Spatial characteristics of the transports in the paper mill’s supply chain

Abstract

This paper examines the impacts of transportation costs to the supply chain management of the Nordic paper industry from a transport geographic view point. The discussion is illustrated by complete cost management accounting data from one paper mill. The main research questions are: What are the transportation costs and how have they developed during the study period concerning the exports to the market? How have the supply chain costs developed? Do order size and transportation costs have any causality in cost per unit of paper? So far, the transportation costs concerning Finnish paper mills have been examined rather scantly. We perceive that transportation costs together with sales costs have crucial
effects on the mill profits. The costs rise due to the spatial heterogeneity of the European market. In paper industry, the freight transportation costs have not decreased as in many other industries. The transaction of a small customer order
can cost more than twice as much as a large one to the same export markets. In addition, the productivity of aged paper machines has not improved as expected, while the paper sales prices have decreased due to the continuous oversupply. In some geographical ranges, the location planning of paper industry may transform towards local production units near the market.