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WPAC completes pellet logistics study

May 30, 2013, Quebec City - A report was released today analyzing the logistics behind pellet exports from eastern Canada, suggesting solutions to reduce transport costs considerably.


May 30, 2013
By Scott Jamieson

The Quebec Wood Export Bureau (QWEB) and the Wood Pellet Association of Canada (WPAC) engaged CPCS Transcom Ltd. to complete a study entitled Supply, Logistics, and Export Strategies for Wood Pellets Produced in Eastern Canada. This study was driven by the associations' belief that the export potential of wood pellets in Eastern Canada is under-exploited, and problems related to export logistics are contributing to this situation.
 
CPCS has analyzed the transport chain for the supply and export of wood pellets from Eastern Canada to identify the barriers to implementing an efficient and optimized supply chain. The goal is to enable producers from Ontario, Quebec, and the Maritimes to increase their competitiveness in wood pellet export markets, particularly Europe.
 
The potential amount of exportable pellets in Eastern Canada is approximately 600,000 tonnes. In the short to medium term, this potential could triple.
 
Based on the pellet export cost analysis, road transport costs seriously undermine the export potential. On the other hand, rail transport could be competitive for bulk shipments to ports, even for limited distances. Moreover, the sub-optimization of port facilities, specifically for the handling of pellets, contributes to increase export costs. Finally, the lack of consolidation results in the shipment of partial loads to Europe, increasing maritime transport costs considerably.
 
For these reasons, CPCS believes the improvement in the export potential through the optimization of logistics operations involves, in particular, the physical and virtual consolidation of volumes. In terms of physical consolidation, consolidating export volumes at one port may require infrastructure investments that would likely optimize handling and thereby reduce costs. Virtual consolidation consists of implementing a cooperative export strategy where producers join forces to market a uniform product. According to considered scenarios, it would be possible to reduce export logistics costs by 20 to 27 per cent.
 
QWEB and WPAC have planned a  one-day workshop for members to review the study, to hear from key players in the logistics chain, and to determine next steps. The workshop will take place in Montreal on Tuesday, July 9th, 2013. For more information, please contact Pierre-Olivier Morency, pomorency@quebecwoodexport.com or Gord Murray at gord@pellet.org.


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