Efficient value chains for the forest industry in Coastal Norway

An overall objective of the Norwegian transport policy is to provide an efficient and environmentally friendly transport system. In Norway, forestry and forest industries are highly transport-intensive sectors. Particularly, transportation of timber products in Coastal Norway is challenging and expensive. Reasons are relatively low-quality roads, bottlenecks along the transportation routes, long transportation distances, islands, and fiords, and also steep and difficult terrain. Also, more of the cultivated forest in Coastal Norway is becoming mature, with a high potential for value creation, but there is a lack of how to efficiently organizing and coordinate the forest value chain. This leads to an increasing standing stock, more import of timber, and less use of regional timber. At the same time, there are ambitions to increase the harvest of wood in Norway. The major part of transportation is carried out by trucks all the way from the harvest area to the customers. A minor part is trucked to quays and transported further by sea. But sea transportation has the potential to be a low cost alternative. Sea transportation, and availability and efficient operation of appropriate quay facilities are crucial for improving timber logistics and reducing transportation costs. Also, alternative ways of harvesting the timber, using for instance mobile quays, could be relevant. In the project, we have developed a mathematical optimization model. The model takes optimal decisions regarding transport routes, harvesting, and investments. It takes the whole value chain into account, and investigate how to maximise profit (benefit minus costs). We also include ripple effects into the optimisation by using multipliers related to products, both in harvesting, transport, and production. The multipliers are developed by a combination of empirical data (financial data from the project partners) and general data from general models. Both local and national multiplicators are developed, so analyses of ripple effects can be down on two levels. The model can also analyse trade-offs between maximisation of value chain profit and ripple effects, and the implications of these trade-offs. A number of cases from Costal Norway are analysed. The analyses shows a high potential increase in value chain profit and especially ripple effects by investing in new industry, under assumption of sufficient resources. The results give the best location of new industries, which is mostly located along the coast, and close to other industry, which makes exchange of by-products cost-efficient. However, the results also show that based on the data available of forest resources in the region, there is barely room for new industry. However, it is questionable, if the data on resources in this region really is good enough. The model is also developed to analyse co-ordination of harvesting of relatively small forest land piceses along the coast and at islands where there are no road network. Governance aspects will also be assessed, to identify drivers and barriers and facilitate better coordination between actors in the industry. A network analyses is performed to analyse weak and strong links between the actors in the network. A survey with the actors in the value chain is performed, and form the basis for the network analysis. The results show that the network is tight and complex, and also that openness and trust have many and strong links. This gives the network of actors a good basis for further development and collaboration. The project has also looked at opportunity to couple the results from the network analysis to the value chain optimisation. This can help evaluate the network from more sites, and give important insights regarding how to make the value chain more robust and profitable, and beter co-ordinated. This project contribute to new knowledge on efficient use of sea and land transportation within the forest value chain, in order to increase the quantities of timber and wood related products transported by ship in Coastal Norway, increase the harvesting, contribute to a more sustainable transport system and develop models for decision support related to investment and operation in the timber value chain. Hence, the project also help to stimulate regional growth and use of local timber in the Norwegian forest industry.

Transportation of timber and wood in Coastal Norway is challenging and expensive. Reasons are steep and difficult terrain, low-quality roads, bottlenecks in the transportation routes and long transport distances. This leads to an increasing standing stock , more import of timber, and less use of local and regional timber. The major part of transportation is carried out by trucks all the way from the harvest area to the customers. A minor part is trucked to quays and transported further by sea. Although se a transportation has the potential to be a low cost alternative, the potential is far from exploited as the number of useful quays is limited and quay operations appear to be inefficient and carry high costs. Sea transportation and availability and effici ent operation of appropriate quay facilities are crucial to improve the logistics and reducing transportation costs. The main objective is to increase the quantities of timber and wood related products transported by ship in Coastal Norway. We will contri bute to new knowledge on efficient use of sea transportation and efficient quay operations within the forest value chain. To meet all the challenges, models for analyzing/optimizing the whole timber value chain will be developed and logistical solutions f or the forest industry will be identified. Governance aspects will be assessed, to identify drivers and barriers and facilitate better cooperation and coordination between actors in the chain. Reduced costs and smooth logistics will increase areas that wi ll be profitable to harvest, and improve quantity and robustness of timber supply. This will contribute to the financial sustainability of the industry and increase the possibility for further development of the scale, products and services, enabling loca l and regional development. Besides, a good knowledge base is an important input for policy design regarding regulations, information and advisory services as well as investment aid and other incentive schemes.