F2M Launches Industry Benchmark Service

Next month, Forest2Market, Inc. (F2M), a Charlotte-based provider of raw material pricing data for the forest products industry, will unveil a new service that will allow forest products companies to evaluate their performance against their peers – a first for an industry known for being highly fragmented.

The service, known as Free on Board (FOB) Delivered, uses actual data from major forest product industry players to establish credible benchmark costs for delivered raw materials, including every variable associated with getting a tree removed from the forest and delivered to a mill.

Components include the actual stumpage cost (the cost of the tree attached to the ground), cutting and loading cost, hauling cost and commission and procurement cost. This information is expected to make the industry more competitive and efficient.

“This service provides pulp and paper mills and sawmills a way to assess their performance against the broader market,” said Pete Stewart, president and founder of F2M. “The service also supplies information to make better operational and strategic decisions, such as identifying cost gaps between a specific mill and its peer group or identifying structural issues that make a market area, product class or mill asset undesirable.”

To use FOB Delivered, forest product companies commit to provide F2M with their actual data, on a load-by-load transactional basis. F2M then organizes the data in a

 consistent manner and computes a weighted average for each benchmark, which is updated quarterly. Benchmarked raw materials include pine pulpwood, hardwood pulpwood, pine sawtimber, pine and hardwood chips and residual woodfuel.

These benchmarks will allow timber companies to compare these cost variables to their own to see how cost-efficient they are compared to other mills in the same area.

For example, one mill may discover it is paying more than its competitor to haul trees to the mill, while another mill may find it is paying too little to have trees cut and loaded on the truck, adding to supplier complaints and disrupting consistent wood deliveries. Still others may see they are working more efficiently than their competitors. Most major timber companies have already signed up for the service.

“Our goal with FOB Delivered is the same as all of the products F2M has innovated – to help bring some clarity and hard data to an industry that has traditionally been fragmented and inefficient,” said Stewart. “We want to make sure our clients have access to data that helps them make sound business decisions.”

Forest2Market was founded in 2000 to bring solutions to participants in the forest and wood products supply chain. F2M provides raw material pricing data for the forest products industry that is current, local and accurate, thus allowing landowners and forest product professionals to make more informed decisions. F2M’s suite of customized market-based analytics allows both buyers and sellers to make better decisions based on better data. For more information, call (704) 357-0110 ext.1