Harvesting System Advancements Recent Challenges: Equipment Fuel Timber People Capacity Costs

1. Harvesting System
Advancements
Dale Greene
University of Georgia
Southeastern Regional
Landowner & Manager Meeting
Valdosta, GA
October 29, 2014

2. Recent Challenges
Equipment
Fuel
Timber
People
Capacity
Costs

3. Equipment
 Tier IV engines
 Ultra Low Sulfur
Diesel (15 ppm)
 NOx and PM 2.5
reductions targeted
 Higher costs
 Larger engines
 Primary equipment
company R&D focus

4. Median Machine Age
10
8
6
4
2
0
Feller
Buncher
Skidder Loader Trucks
Age (yrs.)
2007
2012
Source: UGA Georgia Logger Survey, 2012

5. Tons per $1000 Capital – GA
160
140
120
100
80
60
40
20
0
1992 1997 2002 2007 2012
Tons/$1000
Clearcut Thinning

6. Fuel – Diesel

7. Fuel – Natural Gas
 About ½ the cost of diesel
on energy basis.
 Electric utilities, trucking
firms, railroads, etc. are
switching to gas.
 Log trucks fit this concept.
 Prices can spike in winter
due to heating demands.
 Enormous new domestic
supplies of this fuel.

8. Fuel Options Compared
Source: DOE Alternative Fuels Data Center

9. Fuel – Natural Gas
 US natural gas supplies are
at record levels due to
fracking in tight shale
formations.
 Many shale gas plays are
just being developed.
 Over-supply & low price of
gas is slowing development.
 Killing biomass energy
opportunities.

10. Fuel Consumption
 Fuel is ~20% of cut and load cost
 Diesel range $1.50-$4.75 over past
decade
 2012 GA/SC logger survey:
 21% track fuel use by machine
 21% track fuel use by crew
 19% do no tracking at all
 Benchmarks lacking for comparison

11. Fuel Consumption Study

12. Objectives
 long-term operational fuel consumption data
 per operating hour
 per ton produced
 mechanized feller-buncher/grapple skidder
 pine plantations (clearcut and thinning)
 Southeastern coastal plain

13. Receiving Mill
 Buys ~2 million tons annually of pine pulpwood
in southeastern Georgia coastal plain
 Provided funding for the project
 Provided a list of wood suppliers
 Suggested 12-15 suppliers as candidates
 Received periodic reports showing fuel
consumption statistics with no identities of
crews or statistics by crew

14. University of Georgia
 Solicited the participation of each supplier
 Provided forms, fuel meters, on-site training
 Handled all data input and summary
 Follow-up calls, email, site visits with suppliers
 Periodic reports back to cooperators and
funding company

15. Logging Contractor
 Agreed to record & share:
 Fuel consumption by machine
 Hour meter reading at fill-up
 Weekly production for the crew
 Installed and maintained fuel meters
 Mailed data to us on their schedule – monthly
was most common
 Received reports from UGA showing their fuel
usage compared to others in the study
 Fuel meters are theirs to keep

16. Sample Size by Machine Type
Fellers Skidders Loaders
Tons 136,017 160,873 164,972
Hours 5,880 6,599 6,640
Gallons 38,877 41,156 26,923
We often received gallons and hours without
production reports.
Data received from 1Q2013 through 1Q2014.
Study ends 6/30/14.

17. Fuel Use per Hour
6.46
5.05
3.65
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
Feller-Buncher Skidder Loader
Gallons/Hour
CV = 20%
CV = 20%
CV = 24%

18. Fuel Use per Ton
0.15
0.14
0.09
0.25
0.20
0.15
0.10
0.05
0.00
Feller-Buncher Skidder Loader
Gallons/Ton
CV = 37%
CV = 27%
CV = 31%

19. Fuel Usage Conclusions
 Fuel consumption to cut/skid/load wood
averaged 0.38 gallons per ton.
 These crews work flat (but often wet)
ground harvesting pine plantations with
a limited number of sorts.
 These consumption rates likely set a
floor rather than an average baseline.

20. Timber – Recession Impacts
 Lumber demand off by 40-50% at one point
 Sawtimber prices down 35%
 Landowners sitting on thinned sawtimber
stands waiting for higher prices…?
 Pulpwood demand holding due to pulp and
wood pellet markets and shortage of lumber
chips
 Age class distribution impacts and reduced
planting – where will future pulpwood be?
 Less final harvest = less replanting

21. US South Total Annual Harvest
300
250
200
150
100
50
0
2006 2007 2008 2009 2010 2011 2012
Total Harvest
(Million Tons)
Pine Sawtimber Pine CNS Pine Pulp Hdwd Sawtimber Hdwd Pulp
Source: UGA Wood Demand Report, 2013

22. Timber – Biomass Potential?
 Liquid Fuels
 30% of US energy use
 Still an infant technology
 Wood Pellets
 Technology here today
 Driven by EU subsidies
 Pulpwood not forest residues
 Production up sharply
 Electricity Generation
 40% of US energy use
 Technology here today
 Natural gas has advantage
400,000,000
350,000,000
300,000,000
250,000,000
200,000,000
150,000,000
100,000,000
50,000,000
0
Demand: Bioenergy total Demand: Industry
Non-traditional materials Growth
Chart source: Forisk Consulting 2011, RISI 2013

23. Biomass
 Piled residues through
grinders –ash content too
high for pellets (>5%)
 Chipped tops/slash without
piling or WTC <2% ash
 Residues rely on demand
for other primary products
 Roundwood (pulpwood)
preferred due to control,
cost, low ash, etc.

24. 2000
1800
1600
1400
1200
1000
800
600
400
200
0
No. of
Employees
100 - 249
50 - 99
20 - 49
10 - 19
5 - 9
1 - 4
AL/FL/GA Logging Businesses
Source: Bureau of Labor Statistics, 2012

25. AL/FL/GA Logging Workforce
 Total employment
in logging
declined 31%
since 2000
 18% decline since
start of recession
 Greater decline in
businesses than
employees
16000
14000
12000
10000
8000
6000
4000
2000
0
Logging Employment
in AL, FL, and GA
2000Q1
2001Q1
2002Q1
2003Q1
2004Q1
2005Q1
2006Q1
2007Q1
2008Q1
2009Q1
2010Q1
2011Q1
2012Q1
2013Q1

26. Firms Shift to Higher Production
100%
80%
60%
40%
20%
0%
1987 1992 1997 2002 2007 2012
> 2500 T/wk
1000-2500 T/wk
< 1000 T/wk
Source: UGA Georgia Logger Survey, 2012

27. Total Volume Produced
51%
39%
2011 Total Tons
10%
> 2500 Tons 1000 - 2500 Tons
< 1000 Tons
 50% of
production by
20% of firms
 Doubling of
larger firms in
last 10 years
Source: UGA Georgia Logger Survey, 2012

28. Production per Man-Hour
6
5.5
5
4.5
4
3.5
1992 1997 2002 2007 2012
Tons per Man-hour
 Consistent
improvement in
production per
employee
 No significant
changes in
technology
Source: UGA Georgia Logger Survey, 2012

29. Owner Age – Georgia
25
20
15
10
5
0
25 30 35 40 45 50 55 60 65 70
Percent
Age
1992
1997
2002
2007
2012
Source: UGA Georgia Logger Survey, 2012

30. AL/FL/GA Logging Capacity
140
120
100
80
60
40
20
0
2006 2007 2008 2009 2010 2011 2012 2013
Million Tons
Logging Capacity Actual Harvest

31. Southern Capacity Declines

32. UGA Logging Cost Index

33. Southern Cut & Load
Cost Components
35%
18%
14%
22%
1%
5%
5%
Labor
Depreciation
Repair and
Maintenance
Fuel
Interest Expense
Administrative
Insurance
Range: $9 - $15 per ton

34. UGA Logging Cost Index
 Cut & load cost/ton
 No hauling cost
 Reported quarterly in
Timber Mart-South
 Replaces the index
reported by Stuart
on an annual basis
 Re-validation
underway in 2014
200
175
150
125
100
75
50
Stuart
UGA Cost
Index

35. The Future?
 It is hard to make predictions, especially about
the future – Yogi Berra
 We have problems, but very few that stronger
markets and higher prices would not solve.
 Our logging contractors are becoming even
more efficient to survive.
 Given access to capital, harvesting capacity
can rebound rather quickly.
 Trucking can be made more efficient with
scales, scheduling, and de-linking from
logging.

36. Questions?
Thanks to Shawn Baker, Samantha
Marchman, Cory Dukes, Jason
Cutshall for their work shown here.