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IP CEO Addresses Advancement of Paper Product Transport

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International Paper (IP), Memphis, Tenn., USA, ships a lot of paper, paperboard, and pulp, reportedly spending about $2 billion each year on domestic transportation. The company is employing new methods and procedures trying to get the most out of its shipping dollars.

According to IP data on its website, that level of spending makes the U.S. paper giant the nation’s largest railroad boxcar customer, the third-largest waterborne U.S. exporter by volume, and a leading user of the country’s trucks.

That means supply chain costs are taking up a larger share of the company’s costs, pressing the company to put extra emphasis on planning for transportation, said CEO Mark Sutton in an interview with the Wall Street Journal, New York, N.Y., USA, following shortly after the company’s second-quarter earnings call this past week.

"The whole supply-chain story has been one of increasing costs, and it’s for a lot of reasons, whether it’s rates [or] capacity issues that the rail companies and truck companies have," Sutton said. "So, we’ve put a lot of effort into redesigning our business processes, we’ve put some technology against better planning, so we can plan transportation more cost effectively."

For example, "when a railcar comes in our plant, load it and get it out really quickly, because if you do that, it’s just like you’re adding capacity to the system," Sutton added.Efficiency is increasingly important, he said, because box cars are "not a growing segment" for the rail industry. The number of boxcars in service fell by 41% in the last decade to slightly less than 125,000 last year

But the same need for quick turnarounds goes for trucking, he said—and it makes IP a more valuable customer for truck drivers when they can achieve it. This development is timely as there is ongoing driver shortage in the U.S., with the American Trucking Associations estimating a shortage of between 35,000 and 40,000 drivers as older truckers retire faster than new ones enter the profession.

"It’s affected everybody, I think. It requires you to be a much better planner. It requires you to really make yourself a more attractive customer, if you will, for the trucking lines, so loading them fast and making sure they aren’t wasting time in your plant," Sutton said.

"‘It requires you to really make yourself a more attractive customer for the trucking lines." He went on to explain that improved systems allowing International Paper to plan ahead and hold to commitments for scheduled loads are resulting in better pricing and in a better partnership with the trucking lines.

As a dense, heavy product, rolls of paper fill a truck by weight before filling it by volume. Higher weight allowances could take 20% of IP’s trucks off the road, he said, by sending trucks out more fully loaded. IP would also like to increase weight limits to accommodate this. 

He commented that the company has been pressing lawmakers in Congress to include provisions for heavier trucks in a final highway spending bill.

"With an extra axle, and the right braking systems, there’s a lot of work been done that you can make those trucks carry a bit more weight and still have the same safety performance in terms of stopping distances, and the benefit is more efficient transportation," Sutton added.

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