The CSCL Globe, one of the largest container ships in the world. Photo courtesy of Alifazal / Wikimedia Commons
Wood has been moved by water for hundreds of years. But these days the quest isn’t to move logs downriver to the mill as much as it is to float them to Pakistan, Vietnam, China, or Europe. That requires ships – ships so big their scale is mind-boggling. And it takes contacts, and coordination, and at least a little bit of the same nerve that lumberjacks used to display on log drives. The physical dangers may be less today, but the financial stakes and the logistical hurdles are arguably greater.
For all of these reasons, most woodlot owners, loggers, and mills tend to look to local, or at least American, markets first. Or, if they do choose to take advantage of international demand, they sell wood outright to traders, who take ownership and responsibility for exporting. But for those with the willingness – and the right lumber – to search out foreign buyers directly, the potential profits are there.
Navigating, literally and figuratively, the turbulent waters of international exports isn’t for novices – that’s where Ally Global Logistics (AGL) comes in. The family-owned “third-party logistics” company, headquartered in Norwell, Massachusetts, assists those who want to sell wood to markets around the world. Like PriceLine or Orbitz does with flights, AGL gives its customers a range of options for exporting wood, with different prices for different ports and time frames.
The company doesn’t own forestland, run a mill, buy or sell wood, or operate its own trucks or ships. Yet last year it played an integral role in shipping more than 6,000 cargo containers of wood from sellers in the United States to buyers around the world. “Our only assets are our computers, our phones, and our personnel,” said company president Stephen J. Zambo, who operates AGL along with his wife, Cindra, and son, Stephen A. Zambo.
Stephen and Cindra met while they were working in the shipping industry (he for a Taiwanese steam ship company and she as a cargo broker and later a traffic manager for a company that exported). Between the two of them, they possessed a wealth of knowledge about exports and shipping.
In the early 1980s, as part of his job to solicit cargo for the shipping company he was working for, Stephen attended a National Hardwood Lumber Association convention in Boston, where he had a chance encounter with Ted Rossi, owner of the Rossi Group in Connecticut, which was exporting about 100 containers of wood annually at the time. “He was way overpaying for his ocean freight,” is what Zambo recalls thinking during the conversation. Zambo was able to get Rossi a better price, but more importantly, he and Cindra saw an opportunity to help others in the same situation. In 1984, they formed a company called Aces Limited, which eventually became the largest lumber freight-forwarder in the U.S.
The Zambos sold that company to a multinational exporter in 2008, “retired” briefly during a five-year non-compete window, and then re-entered the market with Ally Global Logistics. Large multinational third-party shipping companies, like the one they sold their first company to, rely on volume and the export of many different products and commodities. AGL focuses on the export of only one product: wood. “We tend to know a lot more about our customers’ products than our competitors,” said Zambo.
AGL doesn’t handle finished products, such as flooring, but rather specializes in helping sellers ship either lumber or raw logs. “We work for a wide variety of exporters,” explains Cindra. “They might be a logger in the woods with a cell phone; they might be a mill, like the A. Johnson Company in Vermont; or they might be a huge, multinational company, like Weyerhauser.”
Currently, about 25 percent of the wood that AGL handles comes from the Northeast; because the company deals almost exclusively in hardwoods, much of the rest originates from elsewhere in the eastern half of the United States. The company also operates an office in Portland, Oregon, to help handle wood leaving from ports on the West Coast. Wood that’s less than a 10-hour drive from a port is usually sent by truck, while longer hauls are done by rail. “We use basically every railhead in the United States,” said Zambo.
Ironically, ground transportation expenses often outweigh the costs of shipping overseas. For a recent shipment that AGL handled it cost $1,500 to get the wood from northern Vermont to the port in New York, and then just $900 to get it the rest of the way to China. Most of the wood that AGL helps to export is hardwood destined for furniture-making. That doesn’t mean, though, that only high-quality wood warrants exporting. “We ship some products, like southern yellow pine, that are worth $4,000 a container,” said Cindra. “The freight and all of the charges can end up almost 40 percent of that. But it’s still worthwhile shipping it.” A container of hard maple out of Vermont, on the other hand, might be worth $30,000 or $40,000 to an international buyer. Other commonly shipped species include red oak, white oak, walnut, and cherry.
At the heart of the services AGL provides is the basic ability to get cargo on a ship. The company purchases space from 10 different shipping lines operating out of ports up and down the East and West Coasts, as well as along the Gulf of Mexico; it then sells that space to those exporting wood overseas. It takes some quantity of scale to be able to purchase this space – the largest modern cargo ships, like the CSCL Globe, are twice the length of the Titanic and can hold 19,100 standard (20-foot) cargo containers; that’s enough capacity to transport 38,000 cars or 300 million laptop computers in a single shipment.
It turns out that crossing thousands of miles of ocean is the easy part. It’s everything else – the scheduling, trucking, phone calls, inspections, more phone calls, paperwork, more paperwork, and yet more paperwork – that presents the real challenge. And that’s where AGL really earns its fees. “Whenever something is exported, there’s a lot of documentation that has to go with it,” says Zambo. “We handle all of that.”
Challenges can arise both in the U.S., and overseas. For starters, the wood needs to get to the port on a precise schedule. In order to prevent the spread of forest insects and diseases, wood products must pass U.S. Department of Agriculture phytosanitation inspections; boards need to be kiln-dried to a maximum moisture level of 8 percent, while logs need to go through a USDA-controlled fumigation procedure. The inspections take time, and that must be built into the schedule. And trucking wood to the ports, whether it’s done by the client or contracted through AGL, takes time, too. Then there is the paperwork required by foreign countries; while there is some standardization in the export business, each country has its own particular requirements.
When the Zambos first got involved with wood exports, the volume coming out of the U.S. was much lower than it is today, and most of it was headed to Europe. “There was really no Asian market to speak of; we couldn’t even trade with China in 1984. Everything went through Hong Kong,” says Zambo. As the Asian market began to boom, the volume of wood exported rose dramatically. Some of that demand has tapered off recently, but new markets, like Pakistan, have opened up. The current emerging market is the Middle East. “They’re in a big building boom right now, similar to where China was several years ago,” said Stephan A. Zambo, who traveled to Dubai in April to build contacts there.
While most of the time it’s smooth sailing, life on the high seas can be unpredictable. Rogue waves can knock containers overboard. Storms can cause delays. Armed pirates can hijack ships. “There are always going to be problems, but we’re very good at fixing things,” says Cindra. For example, sometimes a buyer overseas might reject a load of wood, or refuse to pay the agreed-upon price once the wood arrives. Because it specializes in hardwoods, rather than 100 different commodities, AGL knows this particular market and usually is able to help the seller find a different buyer who might be interested in the wood.
Global trading requires long work days. “Arranging logistics is very labor intensive,” said Cindra; “you’re dealing with a lot of different time frames and there’s a lot of stress involved. We want to make sure that things go smoothly and our customers can grow their business, because their business is our business.”
Wagner Forest Management, Ltd., is pleased to underwrite Northern Woodlands’ series on forest entrepreneurs.