing need for transloading, but a growing number of products and commodities in geographically dispersed markets.

Transloaders are led by small businessmen characterized as opportunistic risk takers who grow and thrive on building a network of improved relationships with stakeholders (owners, creditors, suppliers, customers and carriers.) Transloaders are hired hands who concentrate on efficiently transloading to storage or between modes goods entrusted to them by customers. Transloaders do not purchase, sell, own or profit from trading goods, but from adding value to goods traded by the intermodal or

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