Exporting logs isn’t exactly an exercise in nuclear science, but it has plenty of its own complexities, to which Tom Leeds, the president of Pacific Lumber & Shipping, to this day applies his experiences of more than three decades ago as a Hanford Project engineer. Based in Seattle, PLS depends upon Washington state’s Port of Longview and other maritime hubs to ship logs and related goods throughout the world. And PLS and its customers rely upon the expertise of Leeds, who joined the company as an export sales manager in 1991 and has been its president since 2008.
In an interview with the American Journal of Transportation, Leeds details the logistics operations of PLS, including advantages of containerized shipments versus transport via chartered bulk vessels, as well as his use of lumber in preparing his signature Pacific salmon recipe.
How important are innovative approaches, including as related to sustainability, to Pacific Lumber & Shipping LLC, not just in forestry operations but moreover in advancing an effective supply chain?
Our parent company, Port Blakely Companies, has a history of timberland innovation. Port Blakely’s founders were visionaries in forest genetic research and were one of the first to replant their forestlands after harvest back in the 1940s.
Because of that forward-looking philosophy, we have forests that provide a sustainable production level of 50- to 60-year-old trees that will give us a steady supply of logs indefinitely.
Our business of exporting round softwood logs from North America to Asia competes with supply from New Zealand, Australia and Canada. It’s a high-volume, low-margin business which puts tremendous pressure on our logistics costs to keep a competitive advantage.
Logistic costs for our delivered logs to Asia make up about 35 percent of our sales price. This includes log yard costs, ship loading and ocean freight.
We’ve upgraded our rolling stock in our Longview log yard to newer models which have more efficient fuel consumption and maintenance costs – four Caterpillar 988s and six track machines from Link-Belt and Caterpillar.
We charter about twenty-five 38,000-deadweight-ton bulk vessels per year and focus on newer Japan-built vessels for their increased reliability and fuel efficiency.
You should see the difference between a ship 10 years ago and a ship today as far as fuel efficiency and fuel consumption. The improvements are just amazing.
As far as innovation goes, it’s mainly been keeping up with the times, with the new regulations for fuel consumption and things like that.
What we’re hoping for is that we can get more advances on the computer side, but they’ve been slow in coming. All of our logs have barcodes on them, and we’ve looked into being able to take a snapshot of that and bring that data right into our computer system, but the technology just isn’t there yet, at least not for our industry.
What role does the Port of Longview – on the Washington side of the Columbia River about 65 miles from the Pacific Ocean – play in PLS logistics?
PLS depends on the Port of Longview to have a smooth operation at the port when we’re loading ships. It’s all about people and relationships, in particular the port operations staff and the longshore labor. When we’re loading a ship, we will have up to 32 semis running between our log yard and the longshoremen at the port which is only a stone’s throw away.
The Longview facility we’re in was developed in 1996. We’ve been tenants there since 2005, and then we purchased it in 2009. Being a month-to-month tenant and owning it represent two different levels of comfort.
We also ship out of Eureka, Calif.; Olympia, Wash.; and Vancouver, British Columbia. They are all bulk ship operations.
And then we ship by container out of Portland and Tacoma and out of Savannah, Ga., which is one of my favorite places.
What advantages does shipping in containers provide over more traditional methodologies via bulk and breakbulk ship charters? Do PLS and its customers benefit from the flexibility to ship via either method?
Our bulk ship business to China is typically one consignee per vessel. It’s a very large volume in a single shipment.
Containers are a perfect complement to that style, where we can make more frequent shipments of smaller volume to a wide variety of destinations. It’s a great fit for customers managing their inventory at lower levels.
The containerships call every week, so we can load a 20- or 40- or 60-FEU [40-foot-equivalent-unit container] booking and load that regularly on a weekly basis. And so the customer has always got this weekly amount coming in. They can put it in their yard. They can sell it out.
And they pay whatever that cost is – $50,000 to $100,000 – versus $4 million or $5 million for a bulk ship cargo. That way, they can manage their inventory, plus we can ship to multiple sites that maybe wouldn’t justify having a bulk ship calling there.
If the market’s a little bit smaller and you bring a bulk ship there, you can only bring it there maybe once every three or four months. Well that’s not a very smooth management of inventory, where you basically have a very high point, run it all the way down to as low as you can stand it and then wait for a huge surplus in with a 38,000-deadweight-ton ship.
With containers, we can bring in those 20- or 40-container bookings on a weekly basis, and it’s just much easier to manage. You can imagine, from a logistics standpoint, as long as you have a dependable schedule, that would be a lot easier on the pocketbook and your credit line.
How are changes in the China market impacting your supply chain?
The slowdown in China in some ways has helped us. At the peak of the market in 2013, longshore labor was in short supply and berth access was unreliable due to the sheer number of ships calling the port. We also had frequent delays in China while the ships sat at anchor waiting for an open berth. So, from a logistical standpoint, the slower market has eliminated those bottlenecks.
So you view the slowdown as somewhat of a positive?
Well, from a logistics standpoint, yes.
From a trading standpoint, it’s a challenge, because we sell in U.S. dollars, and all of the competition – the Canadians, Australians and New Zealand guys – sells in U.S. dollars as well. But, as the U.S. dollar got stronger, their currencies were weaker, so, dollar-for-dollar, they’re just getting an advantage on the currency exchange that we’re not getting.
So our competitors have gotten a leg up on us. You could call it maybe 25 percent in the last year and a half.
Noting that you hold a bachelor’s in chemical engineering, as well as a master’s in business administration, from the University of Washington and that you worked as a U.S. Department of Energy program engineer before getting into the forest products industry some 30 years ago, how do you apply your chemical engineering and MBA learning and DOE experience to your present role?
The engineering lessons taught me a lot about problem solving. For example, stopping to write down the variables and really approaching the problems analytically and systematically. That’s helped a lot with logistical challenges.
Working at the Hanford site for the DOE and the MBA experience really taught me a lot about how to interact with people. Especially regarding the fine art of listening!
Aha, Hanford, the old [now mostly decommissioned] nuclear reactor site a ways up the Columbia River. That must have been fascinating…
Especially when you’re 22 or 23 years old. I learned a lot from the experienced engineers on site from contractors like Rockwell International.
I was a program engineer for the final plutonium and uranium production facilities. Basically, at that time, during the Reagan buildup, when he was trying to bankrupt the Soviet Union, they restarted PUREX – the Plutonium Uranium Extraction facility – and they took spent nuclear fuel and dissolved it in nitric acid and recovered all the stuff that you make when you have the reaction in the nuclear reactor. So most of it was just returning uranium to the fuel cycle, but they were interested in adding plutonium to the weapons cycle as well. None of it was used, of course, but that was one of the 50 or so different things that Reagan and his administration did to accelerate the arms race to win the Cold War that way, economically.
Can you imagine living and working anywhere but the timber-rich state of Washington?
I’m originally from Aberdeen, Wash., but I could live outside Washington, and Savannah would be the one place I’d think about.
We also have operations in the Gulf and the East Coast loading southern yellow pine logs. I could easily live in Savannah – when the sand gnats aren’t biting.
As far as living in Washington, I’m Irish, and we get shielded from the sun quite a bit out here, so, for a guy like me that isn’t exactly a bronze god at the beach, you can live with those 30 days [a year] of sunshine in Seattle that you get basically in August. Anybody coming out here in August from the East Coast or the Southeast would think that this is just like heaven.
How do you relax from the rigors of work in your free time?
I’ve got a passion for cooking. I experiment with smoked and cured meats, pastas and seafood. I think it’s a natural way for me to channel my chemical engineering past in a productive way.
Any favorite dishes?
I do a cedar-plank salmon. You know the Pacific Ocean salmon are just absolutely fantastic. It’s a bit of an art cooking a salmon because it’s thin and it’s thick and you can’t overcook it.
So, even in your leisure-time cooking, you’re not getting far from trees, using cedar planks…
It’s fantastic. I figured out it’s cheaper to go to the lumber store and buy raw lumber as opposed to those little finished fancy cedar planks at the department store. I’ve got a big supply.